As the leaves fell, the price of gold rose to a recent high as markets desperately seek a safe haven from political and economic uncertainty – should you do the same with your cash and pension funds?
Check Out The Superb Infographic And Nifty Interactive Gold Map Below
The Gold Price Continues To Rise
With UK coins being completely tax free, buying Sovereigns and Britannias can act as a hedge against political and economic unrest.
Adding gold bullion to your SIPP or SSAS can provide balance and peace of mind to your long term savings plans, though your pension must hold physical gold and not the paper gold discussed below.
The World’s Biggest Paper Gold Market
The term paper gold means you have a piece of paper acting as a substitute for the physical gold.
With paper gold, you don't own the gold; you own a promise to receive physical gold.
It means you’re a creditor of the corporation issuing the paper gold certificate and you’re subject to counterparty risks. Owning the physical gold has no counterparty risk and is fully under your control.
Examples of paper gold are gold certificates issued by banks and mints, pool accounts, futures accounts and the NYSE listed exchange-traded fund.
With these products, you own a piece of paper rather than physical gold. These paper products give you exposure to the gold price; you can make a profit by selling them to someone wishing to own paper gold.
However, if the music stops and nobody wants to purchase paper anymore, it becomes worthless since you may not able to redeem your investment.
London Is Dominant In Global Price Discovery For Gold
Almost all gold (95 per cent) traded in London is unallocated and without legal title.
This makes it easier to trade, but it also raises concerns about a market that is opaque to begin with.
Incredibly, there are 5,500 tonnes of paper gold exchanging hands on paper each day, but there are only 300 tonnes of gold vaulted in London outside of the reserves for ETFs or the Bank of England.
An Inside Look at the World’s Biggest Paper Gold Market
Courtesy of Bullionstar.
The 10 Countries With The Most Gold Reserves
Click the image below to be taken to a lovely interactive illustration showing the 10 countries with the most gold reserves.
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