Buying Gold: Your 9-Point Checklist

LOOKING TO buy gold today? The way you buy and own it dramatically affects the safety gold brings.

1. Do NOT hold your gold at home#

History is littered with people who rightly bought gold to protect against financial stress, but who then made the mistake of holding their gold too close to home.

Think of Zimbabwe (2006), Argentina (2001), Yugoslavia (1992), Vietnam and Cambodia (1975), Nazi Germany (1933), the USA (1933) or Russia (1917). When they needed it, people could not release gold's value. Because it had either been banned, or become a danger to their personal safety.

Gold secures your wealth when it is held in a secure, reliable jurisdiction. This is unlikely to be your own country if you are wise to be buying today.

2. Go 'wholesale' to slash 10% off your costs#

The world's best gold – assayed at 99.5% or better, and traded 100% 'fine' (i.e. gross bar weight x assayed purity) – has a solid, permanent guarantee of its quality. Perhaps surprisingly, this 'Good Delivery' gold is also the cheapest to buy, and it also sells for the highest prices.

Because Good Delivery bullion is the spot-market's international standard, it is massively more liquid than 'retail' coins. You'll save up to 10% in transaction fees by trading wholesale gold instead.

3. Use allocated storage – but not at a bank#

Persuading you to hold your gold 'unallocated' lets your bank keep it on their balance-sheet, as their asset, even though you've paid for it. Yes, this might give you free storage. But it also makes you an unsecured creditor, putting you 'on risk' for the bank's financial survival.

Unallocated gold in fact means you are funding the bank's liquidity reserve with your metal. This is so attractive to banks, they significantly overcharge for the safer, off-risk 'allocated' storage option.

Use fully allocated and insured commercial vaults to store your gold instead. Because they don't have a liquidity reserve requirement, commercial vaults have no reason to offer 'unallocated' credit accounts. So they have no motivation to overcharge you for storing metal which you own outright.

Allocated gold bought via BullionVault, for instance, is all held in dedicated commercial vaults. Storage with insurance included costs just 0.12% per year (minimum US$4 per month). Banks usually charge 10 times that much or more for allocated storage.

4. Don't get trapped in a trust#

With the economy lurching from crisis to crisis, watch out for the threat of exchange controls. Don't get caught out by a trust deed or storage vault in the wrong jurisdiction. A block on large cross-border cash transfers, however, would still leave you free to travel. So you could physically collect your gold – if it's held overseas – and then realize its value outside the controls in your home country.

5. Avoid certificates#

There are two big problems with gold certificates. Firstly they convert your gold into a security (meaning that the certificate becomes the thing you own, not the gold itself), which puts the issuer between you and the gold, which means the problems of trusts apply again.

Gold is a tangible good, so it does not need the complexity of being wrapped as a security. You can own the stuff itself, and involve no-one else in your title.

Certificates also stop you is that there's no way of knowing how many certificates have been issued, which is a threat to your unique ownership. Modern technology can help here, by allowing you internet access to view the register of all owners. BullionVault is the only custody service in the world which publishes – every day – bar lists reconciled to individual private holdings. You can see the public evidence of your property, reconciled to the current bar list. Our central register defines who owns what, and eliminates the possibility of double counting.

6. Get independent proof at every stage#

Fraud is rare in the custody business, but it does happen and it is a material risk to your wealth. So first, make sure that the custodian – who actually cares for your property – is independent and separate from your service provider. That way, internal fraud by your account provider's staff or management becomes impossible.

You then want an independent auditor, and not the service provider, to study and vouch for your ownership records. Also, make sure that the bullion is checked and reported on annually by an independent and qualified assayer.

7. What would you do in a crisis?#

Currency crises blow up with alarming speed. Could you move your gold instantly, or make a rapid switch of location from one vault to another?

Gold stored via a stock-exchange traded trust fund (such as a gold ETF) is not mobile. There will usually be only one vault, in one jurisdiction, storing all the trust's gold. Trading out of your ETF shares will need a 3-day stock exchange settlement, plus another business-day's wait or more to get your cash from your stockbroker.

Imagine instead that you can sell your gold and buy instantly in another location. This is a simple, low-cost transaction at BullionVault, where you can trade online anytime of day or night. Because BullionVault's independent vault operator is also a secure transport specialist, you can also transport bullion from one international location to another quickly and cheaply. The shipment can be arranged without the bullion ever leaving the control of the commercial vault operator, which makes it much easier to set up – fast.

8. Retain the right to take possession#

It is ownership, not possession, which gives you the protection you want from gold ownership. But the cost-savings, liquidity and security of independent, wholesale custody mean little if you don't also retain the right to withdraw your property. All BullionVault customers have the right to take possession of their gold. Each gram is physically present in the vault of their choice, available for withdrawal when they choose, and proven each day by the independently verified daily audit of all client property.

9. Gold Liquidity – look for 24/7 trading; don't rely on just one counterparty#

Most stock-market shares only move when their local market is open, but the gold price moves 24 hours a day. Whether the action occurs during Asian, European and American trading, you should be able to act when the price moves, so you need a marketplace which stays open 24 hours as well.

BullionVault is currently the only gold market in the world which is open 24 hours a day, 7 days a week. Users also quote their own prices, meaning there are thousands of people able to buy and sell with you in open competition. Single-counterparty systems, in contrast, force you to sell your gold back to the system operator – typically, your account-service provider. That forces you to accept his price. Open competition massively reduces the trading spread, cutting your costs and dramatically boosting your liquidity.

BullionVault's quiet revolution in the global gold market is fast-gathering pace — and it's already been featured by the Financial Times, Stern magazine in Germany, CNBC, Bloomberg News, and many other highly-respected news sources.

You can join this service today at no cost to yourself. Simply register here for a free gram of gold, stored on your behalf in Zurich, Switzerland.

Register now, and you can then sell this gram...buy it back...and sell it again to test-drive the BullionVault service without risking one penny of your own money.

Opening a Risk-Free Trading Account will put you under no obligation to buy gold, and no salesman will call.

Nor will we spam, rent or abuse your email address in any way.

If you find that you like the safety, simplicity, and low prices that BullionVault offers, then simply follow the instructions online to fund your account and start investing in gold.

Because buying gold doesn't need to be hard — and it need not be expensive.