flatlander Posted February 2, 2009 Report Share Posted February 2, 2009 (edited) Lately I have read numerous articles and have seen several videos where the more rational economics experts such as Peter Schiff warn that our current recession/financial crisis/depression will lead to a period of deflation, followed by rapid inflation as our statist governments attempt to spend us out of recession. Many suggest that buying gold is the best way for investors to safeguard a portion of their wealth from looming catastrophe. My question is: what are the best ways to buy gold? Is anyone familiar with Bullionvault? I look forward to your insights. Edited February 2, 2009 by flatlander Quote Link to comment Share on other sites More sharing options...
themadkat Posted February 3, 2009 Report Share Posted February 3, 2009 I think BullionVault sounds like a pretty good deal, except you should probably pay close attention to what the market's doing so you can sell when the time is right. But right now is a terrible time to buy gold...the price is up. Lately I have read numerous articles and have seen several videos where the more rational economics experts such as Peter Schiff warn that our current recession/financial crisis/depression will lead to a period of deflation, followed by rapid inflation as our statist governments attempt to spend us out of recession. Many suggest that buying gold is the best way for investors to safeguard a portion of their wealth from looming catastrophe. My question is: what are the best ways to buy gold? Is anyone familiar with Bullionvault? I look forward to your insights. Quote Link to comment Share on other sites More sharing options...
flatlander Posted February 3, 2009 Author Report Share Posted February 3, 2009 I think BullionVault sounds like a pretty good deal, except you should probably pay close attention to what the market's doing so you can sell when the time is right. But right now is a terrible time to buy gold...the price is up. There is certainly the risk of buying gold at a peak price and having it decline. With gold at near-all-time highs it definitely is not something to buy as a short-term investment. But if this recession is a symptom of a fundamental, long-term economic collapse, then buying gold, even at the currently inflated price may still be a good move as a hedge against inflation. So upon further reflection is the current recession simply another economic recovery period, or is it a part of a fundamental collapse of the entire central-banking/fiat-money system? Quote Link to comment Share on other sites More sharing options...
wilicyote Posted February 3, 2009 Report Share Posted February 3, 2009 So upon further reflection is the current recession simply another economic recovery period, or is it a part of a fundamental collapse of the entire central-banking/fiat-money system? Oh, don't go starting that again. Quote Link to comment Share on other sites More sharing options...
eficazpensador Posted February 3, 2009 Report Share Posted February 3, 2009 But right now is a terrible time to buy gold...the price is up. While it still may be a terrible time to buy gold, your reasoning is wrong. Just because the price is up doesn't mean anything (out of context that is). Who cares that the price is up, if it is going to keep going up. Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 3, 2009 Report Share Posted February 3, 2009 Flatlander, BullionVault seems to be one of those companies where you buy gold, but they hold it for you rather than deliver it to you. Is that correct? If one assumes that it's a good time to buy gold, what do you find attractive about buying it in this way, rather than taking physical possession? Is it the saving of delivery cost? If you do not intend to trade in and out, this would be a one-time cost. So, would it be worth the lesser security of not having possession? Also, if one is going to buy gold that someone else holds, what are the advantages of a company like BullionVault over an ETF like GLD, which is much more mainstreet? Quote Link to comment Share on other sites More sharing options...
