The MGS Precious Metals Blog

Manhattan Gold & Silver is an industry leader in precious metal pricing and refining with more than 30 years of experience. During our time in the business, we’ve found the topic of precious metals to be a vast and interesting one. Here on our precious metals blog, we write in-depth posts about the science of precious metal refining, historical and modern uses for precious metals, market news, and much more. Subscribe to our RSS feed to stay current, and discuss the latest posts on our Facebook page.

How ETFs Are Different from Bullion

August 14, 2019 07:00
How ETFs Are Different from Bullion

There are all kinds of investment vehicles for gold, but the two most popular are arguably bullion, and bullion-backed exchange traded funds (ETFs). In this post, we’ll go over the basics of how gold-backed ETFs work – and the differences between owning ETF shares vs owning physical bullion.

An ETF is a type of investment fund that works similarly to stock in public companies. In a gold ETF, shares of the fund are backed by a stockpile of physical bullion, and the fund’s share price directly correlates with gold's market performance. When the price of gold goes up, the value of the ETF's shares does too.

A common misconception is that investing in gold ETFs is just like investing in physical bullion but with extra steps. However, that’s not technically accurate. Most ETFs were never intended to work as a substitute for physical gold ownership. Investors own shares in the fund – the fund and its administrators own the bullion. So, you can’t access the gold your shares represent. A small number of gold ETFs allow investors to take delivery of physical bullion in exchange for shares, but only if the investor meets certain requirements – such as owning a minimum number of shares or paying additional fees. This investment structure also exposes ETFs shares to different risks that don’t apply to direct ownership of physical gold, like custodial fraud, fund mismanagement, or bank system failures.

None of this is to say bullion-backed ETFs are bad – they just work differently than physical bullion. Depending on the investor, gold ETFs can be a low-cost way to invest in the direction of the gold market that’s more convenient to own and acquire than bullion. It all depends on the circumstances and goals of individual investors.

Sovereign vs. Private Bullion

August 7, 2019 07:00
Sovereign vs. Private Bullion

Investors who want to buy gold bullion may be faced with a choice to buy either sovereign or private bullion. Each have their own advantages and disadvantages regarding risk, price, and liquidity that can influence which is the “right” choice for certain types of investors. In this post, we’ll explain the differences between sovereign and private bullion – and why some investors may prefer one over the other.

For bullion products, the terms “sovereign” and “private” refer to the affiliation of the minting authority issuing the bullion. Sovereign bullion is issued by a government, usually via the country’s national mint. Unlike sovereign bullion, private bullion is minted by a private company and not backed by any government.

So in terms of precious metal content and intrinsic value, private and sovereign bullion are the same. However, there are key differences between the two – starting with the purchasing process. Sovereign bullion coins and bars are designated as legal tender that is guaranteed by the issuing government. This assurance improves liquidity, but carries an increased cost in the form of seigniorage fees. Plus, sovereign bullion features limited-run designs and serial numbers that add to the bullion’s collectability, which subsequently adds to its price via demand.

Private bullion does not carry these value-added costs, so it’s almost always cheaper to acquire. Some buyers prefer the security and peace of mind of buying bullion backed by a major government. Other’s – mindful of geopolitical risk and historical precedent (e.g. the Gold Reserve Act of 1934) – actually prefer the opposite.

Ultimately, each investor must decide whether sovereign or private bullion aligns with their investment philosophy and strategy best. Here at MGS, we sell both government-issued coins and private-issued bars from LBMA-verified mints, like Valcambi and PAMP Suisse. For help finding bullion products that match your investing preferences, contact us today!

The Difference between Poured Ingots & Pressed Ingots

July 31, 2019 07:00
The Difference between Poured Ingots & Pressed Ingots

A common question we get in the shop is whether the gold bars we sell are poured or pressed, and if there’s a difference when purchasing one or the other. In this post we’ll explain these processes for making gold bullion and the characteristics of ingots formed by pouring vs by pressing.

The bars we make from all the precious metals we buy are made using the pouring method. You can watch each step in this process on our YouTube channel. To make poured ingots, gold from a variety of sources is mixed together, melted, and refined of impurities before being poured into a mold or cast where it cools into a solid ingot. The process gives every poured bar its own unique surface texture – which is preserved through minimal polishing and post-processing. This “natural” or “raw” looking aesthetic makes poured gold bars appealing to some investors and collectors.

Pressed bars are made from a single source of gold, such as a large poured ingot. The source gold is extruded to a specified thickness, then cut into individual bars that are pressed with a die to emboss the weight, purity, and source. The pressed bars are then polished to a glossy finish before being packaged for sale.

From a manufacturing standpoint, pressing is the less resource intensive process that provides refineries with more control over quality and uniformity. But when making large gold ingots (i.e. greater than 100 oz), pouring is much more efficient. If you compared gold ingots to cookies, then the pouring method is like making one big cookie from scratch and the pressing method is like buying a tube of cookie dough and slicing off the number of cookies you want to make.

You can find examples of poured and pressed gold ingots in our bullion store. All of our variable weight bars are poured ingots and all fixed weight bars are pressed ingots.

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