What Are Gold Certificates?
Gold Certificates And Their Pros and Cons
What are gold certificates? They are documents that prove you are the owner of gold which you do not personally hold. Normally, such certificates are issued by financial institutions from where you buy gold, and those fiscal establishments physically store the gold for you. At least that's how it's supposed to work.
Holding certificates of ownership is like placing your cash in a gold pool account. You hand over your cash to the company who runs the program, and when you redeem your certificate they give you any returns you will have accrued according to the present gold price. But they may not store any physical gold for you. Rather, they are thought to use your cash, and put it into whatever they expect to get the most impressive returns instead of in gold, pay you the returns on gold, and keep the rest of their gains for themselves. That ignores the question of what occurs if they make some mistaken investment decisions and lose your money, and are unable to pay you your returns on the gold price? I don't know. What occurs if the establishment goes bankrupt what will happen to your investment? If it's's not physical gold, I suspect it might disappear.
There are definitely good sides of gold certificate programs. One is that you can fundamentally invest in gold at the official spot price without needing to pay any premiums for physical metal or pay any holding charges. Those premiums and holding charges can cut into your profits quite a lot, so gold certificates are an alternative that offers you the most efficient returns.
One option for gold certificates is the Perth Mint's gold certificate program. The Perth Mint's program is fully protected by the government of Western Australia, which allows rather more of a sense of security than holding gold certificates from a private establishment that could go bankrupt and see your non-physical gold disappear. The Perth Mint's gold certificate program charges 1.75% charges on all purchases plus a $10 certificate surcharge, and a 0.75% fee when you sell. This is lower than the present premiums on physical bullion which have skyrocketed in the current gold shortage. There aren't any storage fees. There is a minimum initial investment of $5000 Australian dollars. The Mint says that every oz. you purchase remains on the premises of the mint and can't be taken away. Your investment is both government backed and insured by Lloyds of London. This is for regular unallocated storage ( but once again they do claim to store gold on grounds for you, in some form ).
The Perth Mint additionally offers allocated gold storage programs, but this needs both storage charges and a manufacturing fee ( to mold the gold into whatever form you choose to have set aside for you ).
Whether you invest in gold certificates will rely on how much faith you are prepared to have in an institution to keep your bought metal for you. I'm personally someone that is ready for the worst-case scenario while simultaneously not paranoid, and seeking the best returns possible. Which has lead me to the conclusion that keeping a pile of physical bullion as the base of your portfolio is important, but that on top of that base it is ok to broaden and have certificates or other kinds of gold accounts that don't have allocated storage. I personally don't take part in the Perth Mint program or others like it, but I do have an e-gold account. I believe these are fine so long as you understand that there's a degree of risk, and pay attention to the markets with the willingness to sell your certificates or egold if investment demand truly rises. I would personally feel very little discomfort in investing in the Perth Mint's program, but I'd possibly stay away from a fiscal institution's certificate program.
What are gold certificates? They are documents that prove you are the owner of gold which you do not personally hold. Normally, such certificates are issued by financial institutions from where you buy gold, and those fiscal establishments physically store the gold for you. At least that's how it's supposed to work.
Holding certificates of ownership is like placing your cash in a gold pool account. You hand over your cash to the company who runs the program, and when you redeem your certificate they give you any returns you will have accrued according to the present gold price. But they may not store any physical gold for you. Rather, they are thought to use your cash, and put it into whatever they expect to get the most impressive returns instead of in gold, pay you the returns on gold, and keep the rest of their gains for themselves. That ignores the question of what occurs if they make some mistaken investment decisions and lose your money, and are unable to pay you your returns on the gold price? I don't know. What occurs if the establishment goes bankrupt what will happen to your investment? If it's's not physical gold, I suspect it might disappear.
There are definitely good sides of gold certificate programs. One is that you can fundamentally invest in gold at the official spot price without needing to pay any premiums for physical metal or pay any holding charges. Those premiums and holding charges can cut into your profits quite a lot, so gold certificates are an alternative that offers you the most efficient returns.
One option for gold certificates is the Perth Mint's gold certificate program. The Perth Mint's program is fully protected by the government of Western Australia, which allows rather more of a sense of security than holding gold certificates from a private establishment that could go bankrupt and see your non-physical gold disappear. The Perth Mint's gold certificate program charges 1.75% charges on all purchases plus a $10 certificate surcharge, and a 0.75% fee when you sell. This is lower than the present premiums on physical bullion which have skyrocketed in the current gold shortage. There aren't any storage fees. There is a minimum initial investment of $5000 Australian dollars. The Mint says that every oz. you purchase remains on the premises of the mint and can't be taken away. Your investment is both government backed and insured by Lloyds of London. This is for regular unallocated storage ( but once again they do claim to store gold on grounds for you, in some form ).
The Perth Mint additionally offers allocated gold storage programs, but this needs both storage charges and a manufacturing fee ( to mold the gold into whatever form you choose to have set aside for you ).
Whether you invest in gold certificates will rely on how much faith you are prepared to have in an institution to keep your bought metal for you. I'm personally someone that is ready for the worst-case scenario while simultaneously not paranoid, and seeking the best returns possible. Which has lead me to the conclusion that keeping a pile of physical bullion as the base of your portfolio is important, but that on top of that base it is ok to broaden and have certificates or other kinds of gold accounts that don't have allocated storage. I personally don't take part in the Perth Mint program or others like it, but I do have an e-gold account. I believe these are fine so long as you understand that there's a degree of risk, and pay attention to the markets with the willingness to sell your certificates or egold if investment demand truly rises. I would personally feel very little discomfort in investing in the Perth Mint's program, but I'd possibly stay away from a fiscal institution's certificate program.
Source...