What Are Gold Certificates?
What are gold certificates? They are certificates that indicate you are the owner of gold which you do not personally keep. Normally, such certificates are issued by money institutions from whom you purchase gold, and those fiscal institutions physically keep the gold for you. At least that's how it's supposed to happen.
Holding certificates of possession is similar to placing your money in a gold pool account. You give your money to the company who executes the program, and when you cash out they give you any returns you will have accumulated according to this gold cost. But they may not store any physical gold for you. Instead, they're believed to take your money, and put it into whatever they are expecting to achieve the best returns instead of in gold, pay you the returns on gold, and keep the rest of their gains for themselves. That ignores the question of what occurs if they make some poor investment calls and lose your money, and are unable to give you your returns on the gold price? I'm not sure. What occurs if the institution goes bankrupt what will happen to your investment? If it's's not a physical asset, I suspect it would disappear.
There are definitely positive sides of gold certificate programs. One is that you can fundamentally invest in gold at the official spot price without needing to shell out for any premiums for physical metal or pay any holding fees. Those premiums and holding costs can cut into your profits rather a lot, so gold certificates are an alternative that offers you the most productive returns.
One option for gold certificates is the Perth Mint's gold certificate program. The Perth Mint's program is totally guaranteed by the govt of Western Australia, which allows rather more of a sense of safety than having gold certificates from a private establishment that would go bankrupt and watch your non-physical 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 much lower than this premiums on physical bullion which have soared during the current gold deficit. There are no storage costs. There is a minimum initial investment of $5000 Aussie dollars. The Mint claims that every oz. you buy stays on the premises of the mint and can't be removed. Your investment is both state backed and insured by Lloyds of London. That is for regular unallocated storage ( however again they do say they keep gold on premises for you, in some form ).
The Perth Mint also offers allotted gold storage programs, though this needs both storage costs and a fabrication fee ( to mold the gold into whatever form you choose to have set aside for you ).
Whether you invest in gold certificates will depend on how much trust you are ready to put in an institution to keep your bought gold product for you. I am personally someone who is ready for the worst-case scenario while at the same time not paranoid, and looking for the best returns possible. Which has lead me to the conclusion that keeping a heap of physical bullion as the base of your gold portfolio is vital, but that in addition to that base it is fine to widen and hold certificates or different types of gold accounts that don't have allocated storage. I personally do not partake of the Perth Mint program or others like it, but I do keep gold in an e-gold account. I believe those are ok as long as you know that there's a quantity of risk, and observe the markets while being willing to sell your certificates or e-gold if investment demand actually picks up. I would personally feel little stress in making an investment in a Perth Mint account, though I would probably stay away from a fiscal institution's certificate program.
