The following is taken, with permission, from Peter Macfarlane's special "Gold Report" Available only to members of the Q Wealth Report where you can learn to buy and store gold bullion from the masters:
How To Buy Gold At No Premium Using COMEX
Making a gold investment is a great way to protect your wealth and put your assets into a safe haven and ensure your future security. The problem is that when you buy gold, you quite often have to pay for it at a premium. This can pose quite an expense. The following article details one method for buying gold without paying a premium on it at all, a method that- if you are a mid to large investor will save you a huge amount of money:
To buy on the COMEX, the minimum purchase is one hundred ounces. As Big Gold’s editors say, “You can elect to play with the big boys and get your 100-ounce bar on the COMEX, where the bullion banks and giant funds do their trading.”
What is the COMEX? It’s a place where speculators make and trade contracts future delivery. It’s really a money game – 99.9% of those contracts get settled bank-to-bank in fiat money and as such are closed out before the contracted delivery date. Very little physical gold changes hands on the COMEX. But every participant who ‘goes long’ does have the right to pay in full at the end of the contract, and insist on actual physical delivery of the gold.
There have been some questions about whether all the gold traded on the COMEX really exists. I wouldn’t frankly be surprised to find it didn’t all exist. But, while most trades are settled on paper, they are certainly not going to risk rocking the boat by refusing to honour physical delivery on the 0.1% of transactions where it is actually requested.
If you decide to proceed with the idea of buying on the COMEX, you will first need an account with a futures broker. This could be a US futures broker, as referred to in the original Big Gold article.
You might equally choose, however, to trade through any international broker that has access to US futures trading. This is where it gets more interesting from a privacy perspective. Again, one could take a Panama Foundation, open a brokerage account at an offshore brokerage such as Thales Securities, then go ahead and buy the futures contracts through that brokerage account. We talked to Thales and they confirmed that this strategy would work through their offshore brokerage system.
You won’t get the gold immediately, because remember you have to wait for the contract to reach its maturity. The good thing, however, is that you don’t have to pay for it immediately either – you can buy it on margin. The minimum margin required varies and is set at the exchange’s discretion. For a single gold contract, at the moment, it would be about 7% of the contract’s value.
Speculators play the market game that way, with as little up front cash as possible. But if you are not going to watch the trade every day, be careful. As the Casey Researchers warn, “That won’t be a problem if the price of gold rises, since the broker will be crediting a matching amount of cash to your account on a daily basis. But you have to be careful if the price of gold falls, because the broker will then charge your account for a matching amount of money day by day – and to keep the balance from going below the minimum margin requirement, he’ll send you a margin call, insisting that you deposit more cash. If you fail to do so, the broker will enter a sale order for you, and you’ll be out of the market.”
Once your contract matures, it’s time to start thinking about how to take delivery of the physical gold – assuming that is your aim. On the agreed settlement date, your brokerage account will be debited an amount equal to the settlement price multiplied by the exact weight of the particular bar that’s been assigned to you (different bars may have slightly different weights).
What happens then is that the COMEX will hand your broker a warehouse receipt with the details of your specific bar (hallmark, serial number, and weight to one-thousandth of an ounce). The broker can either hold the receipt in your account or hand it over to you. If you take possession, don’t lose it! It is a bearer instrument that cannot be replaced.
Next, of course, you will want to trade that piece of paper in as soon as possible for the real physical gold bar which you wanted from the very start. The bar itself will be in one of four designated COMEX depositories, all of which are either in or close to New York City. If you want to take the bar home, you can either show up at the specified depository and pick it up, or arrange for third-party delivery. There is a fee for handling the withdrawal of the bar – estimated at $150. You might plan to hand-carry your gold, but remember it is pretty heavy stuff so you might want to budget in some costs for secure transport too.
The only other cost you might incur is reassaying of the bar when you wish to sell it (this applies equally, of course, to any physical gold you sell) This is to check you haven’t secretly melted down the bar at home and removed some of the gold content. As part of a prospective buyer’s due diligence, they will likely want a professional certification that it was genuine to begin with and hasn’t been tampered with while in your possession. The COMEX provides a list of approved assayers on its website. The one Big Gold contacted, Ledoux and Co., quoted them $300 per bar for the service.
So that, in short, is how an Offshore Corporation or Foundation can buy physical gold at no premium for delivery in the USA.
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