Wednesday 14 April 2021

Started my monthly bullion investment

A week after submitting my application to open an online depository account with Perth Mint/Gold Corporation (where I had to provide snapshots of my passport ID page and a statement from the bank account I wanted to link to the account) I received an email requesting additional proof of my residential address (the bank statement goes to my PO Box). I sent in a snapshot of my local council rates notice and the next day it was confirmed that my depository account was now 'live'.

I setup an automatic savings plan that will purchase $99.50 worth of gold each month (there is a $0.50 or 0.5% transaction fee) that will happen on the first business day of each month, based on the spot price at market close. To fund this I've also setup an ongoing $100 per month transfer from my bank account into the depository account. I decided on only $100/mo instead of $250 as I don't have much spare cashflow each month due to my existing savings plans.

This will only add $1,200 pa of gold into my overall asset allocation each year, so it will take a very long time to become a noticeable fraction of my overall asset allocation.

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Unknown said...

Careful with unallocated metal as there has been some issues with various customers of Perth Mint, ABC Bullion and other companies providing a very long time to produce the metal. Lots of discussion about not having sufficient metal. said...

I have enough physical gold and silver from my previous purchases years/decades ago. This time around I'm just looking for a regular investment into precious metals as an asset class at minimum purchase and holding costs. As long as I can sell my unallocated holding at the spot price it serves my purpose, as I don't envisage wanting to pay the costs to convert into an allocated holding and then fabrication into coins, milled bars or whatever.

I'm not convinced that there is any actual shortage of physical gold and silver etc. in the world, possibly just temporary shortages of refined metal at the bar/coin fabricators due to spike in demand for physical properties that seems to be a recent trend. I know that there are conspiracy theories doing the rounds regarding the price of silver being artificially suppressed, but in reality I believe that if there was an actual total supply/demand imbalance the spot price would have been trending up sharply.

Just remember, although gold producers generally are specifically mining for gold, a large fraction (around 75%) of silver production is essentially a by-product of lead mining. So you don't usually get the supply shortages that sometimes happen when, for example, a large gold mine closes down.

I still remember back in 1980 when the Hunt brothers tried to corner the silver market and drove the price up from $11 to $45 per ounce, before they ended up losing everything and the silver bubble burst.

If there was actually a sustained increase in demand for delivery of physical silver and gold, production can be ramped up quite quickly. As far as I know there are plenty of prospective gold and silver mines that currently aren't in production because their costs would exceed current prices. If prices moved up significantly additional production would soon come on stream.