Security of Gold Storage Vault
Security of ownership – bullion is only owned by you
We absolutely guarantee that when you store your gold it will not be lent out or leased to third parties. This is common practice for some banks and custodians that store bullion as the precious metal can be leased to mining companies and jewellers to make up for supply shortfalls.
While it is profitable for them to do so, it adds a further and hidden layer of counterparty risk to the unwitting investor. There are also concerns about the ‘fractional’ nature of gold ownership which could resemble a run on the bank. This occurs when all the depositors attempt to withdraw money and the bank folds because its volume of lending is far in excess of its capital base. Likewise, if all the gold owners asked for their bullion back at the same time, it is not clear that all banks and custodians could honour their obligations.
Who stores the Gold?
We have appointed Network Securities Limited in the Channel Islands as specialists in precious metal storage to provide safe custody for your bullion purchase. They have been established for 35 years and are registered with the regulator. Bullion held in the vault is insured by Lloyds of London. Network Securities is an independent, professional bullion vault operator selected by Guernsey Gold to be the custodian of all bullion products. It is a private, family-owned company specialising in bullion storage situated in the Channel Islands. It offers state-of-the-art security facilities for clients such as International Banks, Trust Companies, Bullion Traders and Private Clients. Network Securities is part of the Network Group which was founded over 35 years ago to serve the Finance Industry and has built a reputation for stability and integrity.
Is Network Securities associated with Guernsey Gold?
No, Network Securities is a distinct and separate company to Guernsey Gold with no ownership association whatsoever. Guernsey Gold solely uses Network Securities vault for the safe storage of bullion and has no fee-sharing arrangements or hidden commissions. No bullion is stored or handled at our registered office.
Why do you offer discounted storage for the first year?
Many on-line bullion dealers simply promote the upside of gold prices and do little to recommend profit-taking or selling. While there are excellent fundamental reasons to be positive on bullion this should not prevent prudent risk management to re-balance exposures or diversify elsewhere. By offering free storage initially then we are more likely to be asked to sell the gold and make a transaction fee later.
It also means that stored gold sold by existing customers can be offered to new customers without having to undergo a ‘round-trip' of costs. These savings can be passed on by way of cheaper prices for both purchases and sales. Another good reason for us to offer storage is that it means we can guarantee the source and quality of bullion as it has not passed out of the 'chain of integrity' of professional dealers and suppliers.
How do I pay for storage and how much will it cost?
At the end of the first discounted year we will send you an invoice for storage for the next 12 months. The fees are based on a sliding scale as per Network Securities' rates. These vary from 1.5% on small bullion holdings down to 0.5% on large scale storage.
Your invoice will be based on the gold price at the beginning of the period. If you sell your bullion before the end of year 2 we will refund the cost of any unused storage time pro rata. Guernsey Gold subsidises the storage facility in year 1 in the expectation of selling it in future on behalf of the customer, in which case there will be no release fees applied.
However, if you wish to cease storage and have bullion delivered or if you personally collect it then there will be a release fee of £50 to do so on top of other delivery costs. If you refuse to pay for storage after year 1 then we will ask you to pay for its return or in cases of lengthy delay we will debit the equivalent value in gold pro rata based on the storage rates above as per the Terms & Conditions.