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BNY ConvergEx On PHYS
A variety of not so positive stories about PHYS have recently appeared in various blogs and websites. These have claimed to present a full perspective, yet by providing a unilaterally lopsided view, have done anything but. Another point of contention has been the record premium over NAV recently seen in PHYS - this is another widely misunderstood topic. In order to bring some objectivity to the debate we provide the following research report by BNY ConvergEx, which comes up with some very different conclusions on the ETF than the mainstream bashing of this very valuable investment vehicle.
Getting physical with Gold, GLD and PHYS
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If you buy physical gold at the Perth Mint currently (4.50pm Friday) you get:
Ask $1,213.75 Bid $1,201.25
Plus 2% on purchases and 1% on sales.
You can ask for delivery and that would entail freight/insurance costs and also fabrication costs for the items selected.
So there is cost in having the benefit of physical gold.
What's the fab price?...............what's shown if you Aussie, is cheap, but I am sure the fab price runs it up.
short but sweet. just the facts sir. i bought a maple a few days ago and paid about %7.5 premium. just the cost of going physical. get it while you can.
You bought at the wrong place.
Enlighten us with your sources..........anyone paying under 5% Prem ( for coins) is either a dealer, or an IN.
I mugged a guy coming out the coin shop the other day. He let me steal the coin but I had to pay the 6 percent premium.
TRY:
http://inflation.us/reviews/
The premium is hidden in shipping costs at the internet coin shops. With shipping ampex is about 8 percent over spot.
Buy coins, you pay a premium over bars. The premium of the 5-ounce gold coin in the 1869 market corner was 65% over price fix before the price collapse.
The NAV premium in PHYS may be a good indicator of overvalued bullion markets, should we see a 65% over NAV, for example.
Bid/Ask spreads on coins can be viewed here:
http://bordergold.com/
If you're using gold as a 'store of value', the coins sometimes outperform bullion trinkets because they retain both melt value and the potential to be a highly-sought-after coin in time, like a 'trade silver dollar from 187x MS66' or a 'Gauden 1932 double-eagle $20 dollar MS70 w/Motto' which will be 1-2oz and have low denomination, but be worth hundreds of thousands of dollars.
Also a convenient way to reduce your 'stash' to a manageable size for transport, since selling to an interested US party from your UK or Hungarian castle (how much does moat dredging cost again?) is simple over the internet, though dealing in $150k coins is not to be taken lightly; wealthy folk in movies aren't stereotypically cast as numismatists and art collector's for no reason.
hold gold in your hand. hold a fiat note in the other. why the hit pieces? too many legitimate concerns about GLD methinks. sprott's fund is way more transparent.
Agreed. Let them try to short as they give us more supply and we take it up. This ain't no momo game kids!! It's much bigger.
Hold a $20.00 FRN in one hand & a troy ounce .9999 silver coin in the other ...
I'll keep the coin, thank you.
heres another post on possible comex default by harvey organ.
http://harveyorgan.blogspot.com/
get physical.
Fine link there, Breezer. I only found one area of contention:
Actually, the mint does not buy "raw" gold, it only buys pre-manufactured planchets. And the Mint does not make a "fortune" on the gold coin sales. It's a fixed premium. This is a little simplistic on Mr. Organ's part. He should not comment on areas that he is not fully informed on.
I sure as hell hope he's right about everything else!
If your buying from the MINT, your buying investment grade coins, and paying a HIGHER premium, than regular Bullion.
The Mint does not sell Bullion(regular).
Going rate that I have found is 5-6% over spot +shp/Ins.
Someone got a better deal on physical bullion pls advise.
