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How Are Gold Certificates Different from Gold Bullion?

I’ve received various questions about gold certificates from our customers lately. So, I thought it would make sense to tell more about them on this blog.

While gold certificates are a cost-efficient and easy way to get exposure to gold, I’d qualify them as paper gold.

In theory, they are backed by physical gold bars. However, they usually entitle you to a specific number of grams or ounces in gold bullion. That means gold coins and bars are not fully allocated to you, despite the underlying gold value of your certificate.

In most cases, you only own a percentage of a 400 oz. gold bar with your gold certificates. This raises all sorts of liquidity issues when you decide to take possession of bullion.

Some companies that issue gold certificates allow you to exchange your interest in larger bars into smaller bullion. However, this option usually comes with a “fabrication fee” that can be as high as 5%.

The advantage of gold certificates is that transaction fees are usually lower. Plus, in most cases, they do not charge storage fees.

How Our SMARTMETALS® Program Is Different

Owning allocated physical gold bullion is a different story.

At the Hard Assets Alliance, you buy and store investment-grade bullion that is fully allocated to you. You choose the kind of bullion you want—whether it’s a 1 oz. Gold Eagle coin or a 400 oz. gold bar. The Hard Assets Alliance buys the metal from a network of the most reputable refiners and stores it for you.

You can take delivery when you wish, but I would not recommend this option in most cases for safety reasons.

Because you buy actual bullion, you pay a premium that covers minting, distribution, operational, and other costs that refiners and dealers incur. It’s usually between 3% and 5% over the spot price for gold bullion (more for small, fractional sovereign coins and less for larger bars).

The good news is that if you buy gold bullion with us, you’ll receive competitive bids based on real-time prices from the largest pool of reputable dealers in the world. That ensures that our pricing is always transparent and very competitive.

Our storage fees are 0.70% or less annually for gold (depending on the amount stored). The fee includes insurance at full replacement (in-kind) and account administration.

At any point, you can either sell your bullion or take delivery of it.

Please note that once the bullion leaves our vaults, the chain of custody is broken. That means you won’t be able to sell it back to our network of dealers. Your bullion will have to be physically examined and inspected before you can sell it. This will limit your selling options.

However, as long as the bullion is with the Hard Assets Alliance, all you need to do is log in and sell it just like you would any shares of stock. Your order is processed instantly, and the funds are deposited to your account within two business days (like with an online brokerage account).

If you want to have your bullion delivered to your address, you can also request this online. We charge a small fee for shipping and insurance (whatever it costs us to deliver bullion with FedEx or Brink’s). You will get your precious metals within days after the order is placed.

Put simply, the main difference between gold certificates and owning fully allocated bullion with the Hard Assets Alliance is that your gold is always ready to be delivered whenever you want or need it.


Another aspect to consider before owning gold certificates or gold bullion is taxes.

A tax attorney or a CPA will advise you better, but the rules applicable to an exchange of gold certificates into bullion are complex. So before you invest, “fabricate,” or exchange your gold certificates, you should get advice from a tax professional so you don’t trigger an unwanted tax event.

I hope this helps you make an investment decision that is best for you.

Olivier Garret

Olivier Garret, CEO
Hard Assets Alliance


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Why I Founded the Hard Assets Alliance

11 years ago, I became the CEO of Casey Research, a leading publisher of investment newsletters. Like me, many of our subscribers where precious metals investors, and we shared the same challenge: How do I safely buy and store precious metals? Read More...