“When gold speaks, eloquence is without strength”

Erasmus of Rotterdam

Gold is the best known precious metal in the world and it has been used as a safe-haven asset for millennia. It is rare and remains intact over the time as it is difficult to destroy this metal. It does not oxidize easly (we often read in the newspapers of ancient gold coins recovered intact from the seabed even after centuries) and moreover it melts only at very high temperatures.

Since ancient times it has therefore been considered precious and used to preserve personal Wealth, allowing the transfer of value over the time, for instance from generation to generation.

Nowadays, the LBMA (London Bullion Market Association) is the professional organization in charge of establishing the official standards of refining, documentation, transportation and custody of all the ingots traded in the official gold market.

It is precisely the LBMA which decides every day the publication of the gold pricing, ie the official reference price (which is then reported daily by the press and newspapers).

All the Central Banks of the World have reserve of physical gold to guarantee their currency issues and this demonstrates the importance of owning physical bars rather than virtual gold.

It is important to distinguish between:

Allocated gold

The term “allocated gold” means that the clients actually buy physical ingots, regardless of whether they withdraw materially or leave them in storage at some vaults.

The clients acquire the full ownership of the ingots and can dispose of them at any time. Whoever has the clients’ ingots in custody cannot dispose of them (for example to put them on pledge) unless by the clients’ wishes.

Unallocated gold

Also called “virtual gold”, it is generally the one sold by banks to their customers, and it means just buying not-real gold. That is, it is only a credit.

There is no any ingot, but only the bank’s commitment to provide its customers with physical gold at their request and deliver it. It is therefore equivalent to a kind of credit, the gold purchased by the bank is not owned by its customers and therefore the bank can dispose of it at will.

Hence our advice to always focus on the purchase of physical ingots
to be sure that there is actually the property of the gold purchased.

Gold valuation

To evaluate the gold we must consider the fineness, that is the quantity of pure gold inside a gold alloy (indeed, the physical gold on the market is never 100% pure).

To evaluate the quantity of gold inside an alloy (in order to be able to make a precise economic evaluation) it is important to consider the karats, that is the fineness of the alloy that is expressed in gold parts (on a basis of 24 parts ).

Only gold with a minimum fineness of 999.5 (which complies within the “GOOD DELIVERY” standard of the LBMA, the standard of the professional gold market) is considered investment gold.

Only ingots of this type are recommended for Asset Protection, Wealth and Inheritance Tax Planning.

Below is a summary table of the parts of gold in the alloy in relation to the karats.

24 kt (999,900/1000)*

22 kt (916,667/1000)

20 kt (833,333/1000)

18 kt (750,000/1000)**

14 kt (583,333/1000)

1 kt (41,667/1000)

*it means that there are 999.9 grams of gold on 1000 grams
of overall alloys (sometimes it can even be 999.5 grams).

**it is generally the jewelerys’ gold.

The types of gold bars

The gold bars are produced in different weights (generally from 1gr up to about 12.4kg) and are distinguished according to the shape and processing:

to the shape
There are the traditional trapezoidal-shaped ingots and the ingots nicknamed “american ingots”, in the shape of a parallelepiped with rounded corners. Also famous are the ingots nicknamed “english ingots” in the shape of a loaf.

to the processing
The ingots can be simply the result of the casting (CAST) of the liquid gold in a mold. Otherwise, after the casting, they can be finely worked (MINTED).

The gold market