Buying, Storing Gold, Silver, Platinum Bullion
FAQs – Frequently Asked Questions
While BMG Group Inc’s (BMG) professionals are always ready to personally answer any questions you may have whenever you contact us, below is a list of responses to Frequently Asked Questions about the advantages of buying and storing gold, silver and platinum with BMG. If you find your questions have not been answered, or you would like more detailed information, please contact us and we will be happy to help!
Click on a specific question to view the answer.
How do I know that BMG purchases pure gold, silver and platinum and that BMG bullion is not filled with other metals like tungsten?
Recently there have been a number of articles on the Internet about tungsten-filled gold bars, as well as rumours that there are more fake and counterfeit coins than real ones. For a complete answer click on Information Bulletin
Why should I buy precious metals through BMG instead of going to the bank?
Banks do not offer retail allocated storage and do not insure bullion held in safety deposit boxes.
The process of buying bullion through BMG is far simpler than buying bullion bars through banks as banks are not equipped for such a service as anyone who has attempted this transaction will know.
Banks will be quite happy to sell you gold certificates, but these are only proxies for true titled bullion ownership and will be redeemed in cash in the event of a financial crisis, which is the time you need your gold most.
Should I be purchasing coins or bullion bars?
That depends on how much bullion you need. Coins are appropriate for small levels of protection, whereas Good Delivery bullion bars are traditionally held to preserve significant amounts of wealth. Precious metals coins are more expensive per ounce than the larger bullion bars. They usually measure one ounce or less in weight and significant premiums over bar charges may be incurred.
BMG BullionBars™ silver “monster boxes” are an excellent complement to large bullion bars as they contain 500 one ounce silver coins. These can be held in allocated storage with BMG or the investor can take delivery. While premiums are higher when demand increases and spot prices rise, premiums also increase.
Should I be purchasing certificates instead of bullion
Bullion certificates are very common today; however, most people don’t realize that the certificate is not actual bullion but a proxy for bullion. All you own is someone else’s promise to pay the value of the bullion to you. This is the basic nature of a certificate. You cannot convert certificates directly into bullion without first paying bar charges or fees, and most certificates allow the issuing bank to pay you the cash value of the bullion certificate instead of issuing actual bullion. Paper certificates defeat the purpose of owning the actual bullion, as there is no guarantee that there will be bullion available when you want it most. If the issuer of the certificate becomes insolvent, holders of certificates will be treated as unsecured creditors no matter how much bullion is held. The bullion will be distributed to all creditors in priority of other claims and not to the certificate holders.
In order for bullion to work as an effective hedge, it must be bullion that is legally transferred to your name and then stored on an allocated insured basis in an LBMA member vault. BMG BullionBars™ offers you direct ownership of fully allocated Good Delivery bullion bars.
Are there risks involved in purchasing bullion?
All investments involve an element of risk, and bullion is no exception. The value of bullion is affected by many economic factors, including the current market price denominated in your currency and the perceived scarcity of the precious metal, the current demand and general market sentiment. Other factors, such as the bullion futures market, can affect the price of physical bullion, sometimes significantly. Because bullion can decrease as well as increase in value, an investment in bullion may not be suitable for everyone. Since all investments, including bullion, can decline in value, you should have a good understanding of the precious metals markets and have adequate cash reserves before considering an investment in physical bullion.
Since gold, silver and platinum are money and everything else is a fiat currency based on debt, measuring the price of precious metals in a fluctuating currency can be misleading. Money should be measured in terms of purchasing power rather than currency. While the US dollar has declined by 90 percent since 1971, gold has maintained its purchasing power for over 3,000 years both in inflationary and deflationary periods.
What are Good Delivery bullion bars?
Good Delivery bullion bars are cast by a small group of metals refiners accredited by the professional bullion dealing communities: the London Bullion Market Association (LBMA); the New York Commodities Exchange (COMEX); and the London Platinum and Palladium Market (LPPM). They are accurately assayed and guaranteed 99.5 percent pure gold or better, 99.9 percent pure silver or better and 99.95 percent pure platinum or better. In the case of gold and platinum, the market trades the bar’s pure metal content, known as fine ounces, so you don’t pay for impurities. Silver’s price includes impurities in the weight of the bar.
From the day they are manufactured, Good Delivery bars are kept in bullion vaults recognized and monitored by the gold-dealing community. The same standard applies for silver and platinum. Whenever the bullion bars are moved, a record is maintained, showing continuous storage through trusted hands. This audit trail, or chain of integrity, guarantees the bar’s authenticity and becomes key to assuring the liquidity of the precious metal. Taking delivery of the bullion and storing it at home, or even storing in a safety deposit box, does not confirm the provenance of the bar. The bar may have to be re-assayed prior to selling it back into the gold-dealing community.
