Safe Gold, Silver, Platinum Bullion Investment in Allocated, Insured Storage
Investors must exercise caution when choosing what type of bullion to own. Obtaining wealth preservation and portfolio protection through the safe-haven attributes of gold, silver and platinum is a smart decision. Safe gold, silver, platinum bullion investment with allocated storage ensures precious metals are in place when needed most.
Unlike BMG’s allocated bullion, many precious metals products are traded as proxies in the form of ETFs, certificates and pooled accounts, and are held in unallocated storage accounts. Unfortunately, purchasers of those products do not actually own any bullion, but rather hold a promise from the issuer to deliver bullion or settle at prevailing future prices.
The Benefits of Allocated Bullion
Allocated bullion may not be lent into the market as part of the custodian’s general pool of metal. Also, allocated bullion is not subject to any third-party claims of the custodian or bank, and does not form part of the custodian’s assets in the event of bankruptcy or insolvency.
Bullion held under an allocated and insured custodial storage arrangement with BMG is neither the property nor the liability of the bank or dealer. Custodial agreements must be in writing, must be executed by both the custodian and the owner and must set out all of the terms of the agreement, including storage fees and insurance, and they must specifically identify each product.
You will be ensured of safe gold, silver, platinum bullion investment.
Beware of Unallocated Bullion Products
It is vitally important to understand that bullion held in unallocated storage forms part of the working capital of the financial institution in the same way as traditional currency bank accounts. However, bullion owners with unallocated storage are not protected by the depositor insurance that covers regular bank accounts. There is no regulatory requirement for these accounts to be fully backed by physical metal and, even if fully backed, the bullion is considered part of the institution’s assets.
In the event of insolvency, those unallocated assets form part of the overall creditors’ pool and are allocated to general creditors in their respective priority.
Often the bank or dealer will hedge their exposure by purchasing futures contracts during rising markets and close out the positions during falling markets. Loans, options, swaps and leases are other mechanisms that can be used to cover these positions.
As a result, those with bullion in unallocated storage take the risk that their bullion may be leased out without their knowledge or consent, or that the implied bullion may not be there at all. Precious metals held in unallocated storage accounts do not entitle the holder to specific products, and the holder only ranks as an unsecured creditor of the dealer or bank in the event of an insolvency or bankruptcy.
Take Comfort with BMG
To learn more about the benefits of allocated bullion and hazards of unallocated bullion products, please read BMG’s article entitled Allocated Bullion Storage: Do You Really Own the Bullion?
Unallocated and Allocated Bullion Storage Comparison Chart
|No regulatory requirement to be fully backed by physical metal. Investors hold a promise of bullion ownership.||Supervised, secure storage arrangements for owners with full legal ownership of specific bullion products.|
|Bullion forms part of the working capital of the financial institution, just as cash accounts do. Holders are not protected by depositor insurance.||Owners have title documentation that identifies each product by refiner, exact weight, finess and serial number.|
|Holders are dependent on the solvency of the institution. In the event of default, metals held by the institution are provided to creditors with first priority.||Products may not be lent to the market as part of custodian’s pool of metal. Products are not subject to third-party claims of the custodian and not part of the custodian’s assets in the event of bankruptcy.|
|Products may be lent to the market as part of custodian’s pool of metal. Products are subject to third-party claims of the custodian and are part of the custodian’s assets in the event of bankruptcy.||Bullion is owned solely by the purchaser. Written agreements executed by custodian and owner set out all terms of agreement, including storage fees and insurance, identifying each product.|
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