Someone has asked me if it's "safe" to invest in swiss gold coins vs. the usual krugerrands, maple leafs, etc.
This friend would like to start to save by buying swiss gold coins (the 20 franc gold piece called "vreneli") which to him seem to cost less than the 1 oz. pieces, weight-for-weight. His addt'l argument is that the swiss franc being considered "safe", gold pieces denominated in swiss francs should have some kind of safe haven "aura" to them.

I'm no coin specialist so if there's a gold-coin-bug.... I'd love to hear his/her opinion.

Ciao

Paul

I used to get this as present from my Grand-parents. While it is Gold, and I am sure they are internationally recognised, I always understood that you actually loose money by buying them?!? The value for sale just doesn't compare to the price you bought it for, no?
Unless I have seriously mis-understood this when explained to me.... maybe ask Richard - he usually has good and accurate answers to these questions.

To my knowledge the Vreneli are made of 0.900 Gold which could explain the price difference?

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you friend would be better off buying gold ETF's (Exchange Traded Funds) which offer baskets of precious metal in exchange for cash.

One of the better known is GLD on the NYSE
http://finance.google.com/finance?q=NYSE%3AGLD

ETF's are electronically traded, so can transactions can be carried out online ; Kruger Rand etc, you have to physically hold & transport, I know what I would prefer to have.

The smart way to invest in Gold is to buy ETF, certificates, futures or structured products (e.g. capital protected).

Coins may fulfill an emotional need. Take them out occasionally and gloat. May also be good if you want to pack and run.

But do not run too far because they are pretty heavy... and for this use-case the Swiss Francs notes have proven to be accepted very well internationally...

a bit off-topic, but I would also like to point out that gold bars are your best option for physical commodities (vs. diamonds, platinum, etc.). If you've ever tried to resell a diamond you know what I'm talking about -- the markup is outrageous unless you are a dealer.

Gold has the smallest "spread" between bid and asked (buying and selling) relative to silver, palladium, etc. IIRC there is a denomination of bars that is conveniently weighted so as to be just under the 10K USD limit on carrying monetary instruments.

Not as small as a diamond, but perhaps you could put it in the bottom of your shoe if you are truly paranoid.

The arguments for many looking to purchase physical gold is that they do not trust "paper" / financial built "vaporware". Should the poop hit the fan you can't just pocket your ETFs, as you need an open stock exchange (did you already forget 9/11?) to sell them and they settle T+3.

When people tell me they've purch'd $500k of diamonds in Tel Aviv in order to pack the highest value in the smalles possible space they're telling me that the don't want to have anything to do with finance. They want tangible "stuff" - a safe house in a safe country and a store for value outside the "electronic reach" of banks, govt's, who might be tempted to freeze the assets of a nation with a flick of a switch.

A (bad) sign 'o the times.

Paul

Everyone can choose their risk/reward profile. Those with an apocalyptic view can choose to walk around with diamonds in their shoes (ouch).

Gold coins appear not to be cost effective. If "mobile" gold, then gold bars.

I had a debate similer a few years back when investing. I ended up going with the small gold bars. Put 3 together and they are about the size of chocolate bar. My reasoning was, if **** hits the fan, I can't chip off bits of gold off a huge brick. And I just didn't want coins.

While $500K of diamonds is indeed small, keep in mind that the market is controlled by DeBeers, an institution that may or may not survive in your doomsday scenario.

DeBeers proved themselves adept at maintaining price stability during the last world war, if that makes you feel any better. However, there are several scenarios whereby the price may drop rapidly, from liquidation of their storehold to technological advancement in synthethic diamonds. Bottom line: if you don't trust the government, then I'm not sure trusting DeBeers is that much better.

If you know a diamond dealer and can get Rapaport prices of R-3 or better, I could see where they might make a decent substitute currency. $500K of gold is less portable; you might consider platinum (or palladium) as it has industrial uses beyond the jewelry market.

I had a client with a nice watch collection who needed to carry undeclared money into the United States. After considering diamonds and gold, he ended up buying a somewhat rare $30K Rolex (used) and a new $76K Patek Phillippe in Geneva. Both of these brands have a good resale market and can usually be depended upon to increase in value. You might need to do some fancy talking with the customs inspector, but if you claim you bought the watch in the US and were merely travelling with it on your wrist you should be OK. Just don't make the rookie mistake of keeping the box, receipt, and papers in your luggage!

