Digital Gold - How and Why to Buy It
Gold is a solid investment. Literally. And privately owned gold is perhaps the most significant investment you can make - because it truly is the only real measure of monetary value. Fiat currencies come and go (as we are witnessing with the US dollar) yet gold bullion coins & bars have been accepted as a store of value for thousands of years.
Today, demand for gold bullion is unprecedented. The economic crisis stemming from the US has provoked a huge demand as investors rush to attain the most fundamentally sound investment known to man - gold - as a hedge against inflation and economic uncertainty.
So what is the best way to buy gold? Bullion coins & bars produced from the Perth Mint in Australia or the the Royal Canadian Mint in Canada can be purchased through banks, coin dealers, and gold brokers. Yet in some cases - buying gold is not that easy. The increase in demand has caused shortages everywhere. It has gotten to the point where even the mints cannot keep up. And just to buy a 1 ounce .999 gold coin, such as the South African Krugerrand or the Canadian Maple Leaf - many dealers are charging 25 to 50% premiums over spot price (spot price today is $804 per ounce).
This is why you may consider alternative methods of investing into gold. Such as Gold futures (ETFs), gold mining stocks, or the focus of this article: digital gold.
London based BullionVault.com is perhaps the most cost effective, safe and simple way of buying, owning, storing, and selling gold. Essentially, it is a low cost, offshore gold bullion storage for private investors.
The gold itself is stored in secure vaults. BullionVault then provides an interface for you to manage your gold - whether you have 1 gram or 1 kilogram - you can buy & sell at current spot prices with just a few clicks.
With over 75,000 users and over $300 million in client holdings, BullionVault is one of the two most highly praised digital gold services online (the other of which being Goldmoney.com). Their integrity, reputation, and security is rock solid - which means you can invest with confidence.
In fact, after setting up my account I even got a phone call from the director checking that I really existed. Which is a great testament to their commitment to security.
The cost of the service is very reasonable. BullionVault takes a maximum of 0.8% of each gold sale or purchase you make for the first $30k. This tapers to 0.02% if you do more than $600k per year. The annual vault holding fee is 0.12% (which has a minimum US$4 per month, so this fee is actually higher than 0.12% for small values of gold).
BullionVault.com versus Banks
Many banks claim they will hold gold for you. If this is physically held in their safe deposit boxes, then this gold is most likely the bank's asset (not yours) and that the bank is legally obliged to use to pay off its debts should the need arise, in the same way that your cash deposited with them can be used to pay off the bank's liabilities
In the end, the best way to own gold is to have physical possession over it. Yet for a simple, low cost, secure solution for offshore holding of your private gold investment - BullionVault.com is a great service.
And when you sell gold jewelry, always be aware of the true value of your stuff before making a deal.