Bullion is gold and silver that is officially recognized as being at least 99.5 percent pure and is in the form of ingots or bars. Bullion is legal tender that is held in reserves by central banks or used by institutional investors to hedge against inflationary effects on their portfolios. Approximately 20 percent of mined gold is held by central banks worldwide. The central bank lends gold from their bullion reserves to bullion banks at a rate of approximately 1 percent to help it raise money.
Bullion banks are involved in one activity or another in the precious metals markets. Some of these activities include hedging, clearing, risk management, trading, vaulting, acting as intermediaries between lenders and borrowers, etc.
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 and bullion that contains more than one type of metal is called unparted bullion.
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Silver bullion is silver in the form of bars, coins, ingots or rounds. Though not all silver bullion coins are created equal, and buyers must be aware of the differences to make educated purchases. The sliver bullion is bet known as silver Eagles, Kookaburras, Maple Leafs, and Britannia's. The lowest cost way to buy silver bullion is in the form of silver bars and silver rounds.
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