Where to buy physical Gold/Silver Bullion at Market price?

John_

bery_451 said:

bowlhead99 said:

bery_451 said:

EdGasketTheSecond said:

Gordon Brown sold off most of our gold reserves at the worst possible price in the gold market; hence nicknamed the 'Brown Bottom'.

China have been buying vast amounts of gold because:

1) They are smart

2) The want the Yuan to replace the US Dollar as the world reserve currency (and it will)

Damn, how much did Mr Brown sold our Gold for?

Whatever he could get for it at the time - $250-350 /oz range; and what he could get for it was less than if he hadn't had flagged in advance that he was going to do it and held a number of big auctions to do it. 

It cost a few billion versus waiting a few years, though we were not using the gold for anything in particular, its value was volatile and it didn't generate an income, selling it allowed us to pay down some of the national debt and save interest while reducing interest cost on the rest of the debt, and some of the foreign financial instruments purchased with the proceeds appreciated over the coming years anyway.  Missing out on a few billion quid by not selling it earlier or later was not really the end of the world, though it was portrayed as foolish by the government's detractors.

The Chinese Yuan money is not backed by gold so how will it be the world reserve currency?

The same way that the US dollar is currently seen as a world reserve currency while not being backed by gold either.

The dollar is trusted because its a medium of exchange backed by a population of 300+ million working together in an advanced financial market system with tens of trillions of dollars of GDP which the IRS can tap into by changing tax rates.  It's not particularly difficult to imagine that another country with tens of trillion dollars of GDP and 1.4bn population could take over the role of 'safe haven' if its financial markets were less 'emerging' and its government were trusted more than at present.

Okay so our country national debt has been cleared by selling the gold or are we still in deep in debt now? Also will we be in more debt when the chancellor borrows £380 billion?

Gold been stable for thousands of years so how is it volatile?

I understand the UK did not adopt the Euro when we joined the EU and we still have the £GBP and of course we will still have it after Brexit but once we break from EU at the end of this year and become independent can our UK country survive on its own markets without tying to other world markets if the those other world markets go into depression and do not recover from this pandemic?

Good hasn’t been stable for thousands of years, it’s a relatively volatile commodity, the price is all over the place.

By what measure are you trying to say it’s stable?

EdGasketTheSecond

DiggerUK said:

lescarp88 said:

Is there much of a difference between the different gold ETFs............

This article is the easiest read on all the ways to save with gold. It's also simple to turn the cookies off..._

https://moneyweek.com/463616/the-best-ways-to-buy-and-sell-gold

Thanks but its rather brief and doesn't address the question posed by lescarp88.

To partially answer the question you need to look at the following:

1) How is the ETF backed? Is it by derivatives or actual gold.

2) Who is the custodian of the actual gold, do you trust that organisation?

3) Does the fund loan out the gold for short-selling such that in a market meltdown, they may not be able to come up with the gold they say thay have?

4) What is the market cap of the fund? In general the largest, most popular ETFs would tend to be the safest, be more liquid, and have tighter spreads.

5) On what exchanges are they traded and in which currencies? i.e. London, NY, GBP, USD etc.

If there are any others I've left out, please reply.

bowlhead99

lescarp88 said:

Is there much of a difference between the different gold ETFs (currency unhedged/hedged aside)?

Yes

i.e. what's the difference between Invesco physical gold compared to ishares gold etf? Or are they broadly similar?

Those two are broadly similar. They are both ETCs with about $10bn worth of total physical gold value, charging 0.19% fees and even using the same custodian for the hundreds of tonnes of gold they own. 

Effectively an ETC is a loan or debt note certificate issued by a company with a piece of gold as collateral, and the certificate is traded on a market where you can buy it. You hope that the company or underwriter won't fail and if it does, in theory the gold can be sold and used to pay you off, and you hope that process will work out fine.

If they were instead ETFs, you would be buying a share of a corporate entity (again, traded on a market where you can buy it) and as a shareholder you would own part of the company and in turn it would own assets: gold in vaults or contracts to buy or sell gold in future; so effectively the company is holding investment assets on trust for its owners of which you are one. Obviously if the ETF is not holding physical gold but derivatives, futures contracts or the like, there is additional counterparty risk; similarly if there is currency hedging it gets more complex  because there are more things that can go wrong, counterparty risk on the hedging contracts etc. If there are multiple classes where some are hedged, even if you are not buying the hedged class there could potentially be contagion between the classes if something goes wrong with the hedging. But again you hope that the process will work out fine.

