I wrote a previous post that questioned if Scotiabanks bullion bar charges are fraudulent. There was something about the tone of that article I didn’t like, so I re-write it here:

Scotiabank charges what they call a “bar charge” that is quoted on a per ounce basis. The larger the bar, the less $ per ounce you pay. 400oz gold bars and 1000oz silver bars do not have a bar charge premium applied. I have attached their latest (as of this writing) table of charges here:

gld_bar_charges.jpg

According to Scotia, the reason the bar charge is levied is:

scotia_faq_screenshot.jpg

Market values for gold & silver are quoted on the basis of metal delivered in 400 oz bars and 1,000 oz bars respectively. If delivery is taken in this form then no bar charges apply.

If delivery is required in another denomination then a bar will have to be especially made by a refinery to meet that request. A bar charge is the cost charged by the refinery for manufacturing that bar.

Bar charges are levied on a per-ounce basis with smaller bars costing more per-ounce to make. It is therefore wise when requesting physical delivery of gold to ask for the largest bars available since this will reduce costs.

Scotiabank’s rationale for applying the bar charge is clear. If you take physical delivery of your gold or silver, those bars had to be made by a refiner and those costs are passed along to the consumer.

Now I don’t take issue with Scotia applying a “bar charge”, “administration charge”, or a “just because we can” charge. What I do take issue with is when they charge you on something that isn’t true.

Not all bars sold by Scotia are new. In fact, most of the bars they sell are *NOT* new. They are bars that have been sold to them by other Customers or obtained by other means than “straight from the refiner”. They are reselling second hand bars.

Bottom line?

If you line up at the bullion desk at Scotiabank and want to buy a gold/silver bar, bring a copy of the FAQ page cited above. Ask the CSR for a used bar(s). When they bring you the bar and start writing up the receipt, tell them that the bar charge does not apply, then show them the FAQ sheet. If the bar is not new, don’t pay the bar charge. Stand your ground. No doubt the manager will be summoned. Yeah, I know if you buy a 1 oz. gold bar @ $1000.00 / ounce, it is only 1% of the total, but it is your ten bucks. Besides, isn’t it fun once and a while to stick it to an institution that can legally counterfeit money and loan it to you at interest? Oopps…that is another post.

To paraphrase their quote above:

It is therefore wise when requesting physical delivery of gold to ask for the largest bars available since this will reduce costs.

How about:

It is therefore wise when requesting physical delivery of gold to ask for second hand or used bars as this will eliminate the bar charge.

Let me know what happened.

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