Queries Dealer says buying gold is easy matter

I’ve read how easy it is to buy gold from a bank or trust company such as Guardian Trust. But how do you go about selling it? Is it easy to do? Do you have to pay any fees? J.K., Scarborough, Ont.

According to a Toronto gold trader, buying and selling gold is no more difficult than purchasing groceries at your local supermarket.

Gold is usually bought for cash or a certified cheque at a gold dealer like Deak Perera, Guardian Trust or Friedland & Co. The yellow metal can also be bought at any of the big banks.

However, banks like Scotiabank stamp their own logo on the gold bars which makes it harder to sell at other locations. Gold bought from a trust company carries the mark of a recognized refiner like Johnson Matthey and buyers are advised to make sure the wafer carries the four nines — .9999, showing its purity.

On any given day, there are two prices for gold — a buy price and a sell price. For example at press time the buy price (based on the spot price on the New York Commodities Exchange) was $479(U.S.) per oz compared with a $476 per oz selling price.

Unless the markets are really volatile, there is usually a $3 spread between the two prices.

Dealers like Guardian Trust also charge a fee in the form of a $4.50(U.S.) bar charge. However, the larger the bar, the lower the bar charge. Since it is cheaper to make larger bars, the bar charge on a 10- oz wafer, for example, is $1.75.

“When customers come in to buy gold at one of our branches they are given the gold bar plus an invoice,” said Pam Graham, a trader in Guardian Trust’s International Department. “When they come to sell, the bar charge is not refun ded.”

To avoid the trouble of finding a place to store the gold bar or paying the bar charge, customers can buy a gold certificate (minimum 5 oz) at any dealer.

However, Guardian Trust charges a commission of 1/4 of 1% of the total purchase price plus a minimum $10 annual safe keeping charge.

Since gold is a relatively soft metal and easily damaged, buyers are advised to keep their gold bars in the plastic sleeve. According to Graham, if bars are damaged and have to be sent back to the refinery, there is a minimum $50 assay charge.

When buying and selling gold, it is important to consider the risks involved. While experts seem to agree that the outlook for gold remains positive, the precious metal is subject to market fluctuations and a return on investment is far from guaranteed.

Nevertheless, gold is highly portable and it can be redeemed anywhere around the world.