10 Important Things to Consider When You Buy Gold -Final
Content
10 Key Points To
Consider Before
You Buy Gold
10 Key Points To Consider Before You Buy Gold
TABLE OF CONTENTS
TABLE OF CONTENTS .............................................................................................. 1
INTRODUCTION...................................................................................................... 2
1.
AUTHENTICATION AND VERIFICATION ............................................................. 3
2.
SAFE STORAGE ......................................................................................... 5
3.
AVOID CERTAIN TYPES OF ‘GOLD’ ................................................................. 6
4.
REPUTATION ............................................................................................ 8
5.
PROTECTING YOUR MONEY ......................................................................... 9
6.
TIME IN BUSINESS ................................................................................... 10
7.
REPUTABLE AFFILIATIONS, ASSOCIATIONS AND PARTNERS .............................. 11
8.
SIZE, TYPE AND ABILITY TO MAKE A MARKET
9.
INSURANCE ............................................................................................ 13
10.
INTERNATIONAL EXPERIENCE AND EXPERTISE .............................................. 14
............................................... 12
CONCLUSION ....................................................................................................... 15
GOLDCORE’S BONA FIDES ..................................................................................... 16
CHECKLIST........................................................................................................... 18
GLOSSARY OF TERMS............................................................................................ 19
© 2013 GoldCore
1
10 Key Points To Consider Before You Buy Gold
INTRODUCTION
G
old is set to protect, preserve and grow wealth in the coming years as it has done throughout history.
This is gradually leading to gold going from an asset class owned by a tiny minority of wealthy
investors to it becoming an asset owned by the wider public. Therefore,
there has been an increase in the number of individuals and companies
selling precious metal coins and bars.
Some are safe, others far less so. There is very significant counterparty risk
inherent in many of the new ways to invest in, own and store gold.
The provision of gold bullion does not fall under the remit of regulatory
Gold is set to
protect, preserve
and grow wealth in
the coming years as
it has done
throughout history.
authorities. This means that there are few barriers to entry to the gold market for would-be sellers.
As buying precious metals often involves a significant sum of money you need to ensure that you invest
and own gold in the safest way possible.
By becoming aware of the fundamentally important things to consider when
buying and selling gold you will ensure that you own the genuine gold article
in a cost efficient, safe and secure way.
As part of your due diligence process, you should consider these 10
important points before you part with your hard earned money to buy
gold.
Perth Mint Gold Bars
© 2013 GoldCore
2
10 Key Points To Consider Before You Buy Gold
1. AUTHENTICATION AND VERIFICATION
A key consideration is that you can trust your bullion provider with regard to the authenticity of
your gold coins and/or bars.
Verifying the authenticity of your precious metals is of paramount importance. Does your gold provider buy
directly from London Bullion Market Association (LBMA) approved mints and refineries or are they
dependent on buying from the secondary market and the general public?
Does your gold provider have the experience and the authentication
procedures in place to ensure that your precious metals are the genuine
article?
The “chain of integrity” is an important part of the bullion market's
infrastructure and gold providers must protect the chain of integrity for
gold bars that they buy and sell.
Bullion providers need to know the provenance of the bars they sell.
Gold bars that are LBMA
approved, with each bar
individually sealed with a
tamper proof assay card
featuring a unique serial
number, are becoming
increasingly popular.
Reputable bullion providers ensure that every bar they receive is refined
by an accredited bullion mint or refiner, stamped with a serial
number and is of a purity of at least 99.5%.
Once a gold bar has been assayed and is of proven weight and purity to be accepted by the
professional markets, the bar should remain in professional vaults recognised by the LBMA
and international financial exchanges.
London Bullion
Market
Association
A gold bar that remains within the gold market’s chain of integrity can be easily traded and
exchanged and furthermore, it does not need to be reassayed or reproven. Gold bullion
that remains within the chain of integrity is said to be of ‘good delivery’ status.
By keeping gold bars within the chain of integrity, providers can assure that their clients own authentic gold
bullion.
© 2013 GoldCore
3
10 Key Points To Consider Before You Buy Gold
Gold bars that are LBMA approved, with each bar individually sealed with a tamper proof assay card
featuring a unique serial number, are becoming increasingly popular.
Know your customer (KYC) and international anti-money laundering
requirements, which involve having photographic identification documents
for all clients – whether buying or selling – actually help protect clients. They
mean that bullion providers can always trace who has sold them what
product and greatly reduce the risk of inauthentic coins and bars entering the
market.
Gold coins authenticity can also be established using a Fisch gold coin detector
which is used by major banks, bullion dealers and investors internationally since
1980.
Ultrasonic testing is beginning to be used and will become more important in
The Perth Mint 1oz Gold Bar
the coming years with better calibre gold providers offering this service.
Some gold providers make a commitment to repurchase gold coins and bars they have sold to their clients
and you should seek this commitment.
Buying gold bullion coins and bars, made by reputable refiners and mints, through an established and trusted
provider with a direct relationship with the refinery or mint greatly reduces the risk of not owning the
genuine article.
© 2013 GoldCore
4
10 Key Points To Consider Before You Buy Gold
2. SAFE STORAGE
Does your gold provider offer the facility for you to store your metal in an allocated account
with a specialist storage facility with independent verification, audit controls and appropriate
insurance cover?
Having your gold stored in this way allows you to immediately sell your gold or other precious metal
holdings should you wish. It also allows you to avoid further re-authentication costs as the bullion has
always remained within the chain of integrity.
