Bob Coleman: Silver Wholesaler Premiums Rising
Tom welcomes Bob Coleman back to the show. Bob encourages investors to shop around for metals and carefully compare prices. Some dealers have been overcharging for premiums and make sure the products you want are in stock and quickly deliverable. There are premium risks for dealers because the supply chain may force premiums higher.
Bob outlines the risks involved with unallocated and pool accounts. You are giving a firm your money, and they use it for various purposes. The problems can arise when people start demanding products or their money returned. Many of these programs are marketed as a convenience with fewer storage fees, but there are risks. If you want your metals, you may not be able to get them. Clients may be unaware that they have signed away any recourse or may only get back their cash.
People need to understand the difference in meanings between allocated and segregated accounts. Companies could be leasing metals or rehypothecating assets to others.
He recommends investors carefully read agreements because many of them are worded in favor of the depository and not the user. Much of the language in these agreements may have immunity clauses, and you can’t readily sue a government mint or other agency.
Digital assets and related programs are of concern, and they often promote the idea of ownership, but when you study the agreements, they are quite different. One Gold for example has two concerning clauses, “OneGold may use any funds received from you for any purpose in its sole discretion.” and “You will not receive an account statement, passbook, or any other type of record evidencing your ownership of Digital Metal.” These types of clauses are of concern as digital assets tend to have more points of possible failure. Buy physical metal and put it away. Eliminate the counterparty risk.
What’s to stop any program from changing terms or fee structures. You don’t have a lot of options with these programs. Most people don’t have the time to examine these contracts and risk factors. The last thing you want is to be the guy stuck on the inside trying to get out.
Time Stamp References:
0:00 – Intro
0:46 – Dealers & Premiums
9:42 – Risks & Issues
11:40 – Synthetic Metal
13:10 – Cash Settlements
14:38 – Counterparty Risk
16:33 – Confiscation Concerns
18:28 – Read The Fine Print
19:42 – Terms of Concern
21:00 – Digital Programs
24:29 – Changing The Rules
27:20 – Kinesis Terms
29:12 – Wrap Up
Talking Points From This Episode
- Dealers and Premiums
- Types of synthetic accounts.
- Questionable user agreements.
Bob Coleman is a Registered Investment Advisor since 1992. In 2001, he founded Profits Plus Capital Management, LLC (RIA) and Dollars and Sense Growth Fund. Recognizing the necessity for physical metal storage, he founded Idaho Armored Vaults and Gold Silver Vault in 2008. They are a distinguished and respected leader in the precious metals industry specializing in storage, transportation, shipping logistics, and security.