In what I describe as an anti-Black Friday sale, Goldmoney announced on the 29th of November a new $10 per month minimum storage fee.
This goes into effect on 1 January 2020.
Goldmoney (formerly BitGold) already had storage fees, but they were proportional. Now, smaller accounts might not make financial sense anymore.
I’ve determined that Goldmoney doesn’t make sense for me anymore.
Goldmoney Fees are Too Darn High
It is always important to understand the fees a financial services company charges, and Goldmoney has plenty. There is a 0.5% gold buy/sell fee and a $20 wire transfer fee for withdrawals (funding can be free with EFT).
Warren Buffett doesn’t like precious metals. He has several famous quotes regarding why he doesn’t like the shiny stuff. While I wouldn’t be surprised if he actually did own some precious metals, but the way he speaks he acts like he doesn’t own any. I’m not a Buffett fan but I think you can learn from him if you carefully sift what he does from what he says or writes.
Mad Money host Jim Cramer recommends no more than 10% in gold. He recommends owning gold via an ETF unless you have enough money to buy physical in bulk.
I’m not a Jim Cramer fan, but I include him because he is a big-time stock guy and yet he still recommends holding some gold. I think there is reason to believe the ETFs don’t hold the gold they claim to so I don’t like gold bullion ETFs. I also disagree that gold is just an insurance policy. Pure insurance (such as term or homeowners) is not an asset, it’s an expense. I think gold is an asset class in and of itself.
Peter Schiff – SchiffGold and EuroPacific Capital – 5-10%
Peter Schiff recommends 5-10% in physical gold. I was actually surprised by this low number because Schiff talks about gold and silver A LOT. Schiff’s 5-10% allocation to gold and silver does NOT include mining stocks–but that is a different topic.
I would like physical precious metals to be around 10-25% of my liquid, non-retirement portfolio. I don’t have an opinion on the amount of silver relative to gold. I am of the opinion that silver is more undervalued than is gold and as a result has more upside potential.
I think gold and silver are a great way to preserve wealth but they are not a great way to build wealth since they don’t pay a dividend or yield. For many readers that might be obvious but I’m still learning!
I purchased a lot of gold in 2013, on the heals of the all-time highs, so much of my gold and silver holdings are worth less in fiat than I paid for them. So I intend to reduce my gold holdings as a percentage of my portfolio by focusing my savings and investments on other asset classes going forward. By doing this I can reduce my gold and silver holdings as a percentage of my assets without selling any of my gold and silver.
On the flip side, if my portfolio did have less than 5% physical gold I would consider adding to my holdings via gold maples, silver American eagles, and foreign-stored physical gold via a Goldmoney personal account held by a trusted and low cost custodian.
Roy says that this type of point of sale gold backed debit card should be available in 60 days, which would be early October.
Prepaid Debit Card
Goldmoney (formerly BitGold) currently offers a prepaid gold backed debit card. What this means is a person with gold in a Goldmoney personal account could sell all or a portion of his gold, the proceeds from the sale fund the prepaid card (denominated in USD, GBP, or EUR), the card arrives in the mail and then the debit card can be used to buy things just like any other debit card.
The card can be reloaded or auto-loaded by selling additional gold to load the card with dollars (or EUR or GBP).
If price inflation picks up even more this could be an invaluable tool.
Point of Sale Gold Backed Debit Card
What I am even more exited about is a gold backed debit card that sells gold at the point of sale.
The critical difference between a prepaid gold backed debit card and a point of sale gold backed debit card is convenience.
I could get a prepaid card from Goldmoney and then load it right before each purchase by selling just enough gold to cover the purchase.
I could also load it with a set amount of dollars but at that point the card is really just dollars–it’s no longer really gold backed.
For example, if I were to load a prepaid card with $500 and gold goes up 5% I would miss out on those gains. True, it would work in the opposite as well and protect from losses, but I anticipate a rise in the USD price of gold.
If the card is not prepaid Goldmoney does the math for me. When I make a purchase with my point of sale gold backed debit card, my savings remain 100% in gold until the charge comes across and only then is enough gold sold to cover the purchase.
I wouldn’t have to anticipate how many dollars I was going to spend and sell gold to cover it in advance. I could simply make the purchase and the gold would be sold to cover it.
Again, the difference is subtle but in practice I think a point of sale gold backed card provides the maximum convenience and gold exposure.
If you’d like to setup an account where you can save and spend gold, check out Goldmoney.com and get free gold when you setup and fund an account using this link: Goldmoney.com/r/1HWLl0.
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