I live in the DC area - the Gaithersburg Coin Exchange offers $20 over spot on 1 oz gold bars (usually Pamp Suisse or Credit Suisse), which amounts to about a 2% premium. Not bad all things considered. It's cash and carry only though, so no internet buying like @ gainesvillecoins, and you need to be comfortable with walking in with a few $k in cash.
there was another article posted here on zeroh with mr. organ's finger prints on it. it was that CEF had no metal. This article had many flaws that should have been figured out with an hour of work and a few mouse clicks. I no longer trust what mr. organ has to say.
domicile for the physical in Canada is also worth something
10 onz gold bars at $20-25 over spot is silly cheap if you are buying as insurance and plan to hold. Plus, they look really good.
Yeah, it's cheap but, try to sell it..........unless you mean HOLD , and pass down to children/spouse etc.
It will usually have to be be re-assayed, and that's not cheap.
Plus you have a factor of portability, and usability.
http://www.kitcometals.com/charts/copper_historical_large.html
Dr Copper is out of the office this week and will return next Friday.
Look at the 30 and 60 day chart, classic piss of a bridge pattern.
The piss off a bridge pattern is followed by an upward shake, which stalls and falls off. The fall-off is what forms the initial part of this pattern. After the fall-off, the security will basically tradeflat for an extended period of time, albeit less stream.
Could this worsen into a piss-off-the-Dubai-Tower pattern?
http://www.youtube.com/watch?v=8eU5QpFZAfo
Personally, the only reason I would not take physical posession, is when I am legally prohibited.
That is, for qualified assets like an IRA.
For qualified assets, I would consider PHYS over GLD.
To own the GLD, is to propagate the fraud - No Thanks.
If every one who owned the GLD simply replaced 10% of their GLD holding with Physical, the shorts would be destroyed and the price of gold would rise.
Help your self and liquidate your GLD holdings.
This is all such fucking bullshit.
The collapse of GLD, when it comes...and it is most certainly coming...will bring down the entire financial system.
PHYS will continue to be mercilessly attacked because it is the anti-GLD. It actually OWNS GOLD!!
The powers-that-be will defame and degrade PHYS in their blatant attempts to marginalize PHYS and BUY TIME.
It will not work, The house of cards will soon collapse.
If you can't own bullion, own PHYS and nothing else.
PS The Turd DOES NOT own PHYS and is not a paid promoter of PHYS. I'm simply doing my duty by Ezekiel 33:6
Matthew 6:19-24
Lay not up for yourselves treasures upon earth.
Where moth and rust doth corrupt.
Thieves break through.
For, where they treasure is, thy heart will be.
The light of the body is the eye
But if thine eye be evil, thy whole body shall be full of darkness.
If therefore the light that is in thee be darkness, how great is that darkness!
No man can serve two masters:
for either he will hate the one, and love the other;
or else he will hold to the one, and despise the other.
Ye cannot serve God and Mammon.
snowball,
nice,but out of context.
If truth be told, I fight this all the time.
"But if thine eye be evil"...yes, my evil eye ogles about everything that walks, particularly Mandy and Trish at 10:00 every weekday.
Wise words for sure. Thanks for sharing.
PHYS has some of the best features of funds in the gold fund/trust universe. The ability to redeem for physical metal is key to its appeal along with Sprott and its gold holdings being located outside the USA. That’s why I own it.
Another reason investors go for the funds like PHYS is because their money is trapped inside IRAs/401k's. It’s either cash out your retirement account – taking a big hit – in order to buy physical and hold it yourself or invest in one of these funds and accept the counterparty risk, hoping that the outfit you’re dealing with is honest and trustworthy.
The BNY ConvergEX Grp attributes PHYS's Premium over NAV as a market driven phenomena – increased fear about the financial system increases investor demand which increases the Premium which is also supported by the ability to take physical delivery of the metal. That may be the case. It’s as good an explanation as any I have read.
What the BNY guys do not address is the ethics/morals of having a fund with this kind of Premium over NAV built into its design and the fund not having a stated policy/procedure of notifying current investors of a pending Follow-on Offering, knowing full well a Follow-On Offering will hurt all current investors since, necessarily, the unit price will tank immediately after the Offering is announced. This happened after all previous Follow-On Offerings of PHYS Units, most recently the one announced on 25 May 2010, which I commented on in the string beginning here:
http://www.zerohedge.com/article/us-mint-sells-more-gold-coins-may-any-month-january-1999#comment-388033
I contacted Sprott Investments on 26 May about this matter and I am still awaiting a response from them.
