Now that all the hedge-fund short-sellers covered their exposure last week, gold has fallen back nearly 2.4%, the biggest fall so far this year. This provides an entry point for buyers. While I do not know what the future gold-price will be, I think those wanting to buy physical gold should seriously examine BullionVault’s offering. It is sponsored by the World Gold Council, as is the ETF, SPDR Gold, GLD. The WGC is a mining group which wants to sell more of its output to people.
Gold ETFs like GLD or IAU now are the most intelligent trading vehicle for really large holders trading the stuff, because their commissions are minimal for big trading. And as noted they have now proven that they do hold the gold they say they do.
Gold coins are a racket because the spreads are huge, and many buyers are ill-informed about valuations which are based on condition and rarity, and not just weight. Hard money physical gold funds have lost much of their raison d’être now because the exchange-traded funds did in fact turn out to own the precious metal they claimed, why their shareholders were able to sell what they wanted to last year. Buying bullion is very expensive and lucrative in markets like Switzerland, Hong Kong, and India—for the dealer, not the buyer. In Switzerland having your bank hold gold for you results in big insurance and security charges, so you are better off hauling off the ingot to hide under the bed.
For some holders, there is a better way to invest in gold than an ETF. If you want to hold and trade gold in retail quantities, for an amount of ~$20,000, our recommendation is www.bullionvault.com. The management fee is 48 basis points per year , under 20% higher than the 40 bp annual cost of an ETF. The commission to buy or sell is 0.80% on the first $30,000 bought or sold; 0.40% on the next $30,000, and 0.10% on the nest $540,000, cheaper than trading an ETF with a discount brokerage at $8 per transaction once you top $60,000 in your gold pool. If you want to trade in amounts above $600,000 the bite is only 0.02%.
Moreover, the friction cost of trading is lower because the bid-ask spread is reduced by other gold owners in Bullion Vault ranks offering the opposite trade, 24 hours per day> Quantities trading are set by the owners, based on prices in any accessible market: Switzerland, Britain, Canada, or the USA. Unlike the Swiss banks, there is no fee for your dollars to buy gold denominated in dollars.
