It used to be very difficult for private individuals to find a simple, safe and cost-effective way of buying, storing, and then selling gold or silver.
The main problem was the sheer size of the investment you needed to make to access the best prices - and there were extra complications with integrity and storage too.
|A London Good Delivery Bar
Weight : ~ 400 Troy Oz [12.44 kg]
This combination of safety, value, accessibility, transparency and service has quickly attracted 50,000 users. It's created a private bullion store owned by the citizens of 173 countries and worth more than $2 billion, making BullionVault.com the most popular direct gold ownership service in the world.
* We sometimes close the order board for a few hours at weekends, for maintenance.
** Where commercial or political concerns dictate it, your money may be returned to another bank account, but only at your instruction and only subject to extensive identity and security procedures.
For active traders the bottom line is the cost of trading. Traders cannot expect to make a profit if they are always paying commissions and/or the spread. It's as simple as that.
BullionVault allows active traders to choose to behave like a market professional, by quoting prices. This allows the true trader a negative cost per trade, through the opportunity to earn the spread.
To see the power of this examine the net effect of continuous quoting on BullionVault on an unmoving price with a $6 spread at $1600 per ounce of gold. The quoter earns rather than pays the spread - just like a market professional. It soon outweighs the cost of commissions :-
|Annual volume||Buy commission||Sell commission||Spread||Net effect|
*%age of your trade volume.
There are very few systems in the world which will grant you access to the spread, and you can see why. Spread access is what really gives you the ability to profit from trading, and that's why most businesses keep it for themselves.
But notice that you are not making a profit at BullionVault's expense here. What is happening is that the liquidity you provide is being consumed by a retail client who is taking the price you make, and paying the spread to you and a commission to BullionVault.
BullionVault, in the tradition of a true exchange, is acting as a meeting place. BullionVault's capital is not employed in the transaction, and the resources of both parties are on hand to settle the transaction instantaneously. This is how BullionVault is at no material risk, and why it is satisfied to earn the tiny amount of 0.05% on your side, which is greatly exceeded by the likely 0.5% of commission which BullionVault makes on customer who accepts your price.
We think this is fair. A long term holder who trades infrequently pays a higher commission for a service he uses infrequently, but where he expects to find ample liquidity when he wants to sell. A liquidity provider pays a much lower commission rate which means he can earn a profit from providing liquidity. More to the point - and this is very important - people are entirely free to choose which one they want to be. The commission rate simply reduces automatically as people trade more.
BullionVault's objective is to be the cheapest, safest, and most accessible worldwide market in privately owned bullion. There is no safer way for private individuals to deal in and own gold and silver, and there is no fairer proposition to the trader. But always be aware that trading is a risky business because markets can swing against you. When you quote prices you need to be ready to act as markets move, otherwise you will find your prices become unduly attractive to other participants.
When you buy through BullionVault's order board you will pay a small fraction over the current world spot price for bullion. For orders placed at the daily price there is a single commission rate of 0.5%, with an additional 0.3% currency-switching fee if the order is placed in British Pounds or Euros.
The process of entering an order on BullionVault requires you to specify your price limit. You will never deal on terms worse than the limit you choose. You will frequently deal on better terms - i.e. lower prices when you buy, and higher prices when you sell.
You can continually check the prices yourself on the order board.
You pay a commission to BullionVault - as explained in the next section.
You will pay a trading commission and a custody charge.
BullionVault's bank deducts the cost of wiring your money back to you from the sum sent when you withdraw your money. You can trade as many times as you want within BullionVault without incurring this charge, but when you decide to send money back to your bank account you will then pay it once. It's usually $20-$30.
Review the complete tariff here.
Whether you're a buyer or a seller there are three big savings when you deal gold or silver on BullionVault.
The first is that BullionVault only deals Good Delivery professional bullion. We'll come back to that in a minute.
The second is that there is no need to hire an expensive armoured truck to collect your bullion or make delivery when you sell.
But let's explain about the third - BullionVault's market.
Other bullion providers allow no free price competition. Because you must buy and sell from them there's a tendency to wide spreads between buying and selling prices, which is how they make their money.
BullionVault gets you lower dealing costs because all our users - including you - compete with us to quote the best buying and selling prices. This introduces the market competition which naturally reduces bid/offer spreads and saves you money.
For example :-
Imagine, like many other services, BullionVault decided to quote [for you to sell gold] $1500 - $1560 [for you to buy]. That's typical of the spread with many coin dealers. It's a 4% loss on your gold investment straight away.
On the traditional gold market BID OFFER $1500 Your cost: 4% $1560
But on BullionVault, to save that 4%, you might try bidding $1530. Your bid gets quoted on the order board, on the green Best Bid button. Now the best prices quoted on the board are $1530 (your bid) to $1560 (BullionVault's offer). The spread cost is halved, to 2%.
On BullionVault's platform:
On BullionVault's market BID YOUR BID OFFER $1500 $1530 Your cost: 2% $1560
Now the best prices quoted on the board are $1530 (your bid) to $1560 (BullionVault's offer). The spread to everyone else is halved, to 2%.
