Gold Accumulation Plans
Recently, gold-based savings products have been introduced to meet the investment needs of people internationally who want to hold physical gold in their investment portfolios or wish to diversify their savings.
Gold Accumulation Plans (GAPs) are similar to conventional savings plans in that they are based on the principle of putting aside a fixed sum of money every month. The fixed sum then buys gold every trading day in that month.
The fixed monthly sums can be small, and purchases are not subject to the premium normally charged on small bars or coins. Because small amounts of gold are bought over a long period of time, exposure to short-term variations in price is contained reducing risk for buyers. GAPs offer customers the unique opportunity to start accumulating physical gold using a daily average pricing methodology. This helps eliminate the risk of buying into a speculative bubble. At any time during the contract term (usually a minimum of a year), or when the account is closed, investors can get their gold in the form of bullion bars or coins. Should they choose to sell their gold they can also get cash.
Allocated Accounts
Allocated gold accounts allow an investor to buy gold coins and bars from a bullion brokerage which will transfer or ship the bullion to an individual’s account in a depository or bank. Allocated accounts involve ownership of specific gold and the owner has title to the individual coins or bars.
Due diligence should be done on allocated gold account providers and the history, financial standing, credit rating and security of the provider is of vital importance.
Digital Gold Currency or E-gold
Digital Gold Currency, goldgrammes or e-gold are also increasingly popular. There are no specific financial regulations governing DGC providers, so they operate under self-regulation.
DGC providers are not banks and therefore do not need to comply with bank regulations and there are concerns that there are unscrupulous operators operating in this emerging sector
Gold Bullion in Pensions
Most progressive jurisdictions internationally now allow their citizens to own gold bullion in a pension. The poor performance of equity markets in recent years, the poor performance of investment managers and the high costs of pensions means that returns in many pension funds internationally have been very poor.
Having an allocation to gold in a portfolio has been shown to both reduce the volatility of the entire portfolio and also to enhance returns.
Article courtesy of A comprehensive guide to Investing in Gold by GoldCore