A good rule of investing is not to invest in something that you don't understand, so it goes without saying you should read the prospectus of any prospective investment vehicle to know what you are getting into and how it works  from end to end to see what risks they are telling you about and what risks they may not be highlighting so fervently but you could envisage cropping up.  The prospectuses may be long and daunting but are worth reading because products that have similar costs and performance may be structured differently under the skin, which may not matter from a day to day performance perspective but you may perceive one to have an advantage in an area or have the potential for a performance difference when it matters (in times of market dislocation etc).

There is no FSCS protection for ETFs and ETCs, they will all be 'offshore' (e.g. Ireland, Luxembourg, Switzerland etc) and it is 'caveat emptor' - a broker letting you buy them on an execution-only basis doesn't have any responsibility if they implode. It is easy enough to check fees, total size and daily volume (market liquidity) and the latter can impact your return by making it easier or harder to enter and exit positions with low spread between buying and selling prices. But those are not the only things to check - they are simply a crude filtering tool to see if it's worth reading the prospectus.

lescarp88

Thanks Bowlhead, excellent detail as always.

I did look in to buying gold via Bullionvault or Royal Mint direct, but the sums looked too high for the circa £5k that I'm looking to invest initially. I guess I'll take a closer look at all the different gold ETCs, then make a decision.

bowlhead99

EdGasketTheSecond said:

DiggerUK said:

lescarp88 said:

Is there much of a difference between the different gold ETFs............

This article is the easiest read on all the ways to save with gold. It's also simple to turn the cookies off..._

https://moneyweek.com/463616/the-best-ways-to-buy-and-sell-gold

Thanks but its rather brief and doesn't address the question posed by lescarp88.

Yes I agree, if you are trying to evaluate which exchange-traded product to use and what the pitfalls might be, it doesn't really help to have a Moneyweek article telling you that ETFs are 'brilliantly simple' and that online bullion dealers like BullionVault can also be good and that the author has used both methods of taking gold exposure but they 'both have their advantages and disadvantages' without saying what they are, other than noting that financial institutions use ETFs. The author doesn't have a clue about underwriting or counterparty risk or whatever. 

He then goes on to say it is surprising that most UK investors don't buy their gold as sovereigns or britannias which avoids CGT although requires you to pay 5% premium over spot to buy and lose the discount under spot when you sell, and incur storage or insurance charges while you're holding. He notes that there are lots of bullion dealers but recommends two, both of whose bosses are 'a buddy of mine'.   He rather glossed over the point about how buying within an ISA or SIPP would entirely avoid the 'unavoidable 10% or 20% cost for buying and selling gold at a profit' that comes from CGT, because he wanted to fast forward to a nice little history of UK gold bullion and get on to the point about how it was surprising that more people didn't buy from his excellent buddies who owned gold dealerships.

Like many moneyweek pages, the article is hot garbage, and is certainly useless for understanding differences between gold ETFs.

bery_451

In reply to previous threads:
- Gold has stood the test of time hence stable. Of course its going to look volatile on a chart over hundreds of years due to fiat paper money inflation representing its value but gold is stable. One ounce of gold will always be 1 ounce of gold.

- On second thoughts I prefer the physical gold now instead of ETF/ETC paper gold certificates/receipts/tokens/shares because there was a recent article online stating physical gold supplies deliveries have not been fulfilled recently indicating theres not enough physical gold to back the paper gold holders out there. 

- The only disadvantage is with physical gold is if a burglar robs your house he will take the gold if the burglar finds it. The chances of this happening depends on different factors of course. However holding Paper Gold has more disadvantages and risks as the brokers and exchanges could vanish in uncertain times like these leaving your paper gold useless not redeemable for gold. Also with the recent online article regarding troubles with physical gold deliveries not being fulfilled causing physical gold prices to go higher than paper gold then I rather take a chance getting physical gold if I can get it and just dumping it underneath my back garden without fear of my gold rusting away. Cause as we all know Gold doesn't rust!

bowlhead99

bery_451 said:

In reply to previous threads:
- Gold has stood the test of time hence stable. Of course its going to look volatile on a chart over hundreds of years due to fiat paper money inflation representing its value but gold is stable. One ounce of gold will always be 1 ounce of gold.

