Stop, breathe, think before buying gold. Because 'how'
matters as much as 'when'...
BUYING GOLD has suddenly returned as a
trend, writes Adrian Ash at BullionVault.
Searches for "bullion" online rose 77% in the
last week, according to Google Trends. The price has now risen over 18%
against the British Pound so far in 2016, jumping Thursday to its highest
price for UK investors since September 2013 at £873 per ounce.
Whether or not this surge in prices continues, new
investors should beware acting in haste before making a decision to buy gold.
Because the way you buy gold can be just as important
to defending your savings as your timing.
Gold Sovereign coins, for instance, are one of the most
expensive "bullion" products on the market. Even buying 10 of these
gold coins from the UK's cheapest retailer would cost you 9% more than the
wholesale spot price. Selling them back would incur a loss of 10.5% at the
very least.
Add the hassle of shopping around for the best buy-back
price, plus the need to travel or arrange insured postage when you sell, and
you can see why many coin investments never get sold, whatever the price.
Check this comparison, pulled today (Friday, 12 February
2016) at 09:00 GMT...
Who's got the very best deal?
In bullion as in everything else, it's wholesale dealers
of course.
The wholesale bullion market is where professional traders
and investors deal at 'spot' prices. They trade only large gold bars, weighing
400 Troy ounces and meeting the specifications of the globally-recognized London Good
Delivery standard.
To retain full re-sale value, these bars must stay inside
secure, market-approved vaults until they're finally sold to be melted down
and become jewellery, coins or bonding wire for the electronics in your
smart-phone.
Until 2005, you needed to trade at least one whole
400-ounce bar at a time to get in. That would cost you one-third of a million
pounds at today's prices.
Moreover, you needed a storage account in a
market-approved vault to take delivery too – but the vault door wouldn't open
for less than 10 bars or so. That made the price of entry nearer £3m at
current levels.
Private savers can access this wholesale market directly
using BullionVault. It enables you to sell just as easily as buy, trading as
little as 1 gram at a time of Good Delivery gold 24/7 at live prices.
The metal you buy is already vaulted in specialist
facilities in your choice of London, New York, Singapore, Toronto and Zurich.
There is a small storage charge, with insurance included (0.1% by value per
month, with a minimum US$4). Counted against the cost of the bid/off spread
in Krugerrand coins, you could enjoy 21 months' storage for 1 ounce of gold
bought on BullionVault, or 33 months against the bid/offer cost to investors
buying 1-ounce worth of gold in Sovereigns.
Thursday, by the way, saw the busiest day on
BullionVault's peer-to-peer gold and silver exchange since mid-April 2013,
with users buying and selling almost half-a-tonne of gold between them, and
nearly 7 tonnes of silver.
All told, that was worth £15.75 million. It's this size
which enables BullionVault users to share the low costs, secure storage and
tight wholesale pricing which – previously – private investors were locked
out of. And it's BullionVault stand-out value to self-directed investors
everywhere which continues to make it the very largest provider of
privately-owned gold and silver bullion online.