Gold providers should not expose their clients to unnecessary
counterparty risk by storing clients’ gold in anything but highly
specialised storage facilities. The client’s gold should never
remain the property of the gold broker or bank by being held
on the company’s balance sheet.
Via Mat: Worldwide Leader in Safe Storage
This form of gold investment as seen in popular pool accounts and in many gold exchange-traded funds
(ETFs) makes the client an unsecured creditor of the providing company or institution.
Not owning gold in the safest way possible defeats the purpose of owning the safe haven asset and
financial insurance that is gold.
© 2013 GoldCore
5
10 Key Points To Consider Before You Buy Gold
3. AVOID CERTAIN TYPES OF ‘GOLD’
Taking delivery of and/or owning physical gold coins and bars in an allocated account is the
safest way to own gold.
As Shakespeare warned, “all that glisters is not gold.”
Avoid telemarketers or any gold broker that engages in ‘hard sell’
There is a significant
tactics. These are often scams to sell overpriced gold coins (often
unappreciated risk from
semi numismatic and numismatic and proof coins) at extortionate
only being able to sell
rates.
your gold back to the
Consumers have been ripped off by mark-ups of between 25% and
one and same provider,
100% over the spot or melt value of gold. Gold bullion coins
or online dealer that
typically retail at premiums of between 5% and 10% and lower on
sold your gold to you.
some coins and bars with large volume purchases.
Be wary of companies who sell non tradable, illiquid gold plated coins or 9 carat gold coins (only 0.375
pure) and pass them off as “solid gold coins” or gold bullion coins.
Be wary of companies that attempt to restrict your ability to sell your gold when you want to. This is
sometimes done by making you pay for multiple years of storage in advance.
Avoid brokers that try to get you involved in leveraged trading and leveraged trading accounts. You are told
that you only have to pay 10% or 20% for the gold and you will then “get to buy” or “own” 5 or 10 times
more ‘gold’ than you have paid for.
Leveraged trading is extremely high risk speculation. Should gold have a material correction, as is typical in
all bull markets, the buyer can lose all of their money. Also, buyers do not own the underlying physical
asset and are exposed to significant counterparty risk.
© 2013 GoldCore
6
10 Key Points To Consider Before You Buy Gold
There is a significant unappreciated risk from only being able to sell your gold back to the one and same
provider, or online dealer that sold your gold to you.
This is a form of ‘closed loop’ buying and selling. It
creates a dependency and an over reliance on one
single entity or counter party which creates extra
risk, not only in terms of counterparty risk but also in
terms of price risk.
If you own actual physical coins and bars – either in
your possession or in allocated accounts – there is
an internationally competitive market whereby you
can sell your bullion back to any number of
Perth Mint Gold Bars
international bullion dealers at the time of your
choosing. This reduces you dependency on one
provider.
This competition is vital to reduce counterparty risk and ensure competitive pricing at all times.
© 2013 GoldCore
7
10 Key Points To Consider Before You Buy Gold
4. REPUTATION
Is your gold provider established, respected and trusted within either their domestic or
international markets?
Due diligence should be done on your prospective bullion provider.
A little bit of off-line and on-line research can go a long way to reassure you that you are dealing with a
reputable broker.
Simple Google searches will help you to determine the reputation
of your bullion provider – locally and/or internationally. By
checking a company’s offline media presence and online “digital
foot print” you can quickly establish their bona fides.
Check who the owners and promoters of the business are. Check if they are quoted or interviewed in the
general media in an expert capacity. Are they known and trusted gold experts? Do they have a strong track
record of protecting and growing client’s wealth? Always do adequate due diligence on your bullion
provider.
© 2013 GoldCore
8
10 Key Points To Consider Before You Buy Gold
5. PROTECTING YOUR MONEY
The same counterparty risks apply to gold providers that apply to dealers, brokers and agents in
any other open market or industry.
You should make appropriate enquiries regarding any counterparty to
ensure they are not only well-established and reliable but also
financially sound.
You should only deal with providers who are fully audited on an
annual basis and have publicly accessible filings. You can ask for
audited statements from a prospective provider and/or you can
request a letter from their auditors confirming that the company’s
accounts are up to date and in order.
When entrusting
some of your life
savings to a company
it is wise to know if
they have a solid
trading history, are
established and
trusted.
.
© 2013 GoldCore
9
10 Key Points To Consider Before You Buy Gold
6. TIME IN BUSINESS
How many years has your gold broker been in business?
A company with only a few years of business history will have a
limited experience of the gold markets. They may be in business
as a result of the recent rise in the gold price and have no
experience in the gold market, nor may they genuinely have
their client’s interest at heart.
When entrusting some of your life savings to a company it is
wise to know if they have a solid trading history, are established
and trusted.
Recent entrants to the market may not be well capitalised. A well-capitalised established firm reassures
you that they will be there next time you want to make a purchase or more importantly sell your gold.
© 2013 GoldCore
10
10 Key Points To Consider Before You Buy Gold
7. REPUTABLE AFFILIATIONS,
ASSOCIATIONS AND PARTNERS
Is your gold provider a member of, affiliated with or work with reputable
associations and partners?
Do they work closely with other respected and trusted counterparties such as
government mints, large refineries or depositories? Direct relationships with
reputable partners mean that, importantly, independent due diligence has been
carried out on the gold provider.
This can afford a degree of comfort as a result of the independent verification.