This is a pretty much nonsense statement. A house is a house but one year it might be worth £500k and another year it might be worth £300k. If you are not looking to actually live in it, the 40% loss potential is concerning. With gold, a piece of metal is a piece of metal but one year it might be valued by speculators at £1300 per ounce and another year £700 per ounce, hardly protection against inflation.

- On second thoughts I prefer the physical gold now instead of ETF/ETC paper gold certificates/receipts/tokens/shares because there was a recent article online stating physical gold supplies deliveries have not been fulfilled recently indicating theres not enough physical gold to back the paper gold holders out there. 

This seems like you don't understand how financial markets or ETCs work, if you are willing to pay 5% over spot rate just because someone said a gold contract couldn't be fulfilled, when an ETC holds the physical gold and does not need to fulfil a delivery contract.

- The only disadvantage is with physical gold is if a burglar robs your house he will take the gold if the burglar finds it. The chances of this happening depends on different factors of course.
I rather take a chance getting physical gold if I can get it and just dumping it underneath my back garden without fear of my gold rusting away. Cause as we all know Gold doesn't rust!

That 'only disadvantage' seems like a major disadvantage to me.

If you have a child or grandchild or nephew or whatever who knows you have a bit of gold under your back garden, or a neighbour who saw you put it there, and he says to a friend 'can I tell you a secret, my granddad has some bars of gold that he keeps buried to make sure we are rich in the future' and the child's friend tells a friend who tells an older brother who tells a mate who's a window cleaner who comes round to case your property and take a quick look around under pretence of quoting you for a job, and then he comes round one night and holds you at knifepoint to tell him where the gold is, and then beats you to death after you told him, because he doesn't want you to tell anyone else that it was he who robbed you.

Gold 'not rusting' is then the least of your worries, though you don't have any worries, because you have been beaten to death for the information you held.

That is less likely to happen if you held a physical gold-backed exchange-traded certificate, inside a pension scheme. For example.

SA100

bowlhead99 said:

bery_451 said:

In reply to previous threads:
- Gold has stood the test of time hence stable. Of course its going to look volatile on a chart over hundreds of years due to fiat paper money inflation representing its value but gold is stable. One ounce of gold will always be 1 ounce of gold.

This is a pretty much nonsense statement. A house is a house but one year it might be worth £500k and another year it might be worth £300k. If you are not looking to actually live in it, the 40% loss potential is concerning. With gold, a piece of metal is a piece of metal but one year it might be valued by speculators at £1300 per ounce and another year £700 per ounce, hardly protection against inflation.

- On second thoughts I prefer the physical gold now instead of ETF/ETC paper gold certificates/receipts/tokens/shares because there was a recent article online stating physical gold supplies deliveries have not been fulfilled recently indicating theres not enough physical gold to back the paper gold holders out there. 

This seems like you don't understand how financial markets or ETCs work, if you are willing to pay 5% over spot rate just because someone said a gold contract couldn't be fulfilled, when an ETC holds the physical gold and does not need to fulfil a delivery contract.

- The only disadvantage is with physical gold is if a burglar robs your house he will take the gold if the burglar finds it. The chances of this happening depends on different factors of course.
I rather take a chance getting physical gold if I can get it and just dumping it underneath my back garden without fear of my gold rusting away. Cause as we all know Gold doesn't rust!

That 'only disadvantage' seems like a major disadvantage to me.

If you have a child or grandchild or nephew or whatever who knows you have a bit of gold under your back garden, or a neighbour who saw you put it there, and he says to a friend 'can I tell you a secret, my granddad has some bars of gold that he keeps buried to make sure we are rich in the future' and the child's friend tells a friend who tells an older brother who tells a mate who's a window cleaner who comes round to case your property and take a quick look around under pretence of quoting you for a job, and then he comes round one night and holds you at knifepoint to tell him where the gold is, and then beats you to death after you told him, because he doesn't want you to tell anyone else that it was he who robbed you.

Gold 'not rusting' is then the least of your worries, though you don't have any worries, because you have been beaten to death for the information you held.

That is less likely to happen if you held a physical gold-backed exchange-traded certificate, inside a pension scheme. For example.

My take away from this is perhaps hold paper gold and physical. 

coyrls

SA100 said:

My take away from this is perhaps hold paper gold and physical. 

Really?  Then I don't think you've been paying attention.

John_

The idea that the price of gold is stable because an ounce of gold is always worth an ounce of gold is perhaps the stupidest thing that I’ve ever seen posted on here.

Why do people pumping gold as an investment always go down the road of dishonesty when questioned?