Precious Metal Bullions: FAQs
Bullions are precious metals, like gold, silver, or platinum in the form of a bar, ingot or investment coin. These bars are available in different weights and purity.
The word was derived from the French word bouillon, which means to boil. This refers to the processes involved in refining and shaping precious metals. Here are a few frequently asked questions precious metal investors often ask:
Should I Buy Gold or Silver?
This is a very complicated question which depends on several factors.
First of all, gold is much rarer than silver, and therefore it has a much higher price. However, gold is also deemed to be a much more prestigious and valuable precious metal. Most governments hold gold reserves, and in times of crisis, the price of gold can increase precipitously.
Additionally, it’s much more challenging to store silver as it needs to be stored in a cool and dry place. This means it can cost a significant amount to store silver. Finally, the prices of silver are very volatile, which means that you could incur substantial losses when investing in silver or vice versa.
Bars or Coins?
This is a personal preference. Both coins and bars are popular choices among investors, and there is little difference among them from an investment point of view.
The most prominent part of a bar is its weight and metal purity. These can be refined into different shapes and sizes. Furthermore, bars can be easier to store, transport and keep track of.
Coins are also available in different designs. In fact, some of them change every year.
What is Money?
To be considered money, an object must perform three essential functions:
- It must serve as a medium of transaction. Therefore, paper notes, credit cards, and cheques serve as money.
- It should provide a unit of account and value to measure goods and services.
- It should also provide a method of deferred payments, therefore, allowing debt accumulation and future payments.
Precious metals don’t meet the above criteria. Since there is no gold standard anywhere in the world, gold can’t be used as a medium of transaction or as a method of deferred payments, so it is not money.
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