Respected and long established institutions involved in the gold market will
refrain from being associated with inexperienced, unknown and potentially
Perth Mint 50oz
Gold Bar
disreputable entities.
Is your gold provider a member of, or an affiliate of international gold associations
or groups? Such groups include the London Gold Market Association (LBMA), the
International Precious Metals Institute (IPMI), Industry Council for Tangible Assets
(ICTA), Professional Coin Grading Service (PCGS) and the Numismatic Guaranty
Corporation (NGC).
Direct relationships
with reputable
partners mean that,
importantly,
independent due
diligence has been
carried out on the
gold provider.
© 2013 GoldCore
11
10 Key Points To Consider Before You Buy Gold
8. SIZE, TYPE AND ABILITY TO MAKE
A MARKET
Does your gold broker offer the facility to buy back your precious metal?
Some gold providers do not have the facility, liquidity and/or the financial resources to repurchase your
gold when the time comes for you to sell.
This can be rather inconvenient and will require you to source another gold provider to purchase your
metal. This may be time consuming (further ID or ‘know your customer’ procedures may be needed) and
may incur further expense as the new gold broker may have to re-authenticate your gold before agreeing
to purchase.
Does your gold broker have multiple suppliers? If so they will have access to a greater pool of liquidity than
a company with just one or two individual suppliers. This access to liquidity means that over the long term
you will have access to a wider range of coin and bar products and more stable and competitive pricing.
© 2013 GoldCore
12
10 Key Points To Consider Before You Buy Gold
9. INSURANCE
Does your gold provider carry independent insurance covering potential loss in transit of your
precious metals?
Most courier services do not accept any responsibility for bullion requiring the
prudent broker to carry supplemental insurance. Insurance cover for gold sent
through the post is also limited so be sure to ask who insures your gold, silver
or platinum bullion until you get it and what will happen in the unlikely event
that it is lost or stolen while in transit.
4
0
0
o
z
Ask if they have insurance to cover all bullion while in their possession and
while being delivered. If you are not reassured after asking this question then
Access to liquidity
means that over the
long term you will
have access
to a wider range
of coin and bar
products.
request proof of insurance.
G
o
l
d
B
a
r
s
The world's specialist insurance market
© 2013 GoldCore
13
10 Key Points To Consider Before You Buy Gold
10. INTERNATIONAL EXPERIENCE
AND EXPERTISE
Does your gold provider have logistical expertise and experience in dealing with clients in many
different countries?
Many gold buyers prudently choose to store some of their gold in countries which they are not resident in,
in order to reduce national and geopolitical risk.
The logistics of international transportation and the international storage of gold can be very complicated
and requires specialist knowledge and indeed good relationships with post and freight companies and
custom authorities. It involves handling different sales tax (including VAT) regimes as well as customs and
duties obligations.
Inexperience in this area often results in incorrect taxes and tariffs being applied at the expense of the
client as well as delaying delivery of your gold.
© 2013 GoldCore
14
10 Key Points To Consider Before You Buy Gold
CONCLUSION
W
ith demand for gold coins and bars having increased in recent years and likely to continue to do so,
many new individuals and companies selling gold bullion to the public will appear.
At this time of elevated counterparty risk, it is important that you choose your gold broker carefully.
Developing a long term relationship with a trusted gold bullion dealer is the best way to avoid a company
taking advantage of you.
By doing your due diligence and asking these questions you will be in a better position to make an
informed choice when it comes to selecting your gold broker, buying gold and protecting your wealth.
© 2013 GoldCore
15
10 Key Points To Consider Before You Buy Gold
GOLDCORE’S BONA FIDES
GoldCore
Authentication and
GoldCore only buys gold bullion from trusted counterparties such as
Verification:
government mints, large refineries or depositories. GoldCore has long
standing relationships with the Perth Mint in Western Australia, the
Royal Mint in the UK, the Royal Canadian Mint, MKS of Switzerland and
Heraeus of Germany.
Safe and secure storage:
All investments are fully insured by Lloyds of London under Viamat’s
Insurance policy. We operate a system of bailment and as such your
gold investments are held securely in custody in your name and are
never on our balance sheet for your protection.
Deals only in physical ‘real’
gold bullion:
GoldCore strongly advises that owning real gold bullion is the safest and
most prudent option available; it also offers significant peace of mind
and security. We do not sell or recommend exchange traded gold (EFT’s)
because the counterparty risk is far too high.
Reputation:
GoldCore is a regular contributor to the world's major news companies
such as Bloomberg, The Financial Times, CNBC, BBC, RTE and others.
Please visit our media centre here.
Well established bona
GoldCore was established in 2003, making it one of the oldest and most
fides:
well established bullion companies in existence. GoldCore has over
4,000 clients in 50 countries and has executed over $500,000,000 in
transactions.
Solid trading history:
Since inception in 2003, GoldCore has traded profitably and continues
to grow its client and revenue base.
© 2013 GoldCore
16
10 Key Points To Consider Before You Buy Gold
GoldCore
Reputable affiliations:
GoldCore is the only approved dealer in the EU for the Perth Mint
Certificate Programme. GoldCore is regulated by the Central Bank of
Ireland as an authorised Advisor.
Access to liquidity:
GoldCore manages or advises on over $200,000,000 worth of assets,
much of which is divided between the Perth Mint and GoldCore's
secured vaulting service with ViaMat.
Insurance:
GoldCore holds significant insurance cover via Lloyds of London and
insures every shipment of gold delivered, transferred and stored.
