Get all cash out of the bank

[TheHeathens]

So I decide I want to invest in gold. I can buy gold straight at the price it's offered or I can invest in a fund. If I buy it straight from the dealer, the gold is in my possession.

If it's in a fund it's kept somewhere else.Now let me see: Since the gold is kept by someone else I'd have to pay storage charges. So there goes some of my gold in costs. I've also got to pay someone to manage the gold fund. There goes some more of my gold in management fees. Then there's security. It costs a lot to guard the gold. And what about insurance. You'd have to insure it if it was in someone Else's possession.

The above shows your misunderstanding of mutual funds. Collective investments (funds) lower the costs because you are sharing them with other people. Coincidentally, the BlackRock fund actually invests in shares gold mining companies and not physically in gold itself.

A gold exchange-traded fund (ETF) tracks a gold prices index, but is backed by allocated gold held in a vault on behalf of the investors. It allows people to participate in the gold bullion market without actually taking delivery of the gold.

The price of the shares in the ETF rise and fall in line with the gold price but you can short-sell (in the media at the moment!) to gain from falls in the market. Because it's a tracker fund, it requires very little management and fees are low.

The average fees for a gold ETF are about 0.4% per annum - I dare say that just insuring the gold alone would cost a lot more than that per year as an individual investor. If you bought gold though Bullion vault, it would cost you 0.92% per annum in fees (for them to hold and insure it for you, in addition to their commission) - more than double the price.