Gold coins & bar "discounts" compared
against vaulted wholesale bullion...
EVEN with this week's sharp drop, gold
and silver price action remains deadly boring, writes Adrian Ash at BullionVault.
If you are going to make or extend your precious metals
investment, this low volatility and quiet trading might prove a good time to
do it. Especially at these lower prices.
Sadly for UK buyers however, one of Bullionvault's home
competitors...a leading gold coin and bar retailer...just ended what it
called its "biggest ever sale and clearance!" But no doubt they'll
similar offers soon.
Good luck to them, we say. And to their customers.
Half-kilo gold bars, for instance, were last week offered
at 1% off. But they were still 2.6% more expensive than using BullionVault
to buy 500 grams of gold.
How about Krugerrands...the world's most commonly minted
(and so most popular) bullion gold coin? Buy 20 of them in that sale, and
you'll get 2% off the dealer's usual margin. But at £793 per coin last
Thursday, those Krugers still cost 3% more than you'd pay in total for 622
grams of London-vaulted gold using Bullionvault.
"Ah," you may note. "But with free insured
delivery, that dealer puts gold in my hand. Doing that via Bullionvault costs
much more...up to 7.5% in fact for gold."
True. We are working to make taking possession very much
cheaper (full details in due course). Because having a little gold to hand
makes sense, we believe. But even then, for the bulk of your bullion, it will
be worth asking:
Are you buying gold because you want to caress it? Or
because it might help secure a chunk of your wealth?
Purchase price is only one-half of any investing decision.
The price you get back when you sell will count just as much, if not more.
Checking re-sale prices from that leading UK retail
dealer's mega-sale, we found buying and re-selling a half-kilo bar would cost
you 5% of your money. Those 20 Krugerrand gold coins would eat 5.4%...a loss
between purchase and sale of £861 for £15,860 invested.
BullionVault users, in contrast, could buy and sell gold
in the London vault for a gross cost of 1.3%. That's about standard for all
gold locations...a bid/ask spread of around 0.3%, plus 0.5% dealing
commission each side.
"Ah but," you cry, "I have to pay storage
fees on Bullionvault! Surely that makes the total costs more balanced?"
A little more balanced, yes. But the bid/ask spread counts
far more. And the money you save in trading costs by using BullionVault
will cover many, many months of storage, with instant pricing and live
trading on tap.
How long exactly? Buy 500 grams of gold in the London
vault, and the money you save versus "going retail" to buy a
half-kilo bar will cover 197 months of storage fees. (That's $4 per month, or
some £2.40 to UK customers at current exchange rates.) Reject those 20
Krugerrand gold coins to buy 622 grams instead, and your savings would cover
275 months of storage fees.
Please, don't take my word for any of this. Prices have
moved in the wholesale market, and you should see for yourself what you find
to be best value. Check gold coins and bar prices from your lowest-cost
dealers (simple today thanks to Google), and compare them against the firm
prices quoted by Bullionvault – and its users worldwide – for physical metal,
already stored securely in your choice of 5 global locations, on our live gold market Order Board.
Fact is, we like competition, and we're glad to see bar
and coin offered at cheaper prices too. Because better availability and more
precious metals investment is good for the industry more broadly, including
our business. But just note that such retail offers as "clearance
sales" and discounts only apply when you buy. Taking possession still
costs you dearly. And don't confuse it with ownership. Buying through
Bullionvault makes you the owner of physical property, off-risk for anyone
else's solvency.
You simply avoid the wide, costly trading spreads which
retail bars and coins suffer. You also get 24/7 dealing on tap.
(What about silver? UK residents pay 20% VAT sales tax
on retail bar and coin...money they don't get back when they sell.
Bullionvault users everywhere escape that charge until and unless they take
possession. Learn more about cost-effective
silver investing here.)