I am quite certain you have been following all the stories recently of the transitioning of 401/IRA into a nationalized Goobermint annuity system. Take a 30% hit now or a 100% hit soon JUST to hold some bullion. Throw the dice, baby.
I would really like to know TD's recommendations relative to investing and his advice for riding out the storm. Has he ever detailed his recommendations in a previous article or post? For example is he all in PM's and if so a breakdown thereof. This would be much appreciated.
IMHO, anyone who would pay Sprott, those premiums has more $ than they know what to do with.
Can you buy PHYS, and take possession?....yes, if your wealthy and/or hold $350/$400k in cash in a 400oz bar.
Paying premiums of that magnitude is robbery IMHO..........there's a reason Sprott is a billionaire.
The way it's set up, is exclusionary, unless your very well off.
Another way to look at it is that you are paying a premium for the added confidence that the Gold is really there. There is a difference between owning gold (Phys), and owning a bet that gold will go up (GLD). The idea behind gold is to reduce counterparty risk. There is much more conterparty risk in GLD than PHYS. The 20% premium you are paying to reduce counterparty risk. Certainly physically held metal eliminates the counterparty risk altogether, but many still must decide what to do with IRA's/401Ks.
Few good options for an IRA other than Shorting Europe, Shorting BP, and buying PHYS.
Amen, brother. 100% correct.
If you ever decide to offer up that turd hat on ebay, please notify me. I want a hat like that.
Not to mention, and a very disturbing note that I made several days ago in another post regarding PHYS, if you read the prospectus pages 12-15 or so, they clearly say if you take delivery, not only does it have to be at least 400oz, once they delivery it loses its London Good Delivery status. If the mint where they are holding the gold is robbed, destroyed, etc.. they are not responsible for anything and owes you nothing. If they deilver your gold and it is lost during shipment, the Trust owes you nothing. The entire Trust is not insured(which is a serious red flag to me about PHYS). If Gold comes up missing in the inventory, the Trust is not responsible. Also, if Gold does not go up and sits in a small trading window as it has for a month now, the fees eat up the NAV. These are serious red flags to me.
The good part of PHYS I see, is that if there is enough demand, the Trust could end up putting a serious price squeeze on Gold. If they keep taking enough of it off the street, then it is inevitable. The problem is, no one buying into the fund has any factual/verifiable clue of what is acutally held and what is not. How do you know they are purchasing the gold they claim, and how do you know what you get delivered is not Tungsten laced since the Trust is not responsible.
I urge everyone to read the prospectus before buying PHYS carefully. It seems to me buying physical is the way to go still as of now.
I'm surprised not to hear anyone mention Bullion Vault (http://www.bullionvault.com/)
Investors in Bullion Vault don't hold a security which gives a right to delivery, instead they hold a "bailment".
A bailment, "unlike a security agreement or pawn at a pawnbroker, where the secured party is entitled to the possession and use of the property only on default of payment, a bailor can demand the return of the property at any reasonable time, without prior notice. A common example of bailment is leaving your car with a valet." (http://en.wikipedia.org/wiki/Bailment).
The gold is stored at either Zurich, London or N.Y. The inventory is audited daily.
The latest spread was 1215 / 1223. One can trade 24/7.
BV won the 2009 Queen's award for Innovation ("The awards are made annually by HM The Queen, and are only given for the highest levels of excellence demonstrated in each category. They are judged to a demanding level and winners receive a number of benefits and worldwide recognition. - http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1084953735&furlname=queensawards&furlparam=queensawards&ref=http%3A//www.bullionvault.com/help/testimonials.html&domain=www.businesslink.gov.uk)
Testimonials have come from the FT and Bill Bonner.
I'd be interested in hearing any negative information readers might about BV.
