Gold dealers, traders and commodity experts often talk of gold and gold bullion as if they are two different things. When they talk of rates they refer to the rate of gold in the bullion market.

So, yes gold and gold bullion are two different things. One is exclusive and the other term is inclusive.

Gold: the term gold is used for different forms of the metal from coins to bars, jewelry and other things made from the metal. Bullion is a term used for precious metals including silver and platinum. In the gold commodity market it is used to refer to gold in its purest firm i.e. 99.9% that is predominantly sold in the form of bars, coins and ingots.

Since the term bullion is used for other precious metals, traders would often differentiate gold from gold bullion by saying gold that is traded in the bullion market. With that said, we should also acknowledge that gold makes up a big part of the inclusive bullion market since other precious metals like silver and platinum aren’t traded as heavily as gold is.

When you sell gold bullion, it’s value depends on the precious metal content and its weight.

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This means that a gold bullion bar weighing 1kg is priced by converting the weight from kg to gram to troy ounces. A troy ounce is 31.1 grams calculate by using the spot price. In financial markets, the value of gold bullion is measured by the reciprocal value in fiat currencies (predominantly, the U.S dollar)

For instance, in the United States the value of gold bullion is based on the fluctuating 1-oz spot price in dollar terms. Whilst India, which happens to be the second biggest gold buying country in the world, base their gold bullion value on a 1-gram spot price in Indian rupees terms.

Most countries like Australia, use the American system but convert the U.S dollar to their own country’s currency. So, of course when you sell gold bullion to a Brisbane dealer the value will be worked out in Australian dollars and you get paid with the country’s currency not US dollars.

What are the fundamental differences between gold and gold bullion?

Every year, over 100 million of ounces of newly mined and recycled gold comes into the market and just under 50% of it is used to make gold bullion bars and coins while the rest goes into making other gold products like jewellery.

China and India are two of the world’s greatest consumers of gold bullion and gold jewellery. Buyers from these two countries demand certain attributes from the gold they buy.

In these eastern countries, quality trumps all. These nation’s usually pay 10% over spot. In pricing gold jewellery for instance, design, inventory and presentation could play some significant part.

In the west, these other factors might not be included. Unlike Jewellery in eastern countries like China, gold jewellery in the west is usually made of gold that is less pure. Gold jewellery is mostly made up of 14 or 18 karats but gold jewellery is more expensive in western countries than it is in the east.

Gold Vs Bullion: What�s the Difference

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