Buying and Selling Investment Gold and Precious Metal Services

Year of the Snake silver coin and a Vienna Philharmonic silver coin with gift box, a modern presentation of an investment silver collection

Learn how buying and selling investment gold and other precious metals works in person and with insured delivery. Explore precious metal storage options and the additional services offered by gold dealers.

The full precious metals service offering

Investment gold and other precious metals can be purchased at a gold dealer's premises (in person) or through their online shop. If you wish to open a gold account, this too can be done either in person (at the service provider's office) or remotely (through online account opening), just as with the earlier example.

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Like other products and services, precious metals trading is increasingly moving online. It is natural that clients wish to access the full range of precious metal services through a single account, and it is equally reasonable to expect that they can do so at any time, conveniently from home, with real-time visibility of all key data and documents.

The range of precious metal services

• Buying and selling gold, silver, platinum and palladium coins and bars
• Insured custodial storage of precious metals
• Gold account and other precious metal account management services
• Regular gold and silver savings plans

Investor security comes first

Clients want to be confident that:

• They always receive goods of the correct quality
• They can feel secure that their goods will be delivered, even when paying in advance
• The gold dealer's premises are conveniently located and secure
• Their personal data cannot fall into the wrong hands
• The gold dealer will still be in business when they wish to sell

For custodial storage, gold account management and precious metal savings plans, additional security considerations come to the fore:

• The precious metals dealer should carry appropriate insurance that specifically guarantees the gold held in custody (according to the value of the gold deposited)
• The vault service providers used by the gold dealer should be well-known and respected firms in the gold storage sector
• The gold dealer's internal policies and procedures should properly regulate who may access the gold holdings and under what conditions
• The gold dealer's software and data should be thoroughly protected to prevent data loss

Favourable pricing: an investor's priority

A physical gold investment is considered favourably priced when, taking all costs into account, it offers a competitive alternative compared with other investment options. If we compare gold investment with investment funds or property, for example, then, contrary to popular belief, buying physical gold is by no means expensive. Larger bars with narrow spreads are available for major investors, while smaller investors can access physical gold savings at "wholesale" rates through a gold account.

The investment horizon for gold is a minimum of 5 to 10 years, so the buy-sell spread should be amortised over the planned holding period. Unlike property, physical gold requires no personal maintenance.

The costs of physical gold investment are very straightforward to calculate. By contrast, when purchasing securities or investment funds, simply identifying all the existing costs is already a challenge. The management fee of securitised gold products, for example, can be considerably higher than a safe-deposit rental fee, and that is before accounting for brokerage fees, account maintenance charges, custody fees and so on.

At the same time, it must be emphasised that the cost of buying, selling and holding an investment instrument is only one consideration among many. It makes little difference how cheap a government bond or a property fund is to purchase if, precisely when you need the money most, the fund type in question has its redemptions suspended, or the entire government bond market becomes illiquid (recall what happened between 2009 and 2012).

Convenience: access matters

Clients' time has become increasingly valuable. More and more people find the in-person nature of traditional gold investment inconvenient. Online gold trading and precious metals services provide the solution.

Clients expect the various services within a single system to be easily and quickly navigable, and they require straightforward mobile access as well.

It is safe to say that this is the way of the future, yet the relationship of trust between client and gold dealer will endure over the long term. Part of that relationship is the option of personal contact and, for some time yet, the availability of cash transactions.

Buying and selling precious metals in person and online - What to expect from a dealer

For larger gold investments, the premium personal service includes a 10 to 20-minute introductory conversation and consultation before the first purchase. During this discussion, the prospective buyer should receive satisfactory answers regarding the quality, manufacturer and purity of the gold, the conditions for buyback, and a presentation of the various investment gold products. The prospective buyer may also request information in advance by email or telephone, which helps in selecting the firm that best suits their needs.

Payment may be made in cash or by bank transfer. In addition to the local currency, it is generally possible to invest in gold in euros and dollars. When selling, you may request that the gold dealer pay by bank transfer or in cash, and in many cases payment in euros or dollars is also an option.

When purchasing gold, the gold dealer is in every case required to issue an invoice. The invoice must include the buyer's name and address as well as the price of the product(s) purchased. For serialised gold bars, the buyer may request that the bar serial numbers be noted on the invoice, although this is not a legal requirement.

Where the transaction is not in cash, the dealer will typically conclude a purchase and sale agreement with the client, setting out the key terms and conditions.

When selling, it is not mandatory to present the original invoice, but it is worth keeping it. The invoice may be needed when calculating the capital gains tax base, should the transaction have been profitable.

For payment by bank transfer, note your bank account number on the contract and verify it carefully. If the transaction was concluded in person rather than through an online system, always insist on receiving a copy of the purchase and sale agreement signed by the company, which also confirms receipt of the gold bar or gold coin being sold. When selling, you must either visit the gold dealer's office in person or send the product. The dealer will inspect the product free of charge and non-destructively. If everything is found to be in order with the gold coin or gold bar, payment is made immediately. The price may be determined on the basis of the market price at the moment of sale, or on the basis of a price fixed in advance via a telephone or online sell order.

The larger Central European gold dealers all speak English, so orders can be placed by telephone as well. Most gold dealers also accept buy or sell orders for investment gold online. For orders that are not executed instantly, such as online order form submissions or prepayment by bank transfer with subsequent collection or delivery, pay close attention to the firm's pricing policy and, where possible, read through the terms and conditions. Reputable gold dealers confirm and execute the transaction at the prices quoted over the telephone and published online, which track the market rate, and simultaneously lock in the sale or purchase price. This means that the price cannot be adjusted after the fact, regardless of which direction the market moves, which greatly simplifies settlement for both the client and the dealer.

This does, however, represent a risk for the gold dealer who commits to a price fix. At the moment of fixing, the dealer purchases the corresponding quantity of gold or enters into a hedging transaction on the market. If the client were to withdraw from the deal following a sharp price decline, the dealer could incur a significant loss. For this reason, dealers typically state in their general terms and conditions that cancellation after a transaction has been concluded is only possible upon compensation for the resulting loss.

The most modern online systems eliminate this problem entirely. When a gold dealer operates a system similar to online banking, clients can deposit funds via debit card or instant transfer and immediately convert them into gold, against multiple currencies, with virtually round-the-clock availability. Clients can also place the purchased metal into long-term custodial storage with the dealer for later collection. In the most advantageous arrangements, gold purchases are linked to a gold account. This makes it possible to set up regular gold purchases, and the gold account balance can be converted at any time into physical gold products of the client's choice, with only the fabrication cost to pay. Even when purchasing online, you may choose in-person collection, and some firms also offer insured home delivery above a certain order value.