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Precious Metals Are Bullion
Precious metals are rare, naturally occurring metals of high value. Chemically, precious metals are highly lustrous and are soft, making them easy to work with. Historically they were important as currency and now are traded as industrial commodities. These metals include gold, silver, platinum and palladium.
Uses of Precious Metals/Bullion
Precious metals have been used throughout history as a form of exchange. Gold and silver especially have been used in coins since coins began circulating in the ancient world. Platinum and palladium are used for industrial purposes too, and recently platinum has become increasingly popular for jewelry. Gold and silver also have industrial uses in the electronic and photography sectors.
Forms of Bullion
Precious metals in bulk form are called bullion, and these are traded in commodity markets. Bullion metals are often cast into bars or ingots, or they are minted into coins. The primary attribute of bullion is that it is traded by its weight and its purity, and not by face value or with an additional premium as a collectible. Some popular bullion-coin markets include Canada, which mints a Gold Maple Leaf coin and the United States, with its popular American Eagle bullion coin program. Other forms include gold exchange-traded funds, gold certificates and mining company investment vehicles.
Bullion Trading
When bullion is held in coin or bar form, it can be traded in person-to-person transactions at coin stores, jewelry stores or coin shows. Gold that is in exchange-traded funds can be traded on the stock market just like a stock. Gold futures allow investors to leverage their position by borrowing money by hoping that gold will go up or down, and betting for or against either possibility. Those transactions have their own trading networks.
Taxation of Bullion Trading
Bullion trading involves precious metals, and gold has special rules attached to it in many tax -collecting nations. In the United States, citizens may be taxed on gold profits depending on the investment vehicle, with it often being characterized as a collectible. In the European Union, trading of gold coins and bullion products are free of the Value Added Tax, while silver and other bullion metals are not granted the same exclusion.