Benefits of Investing in Pool Allocated Bullion against Unallocated Bullion. Yahoo News
Benefits of Investing in Pool Allocated Bullion against Unallocated Bullion.
By Jehanzeb Hassan Khan.
Gold is one of those assets that has withstood the tests of time with its unique properties. During these uncertain times, investing in gold is in the limelight again as it is a safe-haven asset with no counterparty risk. Neither is it controlled by a central bank nor a single issuing authority. It is scarce and precious but highly liquid globally also. Despite all the technological advancements, the mining of gold is still a very challenging task with a very high cost with the mining companies digging deeper into the earth and working harder to find new reserves of gold.
Not only is the bullion considered an investment, but it is also used as a raw material in the manufacturing process of almost every sophisticated electronic device. It is also treated as a luxury commodity in the form of Jewelry and ornaments. Gold is also considered a safe haven investment as it helps mitigate currency and inflation risk. This is because gold prices are generally inversely related to the value of the US Dollar. Gold prices increase when the US dollar weakens and vice versa. As a result, during times of inflation when the value of the US dollar diminishes, the price of gold and therefore your investment increases.
Allocated vs. Unallocated Bullion
If you have decided to invest in gold after taking into consideration the pros and the cons, then you are only halfway there as you have some more important decisions to make. The first decision to make is whether you want to invest in the physical asset itself through the Allocated and Pool Allocated storage method or through investment in Unallocated Bullion, which does not always have the backing of gold physically.
You may be wondering why Unallocated Bullion does not always have the backing of physical gold?
This is because, in bookkeeping terms, Unallocated Bullion is a deposit for the institution that is providing the service for securing Unallocated Bullion and hence you are regarded as an unsecured creditor on their books and the deposit is their asset. Since the Unallocated Bullion is a deposit for the financial institution, it can be lent to anybody. In case of a crisis of the Bank/Institution and liquidation, the holders of unallocated bullion will fall under a group of unsecured creditors, who will get reimbursed by proceeds generated after selling of the assets of the financial institution. However, the holders will stand in line behind creditors such as taxes owed to government.
Meanwhile, in the case of Allocated bullion, the gold is your property as a result of a custodial or safe-keeping contract, and the financial institution is required to hold the respective physical amount of gold against your name. Furthermore, the financial institution is not allowed to lend this to anyone and in case of liquidation, the bank is mandated to return the physical gold under your name as you are the rightful owner.
Allocated vs. Pool Allocated Bullion
Moving on, there are some differences between Allocated and Pool Allocated bullion that need to be highlighted. As an owner of Allocated Bullion, you are also required to pay for the fabrication costs for turning the bullion into the final product of your liking like a gold bar with your details mentioned. The Allocated bullion only belongs to you and thus you have to pay a storage cost as well.
On the other hand, in a pool allocated storage method, the gold is held under a segregated pool inside a highly secured vault, and you own a part of the total pool. Normally, the pool comprises uniquely numbered gold bars obtained from a gold refiner that is accredited by a market maker like the London Bullion market association (LBMA) and the physical gold bars are delivered to the highly secured vault operator. One of the key advantages of a pool-allocated storage technique is that you are required to pay a lower fabrication and storage cost as it is shared by other members of the pool as well.
What Happens When You Purchase Pool Allocated Bullion ?
After you have agreed to the Terms and Conditions of the purchase, the institution providing you the service of Pool Allocated Bullion delegates the ownership of the physical amount of Bullion to a highly reputable international audited vault operator. Meanwhile, there is an agreement between the institution and the vault operator which states that at all times the ownership of the Bullion belongs to the person who has acquired the Bullion. Neither the institution nor the vault operator can show these holdings as part of their assets.
Some Bullion Trading platforms such as leading Global Platform www.centralbullion.com enable the owners of the pool-allocated bullion to have complete knowledge of where the physical bullion is stored across the globe and he/she has the option of transferring the investment in a pool-allocated bullion from one country to another based on jurisdiction, legislature, and other factors as per preference. In addition, those users have access to the dashboard 24 hours a day, seven days a week, and 365 days a year, and they can buy or sell pool-allocated bullion anytime. Each transaction is secured on the platform.
How to Ensure Security of Your Pool Allocated Bullion ?
To ensure the security of your Pool Allocated Bullion, the owner is wise to use a leading, trusted global platform such as www.centralbullion.com where there is complete transparency and third-party auditors provide the vaulted Bullion Bar lists and every week, the vault operator provides an updated list to the institution. The list provided by the vault operator is cross verified by the institution's list and an updated list is posted on the completion of every first working day of the following week on the portal. This is a piece of evidence that all the Pool Allocated Bullion is covered by physical Bullion with the vault operator.
Can I Send Pool Allocated Bullion as Gifts or Payments?
The only platform that currently gives owners of the Pool Allocated Bullion the option to send and receive Pool Allocated Bullion as a gift or payment is via the www.centralbullion.com platform. The transaction is executed within a few seconds as opposed to a period of two days in the case of international bank transfer. The transaction speed is even faster than that of cryptocurrency as well. Such a transaction also avoids cross-border conversion costs because you are sending the value of your gift or payment in grams of Precious Metal. Other associated high banking costs are also avoided.
Pool Allocated Bullion can be sent to anyone as a gift and payment. You just require an email address. However, if the receiver does not have an account on the portal, then they are required to register an account to obtain the Pool Allocated Bullion.