All About Gold Example Chapter
Definition of Gold Bullion
The Oxford English Dictionary definition of gold bullion includes the following:
Gold and silver in the lump, as distinguished from coin or manufactured articles, also applied to coined or manufactured gold and silver when considered simply with reference to its value as raw material.
Precious metal in the mass.
Solid gold or silver (as opposed to showy imitations).
Impure gold or silver.
Melting house or mint. "Place of exchange".
Any metal in the lump.
Webster defines bullion as:
Uncoined gold or silver in the mass. Properly, the precious metals are called bullion, when smelted and not perfectly refined, or when refined, but in bars, ingots or in any form uncoined, as in plate. The word is often used to denote gold and silver, both coined and uncoined, when reckoned by weight and in mass, including especially foreign coins.
The NESARA - The National Economic Stabilization and Recovery Act defines bullion as:
Precious metal bullion: Any refined precious metal, such as gold, silver, platinum, and palladium, which is in a state or condition where its value depends primarily upon its precious metal content and not its form.
1) A piece of metal with its commodity type, weight and fineness stated on its face; an item of intrinsic value based in the unconditional, historical domain and often used as a medium of exchange.
2) Monetized bullion or other forms of money manufactured from gold, silver, platinum, palladium, or other metals now or in the future and used as a medium of exchange in the United States or in any for sovereign nation.
It could also be called investment-grade, pure gold, which may be smelted into gold coins or gold bars.
A simpler definition is:
Any gold which has been formed into bars or coins or rounds in which there is little or
no premium above the content weight or weight of the gold in the bar or coin.
This is quite different to numismatic coins.
While numismatists are often thought of as students or collectors of coins the term actually covers a wider range to include the actual study and history of coins in general.
Numismatic gold coins, however, could be understood to include all gold coins from the past and this would include such rare gold coins, such as early US, and European gold coins.
But several misnomers abound when it comes to numismatic coins however. Not the least of which is dealers labeling some coins numismatic when they are not, thereby justifying being able to sell coins such as the US$20 for example, for a higher premium than if it were not called a numismatic coin. This on the basis that if the government decided to recall all gold coins from circulation (as in 1933), numismatic coins would be exempt. This is quite incorrect as the exemption at that time was vague and generalized. quote, "gold coins having a recognized special value to collectors of rare and unusual coins" (The presidential proclamation of 4/5/1933). US$20 coins are definitely not rare or of special value to collectors.
Some dealers will tell you that the Law in the US defines US$20 gold pieces as "numismatic" coins. This is totally incorrect and there is actually no law in statute or any regulation to say so.
Together with other factors, such as dealers trying to redefine the definition of numismatic coins has resulted in much false information about gold and sliver coins in the US.
The crunch comes when the time comes to sell and many a gold investor has received a shock to find they did not get the price they expected and, in fact, generally got well under the spot price for the coin.
A good way to find out what kind of dealer you are dealing with is to ask the dealer the question, "If I was to sell this coin to you, what would you pay me for it?"
There is little, if any, value for the gold investor to hold numismatic coins, better to convert them into bullion coins.
There are basically two types of gold bullion, coins and bars. Both are covered extensively in this book.
How do you test for gold purity? How do you know the gold you have is actually pure gold?
24 karat gold is the purest gold you can get in gold bullion, coins, bars or gold jewelry.
Coins should originate from a mint. This can be a private mint or a governmental mint. Such smaller items as rings and other gold jewelry should have an assay mark, or hallmark to show the purity of the gold.
Bars and ingots should originate from a foundry. Since 1994 all SMALL bars coming out of modern foundries are100% pure and at the exact weight they are prescribed to be at, due to various advancements in production and accurate weighing. New bars, especially ones that are polished and are 1kg or less, and are considered jewelry quality, are weighed and formed while the gold is in a semi-liquid state. Gold at a certain temperature will flow down a special ramp at a prescribed speed and can then be cut into exact sizes and weights.
Bars that were made before mid 1994, however, or are above 1 kilo weight (above 5 kilos after 1997) or are graded pure raw gold are almost never 100% pure gold nor are they the exact weight.
Hence the Asian foundries always tend to make their bars slightly heavier, adding up to one gram after the traditional weighing, to make up for any discrepancy in purity. This means that a kilo bar of 999.9 percent will have more than 1000grams of 100 percent pure gold in it.
