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Section
How to Buy Gold
with City Gold Bullion
I’m Nathan Gollan, Managing Director at City Gold Bullion.
This guide is for you if you’re considering your first investment in
gold bullion.
We’ll cover all the major issues and if you have any other
questions, you’ll probably find the answers on our website at
www.citygoldbullion.com.au
Or you can always get in touch with me, and my team, at our
offices in Adelaide and Brisbane.
Whether you are in Adelaide, Brisbane or anywhere else in
Australia, our number one aim is to get you your bullion FAST.
City Gold Bullion Office, Adelaide
Yours sincerely
Nathan Gollan
Managing Director, City Gold Bullion
Why are you buying?
The first question to ask yourself if you are thinking about bullion is: WHY?
It could be a number of reasons:
• Your advisor has suggested holding some precious metal
• You are looking for a way to secure wealth in places other than banks
• You want a way to hold money outside the fiat currency system
• You have a Self Managed Super Fund and are looking to add gold to your investments
About Advice
Before we get started, we need to make one thing clear: we’re a trading company. That means, we buy and sell gold bullion
and precious metals. We don’t give financial advice. So please don’t interpret anything in this guide as financial advice.
We strongly advise you get financial advice before you decide to invest in precious metals. And if you’d like us to point you in the
direction of financial advisers who “get” the precious metals markets, just get in touch and we can help you.
It might be worth mentioning - gold bullion has never been a particularly popular recommendation from many financial planners.
The reason? Because gold a) earns no dividends and b) pays no commissions.
So our advice is, be careful to choose an impartial adviser. One who is truly investment neutral and has only your best interests
at heart.
How to Buy Bullion
Now let’s look at how you can buy bullion quickly and easily. Of course, I hope you’ll choose to deal with City Gold Bullion. But if you
choose to go elsewhere, I think you’ll find all of these tips relevant in any case.
There are two ways to buy:
Walk-in: Walk in purchasers do not have an account with City Gold Bullion (or the relevant retailer).
Account sales: Account sales go to people who have been pre-identified and hold an account code.
Walk in sales can remain anonymous to a certain degree. However they must be made at the retail store. ID may be required for
certain purchase times.
Account sales offer the greatest convenience and enable you to order by phone or online. Often, account holders receive preferential
rates and receive special offers.
Online
Online is probably the easiest way to buy gold these days. You can simply track the price of gold (or silver) live on your computer and
make a BUY order when you are happy with the price.
You’ll want to make sure you’re dealing with a reputable provider before you deal online. Security of your information and data is
critical (which is why at City Gold Bullion we use the latest in secure information techniques and offer the highest privacy levels).
By Phone
Many people like to call up their bullion provider, identify themselves, and place a phone order. This is usually only possible when you
have an account open.
In Person
You can come into a retail bullion outlet and buy your gold bullion either as an account buyer or as a Walk-in.
Storage & Insurance
Storage
One of the most important considerations for the new bullion buyer is “where shall I store my bullion?”
“Securely” is the obvious answer. But this could be any one of the following:
• Bank vaults
• Private vaults
• High security safes
Bank vaults are relatively easy to locate. There are a handful of private vaults in Australia. High Security safes are available from good
locksmiths.
Insurance
You are strongly advised to insure your bullion purchases for full replacement value. See your insurer or ask City Gold Bullion if you
need a hand.
Replacement value insurance is very important because if you only insure for a certain amount, you are not protecting your
investment.
Self Managed Superannuation
Self Managed Superannuation Fund (SMSF) holders are welcome to make gold bullion purchases for their fund. It is perfectly legal as
an asset as long as it suits the trust’s declared investment strategy.
About the Price of Gold
There are a few things you need to know to understand the price of gold:
• Spot price
• Trading margins
• Exchange rates
The Spot Price is like the bulk “wholesale” price for gold bullion at a particular moment in time (spot). The spot price is usually priced
in US dollars.
Bullion trading companies like City Gold Bullion operate by matching buyers and sellers. We make a small trading margin on each
sale (called a premium).
Traders use the spot price as the heart of their pricing, and then add or subtract the appropriate premium for sales or buybacks.
