The best gold for bitcoin merchants
Thursday 11 August 2016
There are an increasing number of businesses that sell precious metals for bitcoin - but are any worth the trouble? (TL;DR: Yes, Bitgild)
This week it transpired that the Bank of England was having some trouble buying bonds for its post-Brexit round of Quantitative Easing. For some reason this made me think about buying gold, and naturally, using bitcoin to do it. I’ve written about a couple of services in the past, including Vaultoro, which allows you to buy and sell vault gold for bitcoin, and Bitstamp, which recently added physical gold to its withdrawal options. But I thought it was worth comparing several different services to see which offered the best deal - and whether any were worth taking. I’m going to look at Bitstamp, Bitgild, Vaultoro, for comparison, and popular UK service Gold.co.uk, which sells gold for fiat, to see whether any of the other bitcoin-charging options are economical.
To ensure a level playing field I’ll be looking at buying 1 oz of fine .999 gold in bar form, including postage. At smaller quantities the spread gets ridiculous, which is one of the criticisms I had with Bitstamp - buy a few grams and you practically pay more for delivery than for the gold itself. (Obviously some spread is normal, but Bitstamp took it to extremes.) You’re always going to pay over spot unless you’re buying a lot, but it shouldn’t be an insane amount if you’re after 1 oz. I’ll include postage to the UK too, but separately because that will differ depending on location. So without further ado:
Current bitcoin price: $596
Current gold spot price: $1,348
Bitgild will sell you an ounce of shiny stuff for $1,417.54 or 2.3781 BTC. Surprisingly, they use the exact spot price for bitcoin - a lot of merchants hit you on the spread for bitcoin purchases, so it’s nice to see these guys are honest about that. You’ll pay 21.95 EUR in postage to the UK (they’re a European service), or $24.58. Total for delivery to your door: $1,442.12.
Stamp will charge you $1438.12 for an ounce gold bar, plus $34.71 in postage. Total $1,472.83. That's $30 more than Bitgild.
Being based in the UK gives these guys a slight headstart on the postage, and being a big retailer means they offer slightly better prices. Only just, though: £1084 for an oz bar = $1412.24 (USD/GBP = 1.3028 right now). Then another £10 for postage, or $13.03. Total: $1,425.27.
Lastly, we’ll take a look at Vaultoro, just for comparison. Right now gold there is 0.0792 BTC/gram = $47.21/g, and there are 31.103g per Troy oz (don’t be tempted to use the avoirdupois ounce unless you’re making a cake; that would be a bad mistake when buying gold). That makes $1,468.37. That’s already significantly worse than Bitstamp, and way over spot. It’s also thinly traded on Vaultoro, which means you’ll bid the price up higher if you try to buy a lot. You can take physical delivery, but only for larger amounts - it's really not intended to be that kind of service.
The bottom line
Bitgild is actually a very nice service and won’t charge you the earth for your gold. You can probably get slightly better prices with a local fiat service, but not by much - especially if you're jumping through the hoops of cashing out bitcoin in the first place. In the past I’ve been tempted to view these services as a bit of a gimmick, aimed at the goldbug/bitcoin-fanatic market. This comparison suggests you won’t lose out on more than a few dollars if you buy for bitcoin, if at all, which makes it a nice way to convert any crypto earnings into physical metals - if that’s your thing.
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