The easiest way to understand Trusts is by thinking of them as “silver certificates”; as they are sometimes known. Essentially, this type of investment involves a company holding the silver for the investor after purchase. It is possible to buy certificates for silver from financial institutions and even governments. Most retail investors buy from websites such as Bullion Vault.
Silver certificates (silver on account) relate to physical silver in different ways. Essentially the choice boils down to two points:
- Whether you own specific silver or part of an overall fund.
- Whether your silver is simply stored for you, or is used by the silver holding company.
- Allocated Accounts- with these certificates the investor owns specific silver held by the seller. This could be specific coins, bars or rounds. The fees for storage will be passed on to the investor. It is possible for the investor to have the silver physically sent to them.
- Pool Allocated Accounts- similar to the allocated accounts the investor owns a certificate to a certain amount of physical silver. The difference is that the specific silver owned is not specified, and there are many owners of the silver reserves. There will be shared ongoing maintenance fees built in. In addition, if the silver investor wants to take possession of their silver then there is normally a fee to turn the correct amount of silver into a form for delivery, whether it is coins or bars.
- Unallocated Accounts- with unallocated silver accounts there is no maintenance fee, making the silver cheaper. However, the institution holding the silver is free to use the silver for their own purposes. In the event that investors choose to pull their silver out there may not be enough in reserves for all to do so. Although cheaper than allocated silver accounts, unallocated investments are also much riskier. In the event of an economic crisis the holding institution may find themselves in a position where their assets do not cover their investors’ certificates.
Advantages of Trusts
There are lower transaction fees for trust silver purchases than there are for buying physical silver, and one does not have the hassle of storage.
Disadvantages of Trusts
Unallocated certificates could leave one with nothing but the certificate in hand should there be a run on silver. There may also be large minimum investment requirement of $10,000+ for certificates, while retail purchases are accessible to more casual investors.
All in all allocated certificates can provide a solid investment as you do actually own specific metal. You can take delivery of it when you need to, however, in an emergency situation you are not personally holding physical silver.
Unallocated silver is riskier and probably not the best idea when the world is in such an uncertain financial predicament. If you have storage available then actually owning your silver can be far more rewarding, and companies like JM Bullion provide a great platform to buy what you want, and at reasonable prices too.