Alan"s Money Blog

Jun 4, 2007

BullionVault: The #1 way to own gold

Good day everyone. I'm back with another review. This time I'm reviewing BullionVault, another great way to own gold - the best way I've found so far. I won't go into the reasons why you would want to have direct (allocated storage) ownership of gold, let me just say that the truly rich will know all the reasons why gold ownership is so important. So without further ado, let me give you some more detail about BullionVault.

Now please bear with me, this review is going to be probably the lengthiest I've ever done. I've taken a lot of the information from BullionVault's website simply because there is no point in paraphrasing them when they say it in such a clear and concise manner already.

Oh, I should also mention before I get into the review that BullionVault will give you 1 FREE GOLD GRAM!!

What is BullionVault all about ?

It used to be very difficult for private individuals to find a simple, safe and cost-effective way of buying, storing, and then selling gold.

The main problem was the sheer size of the investment you needed to make to access the best prices and there were extra complications with integrity and storage too.

Big gold bars & the professional bullion market

  • The most competitive gold prices in the world are enjoyed by the participants in the professional bullion market: large gold dealers, refineries, government agencies and bullion banks.
  • This professional market only deals in what are known as Good Delivery bars. If you're not trading these bars you are excluded from their market - and their very competitive prices.
  • Good Delivery bars are cast by a small group of metals refiners accredited by the professional bullion dealing communities in London, New York and Zurich. They are accurately assayed and guaranteed always 99.5% pure gold or better. The market trades their pure gold content, known as fine gold, so you don't pay for the impurities.
  • From the day they're first manufactured, Good Delivery bars are kept in bullion vaults recognized and monitored by the local gold dealing community. Every time bars are moved a careful record is maintained, showing continuous storage through trusted hands. This guarantees gold bar integrity in a way that keeping gold at home, or even in safety deposit boxes, simply cannot match.
  • The result is that professional buyers accept deliveries of these bars direct from the seller's vault without re-checking their purity - and that greatly reduces bullion dealing costs. This is why they're called Good Delivery bars.
  • Good Delivery bars are large � usually 400 troy ounces each (12.4kg). The professional market doesn't allow you to own part of a bar.
  • But having enough money to buy a whole bar or two would only solve half the problem. You still need that relationship with a formally recognized vault to look after the gold while you own it. The starting balance for an accredited storage account is 15 to 20 of these 400-ounce bars, and the agreements take a lot of time, cost and effort to set up.
  • These barriers keep private users out.

Direct access to the very best prices

  • changes all this. It enables people from all over the world to own professional market gold and keep it in any quantity in officially recognized bullion vaults in London (UK), New York (USA), or Zurich (Switzerland).
  • All BullionVault gold is held in Good Delivery form. So when you come to sell, your buyer is able to trust the purity and weight of your gold, which is guaranteed by BullionVault itself because we know that you never had the chance to corrupt it.
  • So the dealing spread is typically 0.4%, about one-tenth of the equivalent cost charged to private customers for gold coins and small bars.
  • You can buy just a small portion of a 400-ounce bar. You can trade on-line in increments as small as 1 gram - currently about $20.
  • BullionVault is not a unit trust / mutual. There is no 5% front end subscription load. When buying gold you pay a commission whose maximum rate is 0.8%, falling progressively when you invest above $30,000 to the spectacularly low rate of 0.02%.
  • Storage charges are down to wholesale rates of 0.12% pa ($4 per month minimum) with insurance included. That's less than a tenth of the storage fees charged by retail banks, and less than one-third the annual fees charged by typical exchange-traded gold funds (ETFs).
  • BullionVault customers also save money because they deal directly with each other, willing seller to willing buyer, bypassing the gold dealers by using our order board.
  • You make a further big saving at settlement time too. You don't have to arrange for expensive armoured courier bullion collections.