prosperity Posted February 3, 2009 Report Share Posted February 3, 2009 Flatlander, BullionVault seems to be one of those companies where you buy gold, but they hold it for you rather than deliver it to you. Is that correct? If one assumes that it's a good time to buy gold, what do you find attractive about buying it in this way, rather than taking physical possession? Is it the saving of delivery cost? If you do not intend to trade in and out, this would be a one-time cost. So, would it be worth the lesser security of not having possession? Also, if one is going to buy gold that someone else holds, what are the advantages of a company like BullionVault over an ETF like GLD, which is much more mainstreet? When you buy gold, you have a few choices. You can leave the gold in the "chain of integrity", meaning in the vault that it is being sold from. The gold that is for sale on bullionvault can be stored in either New York, London, or Zurich - which is I believe typical. You can buy either allocated or unallocated, meaning that you can buy physical metal and delineate which gold is yours in the vault (allocated) or you can just buy into a pool (unallocated). The risk, as it were, with unallocated gold is that I believe it can still be leased from the pool because while you own it, you can't specify exactly what you own. The upside is that usually you aren't paying storage fees. Although you can't do this from bullionvault (I don't think), you can typically take physical delivery of your gold when it's allocated, but you may have to pay for fabrication, insurance, and shipping. Once it leaves those vaults just keep in mind that if you ever want to do anything with it again (return it to the market), it will need to be assayed and you'll be paying costs for that and possibly for fabrication again, etc....so that will drag down what you get back out of it by a little. Your other option for allocated gold is to just leave it in the vault, pay the storage fee (they're not too bad), and take a trip to your vault once every few months to stare at your shiny metal. There are lots of companies that sell gold. Monex Deposit Company is a good one in the U.S., and if you don't mind buying online, there is KITCO. Those aren't the only reputable ones, but just to give you an idea. ETFs are an easy way to "buy gold", but you're not really buying gold. You don't own the physical metal, just the investment product which is backed by the physical metal, so you can't take delivery of the gold, you can only cash out (which does you little good if what you wanted was the gold). I believe you also pay taxes on gains, fees associated with the ETF, and you also don't control the management of it. Quote Link to comment Share on other sites More sharing options...
brian0918 Posted February 3, 2009 Report Share Posted February 3, 2009 (edited) ETFs are an easy way to "buy gold", but you're not really buying gold. You don't own the physical metal, just the investment product which is backed by the physical metal If people started trading products for shares of GLD, rather than for money, it could be a way to personally get back on the gold standard, couldn't it? Edited February 3, 2009 by brian0918 Quote Link to comment Share on other sites More sharing options...
Steve D'Ippolito Posted February 3, 2009 Report Share Posted February 3, 2009 Acutally if you buy things like Krugerrands, Canadian Maple Leafs, and US Gold Eagles, you will NOT have to go through the expense of assay when you sell the gold. Also many 1 ounch gold bars come encased in a plastic seal for the same reason. Out of these I personally prefer the Eagle, since although slightly more expensive initially, you will get a higher price when you sell it, and the spread is generally less than with the others. Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 3, 2009 Report Share Posted February 3, 2009 (edited) ETFs are an easy way to "buy gold", but you're not really buying gold. You don't own the physical metal, just the investment product which is backed by the physical metal, so you can't take delivery of the gold, you can only cash out (which does you little good if what you wanted was the gold). I believe you also pay taxes on gains, fees associated with the ETF, and you also don't control the management of it.If we assume a situation where you cannot freely buy gold (depression-style gold-confiscation), then taking immediate physical possession is the only way to go. Otherwise, it might be too late. If one wants to guard against a catastrophic situation like that, one ought not rely on the law still allowing you to get your gold. OTOH, if we assume a situation where you can still buy gold, then there appears to be no difference between leaving the gold in a vault controlled by BullionValut vs. leaving it in a vault controlled by the guys who run the GLD ETF. In the latter case, whenever you cash out you can go and buy gold with the money. Both have storage costs, that one ends up paying for one way or the other. To me, I would feel far safer in GLD. Edited February 3, 2009 by softwareNerd Quote Link to comment Share on other sites More sharing options...
flatlander Posted February 5, 2009 Author Report Share Posted February 5, 2009 I am new to gold investment, so I am still investigating my options. Flatlander, BullionVault seems to be one of those companies where you buy gold, but they hold it for you rather than deliver it to you. Is that correct? That is correct. They hold it for you in the vault of your choice in Zurich, London or New York. If one assumes that it's a good time to buy gold, what do you find attractive about buying it in this way, rather than taking physical possession? Is it the saving of delivery cost? If you do not intend to trade in and out, this would be a one-time cost. So, would it be worth the lesser security of not having possession? The chain of integrity through their use of Good Delivery bars is one of my main reasons to find Bullionvault attractive. I also like that I can buy and sell gold in quantities as little as 1 gram. I have not ruled out buying some gold in the form of Gold Eagles, Maple Leafs or Krugerrand. I do intend to carry out some trades in and out as I watch the market, so the delivery savings are a consideration. The spreads on Bullionvault tend to be small (as little as zero), and commissions are low. Their FAQ page is worth a look. Also, if one is going to buy gold that someone else holds, what are the advantages of a company like BullionVault over an ETF like GLD, which is much more mainstreet? I'm still investigating my gold buying options. I may still go with gold ETFs. I have yet to decide on the mix. To me, so far the appeal of Bullionvault is mainly 1)I am buying real physical gold, which I then own. 2)storage is taken care of by Bullionvault, and I can sell gold and withdraw funds very easily from anywhere in the world, day or night. Good questions, all. Quote Link to comment Share on other sites More sharing options...
