Tuesday, November 28, 2023
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HomeFinanceGold Investments: Investing in Bullion

Gold Investments: Investing in Bullion

Investments are a great way to save for the future. When one invests in something, it is with an expectation of profit. With stock trading becoming commonplace, everyone is involved in holding shares and selling them. You would be surprised to know that they are used not only by analysts and investors worldwide to identify the best stocks, but also by the key managerial personnel of companies.

Bullion is a precious metal with at least 99.99% purity, in the form of ingots, coins or bars. Investing in these metals is safer than stocks as their prices are less likely to fluctuate. This includes gold, silver and other precious metals. The global recognition of this bullion as precious metals helps maintain their value. Both governments and the public invest in this and store them for emergency cash. 

The term "bullion" comes from the word bouillon in French. This word means boiling and refers to the molten precious-metals used to create ingots or bars. 

Pricing Gold Bullion

Prices of bullion are set in the London Bullion Market Association every day at 10.00 A.M. and 3.00 P.M. GMT, in US Dollars. These prices are not arbitrary and vary slightly every day. These fluctuations depend on market demand and supply. But people in the market arrive at a fixed rate, with an agreement to maintain demand and supply within the fixed rate. Thus bullion prices are more stable than stocks. There are two types of pricing bullion:

Spot Pricing: The market price of bullion determined every day for immediate purchase of bullion.

Futures Pricing: This pricing is an agreement between two parties. They determine a price for the bullion trade at a future date. Thus, immaterial of the bullion price on that day the agreed parties will trade at this price.

What Determines Bullion Price?

Bullion price does fluctuate daily, but they are still less risky than stocks. The price fluctuation is minimal as these precious metals are globally accepted to be of high value, and thus they are less likely to have vast dips in their pricing. Bullion prices depend on six factors,

  • Price of Other Commodities: Demand and supply of commodities determine their pricing.
  • Global Inflation
  • Twin Deficits.
  • The Activities of the Central Bank
  • Real Estate Rates: This rate indirectly depends upon wages and affordability of the people.
  • Global Production Costs of commodities: Demand and supply of commodities determine production costs.

Advantages of Gold Bullion

Investing in bullion is always a smart choice as this precious metal offers security like no other. The advantages of investing in this bullion are:


  • For many centuries this precious metal has been given the highest value, and it continues today as well.


  • Even if the value of currency dips, bullion rates will be steady


  • Hedge Against Inflation: As the cost of living rises due to inflation, bullion prices soar in the market, increasing one's asset value.


  • Protection Against Deflation: Deflation is when prices drop drastically due to increased debt. Even at these times, buying bullion is the safest way to reserve cash for the future.


  • Crisis Commodity: Even in times of financial or geopolitical crises, this metal retains its value. During such hard times, gold-bullion helps people tide over.


  • The annual production of gold-mining is declining, meaning there is a shortage of supply. But the demand for gold-bullion, globally, has seen a sharp increase. With a supply-shortage and a rise in demand, prices increase. It is better to invest in bullion as its prices are sure to skyrocket in the future.

Investing in gold-bullion is a steady investment in the future. Having a stock of gold-bullion ensures financial security. With bullion traders going online, it has become easier than ever for everyone to invest in gold.

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