I agree wholeheartedly. My reply re. diamonds was just to point out that some folks have lost so much trust in the fin'l system, and to a greater degree are so afraid of some kind of widespread collapse that they are willing to buy precious stones (besides handguns, safe homes, physical gold, etc).

The diamond guy and the vreneli guy are two different individuals, the latter being a prospective client of the studio I work for.

The thing with watches is very popular down here w/ italian clients. I suppose that if they are stopped @ the border they can eventually shrug off the customs officer by saying "Hong-Kong clone - isn't it absolutely identical??...For a minuscule fraction of the real price!"

Paul

Do the banks in this country each offer similar rates for gold bars? UBS has the rates online (under UBS quotes, no need to login), I am not sure if others do to. I had the impression Raiffeisen has cheaper rates but I need to confirm this. (The Credit Suisse site about precious metals is down at the moment).

I calculated the spread on a 1Oz Krugerrand and 1Oz kinebar at UBS, it is 5.68% and 2.47% respectively (e.g., =(1003-946)/1003; not sure if this calculation has the right denominator), making the kinebar more economically efficient.

For a large value low spread investment consider buying the 1 kg bar which costs around CHF 30'000. This great if you think of your gold as an investment. The spread is around 2.5%

If you fear Armageddon, then a pocket full of Kruggerands is probably a good bet. Kruggerands are around CHF 1000 each. But beware, the spread is much wider. Probably 6 to 7 %. That makes them a less good investment - until Armageddon arrives.

From what we've seen, prices are practically similar. Raiffeisen seem to be, if anything, a bit more flexible when you want to sell.

I would agree that the bars are somewhat more efficient spread-wise. I also enquired in the vreneli market, and the main issue is the gold tenor of 0.9 vs. 0.9999.

Then again - "value" is only where we agree it is... cow dung-pies, or certain sea-shells, or iris bulbs, or gorgonzola cheese rounds are all basically the same as far as I'm concerned
(I'm kidding of course - just trying to defuse the armageddonitis...)

Paul

Gold is lighter than the same value in CHF20 (or $20) notes and helluva lot less bulky.

Generally I would say the best coin is the one that is well recongised in the country you will eventually live in. In Switzerland it's the Vreneli, in the UK it's the Sovereign, in the US the Gold Eagle etc.
Internationally well known are the Krugerrand and Maple leaf.
ASAIK in Switzerland the Vreneli is lower priced because it is the standard Swiss gold coin. However, if you took it away with you and tried to sell it outside of Switzerland only a coin dealer would know its value which may well reduce its value.
Since I'm here permanently I have Vrenelis and some Sovereigns.
One place to buy gold coins is Ricardo which IMO gives better value than banks. Naturally registered post delivery and for larger quantities insured.
http://www.ricardo.ch/search/search....NavBarSearch=1

I never quite get this kind of argument. If things get so bad that no paper money of any kind is "hard" enough, then you are looking at some kind of Mad Max style apocalypse. In that situation, there are commodities whose value will appreciate much more than gold between now and post-apocolypse. Things that need to be imported from a long way away, things that require a lot of manufacturing effort, things that are really cheap now (due to relative increase in value).

Valued relative to gold, how much does a chain saw and enough petrol to run it for a year cost today? How much will it cost post-apocalypse? How about a cellar-full of canned food? How about a hand saw? How about the cost of learning how to run a European climate subsistence farm against how to train someone how to run a European climate subsistence farm? If you really believe this kind of collapse is likely to happen in your lifetime, these are the investments to be making now, not buying up over-priced gold.

I've taken your advice. When the day of reckoning comes, I'll simply sell what's in my larder and I'll be a millionaire!



Great. That's retirement planning finished. What a load off my mind.

I believe the other good thing about the old Swiss gold coins is they are counted as coins and not bullion .... most likely not important but in time of war Government's have been known to 'Buy' all privately held bars and bullion coins .... not a big bonus I admit but it is another tick in the plus column