Ending The Rat Race

In a previous post published on November 6, 2009, I reviewed a bunch of ways in which an interested investor can get exposure to gold in one's portfolio. I also asked those visiting my site if they had any gold in their respective portfolios.

After listing the various ways to 'buy into' gold, I made it clear that my #1 and preferred choice in terms of getting exposure to gold was to simply buy it outright and have the damn stuff sent to me in the mail. That's right - buy physical gold.

Upon digging a bit deeper regarding this option, I then proceeded to highlight Scotiabank's ScotiaMocatta eStore where investors are able to purchase gold and silver bars, among other items. For one reason or another, I could not find out with 100% certainty if customers buying precious metals through ScotiaMocatta would actually get the physical gold sent to them in the mail, or just a certificate stating that their gold is safely 'secured' in a vault somewhere.

As a result, I decided to e-mail ScotiaMocatta directly asking the following pertinent question:

"Good morning,

I have a quick question re: the eStore. If I purchase gold (say 1 oz bar), do I actually get the physical gold sent to me or just a certificate of ownership?"

The response I received was the following:

"Thank you for your query.

"...If you purchase a ScotiaGold bar, you receive the gold bar along with an assay certificate.  An assay certificate is provided on all 1 oz gold bars purchased at Scotiabank.

We trust we have handled your inquiry today to your satisfaction.

Thank you for contacting Scotia Mocatta eStore."

At any rate, that solved my concern on whether or not I would be able to receive the actual physical gold. Now it was time to see whether or not I could save some cash on a potential future purchase.

I decided that if I am going to buy some gold in the short-term, I would likely only be able to afford a 1oz gold bar for the time being, so I proceeded to use this for comparing 'apples to apples'.

As per my last post, ScotiaMocatta's 1 oz. gold bars are presently going for about $1,229.76.

Was there an alternative to ScotiaMocatta's e-store? After a search, I came across an article titled, "How To Buy Physical Gold", and this is where I found Kitco.

http://www.kitco.com/: Buying physical gold is an easy process once you find an online gold bullion dealer. Kitco is one of the "most reputable online gold bullion dealers" and is a Canadian company based in Quebec.

Based on spot prices, Kitco's 1 oz. gold bar is presently going for $1,203.90, which seems to offer a savings difference of $25.86 in comparison to ScotiaMocatta. What's more, ScotiaMocatta's site states that "no transaction may be greater than $6000 (before taxes, shipping and administration fees) for any 24 hour period", and their product line in terms of the different types of gold products available, seems to be very limited. For example, I could not find any gold bars for sale on their e-store.

On the other hand, with Kitco, their terms and conditions seem to be quite different. There doesn't appear to be any order limitations other than the fact that orders exceeding $10,000 can only be paid by bank wire. In addition, the customer pays for their gold by means of certified check, cashiers check, postal money order or direct wiring of funds. For orders under $50,000, credit card information also needs to be provided. Unfortunately however, I could not find a 1000g gold bar (roughly $38,000) shipping to countries other than the U.S., so Kitco does have some drawbacks.

At any rate, if you do decide to buy physical gold, the above-mentioned may be a couple of options you may wish to look into. Do you feel it's important to have exposure to gold in your portfolio? Or do you feel precious metals such as gold and silver are simply over priced to even consider buying at the present time?