Your safety & security assured

  • For as long as you own it your gold remains your outright property, stored in specialist facilities reserved exclusively for BullionVault clients and run by accredited professional vault operators who are wholly independent of BullionVault. You choose the storage location :- London, New York or Zurich.
  • You are truly isolated from the systemic risks in the financial system. You have taken legal delivery of your gold and you own it directly in physical form. Unlike the huge majority of investment products no company's financial failure can deprive you of this gold. Lloyds, Via Mat and BullionVault could all fail - and your gold is still safely yours.
  • Each and every working day BullionVault publishes on the internet the complete register of all its gold owners � with each owner listed under a public nickname known only to themselves.
  • This register reconciles exactly to the official bar list published with it. The bar list is produced by the vault operator, independently of BullionVault. No other custody business in the world subjects its records to this continual, daily, public scrutiny.
  • BullionVault is also the only gold market in the world which stays open 24 hours a day, 7 days* a week.
  • Because you and all other BullionVault users have a right to sell whole bars directly onto the main market - one of the deepest capital markets in the world - you'll always find a buyer paying a fair price when you want to sell.
  • You even have the right to withdraw gold from the vault, although the huge majority of BullionVault users leave their gold right where it is. That way they continue to enjoy the benefits of owning Good Delivery gold which - remember - does not leave the professional vaulting circuit. (There may be additional fees, taxes and reporting obligations for bullion withdrawal.)
  • Any purchase you make is settled instantaneously - we checked the seller had sufficient gold in your chosen vault before it was sold to you. Any sale you make is settled instantaneously too - again we checked the buyer had deposited sufficient money before your gold was bought from you. BullionVault offers nobody credit, so nobody can let you down after you deal.
  • You can withdraw your money immediately after you sell. Your money will leave your BullionVault client account by the end of the next business day (London time). There is no minimum period for investing.
  • For your safety � and to obey international anti-money laundering laws � your money is sent straight back to your original funding bank account. Money transmissions to your original funding bank account are fast, safe and low-cost.**
  • And we make sure you can't make an expensive mistake either. You won't be able to buy more gold than you can pay for, or deal at a silly price. Firstly that's because the system eliminates all of these obvious user errors, but it's also because we invite you to phone us, and we'll talk you through your first deal one button at a time. We check that everything is exactly as you want it while you're still on the phone. You'll be amazed how simple it is.

This combination of safety, value, accessibility, transparency and service has quickly attracted 17,000 users. It's created a private bullion store owned by the citizens of 68 countries and worth more than $65m, making the most popular direct gold ownership service in the world.

Why do active traders choose BullionVault ?

For active traders the bottom line is the cost of trading. Traders cannot expect to make a profit if they are always paying commissions and/or the spread. It's as simple as that.

BullionVault allows active traders to choose to behave like a market professional, by quoting prices. This allows the true trader a negative cost per trade, through the opportunity to earn the spread.

To see the power of this examine the net effect of continuous quoting on BullionVault on an unmoving price with a $2 spread at $620 per ounce. The quoter earns rather than pays the spread - just like a market professional. It soon outweighs the cost of commissions :-

Annual volume Buy commission Sell commission Spread Net effect
First $30,000 -0.8% -0.8% +0.32% -1.28% -$384
Next $30,000 -0.4% -0.4% +0.32% -0.48% -$144
Next $540,000 -0.1% -0.1% +0.32% +0.12% +$648
Thereafter -0.02% -0.02% +0.32% +0.28% +0.28%*

*%age of your trade volume.

There are very few systems in the world which will grant you access to the spread, and you can see why. Spread access is what really gives you the ability to profit from trading, and that's why most businesses keep it for themselves.

But notice that you are not making a profit at BullionVault's expense here. What is happening is that the liquidity you provide is being consumed by a retail client who is taking the price you make, and paying the spread to you and a commission to BullionVault.

BullionVault, in the tradition of a true exchange, is acting as a meeting place. BullionVault's capital is not employed in the transaction, and the resources of both parties are on hand to settle the transaction instantaneously. This is how BullionVault is at no material risk, and why it is satisfied to earn the tiny amount of 0.02% on your side, which is greatly exceeded by the likely 0.8% of commission which BullionVault makes on customer who accepts your price.

We think this is fair. A long term holder who trades infrequently pays a higher commission for a service he uses infrequently, but where he expects to find ample liquidity when he wants to sell. A liquidity provider pays a much lower commission rate which means he can earn a profit from providing liquidity. More to the point - and this is very important - people are entirely free to choose which one they want to be. The commission rate simply reduces automatically as people trade more.

BullionVault's objective is to be the cheapest, safest, and most accessible worldwide market in privately owned gold bullion. There is no safer way for private individuals to deal in and own gold, and there is no fairer proposition to the trader. But always be aware that trading is a risky business because markets can swing against you. When you quote prices you need to be ready to act as markets move, otherwise you will find your prices become unduly attractive to other participants.

