Bullion in gold trading
Bullion is gold in bar or coin form valued by its metal content rather than as jewelry or collectibles; it is the physical market that spot prices reference.
Also called Investment gold, Bars and coins, Physical gold
Bullion is gold (or silver, platinum, palladium) held as metal: bars and coins whose value comes from weight and purity rather than craftsmanship or rarity. The wholesale bullion market deals in 400-ounce London good-delivery bars and 1-kilogram bars; the retail market in 1-ounce, 100-gram and smaller bars and in coins such as the American Eagle, Canadian Maple Leaf, Krugerrand and Britannia. All are priced off the spot price plus a premium.
How it applies to gold trading
Bullion is the physical reality behind XAUUSD. The spot price is the price of loco London bullion for prompt settlement; COMEX futures can be delivered as 100-ounce bars; ETFs hold bullion in vaults. When physical demand is strong, premiums on retail bullion rise and local prices in importing countries trade above the international price, both of which are signals that traders watch. Central bank purchases are bullion purchases, usually of large bars.
For individuals, bullion is the way to own gold without counterparty risk, at the cost of premiums on purchase, a spread on sale, and storage and insurance while held.
The gold price pages on this site show the spot price in many currencies, which is the starting point for working out what a bar or coin should cost before premiums are added.
A common mistake
Comparing a retail coin price with the XAUUSD quote and concluding the dealer is overcharging. The gap is the premium, which covers minting, distribution and the dealer’s margin, and it is normal.
See also: Coin premium, Paper gold vs physical, LBMA, Fineness.
Frequently asked questions
What is the difference between bullion and jewelry?
Bullion is valued almost entirely by its gold content and sells close to the spot price plus a small premium. Jewelry adds making charges and design value, and usually sells back at a larger discount.
What size are bullion bars?
Wholesale bars are 400 troy ounces (London) and 1 kilogram (Asia and COMEX-deliverable kilo contracts). Retail bars run from 1 gram to 1 kilogram, with 1 ounce and 100 grams the most common.