Gold Journey - Bairds to Bullionvault

A little about our journey into bullion. It began in 2008 shortly after the financial crisis of September that year. We began reading articles written by experts such as Jim Sinclair, Peter Schiff, Paul Tustain, Mike Maloney and James Turk about the merits of precious metals.

After a little procrastination, we picked up a few coins using respected dealers such as Bairds of London, The Royal Mint and Sarnia Silver (Now closed down), no more than a few coins and we were happy with our purchases.

Gold Storage in a Vault

The thought of keeping too much bullion under the mattress can be stressful :)

That’s why international and UK investors sometimes use companies like London based Bullionvault, to hold some or all of their allocated bullion for them in secure vaults in London, Singapore, Switzerland, Toronto and New York.

Global Demand at All Time Highs

As world demand for gold as both an investment and a store of wealth remains at all time highs, individuals continue to seek efficient ways to participate in this trend.

Options range from the stocks of gold mining companies, to exchange-traded-funds (ETFs) to the purchase of physical coins, which frankly is still one of the most popular ways to invest.

Allocated Gold at Bullionvault

One avenue through which one may purchase physical metal is BullionVault, an independent sales venue and allocated storage facility that meets the standards that allow gold to retain Good Delivery status.

While this approach to owning precious metals offers many advantages, there are some shortfalls that should be understood before any capital is invested.

The term "Good Delivery" refers to metal that has met certain standards that are set by the London Bullion Market Association (LBMA) and are accepted by professional gold dealers internationally.

The Good Delivery Bar

A Good Delivery Bar weighs 400 Troy ounces and is no less that ninety-nine and a half percent pure.

In order to retain Good Delivery status, the bars must be stored in an approved facility that guarantees that the purity remains unchanged. BullionVault is such a facility, assuring that the gold held in its vaults is in line with these standards.

London, Singapore and Zurich

In addition to providing an electronic trading platform to match buyers and sellers of gold held within its facility, BullionVault holds one of the largest stores of gold in the world.

With certified vaults in London, Singapore and Zurich to name a few. The company offers its customers the choice of where their holding is stored.

One of the Best Gold Trading Platforms?

The trading platform provides an easy venue through which customers can increase or decrease their holdings. The company acts as a market participant to ensure liquidity and access to the spot market, but, because other customers are also participants, prices are fluid and not at the mercy of the company. This is a distinct advantage.

The metal that one purchases with BullionVault is typically received directly from the vault of one's choosing, thus eliminating any cost or risk of transportation or additional certification. As the reserves held in the vaults fluctuate, the company maintains liquidity by trading in the open market.

The bullion is allocated, meaning that the specific holding is identified and catalogued as belonging to the purchaser; the gold is not simply a credit or share entered in a ledger, but a specific allocation.

BullionVault offers denominations and sizes as small as a single gram of gold, eliminating a large barrier to entry for smaller market participants that cannot afford an entire Good Delivery Bar.

There are two basic fees associated with transactions conducted at Bullion Vault. The first is the fee for trading the metals that one wishes to buy or sell. This ranges (at the time of writing) from 0.5% to 0.05%.

While this cost is far lower than that offered by some other dealers, the company is able to keep costs down by eliminating the middleman; because the metal never leaves the vault, its security and Good Delivery status is never in doubt.

The second fee associated with these transactions is the storage fee. The purchaser acquiring allocated gold, must pay to have it stored in a vault. BullionVault charges 0.12% per annum for this vaulted gold service, making it one of the lowest cost storage facilities available.

As with most things, some of the strengths of this buying platform are also the basis for weaknesses. For example, because the gold is allocated, one must pay the storage costs mentioned above. The advantage is that the specific bar is owned by the purchaser and linked to a certificate/serial number confirming proof of ownership and cannot be taken away.

With an unallocated account, the gold is treated as a credit and may create chain of ownership issues in the case of insolvency. Essentially, the safety provided by an allocated account has a cost.

The other primary disadvantage is that while BullionVault makes retrieving and asking for physical delivery possible, their system for buying gold bars is set up to keep the metal in their vaults. For most this will not be an issue, but it is something to be aware of before investing.

We've been using Bullionvault since 2008 to diversify our holdings, and believe this award winning company provides a valuable service for very low commissions, although many recommend holding physical coins as well as allocated storage in a vault - it is wise to diversify holdings.

As long as one understands the risks prior to taking the plunge, investment remains attractive. Hopefully you enjoyed reading our review of Bullionvault's services. Please take the time to conduct your own research to find the company that is right for you.