If you spend enough time reading investing and financial planning websites and forums, you’ll start to notice a few trends. Investors almost universally recommend keeping your investing costs as low as possible. They will generally encourage you to focus on diversification (meaning you should own big companies, small companies, companies that pay high dividends, companies poised for economic growth, companies in the U.S., and companies in other countries) and asset allocation (owning the right percentage of each type of asset such as stocks and bonds).What is far from agreed upon is what to do about “alternatives.” There are many formal definitions of “alternative” investments, but I’ll offer an informal definition. If you’re buying an investment that isn’t a stock, bond, or cash, it’s an alternative. That includes real estate, natural resources, bitcoins, and today’s topic, gold.If you’re investing in gold, it’s important to understand exactly what you’re buying, where the gold is stored, how you can access it, and what you’re charged for storage. With the Vaulted app, you can easily understand all of these things.
There are two major philosophies of investing in precious metals.There are investors who specifically want to invest in rare coins with “numismatic” value. Numismatic investing is a bit like investing in fine art. Part of the value of the investment comes from the underlying value of the gold or silver in the coin, but a bigger portion of the value comes from subjective valuations among dealers. The Vaulted app steers clear of numismatic investing.With Vaulted, you’ll buy 99.99% fine gold kilo bars which are minted by the Royal Canadian Mint. This is straight-up gold that you can have shipped to your house at any time. The current cost to buy a full kilo bar of gold right now is just under $49,000.
When you buy gold with Vaulted, you can opt to pay a 0.4% annual maintenance fee and have the gold held at the Royal Canadian Mint. You can also have the gold shipped to you via FedEx.Historically, buying gold was a bit of a risk. You had to trust the dealer and do a lot of research to determine the fair market value for the product. Today, buying gold is easier than ever. Access to information makes it easier to know the value of gold, and it makes it easier to verify what you’re buying.
When you buy gold through Vaulted, you’ll pay a 1.8% transaction fee with each purchase. That means, a person who buys $10,000 worth of gold will pay a $180 transaction fee with the purchase.With Vaulted, you’ll also pay a 1.8% fee to sell the gold. That means that the price you receive will be 1.8% lower than the retail price.There is also a maintenance fee of 0.4% (which is charged 0.2% twice per year). If you choose to have the gold transported to your home, you must own at least one ounce, and you’ll pay about $50 for shipping. The exact amount depends on where you live, the number of bars you’re shipping, and other factors.
Seeing a 1.8% commission off the price of gold sounds crazy to frugal stock investors who are used to $0 trading costs.But surprisingly, Vaulted’s fees are very reasonable in the world of gold. Often, commissions for gold sales will range from 5% to 8% or even more. This puts the Vaulted commissions at the low end of the spectrum.
If you’re interested in buying large amounts of gold, Vaulted is a very good option. The commissions are low, and you can take ownership of the gold yourself (which I think is very important).However, if you want a few ounces of physical gold (a more typical amount to own), Vaulted isn’t the place to buy. You’ll need to own one ounce to take possession of it. You do not have to achieve a full kilo bar to take delivery. Once you have obtained an ounce worth in a kilo bar, they can move you into a deliverable one ounce coin.Of course, not everyone feels the need to take possession of precious metals in their portfolio. If you fall into that camp, perhaps Vaulted could be a good option for you even with smaller amounts.Vaulted offers very low commissions, and an easy and transparent way to buy and sell gold. That transparency is a huge value in an investing structure that’s struggled with transparency.