International experience:
With offices in Dublin and London, and clients in over 40 countries,
GoldCore has forged a deep understanding of how the global bullion
markets operate, and as such, gives us a competitive edge in buying and
selling, and shipping bullion on behalf of our client base.
© 2013 GoldCore
17
10 Key Points To Consider Before You Buy Gold
CHECKLIST
Must Have’s for Your Bullion Dealer
GoldCore
Authentication and verification
A key consideration is that you can trust your bullion
provider with regard to the authenticity of your gold
coins and/or bars.
Safe and secure storage
Does your gold provider offer the facility for you to store
your metal in an allocated account with a specialist
storage facility with independent verification, audit
controls and appropriate insurance cover?
Deals only in physical ‘real’ bullion
Taking delivery of and/or owning physical gold coins and
bars in an allocated account is the safest way to own
gold.
Reputation
Is your gold provider established, respected and trusted
within either their domestic or international markets?
Well established bona fides
The same counterparty risks apply to gold providers that
apply to dealers, brokers and agents in any other open
market or industry.
Solid trading history
How many years has your gold broker been in business?
Reputably affiliations
Is your gold provider a member of, affiliated with or
work with reputable associations and partners?
Access to liquidity
Does your gold broker offer the facility to buy back your
precious metal?
Insurance
Does your gold provider carry independent insurance
covering potential loss in transit of your precious
metals?
International experience
Does your gold provider have logistical expertise and
experience in dealing with clients in many different
countries?
© 2013 GoldCore
18
10 Key Points To Consider Before You Buy Gold
GLOSSARY OF TERMS
Asset class: In financial accounting, assets are economic resources. Anything tangible or intangible that is
capable of being owned or controlled to produce value and that is held to have positive economic value is
considered an asset.
Chain of integrity: A gold bar needs to be assayed and be of a proven weight and purity acceptable by the
professional markets. If this bar then remains in the professional vaults recognised by the London Bullion
Market Association (LBMA) and international financial exchanges, this gold bar is said to have remained in
the gold market’s 'Chain of integrity'. If it does not leave the chain of integrity - it does not need to be
reassayed or reproven and can be easily traded and exchanged. Gold bullion that remains within the chain
of integrity is said to be of 'good delivery' status.
Counter Party: Is a legal entity, unincorporated entity or collection of entities to which an exposure to
financial risk might exist. Refers to brokers and other securities dealers that serve as the contracting party
when completing "over the counter" securities transactions. The term is generally used in this context in
relation to "counterparty risk", which is the risk of monetary loss a firm may be exposed to if the
counterparty to an over- the-counter securities trade encounters difficulty meeting its obligations under
the terms of the transaction.
ETF: Exchange-traded funds are gold exchange-traded products that aim to track the price of gold. Gold
exchange-traded products or trust are traded on the major stock exchanges including Zurich, Mumbai,
London, Paris and New York.
Fisch gold coin detector: The Fisch is an instrument that checks the vital measurements of a specific coin
against the minimum allowable weight, maximum allowable thickness, maximum allowable diameter and
the shape as specified by the issuing mint.
Know Your Customer (KYC): Refers to due diligence activities that financial institutions and other
regulated companies must perform to ascertain relevant information from their clients for the purpose of
doing business with them.
© 2013 GoldCore
19
10 Key Points To Consider Before You Buy Gold
LBMA: The London bullion market is a wholesale over-the-counter market for the trading of gold and silver.
Trading is conducted amongst members of the London Bullion Market Association (LBMA), loosely
overseen by the Bank of England. Most of the members are major international banks or bullion dealers
and refiners.
Numismatics: Is the study or collection of currency, including coins, tokens, paper money, and related
objects.
World Gold Council: The World Gold Council is a non-profit association of the world's leading gold
mining companies, established in 1987 to promote the use of gold. It aims to stimulate demand for gold
from industry, consumers, and investors. The World Gold Council is the market development organisation
for the gold industry. Working within the investment, jewellery and technology sectors, as well as engaging
in government affairs, their purpose is to provide industry leadership and create sustainable demand and
awareness about gold.
© 2013 GoldCore
20
10 Key Points To Consider Before You Buy Gold
WRITTEN BY
Mark O'Byrne, Research Director at GoldCore.
ABOUT GOLDCORE
GoldCore are respected international bullion dealers who are experts in the execution and logistics of the highly specialised
precious metals market.
GoldCore have been providing precious metal investment solutions for an International client base since 2003. Today, our team of
experts service all investor classes from private individuals to companies and institutional investors. Whether you are a small or
large investor looking to take delivery or arrange for secure, trusted insured storage, GoldCore has a solution to suit your needs.
CONTACT GOLDCORE
Ireland
England
USA
GoldCore Ltd
14 Fitzwilliam Square
Dublin 2
Ireland
No. 1 Cornhill
London EC3V 3ND
England
USA Phone
+1 302 635 1160
UK Phone
+44 (0) 203 086 9200
Ireland Phone
+353 1 632 5010
UK Fax
+44 (0) 203 031 1046
Disclaimer: The information in this document has been obtained from sources which we believe to be reliable. We cannot guarantee its
accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information
contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual
circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a
guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may
fluctuate. GoldCore Limited ( www.goldcore.com), trading as GoldCore is regulated by the Financial Regulator of Ireland.
© 2013 GoldCore. All rights reserved.
