Investing in physical gold – discuss

[StephenCurran (Stef)]

Hey Magnus, Murpen: Re BullionVault

signed up just a few days ago. Got my free 1 gram of gold.

[Magnus]

Thanks - I'll give it a go

[grinu]

www.thebulliondesk.com

Invaluable site for following gold price and news etc.

[StephenCurran (Stef)]

www.thebulliondesk.com

Invaluable site for following gold price and news etc.

Just glanced over it, but it looks pretty comprehensive.
Thanks Grinu

[Bandidoz]

$682/oz Jeez!!!

[skeptik]

Yes, I have a bit of gold with bullionvault and silver with goldmoney.com - no problems with either I think bullionvault is great value.

How do you know you have a bit of gold with bullionvault?

Maybe they're operating 'fractional reserve bullion' - how could you ever tell? Nobody ever takes physical delivery.

They dont even have to go that far. The whole scheme would work just as well if there was no bullion in the vaults at all. So long as everybody believes in the gold theres no problem.

All you ever see is a website... what evidence beyond the text on that site do you have that anything exists?

[StephenCurran (Stef)]

Yes, I have a bit of gold with bullionvault and silver with goldmoney.com - no problems with either I think bullionvault is great value.

How do you know you have a bit of gold with bullionvault?

Maybe they're operating 'fractional reserve bullion' - how could you ever tell? Nobody ever takes physical delivery.

They dont even have to go that far. The whole scheme would work just as well if there was no bullion in the vaults at all. So long as everybody believes in the gold theres no problem.

All you ever see is a website... what evidence beyond the text on that site do you have that anything exists?

God dammit skeptik, you are bloody cynical ;~)
However, I understand.
I couldn't be bothered looking to much but watch the wee video on the bullion vault website.
Yes I know, this does not answer your question.
In that case check out this
http://www.bbc.co.uk/crime/caseclosed/brinksmat.shtml
I know, this doesn't answer your question either.
Brinks is bullionvault's keeper
Brinks keeps gold - that's for sure(99.9%).
Ultimately though, how do I know that any of it is billionvault's?

Due Dilligence
By the way i've only been practising buying and selling the "free" gram that bullionvault gives you. Looking for entry points+pullbacks to buy, tops for selling, I have not given them any money - yet?

[murpen]

Maybe they're operating 'fractional reserve bullion' - how could you ever tell? Nobody ever takes physical delivery.

They dont even have to go that far. The whole scheme would work just as well if there was no bullion in the vaults at all. So long as everybody believes in the gold theres no problem.

All you ever see is a website... what evidence beyond the text on that site do you have that anything exists?

They get daily reports from Brinks and make those available on the website: http://www.bullionvault.com/audit/current/brinks.png

If you wanted evidence beyond that I guess you could call Brinks and ask them to confirm that the statements really do come from them. Of course that is only useful if you trust Brinks

The company states that all gold is 100% allocated, they would be open to legal action for fraud if that was not the case. In the FAQ section http://www.bullionvault.com/help/ under "FAQs : Governance" they even tell you who to report them to. There was a feature about buying gold in Investors Chronicle that talked about bullionvault and what good value it offered for retail investors. The company was founded by Paul Tustain who's clearly a bit of a gold bug. If he were selling gold that he didn't own then he's "short" gold, from his writings on http://www.galmarley.com I would say that's a financial risk (in addition to the risk of jail time) that he is not likely to take.

If you don't trust them, don't use them. I have no reason to believe that they are fraudulent.

[skeptik]

If you don't trust them, don't use them. I have no reason to believe that they are fraudulent.

I have no reason to believe they are fraudulent either. They might be, they might not. How can anybody tell? You cant. I can't. The only absolute sure way would be to take up an offer of physical delivery, and thats not how this system works.

"A critical part of the BullionVault system is that people take legal delivery of gold and own it outright, but they do not take physical custody of it."

- trust us, we're a web page! The gold is there , honest! ( But you're not allowed to see it or touch it.)

Even then they might be operating a fractional reserve.

I'm making a point about how money works. It's based on a consensual delusion. A willingness to trust, suspend disbelief. Gold has no intrinsic value (and for the purposes of the above trading system its physical reality is irrelevant) It's 'worth' what somebody is willing to give you for it, and that's entirely circumstantial. In certain circumstances gold is totally worthless.

[murpen]

I have no reason to believe they are fraudulent either. They might be, they might not. How can anybody tell? You cant.

I'm making a point about how money works. It's based on a consensual delusion. Gold has no intrinsic value. Its 'worth' what somebody is willing to give you for it.

OK, I misunderstood you.

Of course, it is also impossible for me to be absolutely sure that you exist.

[skeptik]

Of course, it is also impossible for me to be absolutely sure that you exist.

Nope... but its a good working hypothesis - solipsism leaves a lot to be desired on the purely practical level.

Solipsists generally dont last to long. Unlike in the movies , people who do try jumping from the 21st floor dont experience a Hanna Barbera or Matrix style bounce... at least Ive never talked to anybody who has.

