What Are Gold Certificates?

What are gold certificates? They are certificates that prove you are the owner of gold that you don't personally possess. Typically, such certificates are issued by money institutions from whom you purchase gold, and those financial establishments physically possess the gold for you. At least that's how it's intended to go.

Possessing certificates of ownership is similar to placing your money in a gold pool account. You hand over your money to the company who carries out the program, and when you cash out they pay you any returns you may have accrued based on this gold cost. But they might not store any actual gold for you. Instead, they're believed to take your money, and put it into whatever they are expecting to achieve the most impressive returns instead of in gold, pay you the returns for gold, and pocket the rest of their gains for themselves. That doesn't answer the question of what happens if they make some poor investment decisions and lose your money, and are unable to give you your returns on the gold price? I'm not sure. What happens if the establishment goes bankrupt what will happen to your investment? If it's's not physical gold, I believe it might vanish.

There are some positive sides of gold certificate programs. One is that you can essentially invest in gold at the official spot price without having to pay any premiums for physical metal or pay any holding costs. Those premiums and holding costs can cut into your profits quite a bit, so gold certificates represent an alternative that gives you the best returns.

One possibility for gold certificates is the Perth Mint's gold certificate program. The Perth Mint's program is totally guaranteed by the government of Western Australia, which allows rather more of a feeling of safety than having gold certificates from a private establishment that would go broke and witness your paper gold vanish. The Perth Mint's gold certificate program charges 1.75% costs on all purchases plus a $10 certificate surcharge, plus a 0.75% fee when you sell. This is far lower than this premiums on physical bullion which have zoomed during the current precious metals deficit. There are no storage charges. There is a minimum primary investment of $5000 Australian dollars. The Mint says that each oz you buy stays in-house of the mint and can't be removed. Your investment is both state backed and insured by Lloyds of London. This is for basic unallocated storage ( but once again they do claim to keep gold on premises for you, in some form ).

The Perth Mint also offers allocated gold storage accounts, though this needs both storage costs and a fabrication fee ( to shape the gold into whatever form you choose to have put aside for you ).

Whether or not you put your money into gold certificates will depend on how much faith you are ready to put in an establishment to keep your purchased gold product for you. I am personally someone that is ready for the worst while at the same time not paranoid, and looking for the best returns possible. Which has lead me to the belief that possessing a pile of bullion coins or cars as the basis of your gold portfolio is vital, but that on top of that base it is ok to broaden and own certificates or various sorts of gold accounts that don't have allocated storage. I personally don't play a role in the Perth Mint program or others like it, but I do keep gold in an e-gold account. I believe those are no problem so long as you understand that there's some amount of risk, and pay attention to the markets with the willingness to sell your certificates or egold if market demand truly picks up. I'd personally feel very little anxiety in investing in the Perth Mint's program, but I would probably avoid a finance institution's certificate program.