© 2013 GoldCore
21
Consider Before
You Buy Gold
10 Key Points To Consider Before You Buy Gold
TABLE OF CONTENTS
TABLE OF CONTENTS .............................................................................................. 1
INTRODUCTION...................................................................................................... 2
1.
AUTHENTICATION AND VERIFICATION ............................................................. 3
2.
SAFE STORAGE ......................................................................................... 5
3.
AVOID CERTAIN TYPES OF ‘GOLD’ ................................................................. 6
4.
REPUTATION ............................................................................................ 8
5.
PROTECTING YOUR MONEY ......................................................................... 9
6.
TIME IN BUSINESS ................................................................................... 10
7.
REPUTABLE AFFILIATIONS, ASSOCIATIONS AND PARTNERS .............................. 11
8.
SIZE, TYPE AND ABILITY TO MAKE A MARKET
9.
INSURANCE ............................................................................................ 13
10.
INTERNATIONAL EXPERIENCE AND EXPERTISE .............................................. 14
............................................... 12
CONCLUSION ....................................................................................................... 15
GOLDCORE’S BONA FIDES ..................................................................................... 16
CHECKLIST........................................................................................................... 18
GLOSSARY OF TERMS............................................................................................ 19
© 2013 GoldCore
1
10 Key Points To Consider Before You Buy Gold
INTRODUCTION
G
old is set to protect, preserve and grow wealth in the coming years as it has done throughout history.
This is gradually leading to gold going from an asset class owned by a tiny minority of wealthy
investors to it becoming an asset owned by the wider public. Therefore,
there has been an increase in the number of individuals and companies
selling precious metal coins and bars.
Some are safe, others far less so. There is very significant counterparty risk
inherent in many of the new ways to invest in, own and store gold.
The provision of gold bullion does not fall under the remit of regulatory
Gold is set to
protect, preserve
and grow wealth in
the coming years as
it has done
throughout history.
authorities. This means that there are few barriers to entry to the gold market for would-be sellers.
As buying precious metals often involves a significant sum of money you need to ensure that you invest
and own gold in the safest way possible.
By becoming aware of the fundamentally important things to consider when
buying and selling gold you will ensure that you own the genuine gold article
in a cost efficient, safe and secure way.
As part of your due diligence process, you should consider these 10
important points before you part with your hard earned money to buy
gold.
Perth Mint Gold Bars
© 2013 GoldCore
2
10 Key Points To Consider Before You Buy Gold
1. AUTHENTICATION AND VERIFICATION
A key consideration is that you can trust your bullion provider with regard to the authenticity of
your gold coins and/or bars.
Verifying the authenticity of your precious metals is of paramount importance. Does your gold provider buy
directly from London Bullion Market Association (LBMA) approved mints and refineries or are they
dependent on buying from the secondary market and the general public?
Does your gold provider have the experience and the authentication
procedures in place to ensure that your precious metals are the genuine
article?
The “chain of integrity” is an important part of the bullion market's
infrastructure and gold providers must protect the chain of integrity for
gold bars that they buy and sell.
Bullion providers need to know the provenance of the bars they sell.
Gold bars that are LBMA
approved, with each bar
individually sealed with a
tamper proof assay card
featuring a unique serial
number, are becoming
increasingly popular.
Reputable bullion providers ensure that every bar they receive is refined
by an accredited bullion mint or refiner, stamped with a serial
number and is of a purity of at least 99.5%.
Once a gold bar has been assayed and is of proven weight and purity to be accepted by the
professional markets, the bar should remain in professional vaults recognised by the LBMA
and international financial exchanges.
London Bullion
Market
Association
A gold bar that remains within the gold market’s chain of integrity can be easily traded and
exchanged and furthermore, it does not need to be reassayed or reproven. Gold bullion
that remains within the chain of integrity is said to be of ‘good delivery’ status.
By keeping gold bars within the chain of integrity, providers can assure that their clients own authentic gold
bullion.
© 2013 GoldCore
3
10 Key Points To Consider Before You Buy Gold
Gold bars that are LBMA approved, with each bar individually sealed with a tamper proof assay card
featuring a unique serial number, are becoming increasingly popular.
Know your customer (KYC) and international anti-money laundering
requirements, which involve having photographic identification documents
for all clients – whether buying or selling – actually help protect clients. They
mean that bullion providers can always trace who has sold them what
product and greatly reduce the risk of inauthentic coins and bars entering the
market.
Gold coins authenticity can also be established using a Fisch gold coin detector
which is used by major banks, bullion dealers and investors internationally since
1980.
Ultrasonic testing is beginning to be used and will become more important in
The Perth Mint 1oz Gold Bar
the coming years with better calibre gold providers offering this service.
Some gold providers make a commitment to repurchase gold coins and bars they have sold to their clients
and you should seek this commitment.
Buying gold bullion coins and bars, made by reputable refiners and mints, through an established and trusted
provider with a direct relationship with the refinery or mint greatly reduces the risk of not owning the
genuine article.
© 2013 GoldCore
4
10 Key Points To Consider Before You Buy Gold
2. SAFE STORAGE
Does your gold provider offer the facility for you to store your metal in an allocated account
with a specialist storage facility with independent verification, audit controls and appropriate
insurance cover?
Having your gold stored in this way allows you to immediately sell your gold or other precious metal
holdings should you wish. It also allows you to avoid further re-authentication costs as the bullion has
always remained within the chain of integrity.
