Is the gold account that you are considering a gold funded savings account? This might be the most important question when you are considering a dealer to help you set up a gold savings account.
What does it really mean though? What should you be aware of when choosing an account? And lastly I will show you how you can open up a FREE gold funded savings account today.
A gold funded savings account means that there is actual physical gold backing up the account. Say for example that you have $1000 in your account. Then there should be physical gold in a vault worth $1000 at that one specific time.
Lets take an example
The above example might have been a little bit confusing but I hope we can clear it up with this example.
Let’s say that today you put in $1300 to your gold account. That means that the people in charge of your account have to go out and buy physical gold for $1300 an put in their vault. At the time of writing $1300 equals to one ounce of gold.
The “tricky” part here is that you do not necessarily have $1300 in your account the next week. What you have is one ounce of gold. So if the gold price has risen to $1400 you now have $1400 disposable in your account.
Next week you want to deposit another $1300 into your account. Well, because the price of one ounce now is $1400 you only get 0.93 ounces for that $1300 dollars. Meaning that now your gold account has 1.93 ounces of gold.
Do you realize how this really has nothing to do with dollars? What you have in your account is physical gold. Then it depends on the price of gold for how much dollars you have in your account.
I hoped this cleared it up a bit. So when someone asks me “how much money do you have in your gold savings account?” I will just respond and say, “I have 5.4 ounces (as an example) of gold”.
Then you have to take the price of the gold at that day to convert it back to dollars. In this example if they asked “well what is that in dollars” I would have said: “one ounce of gold is $1300 so that means that today I have $7020″. Tomorrow it might be $7040 or $7000. It all depends on the price of gold for that day.
It’s like a regular bank savings account but instead of your wealth being in 1’s and 0’s in a computer somewhere and giving you almost 0% rate you now have your wealth in physical gold.
Be aware of companies offering you a gold funded savings account
I have been investing in physical gold for around 10 years now and since the beginning I have been looking for a gold savings account.
The reason why was simple: It costs around $1300 for one ounce and I don’t want to save my money in a bank account until I have enough to go out and buy an ounce. I rather save directly in gold every month.
I feel like I’ve seen a lot of these companies offering your a gold funded savings account and almost all of them have been a scam in my view.
Why are they a scam? You might ask. Well, lets look at how they work and you can see for yourself.
Every month you transfer over some of you digital dollars to a company that says that they have a gold savings account for you. Then they do not buy any physical gold to store in the vaults. They just keep this money on their books.
Once you want physical delivery of your gold they go out and buy it and ship it to you. But for as long as you keep your money in this gold savings account YOU do NOT own any gold.
What is the difference then between these pretentious gold savings accounts and a regular bank account? In fact I would rather have my money in a regular bank account then. Because they are a bigger entity than some of these gold saving account scammers. Meaning that the risk of them failing is smaller.
Because what happens if you have for example 5 ounces of gold in this “savings account” and you want delivery of your gold when the gold price went up 10 times? Say that a big majority of their customers wanted to take delivery of their gold and the gold price is now so high that the company can’t afford to go out to the market and buy all this gold.
The company would have to default on it’s promises and you would be left with no gold (because no gold had been purchase a long the way when you saved).
Or what would happen if there was a shortage of gold in the world because some type of event and now the company can’t get their hands on any gold to ship to you?
There is a lot of things that can happen between you saving in gold and you wanting delivery of your gold. And to just give over your digital dollars to an online company like that is in my mind even more stupid than giving the money to a bank.
How do we want our gold savings accounts to work then?
I have spend a lot of time here telling you about what not to look for. Better question then is: what should you look for? How do we want it to work?
Well, obviously we want the company to take our digital dollars every month and then go out and purchase physical gold for us and put it in a vault.
Some companies will have all of their customers gold stored together in one big “pile”. The reason they do this is because then they can buy for example a 1 kg bar that is cheaper per gram than buying it all in smaller quantities.
This is not too bad but it’s not the way we want our gold funded savings accounts to work. What we want is to have our own little safety deposit box with you name on it. And in it is your gold and nobody else’s. Please leave a comment below if you agree with that or not.
At last I found a company that offered what I wanted, and more.
I have researched and tried a lot of these so called gold backed savings accounts in my 10 years as a gold investor and never really found a company that worked the way I wanted it to work. Either they didn’t store your gold, you couldn’t take delivery of less than $10,000, you had shared storage or something else.
Then I found Karatbars International. It’s a German company founded in 2011 that operates under strict German business laws. Germany have one of the strictest business laws in the world. If you do not run a honest and good company you will not be in business in Germany.
Karatbars have also been recommended by Bund Der Sparer. This might not tell you much but it’s a German watchdog, similar to BBB in America, that lobbies for the German public within finance and investing. This is a huge deal and if you are a German this instantly highlights a legit and honest company that you can safely do business with.
And do you know what the best part about Karatbars is? It is completely FREE! There is no hidden monthly or yearly fee’s. It’s just pure free and you can set one up today within minutes.
In short how it works is that you will transfer over digital dollars every week or every month to Karatbars. Once Karatbars has received your payment (can be done automatically through your credit card) they will purchase physical gold for you.
After that they will send it to a third party high security vault in Germany that they’ve partnered up with. There you will have your own safety deposit box where your physical gold will be stored. This vault gets audited every year by another company to make sure that every deposit box has exactly the right amount of physical gold in it. You can read the report every year.
When you want to take physical delivery of your gold you do so by clicking a button in your back office for your savings account and then Karatbars will send the request to the vault that will go to your specific deposit box and ship all, or part of, your gold.
This way you always have your gold stored and you have no risk from Karatbars because the vault is completely independent from Karatbars.
This for me is how a gold funded savings account should work, don’t you agree? Please leave a comment below if you have any questions and I will gladly answer them. Make sure to read my full review of Karatbars where you will learn everything about this FREE gold funded savings account.