The Bullion Dealer ComparatorThe Bullion Dealer ComparatorWe have calculated a mark for each of these points below that we have assigned as a percentage in order to identify the best bullion dealers all around the world.
The value is the premium (fee) for physical precious metal in percentage of the market value of the bullion. It is the additional commission that you pay to get the physical ingot over the spot price XAU, XAG or XPT.
XAU, XAG and XPT is the international code for gold, silver and platinum. It is called 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.
Using the paper price XAU to price the physical gold bars, is the international methodology. Refiners and gold dealers must use this methodology in order to benefit from the special VAT regime under which precious metal fall.
We add 0.25% on top of the price of when the website is refreshed every 2 minutes, whereas the international spot price varies every millisecond. 0.25% is roughly the volatility over 2 minutes of the gold price.
The buy-back premium is the additional price that you will receive if you sell your bar to the gold bullion dealer. It is relative to the spot price of gold (XAU). If the buy-back premium is negative, then it means that you will sell under the spot price, hence that is an additional cost.
Example of a computation:
The spot price on yahoo finance of XAU is 1,291 USD/Oz
The price that the gold seller is buying your 100g gold bar is 4,100 USD
Knowing that 1 Oz = 31.103 g, the price per oz at the bullion dealer is:
4,100 USD / (100g / 31.103g) = 1,275 USD / Oz
Premium for physical:
1,275 / 1,291 – 1 = -1.23%
We compare only storages which provide a full service to the client:
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%.
We ignored the minimum cost of storage when the precious metal dealer had any. We worked under the assumption that the customer will have enough holdings to pay the minimum cost.
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 remove it.
When bullion dealers charge a fee at the time of withdrawal, it means the bar does not really belong to the client, and the dealer has to buy the bullion or get it back elsewhere; hence the additional cost which the dealer transmits to the customer. Having a cost at withdrawal is not a good sign regarding the integrity of the gold broker.
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 opportunity cost and is not a good sign with regard to the integrity of the bullion broker.
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.
If the bullion leaves this chain and goes to a non-certified member, the chain has been broken. The only way to return to the chain of integrity is for a certified refinery to re-assay the bar and put it back into the system.
As long as bullion remains within the LBMA chain of integrity, it can be easily sold and liquidated for a cash position. Once the bullion leaves the chain, selling the position can become difficult.
The bars are usually fully insured against theft, fire, etc. If the price of the storage is fixed and is not a % 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.
It is like having your car in a garage. If the garage goes bankrupt, you don’t lose your car because it is identified by the license plate number. It is the same for the bars. If the dealer goes bankrupt, you will not lose the bar if it has a serial number, which proves it has been specifically allocated to you.
Some gold dealers, or some banks, hide the fact that the metal is not fully allocated to the customer. They just sell the metal. In this case, if the dealer goes bankrupt then the ownership of the precious metal becomes a liability, and the customer just has to line up with all the other creditors in the hope of getting reimbursed. If precious metals are a hedged against the collapse of the banking system, then one should buy only fully allocated bars.
We put this mark because it shows if the precious metal dealer is big enough to provide also news and analysis about the precious metal markets. The number of articles written every day shows how big and active the bullion dealer is
The mark is as follow: 50% is the number of articles written per day 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. There are 2 downsides when the prices are not real time:
- The dealer will take an additional margin: Once you trade, the dealer will probably hedge your trade on the spot market. Hence, if he does not refresh his price, then it means that he will have to take an additional margin to cover himself against the variation of the spot price between the moment you buy and the moment he hedges.
- You don’t buy your precious metal at the real price.