Gold providers should not expose their clients to unnecessary
counterparty risk by storing clients’ gold in anything but highly
specialised storage facilities. The client’s gold should never
remain the property of the gold broker or bank by being held
on the company’s balance sheet.
Via Mat: Worldwide Leader in Safe Storage
This form of gold investment as seen in popular pool accounts and in many gold exchange-traded funds
(ETFs) makes the client an unsecured creditor of the providing company or institution.
Not owning gold in the safest way possible defeats the purpose of owning the safe haven asset and
financial insurance that is gold.
© 2013 GoldCore
5
10 Key Points To Consider Before You Buy Gold
3. AVOID CERTAIN TYPES OF ‘GOLD’
Taking delivery of and/or owning physical gold coins and bars in an allocated account is the
safest way to own gold.
As Shakespeare warned, “all that glisters is not gold.”
Avoid telemarketers or any gold broker that engages in ‘hard sell’
There is a significant
tactics. These are often scams to sell overpriced gold coins (often
unappreciated risk from
semi numismatic and numismatic and proof coins) at extortionate
only being able to sell
rates.
your gold back to the
Consumers have been ripped off by mark-ups of between 25% and
one and same provider,
100% over the spot or melt value of gold. Gold bullion coins
or online dealer that
typically retail at premiums of between 5% and 10% and lower on
sold your gold to you.
some coins and bars with large volume purchases.
Be wary of companies who sell non tradable, illiquid gold plated coins or 9 carat gold coins (only 0.375
pure) and pass them off as “solid gold coins” or gold bullion coins.
Be wary of companies that attempt to restrict your ability to sell your gold when you want to. This is
sometimes done by making you pay for multiple years of storage in advance.
Avoid brokers that try to get you involved in leveraged trading and leveraged trading accounts. You are told
that you only have to pay 10% or 20% for the gold and you will then “get to buy” or “own” 5 or 10 times
more ‘gold’ than you have paid for.
Leveraged trading is extremely high risk speculation. Should gold have a material correction, as is typical in
all bull markets, the buyer can lose all of their money. Also, buyers do not own the underlying physical
asset and are exposed to significant counterparty risk.
© 2013 GoldCore
6
10 Key Points To Consider Before You Buy Gold
There is a significant unappreciated risk from only being able to sell your gold back to the one and same
provider, or online dealer that sold your gold to you.
This is a form of ‘closed loop’ buying and selling. It
creates a dependency and an over reliance on one
single entity or counter party which creates extra
risk, not only in terms of counterparty risk but also in
terms of price risk.
If you own actual physical coins and bars – either in
your possession or in allocated accounts – there is
an internationally competitive market whereby you
can sell your bullion back to any number of
Perth Mint Gold Bars
international bullion dealers at the time of your
choosing. This reduces you dependency on one
provider.
This competition is vital to reduce counterparty risk and ensure competitive pricing at all times.
© 2013 GoldCore
7
10 Key Points To Consider Before You Buy Gold
4. REPUTATION
Is your gold provider established, respected and trusted within either their domestic or
international markets?
Due diligence should be done on your prospective bullion provider.
A little bit of off-line and on-line research can go a long way to reassure you that you are dealing with a
reputable broker.
Simple Google searches will help you to determine the reputation
of your bullion provider – locally and/or internationally. By
checking a company’s offline media presence and online “digital
foot print” you can quickly establish their bona fides.
Check who the owners and promoters of the business are. Check if they are quoted or interviewed in the
general media in an expert capacity. Are they known and trusted gold experts? Do they have a strong track
record of protecting and growing client’s wealth? Always do adequate due diligence on your bullion
provider.
© 2013 GoldCore
8
10 Key Points To Consider Before You Buy Gold
5. PROTECTING YOUR MONEY
The same counterparty risks apply to gold providers that apply to dealers, brokers and agents in
any other open market or industry.
You should make appropriate enquiries regarding any counterparty to
ensure they are not only well-established and reliable but also
financially sound.
You should only deal with providers who are fully audited on an
annual basis and have publicly accessible filings. You can ask for
audited statements from a prospective provider and/or you can
request a letter from their auditors confirming that the company’s
accounts are up to date and in order.
When entrusting
some of your life
savings to a company
it is wise to know if
they have a solid
trading history, are
established and
trusted.
.
© 2013 GoldCore
9
10 Key Points To Consider Before You Buy Gold
6. TIME IN BUSINESS
How many years has your gold broker been in business?
A company with only a few years of business history will have a
limited experience of the gold markets. They may be in business
as a result of the recent rise in the gold price and have no
experience in the gold market, nor may they genuinely have
their client’s interest at heart.
When entrusting some of your life savings to a company it is
wise to know if they have a solid trading history, are established
and trusted.
Recent entrants to the market may not be well capitalised. A well-capitalised established firm reassures
you that they will be there next time you want to make a purchase or more importantly sell your gold.
© 2013 GoldCore
10
10 Key Points To Consider Before You Buy Gold
7. REPUTABLE AFFILIATIONS,
ASSOCIATIONS AND PARTNERS
Is your gold provider a member of, affiliated with or work with reputable
associations and partners?
Do they work closely with other respected and trusted counterparties such as
government mints, large refineries or depositories? Direct relationships with
reputable partners mean that, importantly, independent due diligence has been
carried out on the gold provider.
This can afford a degree of comfort as a result of the independent verification.
Respected and long established institutions involved in the gold market will
refrain from being associated with inexperienced, unknown and potentially
Perth Mint 50oz
Gold Bar
disreputable entities.
