What is 'Bullion'

Bullion is gold and silver that is officially recognized as being at least 99.5% pure and is in the form of bars or ingots rather than coins. To create bullion, gold first must be discovered by mining companies and removed from the earth in the form of gold ore, a combination of gold and mineralized rock. The gold is then extracted from the ore with the use of chemicals or extreme heat. The resulting pure bullion is also called "parted bullion." Bullion that contains more than one type of metal is called "unparted bullion."

BREAKING DOWN 'Bullion'

The price of gold bullion is influenced by demand from companies that use gold to make jewelry and other products, and by perceptions of the overall economy (for example, gold becomes more popular as an investment during times of economic instability).

Central banks and investors who hold gold typically do so in the form of bullion, but it is expensive to store and insure. Bullion is traded in the bullion market, which is primarily an OTC market open 24 hours a day. Trade volume in the bullion market is high, and most transactions are completed electronically or by phone.

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