Bullion refers to precious metals in bulk form which are regularly traded on commodity markets. The value of bullion is typically determined by the value of its precious metals content, which is defined by its purity and mass.
The specifications of bullion are often regulated by market bodies or legislation. In the European Union, the minimum purity for gold bullion, which is treated as investment gold with regards to taxation, is 99.5% for gold bullion bars and 90% for bullion coins.
To confirm the purity of the gold, a modern laboratory uses modern XRF technology to accurately assess its quality in order to ensure the owner receives fair market value for it. It is also weighed extremely accurately.
There may be several reasons that investors choose to purchase physical gold bullion; to attempt to hedge against currency risk, to attempt to hedge against inflation risks, to attempt to hedge geopolitical risks, or to add diversification to an investment portfolio.
Edited by ChrisSilver