The Bullion Dealer ComparatorThe Bullion Dealer ComparatorThe value is the premium for physical in percentage of the market value of the bar. It is the additional commission that you pay to get the physical bar over the spot price XAU.
XAU is the international code for gold, we call it the “paper price”, because you can never get physical gold when you buy XAU, you are only supposed to get the performance of gold. XAU is quoted on many broker and interbank platforms all around the world. You can find the spot price easily on yahoo finance.
Example of a computation:
The spot price on yahoo finance of XAU is 1,291 USD/Oz
The price that the bullion dealer is selling its 100g gold bar is 4,228 USD
Knowing that 1 Oz = 31.103 g, the price per oz at the bullion dealer is:
4,228 USD / (100g / 31.103g) = 1,315 USD / Oz
Premium for physical:
1,315 / 1,291 – 1 = 1.85%
The cost of storage is a percentage of the value of the bar instead of a fixed cost because it includes the insurance, and the insurance is necessarily a percentage of the value insured.
The cost of storage can be compared to the custodian fee for ETFs, which are financial products backed by gold. ETFs custodian cost usually ranges from 0.20% to 0.60%.
The common practise is to have zero extra fee when the customer withdraws his bar. The bar belongs to the customer; hence he should pay only the transportation cost when he wished to withdraw it.
When dealers impose a fee at withdrawal, it means the bar does not really belong to the client, and the dealer has to purchase the bar or get it back from somewhere else; hence the extra cost which the bullion dealer passes to the customer. Having a cost at withdrawal is not a good sign regarding the integrity of the bullion dealer.
The common practise is to have zero extra fee when the customer withdraws his bar. The bar belongs to the customer; hence he should pay only the transportation cost when he wished to withdraw it.
The common practice is to have zero extra fee when the customer withdraws his bar. The bar belongs to the customer; hence he should pay only the transportation cost when he wished to withdraw it.
Some bullion dealers add a clause under which they can amend the price at which you traded if the market moves in your favour until the payment is received. This is a hidden cost of opportunity and is not a good sign regarding the integrity of the bullion dealer.
In many countries, the precious metals have a special tax regime, so the customer does not pay the VAT or the GST.
Refer to our ranking of countries for more information about specific countries.
However, the bars must follow very strict rules in order to benefit from this tax regime. First the price must be a function of the international spot price of gold (XAU). Then the bar cannot be numismatic, or have a historical value, or an added value other than just the gold. Finally, the bar must have been produced by a refiner recognized by the government.
Some bullion dealers sell indistinctly the bars for which you pay the VAT or GST and the bars for which you don’t pay the tax. Bars which are taxed have a lower price, so you might think the bullion dealer price is cheaper, but when you will receive the bars at home or in your vault, you will be charged the VAT. It can be 7% or up to 20% depending on the country. This will be a cold shower.
Chain of integrity:
When buying or selling bullion through members of the LBMA chain of integrity, the value of the investment will be accepted without having to assay the bar or recertify it.
The bars are usually fully insured against theft, fire, etc. If the price of the storage is fixed and is not a percentage or the value, it is very likely that the bars are not fully insured.
The bar will be the sole property of the client if the bar is identified at the moment of the sale by a serial number curved on the bar, or by a serial number which make the identification of the bar possible without any mistake.
If the bar is the sole property of the client, then if the dealer goes bankrupt, the client still has his bar.
We put this mark because it shows if the dealer is big enough to provide also news and analysis about the precious metal markets. The quality and relevance of the articles written regularly show how professional and active the bullion dealer is.
The mark is as follow: 50% is the quality of articles written and 50% is the number of articles relayed per day.
Some dealers or banks will work orders for the client. This means that instead of buying when you connect to the website, you can leave a buying price below the current market price, to be executed if the market goes down to your price.
This is very convenient if you want to build your portfolio of precious metals not randomly, but at the prices you really want
You may want to be able to buy the bullions in your own currency. Additionally if the dealer proposes several currencies, it shows that it is a big enough company which is well set-up.
If you trust a dealer to leave your savings with him, you want to be able to contact somebody at any moment in case of trouble. We count 3 ways of contact: the phone, the email, and the chat window. We measure also the time per week where the company is available over the 168 hours there is in a week
The slower the bullion dealer refreshes its prices, the less credible he is on the prices he shows on his website. The prices of gold, silver and platinum are based on the spot price which is quoted internationally and varies every millisecond.
