In today’s economic climate, adding gold and/or silver bullion to your portfolio, often considered a defensive asset, is increasingly considered by investors. Many individual investors are moving funds into precious metals, mirroring the accumulation by central banks—and increasing numbers of Australians are purchasing bullion through their SMSFs.
But with so many options available, how do you choose the right vendor to trust with your silver or gold bullion investment?
We’ve compiled a comprehensive checklist to help you navigate this decision with confidence.
1. Ownership
Does the vendor provide access to physical gold and silver bullion? How is this regulated?
You should look for access to investment-grade gold or silver bullion, structured to reduce reliance on intermediaries and align with applicable regulatory frameworks.
2. Liquidity
How liquid do you need your investment to be? Consider opting for a vendor that allows you to buy or sell your bullion when required. Some vendors will only be open during work hours, or only when international gold markets are open.
Ideally, you should be on the lookout for liquidity, with app-based access to an app facilitated by the vendor. This will enable you to buy, sell, transfer, gift, and spend from your gold holdings through the platform.
3. Storage and security
What do you intend to do with your bullion once you have purchased it? If you want direct possession of the metal, think about the costs of secure storage and insurance. Alternatively, if you want to outsource the vaulting of your gold or silver, evaluate the vendor’s storage and security measures and look for options with secure vaulting facilities at competitive fees.
Remember, reliable insurance for your vaulted gold and silver is key. For example, having your bullion insured by Lloyds of London and vaulted in Brinks Vaults in Australia with comparatively low vaulting fees.
4. Portfolio diversification
Some investors choose to buy and hold bullion, whereas others want more flexibility in portfolio management—approaching silver or gold with a trading mindset.
If you would like to have more control over balancing your portfolio, look for features that allow users to buy one asset with the other, without any funds leaving the app.
5. Utility
Consider the practical utility of your silver or gold bullion investment. Many investors worry that when investing in bullion, they would sacrifice the flexibility of holding cash.
Features to look out for include allowing you as an investor to spend from gold holdings through supported payment features, make payments using gold holdings anywhere that Mastercard is accepted, and be able to pay, remit, or gift silver or gold through an app.
6. Earning power
Unlike many investments, bullion does not return dividends (although the gold has historically been used as a store of value over longer time horizons), so when investing with most vendors, you only earn capital gains.
A referral program which rewards you when you successfully spread the word about the app could be a feature that you might find appealing to build additional value over time.
7. Transaction fees
Investigate the transaction fees charged by the vendor, especially for larger transactions, as small percentages can add up to large fees as they scale.
An ideal limitation for might be a capped buy and sell fee so the more you transact, the cheaper the fees are as a percentage of the value.
8. Purity verification
There have been cases about bars of gold-plated copper sold as solid gold – which is discovered only when the owner tries to sell.
Make sure all gold and silver is tested, audited and certified for purity by reputable third-party organisations, providing transparency and reliability in your investment. This is especially important if you are planning to sell the bullion in the future.
9. Environmental and socially responsible
Sadly, many gold supply chains do not optimise their environmental and social impacts. If this is important to you, check whether the vendor offers LBMA (London Bullion Market Association) gold.
All LBMA gold meets the Responsible Gold Guidance ESG requirements, which is currently the most stringent framework for environmental and social impact in gold and silver supply chains.
10. Investment strategy
Traditional gold and silver vendors require you to purchase a whole bar or coin—in other words, a predetermined amount of metal. There is no flexibility to choose to purchase a fractional amount or to purchase the whole bar over time.
Opt for a vendor that allows investors to purchase (or sell) any amount of metal that they choose with fractional holdings in gold and silver bullion bars. This allows investors to choose to employ a DCA (Dollar Cost Averaging) approach, setting up recurring payments and purchases over time, providing flexibility tailored to their investment needs.
Be diligent with your silver or gold bullion investment
Investing in gold and silver bullion can be a part of a diversified portfolio. By considering factors like counterparty risk, liquidity, storage and security, portfolio diversification, utility of gold, transaction fees, purity verification, and flexibility in investment amounts, you can make a considered decision when choosing the right vendor for your silver or gold bullion investment.
