Gold News

True Cost of Gold Coin & Bar "Sales"

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. 
 
Yes, really. That is nearly 23 years of secure, insured professional vaulting...with independent Bar Lists and physical vault audits to prove your property is safe...plus 24/7 dealing when you want to sell.
 
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.)

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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