Bullion
Bullion refers to precious metals in bulk form, typically gold or silver, valued by weight and purity rather than face value or craftsmanship.
It includes bars, ingots, or coins that meet international standards of fineness and can be traded, stored, or used as reserves by individuals and institutions.
Definition and Core Meaning
In professional markets, bullion represents refined precious metal that meets a minimum purity level — for gold, 99.5% (995.0 fineness) or higher as defined by the LBMA Good Delivery standard.
Bullion is primarily used as a store of value, a trading asset, or a settlement medium between financial institutions and central banks.
While the term is most often applied to gold and silver, it also includes platinum and palladium in their investment or industrial forms.
Types of Bullion
Bullion is categorized by form, origin, and certification method.
The main types include:
- Bars and Ingots — cast or minted gold and silver meeting institutional weight and purity requirements.
- Coins — government-issued pieces with guaranteed metal content, often legal tender but valued by metal value rather than denomination.
- Granules or Wafers — refined material used for industrial or jewelry fabrication, also traded in wholesale bullion markets.
Institutional bullion is typically serialized and accompanied by assay certificates or refinery documentation confirming fineness and weight.
Market Standards and Fineness
Bullion accepted in professional trade must comply with global standards, most notably those of the London Bullion Market Association (LBMA).
For gold, the LBMA Good Delivery Rules specify:
- Minimum fineness of 995.0
- Accepted weights from 350 to 430 troy ounces
- Unique serial number, refiner mark, and assay stamp
Bars that meet these criteria are eligible for storage and settlement within LBMA-accredited vaults.
Silver, platinum, and palladium bullion have similar requirements under their respective market associations.
Role in Institutional Custody
In institutional finance, bullion forms the base layer of reserve and collateral systems.
Custodians and vault operators hold bullion under allocated or unallocated accounts, allowing clients to maintain ownership or trade exposure to physical metal.
Each bar or coin held in custody is documented through barlists, audit reports, and insurance certificates, ensuring traceability and regulatory compliance.
Bullion held under professional custody remains outside the custodian’s balance sheet, preserving full legal ownership for the client.
Bullion vs. Jewelry or Numismatics
Bullion differs from jewelry and collectible coins because it derives its value primarily from metal content, not design, rarity, or historical significance.
While numismatic coins may trade at significant premiums, bullion’s price closely tracks the spot price of the underlying metal.
This makes bullion the preferred vehicle for institutional allocation, ETF backing, and central bank reserves, where liquidity and valuation transparency are critical.
Institutional and Economic Significance
Bullion serves as a monetary anchor and hedge against currency risk.
It plays a central role in global finance by linking physical assets to monetary systems, supporting settlement between banks, and backing investment instruments such as ETFs and gold-linked notes.
For investors and institutions alike, bullion represents tangible value, auditability, and monetary independence — a form of wealth that exists outside credit and counterparty risk.