Is your gold provider a member of, or an affiliate of international gold associations
or groups? Such groups include the London Gold Market Association (LBMA), the
International Precious Metals Institute (IPMI), Industry Council for Tangible Assets
(ICTA), Professional Coin Grading Service (PCGS) and the Numismatic Guaranty
Corporation (NGC).
Direct relationships
with reputable
partners mean that,
importantly,
independent due
diligence has been
carried out on the
gold provider.
© 2013 GoldCore
11
10 Key Points To Consider Before You Buy Gold
8. SIZE, TYPE AND ABILITY TO MAKE
A MARKET
Does your gold broker offer the facility to buy back your precious metal?
Some gold providers do not have the facility, liquidity and/or the financial resources to repurchase your
gold when the time comes for you to sell.
This can be rather inconvenient and will require you to source another gold provider to purchase your
metal. This may be time consuming (further ID or ‘know your customer’ procedures may be needed) and
may incur further expense as the new gold broker may have to re-authenticate your gold before agreeing
to purchase.
Does your gold broker have multiple suppliers? If so they will have access to a greater pool of liquidity than
a company with just one or two individual suppliers. This access to liquidity means that over the long term
you will have access to a wider range of coin and bar products and more stable and competitive pricing.
© 2013 GoldCore
12
10 Key Points To Consider Before You Buy Gold
9. INSURANCE
Does your gold provider carry independent insurance covering potential loss in transit of your
precious metals?
Most courier services do not accept any responsibility for bullion requiring the
prudent broker to carry supplemental insurance. Insurance cover for gold sent
through the post is also limited so be sure to ask who insures your gold, silver
or platinum bullion until you get it and what will happen in the unlikely event
that it is lost or stolen while in transit.
4
0
0
o
z
Ask if they have insurance to cover all bullion while in their possession and
while being delivered. If you are not reassured after asking this question then
Access to liquidity
means that over the
long term you will
have access
to a wider range
of coin and bar
products.
request proof of insurance.
G
o
l
d
B
a
r
s
The world's specialist insurance market
© 2013 GoldCore
13
10 Key Points To Consider Before You Buy Gold
10. INTERNATIONAL EXPERIENCE
AND EXPERTISE
Does your gold provider have logistical expertise and experience in dealing with clients in many
different countries?
Many gold buyers prudently choose to store some of their gold in countries which they are not resident in,
in order to reduce national and geopolitical risk.
The logistics of international transportation and the international storage of gold can be very complicated
and requires specialist knowledge and indeed good relationships with post and freight companies and
custom authorities. It involves handling different sales tax (including VAT) regimes as well as customs and
duties obligations.
Inexperience in this area often results in incorrect taxes and tariffs being applied at the expense of the
client as well as delaying delivery of your gold.
© 2013 GoldCore
14
10 Key Points To Consider Before You Buy Gold
CONCLUSION
W
ith demand for gold coins and bars having increased in recent years and likely to continue to do so,
many new individuals and companies selling gold bullion to the public will appear.
At this time of elevated counterparty risk, it is important that you choose your gold broker carefully.
Developing a long term relationship with a trusted gold bullion dealer is the best way to avoid a company
taking advantage of you.
By doing your due diligence and asking these questions you will be in a better position to make an
informed choice when it comes to selecting your gold broker, buying gold and protecting your wealth.
© 2013 GoldCore
15
10 Key Points To Consider Before You Buy Gold
GOLDCORE’S BONA FIDES
GoldCore
Authentication and
GoldCore only buys gold bullion from trusted counterparties such as
Verification:
government mints, large refineries or depositories. GoldCore has long
standing relationships with the Perth Mint in Western Australia, the
Royal Mint in the UK, the Royal Canadian Mint, MKS of Switzerland and
Heraeus of Germany.
Safe and secure storage:
All investments are fully insured by Lloyds of London under Viamat’s
Insurance policy. We operate a system of bailment and as such your
gold investments are held securely in custody in your name and are
never on our balance sheet for your protection.
Deals only in physical ‘real’
gold bullion:
GoldCore strongly advises that owning real gold bullion is the safest and
most prudent option available; it also offers significant peace of mind
and security. We do not sell or recommend exchange traded gold (EFT’s)
because the counterparty risk is far too high.
Reputation:
GoldCore is a regular contributor to the world's major news companies
such as Bloomberg, The Financial Times, CNBC, BBC, RTE and others.
Please visit our media centre here.
Well established bona
GoldCore was established in 2003, making it one of the oldest and most
fides:
well established bullion companies in existence. GoldCore has over
4,000 clients in 50 countries and has executed over $500,000,000 in
transactions.
Solid trading history:
Since inception in 2003, GoldCore has traded profitably and continues
to grow its client and revenue base.
© 2013 GoldCore
16
10 Key Points To Consider Before You Buy Gold
GoldCore
Reputable affiliations:
GoldCore is the only approved dealer in the EU for the Perth Mint
Certificate Programme. GoldCore is regulated by the Central Bank of
Ireland as an authorised Advisor.
Access to liquidity:
GoldCore manages or advises on over $200,000,000 worth of assets,
much of which is divided between the Perth Mint and GoldCore's
secured vaulting service with ViaMat.
Insurance:
GoldCore holds significant insurance cover via Lloyds of London and
insures every shipment of gold delivered, transferred and stored.