I have no link to BV: not a customer, stockholder, etc. nor a relative thereof.
Basil: Thank you for bringing that to my attention. I will investigate it further but it certainly looks very promising.
Possibly a good gold/silver trading platform, but they have the same restrictions for physical delivery as the ETF's.
From my reading on the BV website your gold is not physically segregated, just a ledger entry, unless possibly you can afford the size ingots they store. Then they might segregate your physical.
Though they let you trade in gold as small as a gram. I guess if your holdings are this small it makes it rather difficult to segregate physical holdings when your holdings are less than whatever sized ingots they store.
If you want to store physical in a vault then places like this might be more suitable, especially those that segregate physical.
https://goldsilvervault.com/
No expert on any of this, have gleaned most of my knowledge from posts on ZH.
But, with all of these things, how do you know you really own it unless you can hold it in your sweaty palms. (Gold Fever Baby!)
I opened an account with BV and tried to fund the account with a billpay check from my bank. (ING.) Got an email from customer service telling me that they couldn't accept a billpay check. I stopped payment on the check but a day later I got an email from someone else at BV telling me that they would accept
my check after all. I just decided the heck with it.
I bought bullion at a bank in luxembourg and was charged 1.5% tax, but that was it. The bank told me that the tax is not appled to purchases over 1 KG
I have some bullion in my septic tank that I will sell shares in. The fund is not yet publicly traded, so it is your chance to get in on the ground floor. The fund will be called Securely Held Institutional Trust, and will eventually trade under the ticker SHIT. Each share represents 1/10 ounce gold. Shares will be sold at bullion metal price with NO PREMIUMS and NO STORAGE FEES. Trust will guarantee you that should you decide to redeem we will give you your fair share of something out of the septic tank. Trust reserves the right to select which material to deliver upon redemptions.
GLD. PHYS.CEF. meh....twfft. Tulving.com
PHYS, like CEF and GTU, are close ended funds vs ETFs. Close ended funds, may trade a premiums or discounts to NAV. Odd how there is limited discussion of this, have advisors and analysts forgotten this simple fact?
Sprott's convertability IMO does add a small amount of incremental premium, in as much as there is a mark-up or premium to be paid to dealers when buying bullion coins, ingots and bars.
The unconvertible nature of the ETFs (GLD, SGOL, IAU) etc., and valid concerns regarding the verasity of the holdings, audits thereof and the inability to audit sub-custodians thereof, etc., plus aspects of the counterparties/trustees related to the trusts make these much less desirable "paper gold" vehicles. Is it any wonder there gold substitutes trade at discounts?
For those that are interested in owning their own physical bullion in qualified accounts (IRA & Roth IRA) you should consider this. It is possible via Sterling Trust. http://www.sterlingtrustcompany.net/plans-and-services/precious-metals.h... Depending on the premium over NAV PHYS, GTU and CEF may trade at, personal tax advantaged account entry points could be advantageously achieved even with the bullion premium on coins or bars, set-up and carry costs (fees) to physically hold in such an account as the PM traditional or Roth IRA, to hold your Golden (wealth) Insurance policy.
A strong point in favor of this, especially for the Roth route, is the tax treatment. If there is the bullion melt-up that is anticipated by Armstrong and others to $5K or $10K, the after tax nature or the Roth, as long as the metals are liquidated (sold back to the dealer) from inside the Roth, the fiat nominal gains out the other side are tax free. Alternately, after the appropriate holding period, delivery could be taken from the Roth, though the tax advantages may/could/would be lost, and "collectible" rates subjected to the metals as commingling may raise IRS issue.
(Personal DD, tax research and number crunching strongly recommended)
Although I need to read the prospectus on SHIT...
It's available 24/7 right next to the secure entrance which allows delivery while sitting down.
Validate no floaters included before accepting delivery of physical.
So far sales of the ETF shares are slow. People are complaining, "but you can't eat SHIT"
Updated DOW charts:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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