GoldMoney replies

Readers may recall this post of mine on 17 February, in which I reported on the curious phenomenon of 'spikes' in the GoldMoney prices for gold in Pound Sterling (GBP).

Essentially, on days in which there is a big shift in the GBP/USD pair there is usually a corresponding spike (of up to £15/$20) in GoldMoney's gold price after trading closes. No such spike appears on any other website's charts, so it appears to be a phenomenon unique to GoldMoney.

GoldMoney has been in contact with me and this is their explanation, which I think only fair to reproduce here:

Based on the observations specified in your article we have investigated our price feeds of 10th of February, 2012 and detected that there was a glitch in the rates provided to us by our rate providers. The reason has been investigated and addressed. We do not expect this to happen again and we would like to thank you for making us aware of the error.

Further, kindly allow us to comment and clarify the information in your article regarding our and Kitco’s spot prices. The spot price disclosed on our website is sourced from providers that collect rates from various trading desks and we may use different providers than Kitco which is the reason why our and Kitco’s spot prices are not identical, although they can be identical at times. A universal spot price does not exist. If you'd like to learn more about how we calculate our spot price, please follow the link below:

Finally, please allow us to provide you with additional information regarding our delivery options in order to clarify the comment made by KJ on February 17, 2012 7:17 PM: GoldMoney customers can take possession of their physical metals in the form of 100gram and 1kilogram gold bars at any time. The bars will be delivered to their home address. More info on our gold bars can be found at the following link:

Fair play to GoldMoney for admitting to a 'glitch' in the rates provided to them (although this would be cold comfort to someone who had bought gold at £X and then saw it drop by £15 literally in a second: I presume that GoldMoney has no plans to retrospectively reimburse such buyers with the difference...) I also presume that the glitch was not a one-off, as I have personally witnessed this phenomenon on many occasions. But if GoldMoney has now found and fixed the source of the problem, then, like I say, fair play to them.

On the redemption point, it's good that GoldMoney are now offering smaller quantities of gold for delivery. That said, it isn't especially cheap to take advantage of this: it will cost you 4% per 100 g bar just for it to be 'manufactured' (i.e. supposedly melted and recast from a 400 oz bar, although it's hard to believe that they don't have a few 100 g bars lying around...) You will also have to pay the cost of delivery on top of that, and you have of course already paid the 2.74% premium (for Sterling purchases; it's 2.49% for US Dollar purchases) at the time of sale. So buying a 100 g gold bar from GoldMoney would incur a premium north of 8%..! Plus, you can only take advantage of delivery if you're based in one of 20 countries (and I'm not based in any of them, so am forced to miss out on paying over 8% for this privilege...)

As for silver, KJ was bang on. One can only take delivery of a whole pallet - i.e. 30,000 ounces - which is over $1 million worth of metal. Not many takers for that service, I'm sure... Actually, I'm willing to place a 1-oz bet that says not one single individual has ever bought a million dollars of physical silver and taken delivery from GoldMoney by that method.

How about it, GoldMoney? If I'm wrong, I'll send my ounce fiat equivalent* to the Jersey branch of the RSPCA (the Jersey SPCA Animals' Shelter, just down the road from GoldMoney's registered address). But if I'm right, how about you do the same, Mr Turk..? ;-)

Regardless, sincerely many thanks to the jolly nice chap at GoldMoney for getting in touch, and for taking the time to address readers' comments as well as the article itself.

[* Seeing as I can't use GoldMoney to make payments in gold or silver any more...]

[UPDATE: alas, since posting this article, the spikes have continued. See the next episode of this saga here.]


KJ said...

If my memory serves me correct, I obtained the min redemption amounts straight from goldmoney. Any case, looks like I was looking at outdated info.

On the smartphone so I'll try to ascertain later when the change took place.

lords said...

Having tried both, I find BullionVault to be much cheaper, more transparent than GoldMoney. I somehow feel BV is a more trustworthy company (nebulous, I know)

Jeanne d'Arc said...

@KJ - Yes, I think you're right. I'm sure it used to be the case that one could only take delivery of a 400 oz bar; this was then supplemented with the option of 1 kg bars (with a hefty premium to do so). The 100 oz bars came in recently, following a forced closure of accounts due to financial regulations somewhere or other (I want to say the Netherlands, but that's probably wrong). They gave their customers the choice of getting their money back in cash, or in 100 g bars if desired.

@Lords. A fine cricket ground. Anyway, I think the general argument against Bullion Vault is that one can only sell to the small pool of buyers within Bullion Vault. So during crashes, for example, one can only sell at prices way above spot. So maybe it's good for keep and hold, but it's lousy for getting into and out of the market at will.

lords said...

I'm a keeper.
And a holder.

Are there other good arguments against BullionVault you know of?

Jeanne d'Arc said...

I'm only being Devil's Advocate here, but the lovers of 'phyzz' would say that neither GoldMoney nor BullionVault let you have the physical metal in your hands. So in the event of a collapse in those companies, you get nothing.

Jeanne d'Arc said...

Erratum: In my comment at 4:00 PM, I obviously meant to say, "...during crashes, one can only BUY at prices way above spot..." Otherwise it'd be a splendid deal... ;-)

Bron said...

While BV markets itself as a peer-to-peer trading platform, they themselves also trade on the platform, making a market, so the prices on their system should stay in alignment with the spot price.

Not too much different from GM or Perth Mint which are also "closed systems" - you rely on the provider to make the market. Only difference with BV is it has the extra ability to allow you to trade directly with others.

Jeanne d'Arc said...

@Bron - indeed. But although I've never used BV, I've had reports from others that the prices on their system are often far from in alignment with the spot price.

It'd be interesting to know if Screwtape readers have had such an experience.