Do you see how now any seller who comes along to sell at the best price will be selling direct to you, and you'll be buying from them $30 per ounce cheaper than BullionVault's price; that's a 2% saving for both of you.
Then a selling customer decides to beat BullionVault's offer price too, and offers his gold at $1536. You see how he's now making himself the most attractive to any new buyer, by offering gold $24 cheaper than BullionVault. His price goes on the button too - as the orange Best Offer.
On BullionVault's market BID YOUR BID ANOTHER
OFFER $1500 $1530 Your cost: 0.4% $1536 $1560
Now the quoted spread to everyone else is $1530 - $1536, which is only 0.4%. BullionVault is cut out from the middle. Open and fair competition has reduced the cost of the spread from $60 to just $6.
On BullionVault this is going on all the time, as sellers quote directly to buyers (and vice versa) cutting us out unless we quote better prices than our own users. The result is a huge reduction in the spread for everyone. BullionVault prices usually show a spread of about $6 per ounce of gold. That's 0.4%, not 4%, which is a 90% saving in trading costs for you.
On BullionVault all users decide for themselves if they wish to make or take prices, and that is why on BullionVault the average spread paid across all users is exactly zero.
How about trading actively and earning that spread for yourself? Look carefully at the numbers. We've spelt it out clearly here. BullionVault is one of a tiny number of businesses around the world which grants you access to the spread and lets you choose to participate like a market professional would. It's one big reason the system has quickly proved so popular.
Now - back to that other big saving. If you haven't already read about Good Delivery gold learn about it here.
BullionVault is not a closed ended system with only a limited amount of gold and silver. Think of it as a buffer zone - between the large good delivery bars of the professional bullion market, and the smaller dealing and storage requirements of the private individual.
BullionVault maintains a float - equivalent to several big bars of gold (and many more bars for silver) - which it adds to and takes from by trading in any amounts with other BullionVault users. After a period of customer demand our float gets diminished, and we go and buy several more big bars on the main market. We do the opposite if there have been lots of customer sales.
But also any other BullionVault customer has the right to buy and sell on the main bullion markets too. To do this they must be able to settle the main market bullion unit. This excludes most (but not all) BullionVault users because the unit size of a main market deal - two Good Delivery Gold Bars of 400 troy oz or a tonne of Good Delivery Silver - is so big. This right is very important, because it ensures that BullionVault has no monopoly privilege to operate in this buffer zone, and that keeps BullionVault prices fair.
How does this work in practice? Suppose you - as a small seller - were being disadvantaged by prices being too low on BullionVault. Then bigger private buyers would start competing to buy any available bullion, because it would be obviously cheap, and they could immediately sell it on the main market for a profit. In this way the larger traders' demand on BullionVault would drag up the BullionVault price to the main market level by the natural rules of market forces.
In just the same way if BullionVault were disadvantaging a smaller buyer, by quoting high prices, then larger private sellers would start competing to sell on BullionVault, and exercise their right to buy the cheaper gold and silver on the main market - again making a quick profit and again causing natural market forces to balance the price on BullionVault to the price on the main market.
This probably sounds unfair to some people, because they might think that this privilege to make quick profits is reserved to bigger customers. But in fact in a fairly constructed marketplace like BullionVault it doesn't work like that, because the possibility of profiting from a difference in price between two markets has the effect of uniting the two markets' prices, so the price differential doesn't appear in the first place.
That is exactly what has happened on BullionVault. There is never more than a fleeting instant when BullionVault prices don't fairly reflect main market gold and silver values.
The form of your bullion is a Good Delivery bar already stored in the BullionVault section of the professional bullion market vault selected for storage.
This is slightly different from the form for which you can expect to see prices quoted all over the world. The world spot price for bullion is quoted on an unallocated basis. Spot market buyers pay extra fees for large gold or silver bars to be fabricated into smaller bars or coins, and they must pay for collection and delivery too, because the spot price only includes making whole bars available for collection at the seller's vault.
A bullion courier needs to be recognised by the vaults of both seller and buyer - because there are delivery procedures necessary for maintaining the chain of integrity. Physical delivery is awkward and expensive to arrange in small delivery amounts because the procedures require armoured transport and careful controls on staff.
In BullionVault you are buying physical gold and silver which has already been fabricated and delivered into a qualifying vault and both are included in your price - regardless of size.
BullionVault gold and silver is equivalent to spot gold and silver inclusive of physical delivery, which eliminates the unsecured credit risk of unallocated bullion and the costs of fabrication and shipment, which is why it is considered slightly more valuable than spot gold and silver. The extra value becomes apparent when you sell, because other buyers pay more for fully delivered gold or silver. Both you and they enjoy the extra benefit of owning bullion which definitely exists and does not give rise to extra expenses in settlement.
There are many resources on the web for finding out about gold. A good place to start is our news and analysis site, GoldNews.BullionVault.com.
© BullionVault Ltd 2013 - Buy gold online at live gold prices.