International experience:
With offices in Dublin and London, and clients in over 40 countries,
GoldCore has forged a deep understanding of how the global bullion
markets operate, and as such, gives us a competitive edge in buying and
selling, and shipping bullion on behalf of our client base.
© 2013 GoldCore
17
10 Key Points To Consider Before You Buy Gold
CHECKLIST
Must Have’s for Your Bullion Dealer
GoldCore
Authentication and verification
A key consideration is that you can trust your bullion
provider with regard to the authenticity of your gold
coins and/or bars.
Safe and secure storage
Does your gold provider offer the facility for you to store
your metal in an allocated account with a specialist
storage facility with independent verification, audit
controls and appropriate insurance cover?
Deals only in physical ‘real’ bullion
Taking delivery of and/or owning physical gold coins and
bars in an allocated account is the safest way to own
gold.
Reputation
Is your gold provider established, respected and trusted
within either their domestic or international markets?
Well established bona fides
The same counterparty risks apply to gold providers that
apply to dealers, brokers and agents in any other open
market or industry.
Solid trading history
How many years has your gold broker been in business?
Reputably affiliations
Is your gold provider a member of, affiliated with or
work with reputable associations and partners?
Access to liquidity
Does your gold broker offer the facility to buy back your
precious metal?
Insurance
Does your gold provider carry independent insurance
covering potential loss in transit of your precious
metals?
International experience
Does your gold provider have logistical expertise and
experience in dealing with clients in many different
countries?
© 2013 GoldCore
18
10 Key Points To Consider Before You Buy Gold
GLOSSARY OF TERMS
Asset class: In financial accounting, assets are economic resources. Anything tangible or intangible that is
capable of being owned or controlled to produce value and that is held to have positive economic value is
considered an asset.
Chain of integrity: A gold bar needs to be assayed and be of a proven weight and purity acceptable by the
professional markets. If this bar then remains in the professional vaults recognised by the London Bullion
Market Association (LBMA) and international financial exchanges, this gold bar is said to have remained in
the gold market’s 'Chain of integrity'. If it does not leave the chain of integrity - it does not need to be
reassayed or reproven and can be easily traded and exchanged. Gold bullion that remains within the chain
of integrity is said to be of 'good delivery' status.
Counter Party: Is a legal entity, unincorporated entity or collection of entities to which an exposure to
financial risk might exist. Refers to brokers and other securities dealers that serve as the contracting party
when completing "over the counter" securities transactions. The term is generally used in this context in
relation to "counterparty risk", which is the risk of monetary loss a firm may be exposed to if the
counterparty to an over- the-counter securities trade encounters difficulty meeting its obligations under
the terms of the transaction.
ETF: Exchange-traded funds are gold exchange-traded products that aim to track the price of gold. Gold
exchange-traded products or trust are traded on the major stock exchanges including Zurich, Mumbai,
London, Paris and New York.
Fisch gold coin detector: The Fisch is an instrument that checks the vital measurements of a specific coin
against the minimum allowable weight, maximum allowable thickness, maximum allowable diameter and
the shape as specified by the issuing mint.
Know Your Customer (KYC): Refers to due diligence activities that financial institutions and other
regulated companies must perform to ascertain relevant information from their clients for the purpose of
doing business with them.
© 2013 GoldCore
19
10 Key Points To Consider Before You Buy Gold
LBMA: The London bullion market is a wholesale over-the-counter market for the trading of gold and silver.
Trading is conducted amongst members of the London Bullion Market Association (LBMA), loosely
overseen by the Bank of England. Most of the members are major international banks or bullion dealers
and refiners.
Numismatics: Is the study or collection of currency, including coins, tokens, paper money, and related
objects.
World Gold Council: The World Gold Council is a non-profit association of the world's leading gold
mining companies, established in 1987 to promote the use of gold. It aims to stimulate demand for gold
from industry, consumers, and investors. The World Gold Council is the market development organisation
for the gold industry. Working within the investment, jewellery and technology sectors, as well as engaging
in government affairs, their purpose is to provide industry leadership and create sustainable demand and
awareness about gold.
© 2013 GoldCore
20
10 Key Points To Consider Before You Buy Gold
WRITTEN BY
Mark O'Byrne, Research Director at GoldCore.
ABOUT GOLDCORE
GoldCore are respected international bullion dealers who are experts in the execution and logistics of the highly specialised
precious metals market.
GoldCore have been providing precious metal investment solutions for an International client base since 2003. Today, our team of
experts service all investor classes from private individuals to companies and institutional investors. Whether you are a small or
large investor looking to take delivery or arrange for secure, trusted insured storage, GoldCore has a solution to suit your needs.
CONTACT GOLDCORE
Ireland
England
USA
GoldCore Ltd
14 Fitzwilliam Square
Dublin 2
Ireland
No. 1 Cornhill
London EC3V 3ND
England
USA Phone
+1 302 635 1160
UK Phone
+44 (0) 203 086 9200
Ireland Phone
+353 1 632 5010
UK Fax
+44 (0) 203 031 1046
Disclaimer: The information in this document has been obtained from sources which we believe to be reliable. We cannot guarantee its
accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information
contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual
circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a
guide to future performance. The value of investments may fall or rise against investors' interests. Income levels from investments may
fluctuate. GoldCore Limited ( www.goldcore.com), trading as GoldCore is regulated by the Financial Regulator of Ireland.
© 2013 GoldCore. All rights reserved.
© 2013 GoldCore
21
