1) What does the “premium over spot” actually mean?
The premium is the difference between the spot price or live market price on international markets and the unit price per coin or bar.
The premium is not a margin or a commission.
When we buy gold, we buy at a wholesale price close to the spot price of gold. The premium per coin or bar contains the total costs of getting that gold available for sale to you. If you broke it down you would find that it contains the costs and charges of every step in the process from ore in the ground to shiny coin or bar in your hand or vault. From mining to transportation to refining to minting to distribution and sale of that coin or bar.
Each step requires risk management and hedging cost. The smaller the unit of gold the higher the costs of providing the product. Think of the time, energy and manufacturing costs in creating and supplying a few four hundred individuals (1) ounce Gold Britannias versus the costs of providing one big “James Bond” style 400 ounce ‘London good delivery bar’ of gold.
2) Can I actually take delivery?
Yes you can with us, unlike with some popular digital gold, ETF and other investment providers. Owning gold is about financial insurance and about taking value off the economic table and out of the financial system. Having the ability to take delivery of your bullion is vitally important.
Our clients tend to do both. They will take delivery of an amount of bullion that they feel comfortable with and will then leave the majority of it in our secure international storage vaults with the option to take delivery with an email or phone call.
3) Bars and coins are all the same…
Yes and no. Coins are very popular for a number of reasons. Firstly they are divisible – you can sell off small amounts quite easily should you need to. A large bar is more cumbersome and you can only sell the entire bar in one go rather than gradually over a period of time.
Some people think bars are bullion and coins are not. Both coins and bars are bullion if they are precious metal coins and bars of a sufficient purity. Bullion simply means the actual precious metal in its purest form – at least over 90% pure plus and sometimes as much as 99.999% pure.
A coin is nearly impossible to forge. The atomic weight of gold and the diameters of gold coins and the level of detail in the design make forging a gold coin impossible to do accurately. Traders occasionally focus on far bigger formats but with serial numbers and the chain of integrity they are generally discovered quickly. Traders tend to focus on paper money which is easier to counterfeit … especially if you are a central banker today!
Gold bars are popular for long term storage, they have serial numbers, and they are cheaper to produce and generally have lower premiums than coins. Kilo gold bars are our most popular gold storage product – each kilo bar is 31.1034 oz of pure gold.Gold bars are popular for long term storage, they have serial numbers, and they are cheaper to produce and generally have lower premiums than coins.
4) Gold is very volatile…
Gold is actually rather stable, especially over the long term. It tends to rise in price in times of uncertainty as investors seek safe havens for their money. Over the long run gold price volatility is only slightly higher than any kinds of Asset Glasses such as equities, fixed income, and cash equivalents.