What Are the Advantages of Buying Gold or Silver Bullion?

Gold and silver are precious metals that have been used as a medium of trade for thousands of years. In contemporary society, gold and silver are no longer used as a form of money, but some people still like to own bullion as a tangible source of wealth to offset the vagaries of inflation. The idea is that while the purchasing power of the dollar has steadily declined, the purchasing power of gold and silver has remained stable.

Investors who are bullish on gold, known as "gold bugs," assert that paper money has no inherent value beyond that ascribed to it by the government. Gold and silver are tangible assets which have inherent value based in part on their industrial uses and in part on their scarcity. While the government can print up as many dollars as it wishes, there is only so much gold and silver available in the world.

You can gain exposure to gold and silver by investing in precious metals exchange traded funds, gold and silver mutual funds or the stocks of precious metals mining companies. However, owning gold or silver bullion gives you access to the physical investment. Bullion is available in small size coins, bars and ingots that can be easily stored in a home safe or bank safe deposit box.

There are advantages to buying gold and silver bullion as a portion of your diversified investment portfolio, but there are some considerations to be aware of before you take the plunge. Not all gold and silver bullion is created equal. Gold and silver bullion comes in different levels of fineness, or purity. Some bullion coins contain different percentages of the precious metal than others. For example, American Eagle gold bullion coins are .9167 fine, or 22 karat, while Vienna Philharmonic bullion coins have a fineness of .9999, or 24 karats. The Federal Trade Commission advises investigating both the bullion and the seller before you invest in gold or silver bullion.