Gold Savings Plan: For Whom Is It Useful?

The idea of having a pot of gold that grows every month is appealing. A gold savings plan makes this possible. You pay a fixed amount regularly, usually monthly, into a kind of gold account. This money is then invested in physical gold.

However, you do not own the gold yourself. A service provider handles the entire process from purchase to storage. With this one concludes a corresponding contract about a proportionate gold ownership.

So it is not a question of classic saving with a fixed interest rate, but of a periodically regular investment in the raw material gold. The price of gold can rise or fall.

Since the gold is stored in vaults, gold savings plans are also called vaulted gold. A delivery is possible in principle, but often associated with extra costs. Therefore, a later sale usually also takes place via this service provider.

There are also gold savings plans for so-called paper gold. Here, savings are not made in gold coins or gold bars, but in gold ETCs or gold ETFs. So, if you are interested to invest in gold savings plan, let the best budgeting app for android handle your financial plan. A budgeting app like MoneyPatrol help you oversee your personal finances.

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Who owns the gold?

Since you do not own the gold, this is an important point that investors need to know in advance.

From a legal point of view, two variants are possible.

Special assets: The gold is the property of the investor and remains so even in the event of the provider’s insolvency. For this purpose, the gold is formally separated from the property of the service provider.

No special fund: The gold is the property of the provider. In the event of bankruptcy, the gold is included in the bankruptcy estate. Creditors have a priority claim, gold savings plan investors are at best compensated proportionately.

Gold savings plan models

Most gold savings plans are essentially based on one of the following three models or a combination of these.

Savings model: You pay a fixed monthly savings rate into an account or have this debited from your bank account. As soon as a sufficient amount is saved, a previously selected gold product is purchased.

Purchase of micro bars: Small and micro gold bars are purchased. This is not recommended, since the premium is disproportionately high in relation to the material value for small weights.

Partial purchase of large gold bars: The premium is cheaper in relation to the material value. Also called fractional ownership.