Because the provenance of the bullion is verified when it remains in an LBMA member vault, you can sell your BMG Bullion Bars without the need to re-confirm their purity; this greatly reduces the time required to sell the bullion and reduces the costs related to a sale.
Good Delivery bullion bars tend to be large and can vary in weight within a specified range. Bullion Custodial Services Inc. Good Delivery gold bars usually weigh roughly 400 ounces troy (12.44kg); COMEX Good Delivery gold bars weigh roughly 100 ounces troy. LPPM Good Delivery platinum bars can range from a low of one kilogram (32.151 troy ounces) to a high of six kilograms (192.904 troy ounces).
What size of bullion products can be purchased from BMG?
- Gold in kilogram (31.15 ounces);
- Gold in 100 ounce bar;
- Gold in 400 ounce bars;
- Gold in 10 – 1 ounce Canadian Maple Leaf coins;
- Silver in 1,000 ounce bars;
- Silver in 500 – 1 ounce Canadian Maple Leaf coins; and
- Platinum in 50 ounce bars.
How do I purchase BMG BullionBars™ ?
BMG BullionBars™ are available for purchase through BMG’s Bullion Custodian Services (“BCS”). BCS submits an order on behalf of the client. BCS submits a limit order by price-per-ounce for the metal. BCS then informs the client if their limit order was met and the order was accepted. BMG accepts both US and Canadian funds for all gold, silver and platinum bar and coin purchases.
Are there any sales or Value Added Taxes (VAT) payable when I buy or sell the bullion?
In Canada there are sales no taxes payable on the purchase of bullion. Harmonized Sales Tax (“HST”) of 13 percent does apply to the ongoing storage fee. You may have to pay a sales tax if you take delivery or transport the bullion to a jurisdiction that requires such tax to be paid. You will be responsible for any sales or VAT payable in your jurisdiction. You should consult with your tax advisor for definitive answers in the area of taxes.
Foreign investors who buy silver and platinum bullion through BMG will be VAT exempt, even if it is normally charged on platinum and silver bullion in their country of residence. As long as the bullion remains in BMG’s Canadian vaults, no VAT will be charged.
Few countries charge tax on gold bullion purchases but many charge VAT tax on silver and platinum purchases, so this is an cost-effective way for these investors to buy silver and platinum bullion. If the bullion is sold for a profit then capital gains taxes will be charged in the country of residence, but not in Canada. No withholding tax will apply in Canada.
How can I be assured that my precious metals are really in the vault?
BMG’s bullion is stored on an allocated and insured basis under a Custodial Services Agreement with its LBMA vaults. The BullionDeed Number Confirmation Report, updated monthly, includes details of the refiner, exact weight, purity and serial number for each bullion product. The custodian issues a monthly report to BMG that records bar serial numbers, by crosschecking this unique number and the Bar Serial Number on a particular BullionDeed against the confirmation report. Clients can have absolute certainty with respect to the ownership of their bullion. BMG’s auditors, RSM Canada LLP, review all bullion product lists and annually reconcile the vault holdings.
How can I prove that I own the BMG BullionBars™ I just purchased?
As soon as you have transacted your purchase, you will receive an email reconciliation from Bullion Custodian Services (“BCS”) giving you details of the cost of the bar purchased and the balance (if any) in your BMG account.
Within a week of your purchase, BCS or the custodian will issue a BullionDeed that identifies your specific bullion by weight, purity, refiner and serial number. BMG BullionBars™ each have their own unique deed that serves to prove ownership of your allocated bullion product(s).
Do my BMG BullionBars™ depend on the solvency of Bullion Custodial Services Inc., or the custodian from which I bought the BMG BullionBars™?
Absolutely not! You have clear title to your BMG BullionBars™ as evidenced by your BullionDeed, and you have the unfettered right to take delivery of your bullion at any time.
Would a creditor of BMG or the bank have any hold on my gold, silver or platinum?
No. Your BMG BullionBars™ are your property and are allocated to you only and without any lien. They are not the property of BMG or RBC Investor & Treasury Services (RBCI & TS) as Custodian for the BMG Funds and Brinks as Subcustodian, nor are they vulnerable to creditors of either.
How do I sell my BMG BullionBars™ and what does it cost?
Simply contact BMG’s Bullion Custodian Services (“BCS”) and identify the BMG BullionBars™ you want to sell. Send in the corresponding BullionDeed(s) to Bullion Custodian Services (“BCS”) Inc., signed to indicate sale. Once your bullion has been confirmed, BCS will execute the sale transaction based on your limit price. Because your BMG BullionBars™ are stored within the vault and the chain of integrity is intact, your sale is transacted immediately.
Where do you keep the personal information I send to you?