Usually, the spot price will be converted to AUD using the prevailing exchange rate. Then the premium is added in order to come up
with the consumer price.
For example:
Spot Price in USD:
In AUD
Premium:
AUD $900
AUD $1000
AUD $10
For a buyer:
For a seller:
AUD $1,100
AUD $990
Exchange Rates
Watch out for exchange rate changes. These can often move in the other direction from the spot price and counteract the impact
of a spot price move. On the other hand, an exchange rate move can also magnify a spot price move (if they both head in the
same direction).
For example:
Price in USD day 1
ER
Price in AUD day 1
$1000
$1100
1
.92
$1000
$1000
Accounts
Holding an account is the easiest way to make sure you can get hold of gold bullion exactly when you need it.
How to Apply
It’s easy to apply for an account. The relevant paperwork is just like a bank account application. You just need 100 points of ID and a
completed account application form.
If you are based outside SA or QLD, or cannot make it into our office, then you can send us an original certified copy of your
identification as well as our account application form. This is a very quick and easy process (a certified copy can be done by your JP,
professional or pharmacist).
GST
Under Australia’s GST legislation, GST is NOT applicable for pure bullion.
This means that you are able to invest in Gold without paying 10% GST to the government. And it means you are able to use physical
Gold as a trading commodity for wealth protection.
Some things to watch out for when it comes to GST:
• Only 99.99% pure gold and platinum are GST free.
• Only 99.9% pure silver is GST free
• Palladium is not GST free
• Coins that are 99.99% pure (gold) or 99.9% pure (silver) are GST free because they are classed as bullion
• Coins that are an alloy (for example, Krugerrand) are NOT GST free.
Types of Bullion
Before you decide what gold bullion to buy, it’s a good idea to be aware of your options.
What is Bullion
Bullion is actually any pure form of precious metal that is formed in a consistent way, so that it is predictably tradable. This means
that pure gold coins are technically bullion.
The most common forms of gold bullion are the 1oz, 2oz, 500g, 1kg.
Cast, Minted or Coin
You can buy either cast or minted bullion.
What’s the difference?
• Cast Bullion is pure metal that is melted and poured (cast) into a mould to form an ingot as the metal cools and solidifies.
• Minted bullion is stamped like a coin from pure metal sheeting.
• Coins are pure metal stamped into coin shapes and often pronounced legal tender (however their face value is usually much less
than their bullion value)
Minted bullion costs a little more than Cast, but most people prefer the shiny, luxurious look of Minted bullion.
Cast bullion is the choice of traders who are more concerned about the underlying price than the appearance of the bullion.
Coins are chosen by people who like to make small investments - and collectors and speculators attracted to a coin’s rarity.
Key Brands
Some of the brands you can trust are:
• ABC Bullion - Australia’s oldest independent bullion brand
• Perth Mint - Owned by the WA government
• Johnson Matthey - A US precious metals refinery
• PAMP Suisse - the worlds largest independent precious metals refinery
• Mitsui - Japanese precious metals
There are others, but you need to be careful when selecting your brand, to be sure it will be accepted when it comes to selling it.
In Conclusion
I hope this short guide has given you some tips for getting started in gold bullion investment. If you want to learn more, pop over to
our website at citygoldbullion.com.au and you’ll find lots more information.
Even better, call us, email me - or pop in - and let me know how we can help you at City Gold Bullion.
We’ll have you up and running FAST.
Please note:
This report is not intended as, and should not be interpreted as, financial advice. All investments can go down as well as up. Your investment needs are unique
to your situation and we advise you receive professional advice before making investments in any commodities.
CITY GOLD BULLION
email: [email protected] website: www.citygoldbullion.com.au
ADELAIDE STORE
20 King William Street
Adelaide SA 5000
tel: +61 8 8223 2444
fax: +61 8 8231 5420
BRISBANE STORE
Level 2, 17-19 Mt. Gravatt-Capalaba Rd.
Upper Mt. Gravatt, QLD 4122
tel: +61 7 3349 7965
fax: +61 7 3420 3764