But as a result of the .999 purity standard adopted in the 80s, to replace the 24 ct norm, non-Asian bars had to be made to meet the stencil marks as closely at possible. Prior to that, and even continued by smaller foundries until the early 90s, in Asia a kilo bar always weighed more and was stenciled as 24ct pure.
The karat is a measure of the purity of gold. In the US and Canada the spelling karat has been adopted solely for the measure of purity and carat referring to the mass weight. These are two different things. As a measure of weight, 1 karat is one 24th purity by weight. 10 karats are ten 24ths. 24 karat gold is pure gold or 999.999% gold with some possible impurities. 18-karat gold is 75% gold, 12-karat gold is 50% gold, and so forth. There is actually no such thing as absolute pure gold. In the refining process it is possible and even likely that a tiny amount of copper will be alloyed as part of the refining process.
However, moves are being made to change the current karat system to the millesimal fineness system by which the purity of precious metals is noted more accurately by parts per thousand of pure metal in the alloy. The most common carats used for gold in bullion, jewellery making and by goldsmiths, for example, are:
24 karat (millesimal fineness 999)
22 karat (millesimal fineness 916)
20 karat (millesimal fineness 833)
18 karat (millesimal fineness 750)
15 karat (millesimal fineness 625)
14 karat (millesimal fineness 585)
10 karat (millesimal fineness 417)
9 karat (millesimal fineness 375)
But this system of calculation only gives the weight of pure gold contained in an alloy.
18-karat gold means that the alloy's weight consists of 75% of gold and 25% of alloy. The quantity of gold by volume in a less than 24-karat gold alloy will be different according to the alloys used. We know that standard 10 karat yellow gold consists of 75% gold, 12.5% silver and the remaining 12.5% of copper by weight. The volume of gold in this alloy will be 60 percent. As gold is denser than the silver or copper.
But for most people it is a matter of, how much gold is in the ring or gold jewelry or even gold bar. And how do you know that the figure given to you is correct?
In addition the various colors of gold also have different mixes of other metals.
Yellow Gold consists of 50% silver and 50% copper. White Gold of Nickel, zinc, copper, tin and manganese. Pink (rose) Gold of 90% copper and 10% silver, Green Gold contains a high proportion of silver or cadmium, Blue Gold contains some iron and Grey Gold around 15-20% iron.
You can test the purity of gold yourself with the right test equipment. Mostly this consists of acids which you can purchase for that purpose although electronic testing is now becoming popular and electronic testers can be found with a little investigation and research. The cost of the test equipment means that you would want to test a lot of gold to warrant the cost of the equipment and along with the other factors such as safety measures, time involved etc, you would probably be better off just getting an independent jeweler or laboratory or even a mint to test the gold for you if it is just a one off or a small amount.
Bear in mind however that any testing of gold with chemicals will mean a loss of some small amount of gold. For a kilo or more gold bar this may not amount to much but for a ring, it could be quite significant.
Many a person has been surprised to find that their bar, coin or ring has somewhat less gold than they were given to understand. By the same token it is quite possible to buy a ring and find it has a lot more gold than originally thought.
Gold purity is an important factor when it comes to owning gold!
Gold bars come in all shapes and size from the very small wafer thing 1 gram 'biscuits' to the heavy 400 ounce ingots, so favored in exciting movies such as "The Italian Job" for example. The larger bars are called ingots and are made by poring molten gold into moulds. This is called casting. The smaller bars are made by pressing gold with a hugh multi tonne stamp, much in the same way gold coins are made, and these are usually called biscuits, although not so crunchy.
All bars of gold should have stamped on them, the weight, the size and the manufacturers stamp. Also a registration number that corresponds with a certificate which should also accompany every bar.
The advantage with the smaller bars of course is convenience. They are easier to buy and sell due to the lower cost involved. Easier to store and transport. The disadvantage is the price. They carry a higher premium over the value of the gold due to the costs involved in manufacture.
The advantage with the larger bars or ingots is that the premium is much lower and usually a fraction above the spot price of gold for the day of the sale. The disadvantage is that they are more difficult to move around and store due to their weight and can be more difficult to sell as there is much more funds involved in the transaction. Your next door neighbor is unlikely to have enough spare cash lying around to pop down and buy a 400 ounce gold bar!
Most of the larger ingots are stored in bank vaults around the world and the ownership is simply a transfer by ....
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