Best way to buy Gold/ Silver?

sambessey

Hi

I am going to be buying some Gold/ silver in one form or another soon. However, I am slightly unsure of the best way to do it. Which way do you think is best?

A) Buying physical bars: I have a large, very well hidden, fireproof safe so there would be no storage costs... I presume there would be no issues with either metal tarnishing at all, hence affecting its value? Of course there is still the risk of it being stolen and the worry that I have thousands of pounds of metal literally buried under the floor.

Goldmoney.com or similar- I am not too sure about these sites... I hear mixed things from different people. i.e. you still don't actually own anything and are at the mercy of goldmoney.com as far as your investment goes.

C) A Gold/ silver tracker fund. Pretty safe I would imagine, but of course there are management fees to pay and probably a bigger bid/ offer spread than with the other two options. Also I have no control over the gold/ silver ratio. Also CGT etc come into play.

Also is there such thing as a gold/ silver price tracker wrapped in an ISA (as there is with the FTSE 100, DOW, etc)?

I would appreciate any opinions on what you think the best option is.

Thanks

Stonk

A) Buying physical bars: I have a large, very well hidden, fireproof safe so there would be no storage costs... I presume there would be no issues with either metal tarnishing at all, hence affecting its value? Of course there is still the risk of it being stolen and the worry that I have thousands of pounds of metal literally buried under the floor.

Depending on how much you buy, expect to pay between 3% and 10% over the market value for physical gold to take home. For small amounts, bullion coins are the way to go; for larger amounts, it is possible to buy kilo bullion bars.

You won't need a large safe! Gold is astonishingly dense. A kilogramme of the stuff is about the size of a chocolate bar - and is worth over £10,000. Those big brick-sized bullion bars you see in films - they're not as easy to lift as they make out!

It won't decay in any way. That's one reason it's seen as a store of value. It's density is another reason (easy to store).

Physical silver is extremely inefficient for an ordinary person to buy. The spread between buy and sell prices is huge, so you need to experience an enormous price change even just to get your money back, let alone turn a profit. Also, it takes up a hell of a lot more storage space. People think of silver as valuable, but it is actually very cheap compared to gold; that, and with it being much less dense, means the same value takes up a great deal more space.

Personally, although I do own some physical gold for curiosity's sake (it's amazing stuff, so heavy, and such a beautiful colour when totally pure (.9999)), I wouldn't buy large quantities in this form. The spreads are too large. I would opt for a fund. CGT wouldn't bother me, because I wouldn't want to have a large proportion of my portfolio in this sector and the chances of the annual gains exceeding my CGT allowance would be low.

cloud_dog

sambessey, these things have been asked before - I should know I've asked once or twice :rotfl: You may want to a search on "gold" and read the threads.

sambessey wrote:

I am going to be buying some Gold/ silver in one form or another soon. However, I am slightly unsure of the best way to do it. Which way do you think is best?

'Best' is a very subjective statement but, I'll offer some opnions.........

A) Buying physical bars: I have a large, very well hidden, fireproof safe so there would be no storage costs... I presume there would be no issues with either metal tarnishing at all, hence affecting its value? Of course there is still the risk of it being stolen and the worry that I have thousands of pounds of metal literally buried under the floor.

Physical is best because you know you own it but then you have the worry of owning it.

Goldmoney.com or similar- I am not too sure about these sites... I hear mixed things from different people. i.e. you still don't actually own anything and are at the mercy of goldmoney.com as far as your investment goes.

Any collective commodity investment vehicle is in a similar boat. The thing that does concern me regarding commodity Gold funds is that they can often (without your authorisation) 'loan' (sell/buy) the gold to other parties for periods of time with an agreement to buy back at a set price etc. Probelms may come if the other party reneg on the agreement (for some reason) and the gold never comes back - highly unlikley but the risk is still there, and the practice is widespread.

C) A Gold/ silver tracker fund. Pretty safe I would imagine, but of course there are management fees to pay and probably a bigger bid/ offer spread than with the other two options. Also I have no control over the gold/ silver ratio. Also CGT etc come into play.

These are thin on the ground in the UK. There are a number of Gold and silver funds (lesser so silver). The obvious being Gold Bullion (ticker GBS), the iShares Gold Tust (GLD) and Silver Trust (SLV) - both traded on NYSE, there's also StreetTRacks Gold (biggest one I think)

Also is there such thing as a gold/ silver price tracker wrapped in an ISA (as there is with the FTSE 100, DOW, etc)?

You cannot hold commodities in an ISA.

