English translation of Fabrice Drouin Ristori's interview by 24hGold.com.
24hGold : What is, according to you, bringing people to have their gold and silver stored ?
FDR : There are two reasons, actually : the diminishing trust in the banking system and the will to avoid counterparty risk. By owning gold stored outside of the banking system these two risks are taken care of, as long as the chosen storage solution provides certain garantees.
24hGold : Since we’re talking about storage, how many people are actually trying to physically own gold rather than allocated or « paper » gold ?
FDR : What we are seeing now is a movement out of all « paper » investments toward tangible assets, like physical gold. This phenomenon is just starting in France.
24hGold : With owning gold or silver comes the question of storage : what are the solutions ?
FDR : Home storage, of course. But it might get risky with a large investment.
Secondly, storage in a bank safety deposit box. But, with this option, there are risks of not being able to access your gold in case of a bank holiday and of your gold being rehypothecated by the bank (they can sell the physical gold a few times). Also, your physical gold may be added to the bank’s balance sheet.
Thirdly, owning mutual gold outside of the banking system : it lets you share a portion of a bar with other investors.
And, finally, storage outside of the banking system with full ownership of each bar : this is what we offer here at Goldbroker.com.
24hGold : What are the advantages and disadvantages of storage in the banking system ?
FDR : With the present situation in the banking system I don’t see any advantage. The only « advantage » would be the proximity of the vault. The rehypothecation of physical gold and the failure of MF Global have recently shattered the trust in any storage solution within the banking system or in owning gold through a third party.
24hGold : What are the advantages and disadvantages of storage with a private institution ?
FDR : The advantages are :
- No risk of counterparty default.
- Your gold is guaranteed not to be part of any bank’s balance sheet.
- You know your gold is for real, under the condition that you can verify yourself every bar of gold or silver personally.
- Storage outside one’s country of residence has the added advantage of preventing any risk of confiscation from the government.
- Most private precious metals storage facilities are located in Switzerland or in London, and so are only relatively accessible.
- Storage fees are generally higher than in the banking system, because there are costs associated with storing and ensuring physical gold. These fees actually prove that your gold exists and is where it should be.
24hGold : How can one be certain that the gold bought and stored really exists and is readily available ?
FDR : If one is not given the possibility of verifying one’s physical gold personally, the risk of non-existing gold is very real. It is thus imperative to be guaranteed access to one’s gold, to be able to « touch » it and withdraw it rapidly in case of need.
Also, the storage certificates must indicate not only the serial numbers of the bars, but also the name of the client. If your storage certificate only mentions a client’s number, you may not be recognized as the owner and may not access your stock privately.
24hGold : We hear about storage in a free zone... what makes it interesting ?
FDR : The advantage of storage in a free zone, in Switzerland, concerns only physical silver. By not having to pay the VAT when buying physical silver bars, one is free to invest a little more into the metal itself.
We should mention, though, that storage in Switzerland, outside the EU countries, does not exempt from paying taxes when re-selling your investment.
Normally, a French citizen would have two tax options : pay tax when buying or on the realized plus-value. Storage outside the EU countries voids these options.
So, to be clear, storing your investment outside the EU will automatically entail paying a tax on the added value, come selling time.
24hGold : Can one easily re-sell stored gold or silver ? Does one have to find a buyer ?
FDR : As far as we’re concerned here at Goldbroker.com, we provide the « liquidity », either by buying back our clients’ investments, or by re-selling to other clients. We also have the option of selling back to our Swiss providers or partners.
24hGold : Can you be more specific about Goldbroker.com’s solutions ? How is your offer different from the others ?
FDR : Goldbroker.com proposes a unique service for owning physical gold and silver outside of the banking system.
We offer :
- Full name ownership of physical gold and silver. Our storage certificates bear the client’s identity.
- Full ownership of all allocated bars of gold or silver, no mutualized gold, so that our clients may retrieve their investment in case of an emergency.
- Storage outside of the banking system.
- Direct access to the secured vaults without anyone from our company having to be there, thus guaranteeing the absence of any third party between the clients and their gold. Our storage partner, Malca-Amit, based in Zurich, knows the identity of each of our clients; therefore, they know perfectly well what client owns what bar(s) of gold or silver.
- Our offer is unique in that we are the only ones issuing storage certificates in our clients’ full names (which, again, guarantees sole ownership without counterparty risk) giving direct and individual access to the secured vaults without a member of our company being present.
24hGold : Thank you very much, Mr. Drouin Ristori, for taking your time to explain these aspects.
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The information contained in this article is for information purposes only and does not constitute investment advice or a recommendation to buy or sell.