The only people who really do think this way at a subconscious level are psychopaths and narcissists - and they tend to end up badly.

The objective existence of an independently operating external universe, that is consistent in its operation ( eg gravity over here works in the same way as gravity over there) is one of my few a priori assumptions. I find it easier to work with than the alternatives.

[murpen]

Of course, it is also impossible for me to be absolutely sure that you exist.

Nope... but its a good working hypothesis - solipsism leaves a lot to be desired on the purely practical level.

That was my point. Bullionvault say that they hold gold bullion in brinks vaults that matches the amount held by their customers. They provide you with daily bar lists from brinks and also a complete list of users and their holdings. The numbers all match up and they have stated that they are 100% backed (i.e. not operating a fractional reserve). If they were not 100% backed they would be effectively shorting gold, giving them an unbounded financial and legal risk. They can make good money from commissions and storage fees, there is no reason to believe that they are operating in a fraudulent manner. While I cannot be 100% sure that my holdings are safe, it is a good working hypothesis.

Gold has no intrinsic value (and for the purposes of the above trading system its physical reality is irrelevant) It's 'worth' what somebody is willing to give you for it, and that's entirely circumstantial. In certain circumstances gold is totally worthless.

I absolutely agree with this. However, historically, gold is unique in that it has acted as a good store of value for thousands of years. The trade value of anything is what others are prepared to give you for it, and clearly that is entirely circumstantial. Earlier in this thread razorblades were mentioned as a possible store of wealth. If there were ever a shortage of razorblades, I imagine that many men would simply grow beards. You might find that growing a beard became fashionable or a sign of virtue (not wasting energy on non-essential items) so your garage full of razorblades wouldn't be quite the store of value you thought it might be. Faced with an uncertain future I think you need to hedge your bets and spread risk. I'd put things like land, skills, tools, & knowledge all above gold in my peak oil preparation checklist. I think it would be foolish to rule out investing in gold based on some imagined future where gold is worthless, likewise it would be foolish to deny that possibility and rely on gold keeping its value.

[Ballard]

Gold above $700

http://edition.cnn.com/2006/BUSINESS/05/10/gold.price/

SINGAPORE (Reuters) -- Gold rose to a 25-year high above $700 an ounce on Wednesday, prompting some investors to take profits on bullion's sharp rally this year, while platinum surged to a record high on speculative buying.

You ain't seen nufink yet.

[PowerswitchClive]

One of the main problems with investing in physical gold (& silver) is that they are hard to sell quickly & easily at the quoted gold spot price. Most gold dealers won't give you too good a deal on a few Krugerands & I doubt if Jewellers will touch them at all. Bullion is, I understand, even harder to sell away from the dealers who regularly deal in bullion.

Contrary to popular myth There is a around a 10% mark up with Bullion coins. Most bullion dealers will buy gold bullion coins in any amount on the spot, usually for slightly less than the gold value (within - 10%) and then sell it on at slightly more than its gold value (again with in +10%). They will give you a price over the phone (which is then fixed at that amount) and you can either send the coins in or take them in, in person.
Many bullion dealers and private individuals sell coins on ebay, so you could cut out the middle man and sell for the full value here. I have bought bullion this way, (from a dealer via ebay)in recent months, and you can actually get the coins a little bit cheaper sometimes if the seller is using the buy it now feature. The price is fixed and is advertised for a number of days, whilst in the market the price is rising.
At the moment ebay is a very good place to buy and sell bullion*.

Jewellers are quite different. I have seen jewellers & pawnbrokers in my local area, sell Kruggerands for ?400 and over, at a time last year, when I bought them for ?280 from a bullion dealer.

At the beginning of this conversation gold was at $540
It is now $700 - what more can I say

If you had bought (any) 2 1oz bullion coins in January, you would have made $320 around ?170

This had nothing to do with the future long term value of gold, this was about making money now.

regards



*if buying gold bullion off ebay, always make sure you are buying from a dealer and check the feed back.

[andyh]

Indeed Clive.

I think people will find as gold attracts more interest it will become easy to buy and sell. I have had no problems here in NZ - indeed as the price continues to rise I hear that bullion dealers have been approaching holders to buy coins from them to meet demand from others. There seems to be a deal of rather erroneous comment on the thread - some of it comes I think from an instinctive feel in some that gold is something of a 'barborous relic' (to recoin a phrase), something to be shunned as being beyond the pale etc.

I am sure its been covered but anyone looking at gold to buy should be aware that any gains will be determined as much by the currency they are buying it in as by what the price in $ is actually doing. If for example you buy it in ? and the latter strengthens against the $ your gains will be negated). Ideally its best if you can to buy in a currency that is weakening aginst the US$, so you get the double boost of gold rise and currency fall.

In my opinion there is a long, long way to go in this gold bull run. There will be retraces (some sharp), but they are buying opportunities I feel. Gold is not simply a peak oil issue but is as much a marker for the coming crisis in the US$ - and inflation of course (which IS an oil issue).