Before you send in your application, Bullion Custodian Services (“BCS”) signs a mutual confidentiality agreement with you. Your information is kept at our administrative office in Markham, Ontario, Canada. We will not release this information to anyone other than a government agency when required by law. An electronic copy of your documents is made and held encrypted on our secure servers. These servers are physically isolated and cannot be accessed over the Internet. Redundant, encrypted backups are stored offsite in a secure facility. Original hard copies are shredded.
Who has access to my personal information?
Mining Stocks vs. Precious Metals Bullion: Is there a difference?
Asset allocation is one of the most crucial aspects of building a diversified portfolio that not only preserves and grows wealth, but also weathers the twists and turns that ever-changing market conditions can throw at it.
Many investment advisors mistakenly assume that ‘the big three’ (stocks, bonds and cash) are all that is necessary for portfolio diversification. This incorrect (and dangerous) assumption that exposure to precious metals is satisfied through owning mining stocks weakens a portfolio. While mining stocks do have a place, they tend to move in the same general direction as the broader equities market. They are positively correlated. Greater diversification, and proper balancing, requires the inclusion of a negatively correlated asset class. Physical precious metals satisfy this necessity by introducing another asset class that increases the rate of return and decreases the overall volatility of the portfolio.
How do I know that BMG Group Inc. secures socially responsible precious metals?
BMG Group Inc. is an affilate member of The London Bullion Market Association (LBMA) and only purchases ‘Good Delivery’ bars for its programs, ensuring all precious metals are SRI.
The LBMA Good Delivery List is now widely recognized as representing the de facto standard for the quality of gold and silver bars, in large part thanks to the stringent criteria for assaying standards and bar quality that an applicant must satisfy in order to be listed. The assaying capabilities of refiners on the Good Delivery List are periodically checked under the LBMA’s Proactive Monitoring program.
Investors can read the LBMA “Responsible Gold Guidance” investment guidelines.
What is the ‘LBMA’?
The London Bullion Market Association (LBMA) is the international trade association that represents the market for gold and silver bullion, which is centred in London, England but has a global client base, including the majority of the central banks that hold gold, private sector investors, mining companies, producers, refiners and fabricators. The current membership stands at 145 member companies across more than 20 countries around the world.
What is ‘Responsible Gold Guidance'?
The LBMA has set up a Responsible Gold Guidance for Good Delivery Refiners in order to combat systemic or wide-spread abuses of human rights, to avoid contributing to conflict, to comply with high standards of anti-money laundering, and to combat terrorist financing practices. This Guidance formalizes and consolidates existing high standards of due diligence among all LBMA Good Delivery Refiners.
How is gold superior to currencies or other liquid investments from an environmental, social and governance point of view?
Gold is often touted as a poor investment; advisors and the media alike warn investors to avoid it because they think gold is volatile, or because it doesn’t pay dividends. Treating gold as an investment, however, misses the point. Gold is neither a good investment nor a bad investment; gold is money.
Physical gold bullion or physical paper currencies locked in a vault are not invested; they are simply being stored. Since neither is invested, they don’t earn interest or dividends, but equally they don’t have any counterparty risk. The major difference between gold and currencies kept in a vault, however, is that gold’s purchasing power increases over time, while paper currencies’ purchasing power decreases over time.
Gold cannot be devalued by government deficit spending and the corresponding increase in the currency supply that is needed to keep the exponential curve moving. Gold is not subject to devaluation by inflation; it is negatively correlated to inflation. In fact, most banks, (especially central banks), view gold as a currency. This is evidenced by the fact that most large banks trade gold as a currency, not as a commodity.
Why do we still value precious metals?
Gold is money, not a commodity as many investors and advisors incorrectly view it. Gold trades on the currency desks of the major banks and brokerage houses, not the commodity desks. It is a wealth-preserving asset, not a wealth-accumulating asset. We buy and hold gold bullion to preserve wealth. It is important to note that, while we may speculate in gold stocks, exchange-traded funds, futures and options to increase wealth, it is gold bullion ownership that best serves the purpose of wealth preservation.
What is meant by the term ‘honest money’?
Gold is often referred to as ‘honest money.’ For money to be considered honest it must be a store of value and it must provide a firm baseline for measuring the price of goods and services. Gold bullion has both those attributes; fiat currency has neither. Honest money retains its worth by virtue of its intrinsic value. Paper currencies, or digits on a computer screen, have no value in and of themselves. They cannot be used for anything else. The over-printing of bank notes backed only by faith dilutes paper currencies’ worth in a way that can never happen with gold. That is why gold and silver are called honest money.
Money must satisfy several functions. It must be: easily transportable; equally divisible; rare; durable; and a store of value. Gold and silver can never become worthless. Paper currencies come and go, but precious metals remain valuable. Gold, silver and platinum are not created from thin air; they are not dependent on a fractional reserve system; they are not dependent on the solvency of an institution; they cannot be obtained easily; and they are the ultimate extinguisher of debt.
Buying, storing gold, silver, platinum bullion with BMG is the highest level of bullion ownership.