goldmoney.com

[rickb]

Anyone have any experience with http://goldmoney.com/?  I know the basics, i.e. it's effectively an offshore bank (foreign account for US taxpayers) in which you can deposit money and then convert the money into gold (pooled).  There's a sliding fee charged to convert into gold (a premium over spot, between about 1% to 2.5%) plus a recurring storage fee of about 0.18%/year (minimum .1 goldgram) charged monthly.  As far as I can tell, the focus is not so much on simply storing gold for individuals but enabling financial transactions between individuals to be conducted using goldgrams as the currency.  Unlike most "paper gold" it's possible to request physical delivery (in 100 gram or 1 kilogram bars), although there's a fee involved. Relative to insured storage in a safety deposit box the fees look kind of high, but it seems like it might be a reasonable way to implement an offshore storage account.

[MediumTex]

I don't know anything about this company specifically other that what I see in the ads, but conceptually it strikes me as one of those solutions that is more complicated than the problem.

Assuming it is legit I'm not saying it may not be right for some people, it just strikes me as a maze of potential problems compared to direct ownership.

[rickb]

it just strikes me as a maze of potential problems compared to direct ownership.

I definitely agree if the comparison is to buying gold coins.  However, if the goal is to keep some portion of your gold holdings in an offshore location it's not clear to me the risks are tremendously different from opening an offshore bank account.  In both cases you're subject to fraud on the part of the bank and theft during transit (physical theft on the way to the Swiss bank vs. internet theft in the goldmoney.com case).  I suppose the risk of someone obtaining your goldmoney.com account id and password and emptying your account is higher (maybe MUCH higher) than that of someone physically impersonating you at your Swiss bank, although really no more than any other internet banking that most people seem to be comfortable with.

A major advantage of a goldmoney.com account is that it is accessible anywhere on the planet.  However, a major disadvantage of a goldmoney.com account is that it is accessible anywhere on the planet.

[brylig]

I seem to remember Harry Browne himself specifically responding to a question about goldmoney on his radio show.  I believe his answer was something to the effect of "Having an IOU for Gold is not the same as having Gold."  He said the ONLY way to store gold is to have your own personal sealed bag with your gold in it at the bank. 

With all the rumors I've seen of alot of these major Gold depositories actually only holding fractional reserves... I shudder to think what would happen if the rumors are true and there is ever a run on gold.  Is it likely?  Of course not, but it's exactly the sort of black swan event that would make or break you depending whether or not you had physical possession of your gold.

[craigr]

Having a more direct access to the gold is always ideal as a fail-safe asset. But unfortunately since Browne passed away in 2006 many avenues for US residents to have a bank hold their gold overseas have vanished due to tightening bureaucratic controls. With this new reality many people are simply running out of options so places like goldmoney and BullionVault have grown to fill the need. They are not optimal in Browne's strict view. But in light of the change in situation the past few years it's the only option some people have easy access to any longer.

Comparing these services though to physical gold is probably not the fairest. Probably it would be better to compare them to conventional gold ETFs like GLD or IAU. The question then is if you have to use a gold service or ETF, which is best? I don't know the answer to that. Each has plusses and minuses.