Part Two; the Three Pillars of Commodities Investing
The world has become a smaller place and in no small part because of the internet. The internet has improved access to information and services to the individual as never before. But of course it I like a two-edged sword, while it has produced many benefits for society, at the same time it has increased some risks.
Numerous scoundrels have used the ease of creating a website to give their gold-coin or certificate program the appearance of a legitimate business, robbing unwitting savers of their money. As ever, education and diligence are key.
On the positive side, there have been many more honest merchants offering quality service and products. The most ground-breaking of these is the ability for the customer to buy and sell gold at a price they set for the amount they want. In other words, the investor is given flexibility, assisted by technology, to the wholesale markets.
How does an investment advisor know which are the best companies and services available? To this end there are certain criteria that must be met and I call them the three pillars of commodities investing.
The first pillar is transparency, which means that the customer is able to see at all times the value of the product they are buying and the commission and storage fees they would pay. By giving the customer and or their advisors the ability to see the real market price and set their own prices the physical gold market has become a valid investment choice. No longer is it relegated to coins and bars. Because of technology the advisor and his or her customer can always see what their investment is worth in the marketplace at any given time.
The second pillar is liquidity. Many of the gold investment products with the exception of the ETF are not instantly negotiable. Coins and bars need to be shipped and verified before payment and sometimes even before pricing. Certificate programs have the delay needing to ship the paper back to the dealer to receive payment and confirm ownership. But the new model where the service provider holds the gold and offers the ability to buy and sell directly their gold, which is good delivery material for the world's largest physical gold bar market, was the greatest advance in creating the largest most liquid marketplace for physical gold ownership. This turnkey advance was the most important piece of the puzzle in providing a customer the best platform for investing in gold.
The third pillar is security. Security; this is meaning that their gold is fully allocated and insured. Again technology has helped make this another important feature. An advisor must look for full transparency as well in the auditing and reporting process of their customer’s holdings with any of the companies that provide this service. It is important that auditing should be done on a regular basis. In fact the more frequent the better. There is a firm which does daily audits and is ahead of the curve as a service provider.
Finally, a customer’s physical metal or cash holdings should never appear on the service provider’s balance sheet. It is imperative that customer’s assets be protected from any problems real or imaginary that may affect a service provider. In ascertaining that assets are never held on service provider’s balance sheet and are truly segregated an advisor has done the bulk of their responsibility which is to look out for their customer.
As an advisor you want to provide your customer with the best pricing and services available in the marketplace for their investing options. In the physical gold market space there is a website that is well recognized for its independent review of firms that vault gold for customers. This website is www.trustablegold.com
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