Buying Physical Gold & Silver Was Never That Simple But Mind The Risks

The paper market is some 100 times larger than the physical one. It’s easy to “fall into the paper trap” by investing in of the “gold proxies”. Those are mostly ETF’s that track the price of gold or silver. Our vision here at GoldSilverWorlds is that everyone should have a core gold or silver holding in physical form. We consider it so fundamental, that we think it’s worth repeating once again what we consider the “safe plays”.

(1) Purchase of coins or small bars in physical form – the “traditional” method.

  • You need to make sure that the metal is pure.
  • Storage can be a risk, both at home or in the bank (you need to figure out in which circumstances you have no access to your bank’s safe).

(2) Gold and Silver ETF’s are funds that are trading on the exchanges. ETF’s are a very easy way to participate in the gold bull market and became popular with the advent of the GLD and SLV in 2004 / 2005. Trading in ETF’s doesn’t come without risks:

  • Buy ETF’s that are backed by physical gold. GLD and SLV are far from fully backed. What’s more, the custodians of those ETF’s are banks that have massive short positions in the futures market.
  • Consider rather the Sprott Physical Trust, the most known example of an ETF that’s fully backed with bullion. Very recently, the Sprott Physical Silver Trust purchased additional bullion. Yahoo! reported that “Once the Trust has taken delivery of all the silver bullion, it will publish the serial numbers of all bars held by the Trust on its website.”

(3) Vaulted services are very convenient by offer storage in a safe vault. These services make it extremely easy to own bullion, without the risk of transport and storage. Examples include programs like GlobalGold, BMG Bullion, GoldMoney or BullionVault.

  • Vaulted services are characterized as follows: you purchase the ownership over the metal, you can request delivery, your bullion is stored by an independent provider, there is  an insurance of the gold holdings and regular inspections. Check all these “features” before chosing a program to work with.
  • Online programs are incredible simple to use. The two major providers are GoldMoney and BullionVault. The premiums on top of the spot price are limited just like the storage fees. When looking at the example of gold at BullionVault, it appears the costs are very cheap compared to the convenience of a vaulted service.


Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing

Comments are closed.