Internet Investment Gold

 

 

Internet investment gold allows investors to buy physical gold online and have it stored in an independently owned vaults and also take physical possession when the need arises.

Internet investment gold offers the following benefits:

1. Investors can buy physical gold and have the investment benefits
2. Acquire gold swiftly and efficiently
3. Stored gold in secure vaults
4. Take possession of gold if the need arises
5. Easily purchase gold on the internet after due diligence

Investment gold has two main characteristics:

1. Its value is determined by its fine gold content and market price
2. It can be in either coin or bar form

Types of accounts with bullion dealers:

1. Allocated account: An allocated account with a bullion dealer is an account which is credited with individually identified bars and coins. The gold is specific to that account and can be uniquely identified.
2. Pooled account: A pooled account gives the account holder a fractional ownership in one bar or in a pool of allocated gold. The fractional ownership can be defined as a specific mass of gold. For example a particular weight in grams.
3. Unallocated account: The investor is not the legal owner of any physical gold but is rather a creditor of the provider. The holder does not own specific bars or coins but has a general entitlement to a set of gold.

Ownership:

When buying internet investment gold you should understand whether you obtain outright ownership. Under legal title or outright ownership, the gold becomes your property. Internet investment gold products provide outright ownership in two different ways: through individually allocated physical gold or through pools of allocated gold.

Other gold investment products such as unallocated gold accounts and some gold savings plans offered by banks provide a claim to gold. They allow you to participate in the gold market, and offers an option to exchange your claim for physical gold. You are however, subject to the creditworthiness of the product provider.

Standard gold bullion is the most widely used form of investment gold. When it is acquired from reputable producers, it is typically accepted and bought back from professional gold bullion dealers at fair prices, particularly when the London Bullion Market Association’s (LBMA) chain of integrity is used. This means that the gold’s purity has been established and it is stored in approved vaults.

Investment gold refers to gold bullion bars or gold bullion coins which meet certain requirements.  In the European Union (EU) investment gold is defined as gold bars with a purity of 99.5% or higher or gold coins which meet certain requirements. The coins must have a purity of at least 90% they must have been minted after 1800, they must be or have been legal tender  and are usually sold at a price which does not exceed the value of the gold contained in the coins by more than 80%.

In the United States, the term bullion is used for a bulk quantity of a specific precious metal, such as gold which can be either gold bars or gold coins. Rare and collectible coins are not considered bullion.

Investors who buy investment gold on the internet should ask themselves the following questions when dealing with an online gold dealer regarding gold delivery:

1. What are the costs for delivery or pickup?
2. What are the delivery restrictions such as minimum amounts or delivery destinations?
3. Is there a guaranteed timeframe within which the gold will be delivered or available for collection?
4. Is the delivery fully insured?
5. At what point is ownership of the gold transferred from the provider to the investor?

Trustworthiness of the internet gold dealer/provider:

The investor should do his due diligence to ensure the provider is reliable and trustworthy.

The following checklist is suggested:

1. Does the provider have a proven track record?
2. How long have they been in business?
3. Where are they incorporated and what is ther legal status?
4. Are there any independent reviews or complaints about them|?
5. Are they subject to any local licensing or regulatory requirements?
6. If they are based in another country, will you be able to enforce a legal claim?
7. Are any other parties involved in the offer?
8. Are there any warnings about them from regulators or consumer protection agencies?
9. Who is the provider’s intended client base, and do you fit that category?

You should also make sure that you can contact the provider. You should have the provider’s address, not just a P O Box number

External sources of information include:

1. Regulators and consumer protection agencies such as the Financial Conduct Authority (FCA) in the United Kingdom or the Commodities Futures Trading Commission (CFTC), Securities Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) in the USA.
2. Accreditations by third parties, such as the Better Business Bureau in North America.
3. Corporate registries for checking if and where the business is registered or to review company filings
4. Internet search engines

Fees and other costs:

Before buying internet investment gold you need to know the costs in purchasing and selling gold. There is usually a purchase premium which allows the provider to cover costs as well as make a profit. You can calculate the premium by comparing the purchase price to the benchmark price of gold. Similar costs arise when you want to sell your gold holdings i.e. selling fees and selling discounts.

In general, larger bars incur lower premiums than smaller ones, and gold bars incur lower premiums than gold coins. The relative costs of selling larger gold bars should also be lower than for smaller bars and coins.

Other costs include storage, insurance and administration fees. In most cases they are calculated as a percentage of the value of the gold holdings.

Storage costs for pool allocated gold usually incur the lowest storage costs. Segregated storage or safety deposit boxes in professional vaults are more expensive, since they require more space and effort.

Other costs may include charges for physical delivery.

Please go to our “Glossary”“Glossary” page for more definitions.

In summary, internet investment gold requires due diligence by asking yourself these questions:

1. Are you acquiring physical gold?
2. Will you be able to withdraw or sell your gold easily?
3. How much will everything cost?
4. Is the provider reliable, trustworthy and easy to contact?
5. Is the provider using the latest and safest technology?
6. Is the gold stored and insured properly?

Source: World Gold Council