However, an investor may opt to arrange with Brinks or another armored car service to pick-up the gold and transfer it to another storage provider who will take and hold London Good Delivery bars. Currently this might cost $2500 per bar which isn't that costly given prevailing value of a bar at around $450,000. Or, if you're feeling strong enough, you can pick bars up yourself and toss them in the trunk of your mini. Um, bring your shotgun.
So what's the big deal about redemption and taking delivery anyway?
Because you can!
This brings peace of mind to those with more extreme views who question the validity of assets backing various ETFs currently so popular. For example the COMEX has recently changed physical delivery previously customary for most commodity contracts. They might issue a certificate for an ETF like GLD in lieu of delivery.Other more extreme views prevail regarding this issue. Many, coin dealers and other vendors ("GOLD...Call Now!"), trash competitive products like current ETFs since they have coins to sell. They play to your fears of a financial Armageddon arguing you'll need to hold the metal in your hand to buy bread. Also, given the financial roller-coaster infecting the global financial system, many fiduciaries are bound to insure clients and members that they have access to the "real deal". Further, the cost of a 400 ounce bar is expensive, precluding delivery for most retail investors and making it an institutional investment. What conditions would need to exist for investors to take delivery? A financial Armageddon where gold prices are soaring not falling. In that case, the cumbersome nature of the redemption process is a small inconvenience. Aside from taking comfort in the integrity of what you own, delivery is the ultimate attraction. Won't all these gold issues affect gold prices? Not necessarily. However, supplies and new gold discoveries are lessening. There remains activity on both sides of the market. Many central banks, and the IMF recently, are selling while others (Russia, China and India) are buying.
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