The 6 Ways to Own Gold and Silver – Precious Metals Certificates

January 18, 2010 9:53 pm Published by
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By John Fisher

One of the inconveniences of owning physical metals is handling and storage.  Some private companies have attempted to alleviate this hassle by providing the storage for the customer.  All the owner has to do is take possession of a paper “certificate” documenting their ownership of the metal.

Although there are many types of certificate programs, the most common involve what are known as “pooled accounts”.  Pooled accounts are just that – the accounts of all certificate holders are pooled together into a single account – much like a mutual fund.  The metals are stored in bulk form, such as 1,000 ounce bars.  No one person owns a specific bar, but is instead entitled to a share or interest in a 1,000 ounce bar.  In some cases the account holder is able to convert their pooled holdings into specific allocated holdings.  They may even be able to take delivery of the physical metal subject to paying fees for the privilege.

Allocated accounts are somewhat less common.  Theoretically, owners own specific bars or coins held in a segregated (allocated) location.  Supposedly this method provides some additional protection.

There are numerous risks in owning gold and silver in pooled or allocated certificate accounts as the actual inventory is an asset of the company that sold the certificates.  Should the organization become embroiled in a lawsuit, fall subject to creditors or declare bankruptcy, the precious metals may be sold to satisfy these claims.  Owners of both allocated and pooled accounts have lost most or all of their holdings when their custodian goes out of business.

Over the years there have been a multitude of companies who have set up certificate programs to offer customers both convenience and lower transaction fees.  History has shown that a significant number of these organizations end up declaring bankruptcy leaving little or no metal available to honor the certificates.

Although there may now be more safeguards than in the past, it is far safer for purchasers to take delivery of the physical metal.  By taking possession you eliminate any counter party risk associated with non-performance by a third party.  If you have personal possession, you don’t have to worry about the integrity or viability of the organization buying and storing your gold and silver.  Hold on to what is yours!

In Part 4 of our 6 part series “The 6 Ways to Own Gold and Silver!” I will examine Buying and Storing your gold and silver in depositories.

Action to take now:  Continue to accumulate cautiously, with a weighting to silver over gold.  If the market declines, add to your position.  If you do not yet have a position, begin by buying silver in the least expensive form.  Accumulate silver on a 2 to 1 ratio to gold.  Call us for details, as we are focused on educating our buyers.

What to buy now:  The best values in silver are US 90% silver coin.  In gold, there are very good values in British Sovereign fractional coins, 1-oz bars and Austrian 100 Corona coins.  Call for pricing.  For a limited time, most gold and silver in quantity are shipped Fed Ex with 1-week or less turn around.