by It has never been more important to own gold as part of a diversified portfolio. The form your gold investment takes is just as important as owning it in the first place. ETFs and pooled gold may not be functional in extreme markets and may themselves be subject to systemic risk events. Fifty gram gold bars sit across a one kilo gold bar at bullion dealers Goldcore, in London, U.K., on Thursday, March 11, 2010. Photographer: Chris Ratcliffe/Bloomberg We are living in extraordinary times and key to any investment plan that can weather the coming global financial storm is access to all important - liquidity. Traditional market liquidity is drying up. Increasingly dark pools are hoovering up equity and FX volumes. Markets are becoming disjointed and prone to large wild swings. Central banks are entering the market on political mandates as opposed to a search for yield, algorithmic investors are untested in bear markets and likely unprepared. The table is set for significant disruption and systemic damage. Your gold investment may not be accessible nor liquid in times extremis. When you buy gold as a systemic hedge you do so hoping that it will never be needed. You may even hope it falls in value, because if it is falling all your other productive assets are hopefully appreciating.
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GoldCore considers the following as important: Central Banks, Citigroup, dark pools, Deutsche Bank, Dubai, Hong Kong, Krugman, Ron Paul, Wells Fargo, Zurich
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It has never been more important to own gold as part of a diversified portfolio. The form your gold investment takes is just as important as owning it in the first place. ETFs and pooled gold may not be functional in extreme markets and may themselves be subject to systemic risk events.
- Fifty gram gold bars sit across a one kilo gold bar at bullion dealers Goldcore, in London, U.K., on Thursday, March 11, 2010. Photographer: Chris Ratcliffe/Bloomberg
We are living in extraordinary times and key to any investment plan that can weather the coming global financial storm is access to all important - liquidity.
Traditional market liquidity is drying up. Increasingly dark pools are hoovering up equity and FX volumes. Markets are becoming disjointed and prone to large wild swings. Central banks are entering the market on political mandates as opposed to a search for yield, algorithmic investors are untested in bear markets and likely unprepared. The table is set for significant disruption and systemic damage. Your gold investment may not be accessible nor liquid in times extremis.
When you buy gold as a systemic hedge you do so hoping that it will never be needed. You may even hope it falls in value, because if it is falling all your other productive assets are hopefully appreciating. This is the key, gold is valuable as a systemic hedge, if the system is working then gold should fall in value. If gold is rising then the system is not healthy and you need to take stock, literally.
At GoldCore we have long advocated a 5 - 10% allocation of gold into your portfolio. Today given the increasing risks, we believe there is a justification for allocating as much as 20% to 25% of a portfolio to physical gold. Your gold should be held in allocated, segregated and most importantly physical form, with serial numbers, in a non bank vault, in a safe jurisdiction.
Gold owners should be able to take physical delivery of their gold whenever they wish, without entering into a transaction to sell. We believe that gold should have as little legal separation from our clients as possible and that is how we have designed GoldCore Secure Storage - with clients having maximum and outright legal ownership of actual, individual bullion coins and bars.
Beware of e-gold masquerading as allocated gold
Buying gold through an electronic platform can be very convenient and very fast. You can buy significant sums and pay low spreads and low fees, your storage costs for such investments can be extremely cheap too.
These electronic platforms spend a lot of money advertising, and some even claim to give you allocated gold. We do not consider a part ownership of a large 400 oz bar of gold as being allocated. You are in fact a pooled gold investor and one who has no idea of what particular part of a gold bar you own. You can not, unlike GoldCore Secure Storage, drive to a vault in Zurich, Singapore, Hong Kong, Dubai or London and take delivery of your gold, without entering into a sale transaction.
In addition many such platforms force you to only buy and sell through their market board and their online platform and website. Digital gold platforms are "closed loop systems" where liquidity and pricing are dependent on a single platform, website and company. A buyer can only buy and sell through that one online platform. An investor is in effect "captive". This is very different to owning individual Canadian Maple Leaf gold bullion coins or gold kilo bars and the huge level of liquidity and pricing one has when one owns coins and bars in a segregated and allocated manner.
Yes you may be able to sell your gold in the future but at what cost? Yes you may be able to take delivery in the future, but at what cost? The fact is that if you can't hold it you may not truly own it.
Caveat Emptor
Stephen Flood, CEO of GoldCore Limited
Email: [email protected]
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UK +44 (0)203 086 9200
IRL +353 1 632 5010
Open an account with GoldCore today
Gold and Silver Bullion - News and Commentary
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Gold Prices (LBMA AM)
13 Oct: USD 1,258.00, GBP 1,029.93 & EUR 1,141.76 per ounce
12 Oct: USD 1,255.70, GBP 1,024.53 & EUR 1,139.05 per ounce
11 Oct: USD 1,256.40, GBP 1,021.58 & EUR 1,130.76 per ounce
10 Oct: USD 1,262.10, GBP 1,016.62 & EUR 1,129.71 per ounce
07 Oct: USD 1,255.00, GBP 1,012.91 & EUR 1,127.62 per ounce
06 Oct: USD 1,265.50, GBP 994.30 & EUR 1,131.23 per ounce
05 Oct: USD 1,274.00, GBP 1,001.11 & EUR 1,134.37 per ounce
Silver Prices (LBMA)
13 Oct: USD 17.59, GBP 14.40 & EUR 15.95 per ounce
12 Oct: USD 17.44, GBP 14.23 & EUR 15.83 per ounce
11 Oct: USD 17.48, GBP 14.26 & EUR 15.78 per ounce
10 Oct: USD 17.78, GBP 14.31 & EUR 15.92 per ounce
07 Oct: USD 17.33, GBP 14.01 & EUR 15.55 per ounce
06 Oct: USD 17.76, GBP 13.98 & EUR 15.88 per ounce
05 Oct: USD 17.80, GBP 13.99 & EUR 15.86 per ounce
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