DavidV Posted February 5, 2009 Report Share Posted February 5, 2009 What you should buy depends on your motivation for buying it. I bought gold bullion from Kitco as a "worst case scenario", bought GLD and SLV as a hedge against inflation, and then bought GDX and XME (mining ETF's) as an investment. Quote Link to comment Share on other sites More sharing options...
Sarrisan Posted February 5, 2009 Report Share Posted February 5, 2009 I've heard good things about the Anglo Far-East Bullion company - anyone have thoughts on them that they'd like to share? I'm new to gold as well, though I'm making sure to do all my research. I'm primarily interested in using gold as a form of savings, not an investment (I also plan on holding at least some gold physically, though as my savings increase I can imagine that it would simply stop being feasible eventually). Any thoughts on that as well would be welcome. Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 5, 2009 Report Share Posted February 5, 2009 ...I do intend to carry out some trades in and out as I watch the market, so the delivery savings are a consideration.On what basis would you trade in and out? Could you explain with some detail. For instance, if you buy gold today (around $900) and it goes to $1200 sometime this year will you sell? If not, what would level it have to go to this year for you to sell? (I'm talking rough figures only). If you would sell, why? Do you assume that it will come down below $1,200 the year after? I'm trying to understand the underlying assumption(s). Without a clear set of underlying assumptions -- which you might already have or might well be working out -- I see the risk of trading as getting in and out based on fears of the moment. Quote Link to comment Share on other sites More sharing options...
flatlander Posted February 5, 2009 Author Report Share Posted February 5, 2009 On what basis would you trade in and out? Could you explain with some detail. For instance, if you buy gold today (around $900) and it goes to $1200 sometime this year will you sell? If not, what would level it have to go to this year for you to sell? (I'm talking rough figures only). If you would sell, why? Do you assume that it will come down below $1,200 the year after? I'm trying to understand the underlying assumption(s). Without a clear set of underlying assumptions -- which you might already have or might well be working out -- I see the risk of trading as getting in and out based on fears of the moment. Most of my activity would be purchases, with the assumption that gold is on a long term upward trend. Or, more specifically, that the US$ will be significantly debased by the Fed. I do, however, have a set of circumstances that will require for me to withdraw several thousand US dollars within the next two years. My wife and I are in the process of an international adoption, and the final country fees are in USD. As I live in Canada, most of my financial dealings are in Canadian dollars. If gold has a significant increase in that time, it may be advantageous to use some of the proceeds from a gold investment (though it is more likely that I will simply use my US$ bank account). While the likelihood that I would sell gold in the next year or two is low, I want to keep my options as open as possible. My investment strategy overall is long term. I certainly don't want to put myself into a state of reacting to every blip in the price of gold. Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 5, 2009 Report Share Posted February 5, 2009 It sounds like you're saying that you do not have any particular target gold-price in mind. Rather, you're thinking that you'll buy some and keep it as long as you judge inflationary policies are in place. Thanks for the clarification and the extra context. Quote Link to comment Share on other sites More sharing options...
flatlander Posted February 5, 2009 Author Report Share Posted February 5, 2009 It sounds like you're saying that you do not have any particular target gold-price in mind. Rather, you're thinking that you'll buy some and keep it as long as you judge inflationary policies are in place. Thanks for the clarification and the extra context. Thanks for asking me the right questions and thereby assisting me in thinking through my reasoning. You're right, I do not have any particular target gold price in mind, my approach to gold is more long-term. Philosophical, one might say. Quote Link to comment Share on other sites More sharing options...
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