Physical Gold (Via Mat, Perth Mint, Possession) and Paper Gold (Futures, Pool / Some Unallocated Accounts etc)

Our Market Update on Friday led to queries regarding the nature of "paper gold". 

The important difference between actual physical gold and paper gold is something we have addressed frequently since 2003.

Some of our readers sought clarification as to whether Perth Mint Certificates are paper gold. 

By paper gold, we do not mean Perth Mint Certificates. Perth Mint Certificates are fully backed by physical gold, silver, and platinum bullion. 

 

By paper gold we mean gold futures, gold futures options, some gold ETFs, certain forms of unallocated gold ownership, pool accounts, contracts for difference (CFDs), spread betting contracts, gold stocks and or gold options. 

Perth Mint Certificates are unlike many ways of investing or speculating in gold which are not fully backed by physical metal. 

Another distinction is that the gold and silver bullion backing Perth Mint Certificates is not held in the banking system. Rather the Perth Mint Certificate Programme is owned and operated by the Perth Mint of Western Australia which is a AAA rated government mint. 

The Perth Mint is owned by the Government of Western Australia and is run within very strict and ethical guidelines. The Perth Mint does not and would not contravene the law and act in a manner which would embarrass its government owner. Indeed because it is government owned it has to be absolutely scrupulous in adhering to strict business procedures. 

For every ounce of precious metal that is sold to a client, the Perth Mint must buy a corresponding ounce in the marketplace. 

To ensure that this policy is maintained at all times.The Perth Mint is audited rigorously by the Auditor General of Western Australia as well as by external auditors Price Waterhouse Coopers. 

The Perth Mint holds full inventory confirmations on a quarterly basis as well as the comprehensive audits. The Perth Mint Depository programs are not permitted to, and do not, run short positions under any circumstances The Perth Mint does not lease metal out to mining or exploration companies and does not undertake precious metal derivative transactions. 

Conclusion 

GoldCore shares concerns about pool and unallocated accounts where it cannot be established if the operator is backing its liabilities to investors. GoldCore would advise investors to research and question any program or facility they are investing in. 

Via Mat and the Perth Mint Certificate Programme remain two of the world’s safest and securest ways of owning gold and silver offshore. 

 

We are confident that Via Mat and the Perth Mint are two of the safest options when it comes to third party precious metal ownership. 

Some bullion buyers prefer private storage, others public. 

Some bullion buyers prefer storing bullion in Via Mat London or Zurich, others Perth in Australia. 

Due to the significant geopolitical, macroeconomic, monetary and systemic risks of today, GoldCore also strongly advise that it should not be a question of either safe third party ownership or personal possession. Both are important and complementary and both should be considered by all prudent investors and savers. 

 
Gold bars and coins at GoldCore’s London office 

If you are not fully confident and satisfied with any of your current forms of gold ownership, the ultimate holding is outright ownership. 

Further reading on our thoughts regarding physical gold versus paper gold, can be found here: 
A Beginner’s Guide to Gold Investing 
Are Your Precious Metals Held By A Third Party?

Mark OByrne

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