The Best, Cheapest Way to Own Physical Gold

In a moment, I’m going to tell about a new way I’ve discovered of owning physical gold. For my money, it’s the best and cheapest way of owning physical gold right now.

But before that, I want to tell about a recent online auction I participated in. (Bear with me, it’ll help highlight why the new service is so outstanding.)

The auction in question ended with a whimper, as do most online auctions. The countdown timer simply ceased its countdown, and with that I owned an Austrian 8-florin gold coin from 1887.

Below is that coin—the actual coin I now own.

I’m not a professional coin grader, but I’d say it’s in pretty darn good condition, given that the coin is nearly 125 years old. When you hold it in your hand, it still has the luster of having just come from the Austrian mint—as though Austro-Hungarian Emperor Franz Joseph I is still strolling the grounds of the Imperial Palace.

I do this on the regular: snap up gold and silver coins from all over the world.

I do so because I have a fascination with world coins. I also have little use for an upgraded TV, or a car, or regularly buying new clothes.

Instead, I typically spend my spare cash on assets, such as cryptocurrencies, rare coins, gold and silver bullion, and various types of collectibles that interest me.

The reason I share this particular coin is that I grabbed it at a European auction for €298 or about $361, including the auction house commission. At the time I bought it (earlier this month), the value of the gold content in this coin was just under $350. So, I paid $11 over the spot price, or about 5%.

Frankly, that’s not bad. I was quite pleased with myself.

Just about any coin dealer you go to—brick-and-mortar or online—will price their gold at between 5% and 10% over the current market price for gold. Some are more.

But…it doesn’t have to be that way. Which brings us back to the true topic of this missive.

A few months ago, I opened an account at Britain’s Royal Mint, the government agency that mints and distributes coins in the U.K. I did so specifically because of a unique program I stumbled upon there while looking to buy some Britannia silver bullion coins.

The program is called DigiGold and it might very well be the single best way on the planet to buy and store gold.

In a nutshell, you can buy any fraction of gold at the market price, and the Royal Mint will store the gold for you in its highly secure vaults in the U.K. That doesn’t sound so whiz bang until you work through the details and realize what a bargain this truly is.

Most people aren’t running around buying full kilo bars of gold at a cost of nearly $66,000 right now. Most of us are buying ounces and grams, and that gets expensive because of the upcharges you pay.

Worse, the smaller the amount of gold you buy, the more egregious those markups.

At a very popular online gold dealer I won’t mention by name, a one-ounce gold bar or coin will cost 4.8% to 8.6% over the market price right now. When you step down to a single gram of gold, the premium you pay soars to 29%. That is an egregious, usurious markup.

The reason: fabrication costs. Fabricating 1,000 individual grams of gold is more expensive than fabricating 35 ounces, which is more expensive than fabricating a single kilo of gold.

Now, let’s go back to the Royal Mint…

There, you pay 0.33% to buy gold in any quantity as small as £25 (about $35), and you pay an annual storage fee of 0.5% of your portfolio value, plus VAT tax.

I’ll steal this example directly from the DigiGold website to illustrate my point with numbers. Let’s say you buy £600 ($850) of gold. You will:

• Own 13.04 grams of gold (assuming a gold price of $1,865 per ounce)
• You will pay $2.81 in commission.
• And you will pay about $5.08 in storage fees for the year.

That same quantity of gold (13.04 grams) at a typical dealer would cost you about $1,107, not $850.

Or if $850 is what you have to spend, then you’re only getting 10 grams of gold.

Either way, you’re worse off than if you’d invested through DigiGold. 

The program is set up so that you own an allocated portion of physical kilo bars held in a vault, so you cannot take physical delivery of your gold. Though, to be clear, you do own physical gold, not paper gold.

Moreover, you can connect a DigiGold account directly to your bank account so that you can easily move money into DigiGold to buy, then easily move proceeds from your DigiGold sales back into your bank account.

To be transparent, I have zero financial ties to the Royal Mint. I tell you about this program simply because I buy gold and silver all over the world, and I know what it costs.

This is the most affordable way I’ve found yet to own and store physical gold bullion.

If you want physical gold in your personal possession, well DigiGold is not for you.

But if you just want to own physical bullion and not worry about where to store it securely, yet know that you can access it from anywhere in the world, then a DigiGold account makes a lot of sense.