Was looking for alternative (safe) places for a modest amount. Bullionvault has been mentioned as a good bet and I have heard good things.. but three things trouble me :-

1. It has only been trading since 2005.
2. When I look at the daily audit at http://www.bullionvault.com/audit.do the are loads of accounts which seem to only have 1 gram with very similar sounding names eg XENON101050, XENON101899, XENON101926 etc etc etc. I know that you can get 1gm free for opening an account so there is an incentive for unscrupulous people to open lots of these starter accounts - which can't be good if there is a loophole.
3. They bank with Lloyds TSB - how safe is that ?

Any reassurance from those of you who are advocates of Gold and use these guys ? or indeed other alternative ways of holding....


Thanks


Deag

I wouldnt.

That is one minor point. You can still go for some gold funds created more than 10 years ago. Do you think the merrill lynch one will be safe in a few months time for instance?
If you are worried for something like that then I would advise you to buy yourself some physical gold.



These are usernames that are automatically generated when someone registers. I do not see what unscrupulous people would benefit from doing that as they cannot withdraw it. You need to validate your account and buy some gold before taking advantage of the 1gr free gold. BV deletes them after a while anyway and use them for newly registered users.



Well, they gotta deal with a bank at the end of the day to make the cash transaction. Once you bought some gold then the bank has nothing to do with your gold pool as the gold is ALLOCATED to you and kept in one of the vaults.

I have a fair amount in BullionVault. I too was concerned about the security/safety aspect and they do have quite a lot of documentation regarding this. The guy who runs it is a former trader I think, so he knows that these issues and things people need to be 100% confident in.

1. This is true. But in itself this does not mean it is unsafe. If you read the documentation carefully, you will note that you purchase and hold real gold. You have title and are the owner. You pay bullionvault commissions on buying/selling and also a modest fee (4 USD/month) to hold your gold in its vault. But if BV goes belly up, your gold is your gold and you have proof of ownership. It is not part of BV assets to form part of any administration proceedings. You own physical gold. The public audit is yet another attempt to be transparent about the gold they're holding for clients (although you can choose names).

Contrast this to a bank. If it goes bust, you have no legal entitlement to your cash other than what the govt provides in the UK (100% up to 2k, 90% of next 33k, nada after that). So this is like having gold coins under your bed, but safer.

2. To open an account is easy, to fund it is also easy by wire transfer. But to withdraw cash you need to validate your account by providing scans of some documents like passport, bank statement etc. However, i wonder whether what these guys are trying to do is get a free gram and sell it to themselves at well below value. This would be tricky to do in practice though, as the BV trading system tends to get you best price. So if you offered 1g for a stupidly low price, it would just go to whoever has the highest offer already on the order board. Alternatively these might be new accounts that are waiting to be assigned to new people signing up, and they already have their 1g. I'm sure BV would clarify if you ask them.

3. When you fund your account, the cash has to be held somewhere when you fund your account, or sell gold. They point out that Lloyds TSB is the only AAA rated bank in the UK. For what ratings are worth... The account is marked as CLIENT ACCOUNT at Lloyds, which means if BV goes belly up, those funds again are client funds and not the property of BV. It's the same way lawyers hold cash for clients (or should do...). So in that respect, it's difficult to imagine what they could do to hold cash any more safely.

I am not exactly sure of the tax situation if you make some profit and then hold it in cash. Presumably you need to declare capital gains, but only at the point of sale. But I get the impression part of having a vault in Switzerland is a tax dodge. Not so important for me because I live in Dubai but I feel safer with funds in switzerland than here in Dubai.

In the end you take a risk with anything but I researched quite a lot when I was planning to get into gold and I cannot see anything much safer all things considered.

I am just a user of BV btw, I don't work for them.

Regards

George

I have had a good look over their site . i cant see it being any more risky than internet banking or share dealing online. The strange names you see are not purchasers names ,but Aliases created for extra security to keep buyers anonymous. There seems to be every security precaution in place. For instance if someone hacks your account and tries to sell your gold, bullionvault will only pay your funds back into the lloyds bank account that it originally came from., which is no use at all to the fraudster.
George im glad to see your happy with the service. Thats one bit of imformation that i didnt seem to find about tax, i noticed no VAT. suppose i better go read a little more. the predictions of $1000 an ounce is what stirred my interest.

I too am now a user of BV.
I like them, they seem pretty safe;
all cash in CLIENT A/C and also gold is allocated;
so BV could go nipples up and the gold is still yours.

The only thing I don't like (and it won't affect you if you don't regularly trade gold)
is that the trading interface for Level2 (i.e. the yellow/green rectancles) is very very slow to update when you submit an order it takes ages for your pile of gold/money to appear on the order board; Similarly to kill an order also takes ages!

Other than that, I'm happy.

I now understand why there seem to be so many clients with similar names XENONXXXX etc, this is the nickname which is assigned by the system (not user selected). So no problem there.

I am left with three worries...
1. That they may be vulnerable to cyber attack / blackmail e.g. via Denial of Service attacks.
2. That they have not yet traded through a significant market downturn e.g significant drop in price. Not sure how the somewhat closed market would cope if sellers vastly outnumbered buyers.
3. The marketing methods e.g. referral commission scheme and free gram seem a bit gimicky. Then again, I suppose that they need to build the business somehow.


Deag

A couple more points:

1. Your gold is also insured.

2. If the market price on BV is significantly below the world market price, you can request delivery. That potential problem has obviously been thought about, and has been discussed on here before.

3. IMO the free gram is a great scheme. It allowed me to try it with no money and no risk.

4. I think there is risk in everything, but after careful research, I decided it was as safe as anything else like a bank. If not safer these days
For that reason, I would suggest spreading your gold purchases into BV, gold money, and physical gold you take possession of.

Steve

Might be dumb question ?

How does the pricing / purchasing work. I see that you can adjust the kg, unit price
etc..

Not dumb at all !

Unlike GoldMoney where you just buy at the current price, with BV you can set the price you want to buy/sell at.
Of course no one may deal with you. IMO it's a little tricky to work out the price to trade at because the BV graph doesn't match the trading price due to spreads.
But it has the advantage that you can set the buy price a little below the current automatic price (the coloured prices you can click on) and hope to get someone to deal in a dip.
I've done that and got little trades over a couple of hours, just catching the dips.

I suggest trying it with a small purchase/sale first to see how it works.
That way you'll spot your mistakes before you do anything big.
Steve

Just a question - are people buying in sterling, euros or dollars here? I have some held in sterling - in retrospect, I should have bought in Euros

IMO if you think of gold as another currency, then buying gold is just like buying Yen.
And all that matters is how gold moves relative to the currency you start with and want to end up with.

For example, if you have Euros, apart from the cost, it makes no difference whether you buy in Euros, or convert to GBP and then buy.
Likewise when you sell.

Has any one had a problem with the bacs form from Bullion Vault? I printed off the form and took it into Lloyds last saturday, on tuesday i had a phone call from them saying they had never seen one of these before and it had been returned to them with a fax from within Lloyds. I thought it was sraight forward, i instruct my bank to pay bullion vault x amount of pounds into their account, what the hell is the problem.

I used the chaps but having said that there was a problem -not from bv but Nat west. Staff just didnt know their own services and products, cost me time and money and ended with red faces. Abbey bank was awful too, incompetent staff contradicting each other, lost letters,non returned calls, crummy excuses. Im resigned to the fact that if it can be f**ked up it will be.
btw BV dont pay interest on stationary money, gave me some ol chat about quarterly discount on commission.