Gold bullion is heavy but it has a low volume. A tonne of bullion can be stored within 14 inches of space. Gold bullion is verified by a process called assaying. It is refined by an accredited bullion refiner, stamped with a serial number, marked "99.5 pure," weighed at 400 Troy ounces, then certified as good delivery bars. As it moves through the system of recognised vaults, the bullion is closely monitored.
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Gold stored in a bank can be allocated or unallocated. Allocated gold does not belong to the bank, so the bank can't use it for profit. It only holds it for you and charges for the service. Therefore, it is immune in case a bank collapses, and it reverts to the owner intact. However, it needs to be insured against theft. Premiums are low, and are often part of the fee paid to the bank for storing the gold. Unallocated gold is stored at no charge, but the bank is allowed to use it for profit. You can receive your gold on demand -- at a fee but if the bank becomes insolvent, you are not guaranteed to get it back. Most banks provide gold accounts which only store unallocated gold, but if you must use a bank, insist on an allocated storage agreement. It costs more, but it is safer.
Anglo Far East Bullion Company
The Anglo Far East Bullion Company (AFE) stores good delivery bars that have been certified by London Bullion Market Association (LBMA). The gold is stored in vaults that are provided by accredited members of LBMA. AFE uses European vault services from ViaMat. In Australasia, vault services come from Brink Incorporated. These two companies have a long history of dealing with transport, security, logistics and storage of gold bars. ViaMat was formed in 1845. It is an international company based in Switzerland, and its services extend worldwide. Brinks Incorporated started in 1859. Lloyds insures all gold handled and stored by the AFE.
This firm allows individuals to buy gold and store it in three separate vaults in London, Zurich and New York. BullionVault is a digital system which started in 2005. It charges an annual storage fee of 0.12 per cent of the value of the gold, but the minimum fee allowed is £2 per month. This fee includes insurance against theft and damage. You can switch your gold between the three vaults at will. BullionVault has a daily count of all bars in all three vaults, and the lists are published online, including nicknames which are only known by the owners of the gold. The daily lists are compiled by ViaMat.
Gold-backed Exchange Traded Funds are securities that allow you to digitally buy gold. They began in Australia in 2003 and are now available worldwide. The gold is stored in various vaults in London, though the vaults are not specified. The system tracks the price of gold and lists of the actual bars are posted online. ETFs charge a 0.4 per cent storage charge per year with no insurance.
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