BUT, having said that I have been following a Canadian fund for awhile (Central Fund of Canada - trades on NYSE and Toronto) which essentially has a near 50 / 50 split between holding Gold and Silver. I have been investigating the options of investing my daughters CFT into this fund and was advised by SelfTrade that it can be held in a CTF - which means that it should be able to be held in an ISA. Having said that SelfTrade have given me slightly inaccurate info in the past so I am trying to get some confirmation.

I would appreciate any opinions on what you think the best option is.

The 'best' option is the one you feel most comfortable with I'm affraid. This is not a recommendation but I am seriously considering the CFoC for both the CTF and our own investments.

cloud_dog

Chrismaths

One problem with owning physical gold is if it gets nicked. Sure you may say that it's in a big safe etc, but just consider an armed home invasion - Open the safe or I'll kill you/your wife/your children/pets etc. You'd open the safe. So that leaves you with either a) taking the risk or b) insuring against it, which incurs a cost. Paying GBS 0.4% per annum to do this is actually pretty cheap.

sambessey

cloud_dog wrote:

sambessey, these things have been asked before - I should know I've asked once or twice :rotfl: You may want to a search on "gold" and read the threads.



'Best' is a very subjective statement but, I'll offer some opnions.........

Physical is best because you know you own it but then you have the worry of owning it.

Any collective commodity investment vehicle is in a similar boat. The thing that does concern me regarding commodity Gold funds is that they can often (without your authorisation) 'loan' (sell/buy) the gold to other parties for periods of time with an agreement to buy back at a set price etc. Probelms may come if the other party reneg on the agreement (for some reason) and the gold never comes back - highly unlikley but the risk is still there, and the practice is widespread.

These are thin on the ground in the UK. There are a number of Gold and silver funds (lesser so silver). The obvious being Gold Bullion (ticker GBS), the iShares Gold Tust (GLD) and Silver Trust (SLV) - both traded on NYSE, there's also StreetTRacks Gold (biggest one I think)

You cannot hold commodities in an ISA.

BUT, having said that I have been following a Canadian fund for awhile (Central Fund of Canada - trades on NYSE and Toronto) which essentially has a near 50 / 50 split between holding Gold and Silver. I have been investigating the options of investing my daughters CFT into this fund and was advised by SelfTrade that it can be held in a CTF - which means that it should be able to be held in an ISA. Having said that SelfTrade have given me slightly inaccurate info in the past so I am trying to get some confirmation.

The 'best' option is the one you feel most comfortable with I'm affraid. This is not a recommendation but I am seriously considering the CFoC for both the CTF and our own investments.

cloud_dog

Hi Cloud Dog, I have been looking at exactly the same fund- I would be very interested to know whether it can be held in an ISA too- please let me know what you find out

and thanks to everyone for the replies- lots to think about there

cloud_dog

sambessey wrote:

Hi Cloud Dog, I have been looking at exactly the same fund- I would be very interested to know whether it can be held in an ISA too- please let me know what you find out

sambessey, not sure if you are still looking to get in but, in my opinion, the cards certainly seem to be falling in line for a purchase in the very near future. There is a conspiricy theory doing the rounds that (amongst other tings) the US powers that be are attempting to lower the price of Gold as it gives a better 'feel good factor' for the up 'n' comming mid-term elections.

With regard to CEF, I am now sure you can hold CEF in an ISA (and CTF) as it is strutured as a company rather than a commodity fund - the current Silver / Gold ETF's are structured as commodity funds rather than companies.

Also, based on last nights closing numbers the CEF premium has now come down to 4.8% which for me is much more acceptable.

cloud_dog

dunstonh

Merrill Lynch Gold and General fund is probably the highest profile unit trust fund available and you can place that in an ISA, investment bond or personal pension as well as having it as an unwrapped unit trust.

Physical holdings are usually less liquid and you could find your home insurance is invalidated if you dont inform the insurance company of the holding.

cheerfulcat

MLG&G is largely invested in miners, though. If the precious metal prices continue to rise it should benefit but it's not the same as holding gold or gold/silver trackers - its benchmark is the FTSE Gold Mines index, not the PoG itself. Having said that, it's certainly a way to get some PM exposure in an ISA. A similar fund is the Ruffer Baker Steel Gold Fund.

sambessey, the purest way to hold gold is in physical form - bullion coins are easiest to deal with. However you pay a premium, as has been mentioned ( the smallest is I think in sovereigns ). I think that the Central Fund of Canada is worth a look too. I am inclined to avoid the Goldmoney sort of operations as I'm not convinced by their claims. There is a good bit on investing in gold here.

cloud_dog

sambessey (any one interested)........... I also note that CEF have a sister fund - Central Gold Trust - which is also a closed end which would also make it available in an ISA - haven't tried it but that's my understanding.

[Edit] See link for recent news:
http://www.resourceinvestor.com/pebble.asp?relid=24102

cloud_dog