Buying gold has become very easy these days with ETFs like GLD or AUCHAH. However, many investors who fall back on the yellow metal do so precisely because they distrust the financial system. Going through a bank or a broker to take a position on an exchange-traded fund therefore seems totally out of place to them. They need something concrete: a beautiful and large gold bar placed in a secure safe.
Obviously, this solution, while it has the merit of being very tangible, is more complicated to implement. You can't go to the local grocery store to buy a kilo of gold and put it at the back of your cupboards.
Buying gold via GOLD AVENUE
I was recently contacted by a collaborator of GOLD AVENUE, who decided to ignore the message on my contact form "There is no point in contacting me for sponsored articles, I want to keep my independence". Many like him decide to ignore this message and I usually delete their email without even reading it. Who knows why, this one piqued my curiosity. Maybe because it is a Geneva company. Maybe also because the style seemed more familiar to me than the other canvassers.
Looking at their offer, I see that GOLD AVENUE offers:
- to buy physical gold online
- to store it free of charge up to 10 kg in secure, insured, dedicated and separate safes in Switzerland
- to resell without commission
- a certificate of ownership of the stored products
The second exchange with the GOLD AVENUE correspondent finally convinced me when he spoke to me about Rat Race. This guy didn't come to dividendes.ch just to pass on his junk. Or he had planned his move well.
So I decided to investigate a little further by doing some fee comparisons with an ETF purchase solution.
Comparison with buying ETFs through traditional platforms
In addition to allowing the purchase of physical gold (as well as other precious metals), an undeniable advantage of GOLD AVENUE is the free (and easy) storage, up to 10 kg. So there is a certain margin before having to pay a single penny! The other plus is obviously being able to get rid of it with a single click, also without any fees. The account is opened in less than a minute. There is no need to provide an ID up to a purchase limit of CHF 15,000. The graphical interface is user-friendly and in several languages. Deposits can be made free of charge from your bank or by credit card (3% supplement). Also note the possibility of two-factor authentication, via mobile phone, which adds an additional level of security.
On the more negative side, the purchase premium is quite high. On a one-kilo bar it represents nearly 2.5%. Even if we take into account that there is no sales commission, this represents infinitely more in transaction costs than what we would have to pay for an ETF with a broker like IB. It is even much more expensive than traditional institutions like Postfinance.
However, it must also be taken into account that the custody fees are zero, whereas, even if you are with a financial intermediary who does not charge any, you pay an annual commission on ETFs (0.23% for AUCHAH and 0.4% for GLD). Compared to Postfinance, the GOLD AVENUE solution thus becomes more advantageous from the fifth year of detention. This is quite logical after all. Indeed, if you place your gold in safes, it is to keep it for the very long term.
The two approaches therefore seem complementary to me:
- ETFs to use gold in the context of a asset allocation portfolio, with fairly frequent movements
- physical gold for long-term investment, depending on the investor's profile and objectives.
If you are interested in GOLD AVENUE, you can subscribe here. This is a sponsored link, but if for once I allow myself to submit one to you, it is because I think that this original solution is likely to interest some of you.
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Ever since I saw Die Hard III, a few decades ago with Bruce, I've always wanted to have a gold bar in my hands. While they had it by the shovelful!
I would rather have him at home, so I can pet him in the evening when I feel lonely 😛
Okay I'm kidding, for the last part haha! I have some gold, in a safety deposit box at the bank, where I rarely go by the way. Besides, it reminds me that I should go there soon to deposit some important papers.
On specialized metal sales sites, however, such as JM Bullion for example, buying an ingot of anything is more expensive than with an ETF. Is this the case for your sponsored link?
Yes, as I indicated there is a purchase premium which is of the order of 2.5% for a one kilo ingot. So for the short/medium term it is preferable to go through an ETF.
I am familiar with Bullions and have tested a few providers (Aucoffre, Veracash, GoldMoney, Pieces Or, BullionStar). What I don't understand with GoldAvenue is how they manage to make money if all custody fees are free and purchases/resales are commission-free? On the 2.5% premium? Is their margin included in the sale price?
Don't tell me these are chocolate bars...
Purchases are not commissions, precisely. The purchase premium of 2.5% on a kilo of gold currently represents CHF 1,650.-
It's far from being a given and a gold bar doesn't take up much space...