Your bullion's physical storage

Your gold is held in one of the world�s strongest and most trusted specialist bullion vaults, operated on our behalf by Via Mat.

You choose in which Via Mat vault your gold is stored from one or more of the following locations:

These three locations cover the three most active bullion markets in the world and give you an opportunity to select an offshore jurisdiction for storage.

You buy your guaranteed quality gold only when it is already safely in the vault. Bars are always insured and they do not move. Even in the course of delivery from BullionVault seller to buyer the gold stays securely in the vault.

You can at any time prove your individual ownership of gold in the vault by comparing the Via Mat bar list to an individually nicknamed list of all BullionVault holdings published on a public page on the site.

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Why is my bullion not stored in a bank ?

You may be surprised that your gold is not stored in a vault run by a bank. Why not?

The short answer is that nowadays banks operate the wrong kind of business to be willing and reliable custodians of your gold.

Modern banks make their money by providing credit, and by executing transactions. They have little enthusiasm for a low margin role as physical custodians of bullion. Very few of them actually manage bullion vaults at all.

They will - nevertheless - be pleased to provide you with unallocated gold which in most cases is probably not the form of gold which properly informed private buyers are looking for. [Click here for a full explanation of unallocated gold]

BullionVault does not provide unallocated gold. BullionVault's gold owners own their gold outright and on their behalf BullionVault seeks a vaulting system and a custodial relationship which meets the following criteria:-

  • the vault management company must be long established, substantial, and 100% trustworthy
  • the maintenance of physically secure facilities must be at the heart of its normal commercial operations
  • the core business must not be based on, or related to, the creation and sale of financial or credit products
  • the operators must be very experienced in managing bullion
  • the operators must have multiple international vaults under their management
  • the operators must be competent to undertake international shipments of gold
  • the operators must be fully authorised by their local bullion community to take delivery of Good Delivery Bars, store them, and deliver them up at sale as good delivery.

We believe Via Mat fulfils these criteria to the very highest levels - and we believe Via Mat's Swiss heritage and ultimate ownership provides the most solid and responsible of custody environments.

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Protection for your gold

In the vault your gold is soundly protected.

  • It is insured.
  • It exists under the jurisdiction you choose, so you yourself select the government and legislative structure you trust to protect your property. You can switch jurisdictions in moments.
  • Access to your account is protected with state of the art encryption technologies - but BullionVault is designed to allow account access to be compromised and still keep your property safe.
  • Withdrawal restrictions ensure value on your account is returned only to you.
  • You can at any time monitor BullionVault records to prove they correctly assign vaulted gold to you.

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In a vault gold is so secure that it is extremely easy to insure, and not expensive.

Via Mat arranges the insurance for us and the insurance certificate is available to be viewed on the website.

The cost is included in your custody charge.

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Offshore custody

Government action against gold owners can be a material risk. This is why BullionVault enables you to secure your gold offshore and to transfer its location at minimal effort as risks in given locations change.

It is very difficult for a government intending domestic gold confiscation to apply it on gold held overseas. Conversely it is surprisingly easy where property rights depend on domestic legal arrangements.

With offshore storage it is important that foreign held assets are not subjected to military or political threats. In different ways Britain, Switzerland and the United States of America are marked in their suitability under these criteria.

All BullionVault customers - wherever they live - can benefit from offshore custody by making an appropriate choice of storage location. Residents of these countries also have the option of domestic storage if they prefer it.

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BullionVault account access

Your account is protected by some of the most secure cryptographic methods ever devised. These are widely recognised as offering a thoroughly secure means of data communication and are the technical protocols in wide use by banks, governments, and other highly secure users of the internet.

But we do not accept that the ciphers could not in future be broken, or your passwords found out.

Because of these very real risks BullionVault has assumed that against the odds your internet access will be compromised, and we have implemented substantial further safeguards to guard against such an eventuality so as to still keep your gold and your money safe.


Whew! That was a LOT of information. I hope you've read through the majority of it in order to get the background knowledge about BullionVault and to see why this is one (I say it is THE best) of the best ways to own gold!

I realize some of you might have just skipped to the end and all you're interested in finding out BullionVault's website. Ok, you'll get what you wish.

Click the link below to find out more about BullionVault or to create an account:

Buy gold online - quickly, safely and at low prices

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