Physical Gold – will I or buy it or not?

THE CONFERENCE CALLER: We all hear about gold and how it is a ‘safe haven’ investment. But how do you actually go about buying it?

The simple answer is to visit a reputable gold dealer, hand over your money and take your gold home.

For a country that was basically built around a gold rush mentality – on both the east and west coasts, Australia doesn’t have a strong cultural background in investing in gold.

Even today, if you speak with gold bullion dealers, most of their clientele will be made up of people from Asia or with Asian ancestry, in particular from China and India.

Because of this ownership of gold bullion is generally viewed as being for the more affluent echelons of society and for people who have come to these shores from foreign lands.

“I don’t think investing in gold is part of an elite club, I think if you are a gold investor you a really smart person” ABC Bullion CEO Janie Simpson told The Roadhouse.

“A lot of gold investors have done a lot of extensive research.

“They haven’t come to the conclusion they wanted to buy gold because they read some throwaway line in a newspaper or heard it on TV.

“They actually have read a lot of reports and spoke with numerous people.

“It doesn’t mean they’re wealthy – they probably will be, in my opinion, with the knowledge they have acquired and the understanding they have now.”

Simpson said buying gold should be part of an investor’s strategy to balance their portfolio or superannuation if, for any reason, just as a form of insurance.

“What we are seeing since the Global Financial Crisis is that there is a need to balance peoples’ portfolios,” she said.

“A lot of people have the traditional 65 to 75 per cent stocks, bonds, or cash, but what you need to do is have a bit of gold as a diversification and a form of insurance.

“A lot of wealth managers and institutions are coming to us for that diversification and are using gold as a separate asset to get that diversification.”

Buying gold as a portfolio stuffer might seem to be a good enough idea, but when it comes to actually taking the plunge there are still a few important decisions to make.

Looking into a cabinet full of gold bars is literally like peering through the window of your local chocolatier with any number of different sized bars on offer from different brands, you just have to decide which one you want.

One price list The Roadhouse found priced a one ounce ABC Bullion gold bar at $1389, while a one ounce bar from PAMP Suisse would cost $1432.

The reason for the difference, we were told, is because the PAMP bars are numbered and come with a certificate of authenticity.

This is apparently important for investors managing their own super funds as the government likes to keep track of things to ensure people aren’t selling and making profits they don’t know about.

Once you have your new gold bar – what do you do with it?

Most gold dealers provide storage facilities, which lowers many home insurance premiums and also lessens the chance of your gold being stolen by treacherous nephews.

Paying around $1500 for an ounce of gold but it is a lot harder frame and hang above your mantelpiece and probably won’t earn as many admiring glances as a new artwork, but it probably will make sound financial sense.

That is of course, the gold price does go up and not down, which like any investment is the core risk.

With the state of the world economy and American senatorial brinkmanship, anything is bound to happen.

“I have been watching the gold market every day since I was 20,” Noahs Rule managing director Sean Russo said in his presentation to the Gold Investment Symposium.

“I am a gold beast – not a gold bug, I have made a living for 30 years being around the gold market and I will make a living being around the gold market for another 30 years.

“I probably believe the gold price can go higher than most people in this room consider to be reasonable and I also think the price I believe it can go to on the low side is probably lower than most people think is ever imaginable.

“The reason for that is because I know that I don’t know and I know that nobody else knows either.”

That chocolate is looking really good right now.