The What, Why’s, and How’s of Physical Precious Metals

The What, Why’s, and How’s of Physical Precious Metals


The What

The first and foremost question is what are you investing in? Are you putting capital into physical metal that stands alone and outside the monetary system? This is the primary function of owning precious metals in the first place yet many we speak with seem to misunderstand or interpret this crucial factor!

Restated we might ask do you understand the difference between investing and participating in physical gold and silver. In my view, investing has the following characteristics:

Invest in a known form of physical gold and silver this can be coins or bars and sizes up to deliverable commercial silver and gold as held on the Comex.

If you elect to own metal in individual or commercial form make certain of the following:

Have the precious metal stored in an armored and insured vault.

Have the custodian independent from the financial system.

Provide the investor a choice upon distribution, cash or physical metal.

Offer accessibility to the metal and have prearranged options for delivery if client wants the metal in hand.

On the other hand, participating offers the following characteristics:

Ability to follow the price of the precious metals.

Settlement is normally in cash or currency with little emphasis on actually delivering in smaller deliverable form.

The program is directly tied to the financial or bullion dealer system.

Accessibility to the metal is hindered by the custodian in the form of sub-custodian or bailment relationships. Also, participants have to factor serious tax consequences if the program offers the ability to take physical delivery in jurisdictions where Value Added Tax is an issue.

In other words participation programs buy and store mostly large bars of metal with the focus on cost efficiency and effectiveness for the program itself.

If your preference is participation then understand the risks to your capital.. If your preference is investing then understand the risks of accessibility. Programs may have the best intention but if you can not get to your metal or your metal can not be delivered you may not have it just when you need it the most!

The Why

With the recent chaos in the financial markets one must examine their entire portfolio. Yes, that includes precious metals. For those who are involved in precious metals, what I am referring to is the form in which you are pursuing (gold and silver). Although, many own the physical metal and store it “close to home”, many others use conduits to gain participation in this sector. With all the options in the market place, lack of understanding can breed mistakes. I believe we are entering a period in which these mistakes may become very costly. However, for the investors who are involved in the bullion, the distinctions between the numerous programs are extraordinary and need to be recognized.

Lets first start with the reasons why you believe in gold or silver. The basic premise is to diversify from inflation, systemic risk, or political uncertainty. Ask yourself are my gold or silver investments in bullion attainable and accessible?

Again, the distinction depends whether you are participating or investing in the bullion itself. Review your agreements and documents, ask questions that pertain to you and your portfolio needs(for example understand the difference between fully allocated and fully segregated), and most importantly ask the precious metals program what would happen under extreme circumstances. Understanding your investment and how it operates may avoid unpleasant surprises in the future.

The How

In this dynamic political and economic climate, what sounds reasonable today may not be appropriate in the future. For example, capital and exchange controls could hamper overseas programs and your ability to receive the metal. How do you know for sure that the bullion vault is not leasing out your gold? How fast can companies turn large bars of gold and silver into deliverable ounces?

In other words the program must have already considered issues such as confiscation, changes in economic/political policy, systemic concerns within the central banking system, and geo-political events. The precious metal programs that have built a model that is flexible and adaptable to change will have the ability to overcome these challenges and protect its investors.

Three years ago, I reviewed nearly every gold and silver program in the world. None met my stringent standards and fiduciary concerns. A few of which were:

accessibility and transparency of storage,
clients assets were held in allocated form not fully segregated form, and
communication or delivery between the program or vault and the customer.




Your objective must be to invest in the precious metals not merely participate in price movement.

Therefore I created a set of unique programs for you – the precious metals investor.

The structure, which puts the needs of the investor first, is simple yet very competitive. We offer storage and investment solutions that can be tailored to each individual throughout world. We have taken into account many common concerns of precious metal investors such as viewing one’s holdings, having ideal alternative storage locations, and providing an insured, secured and fully segregated vaulting environment. Understanding the current political and economic environment is only part of the foresight included in our approach.

In summary, part of investing in the bullion markets includes understanding the market environment, eliminating as much risk as possible, and protecting your assets in a prudent manner.

To find more information visit my blog at http://profitsplusecaptial.blogspot.com or send an email to profitsplus@cableone.net We can answer any of your portfolio questions and quickly provide you many ways to purchase your very own gold and silver. We will completely furnish insured, fully segregated, and armored storage for you. At that point you will realize just how profitable and vital ownership of physical gold and silver truly is.



Bob Coleman

http://profitspluscapital.blogspot.com/