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What if you
thought you were saving gold, only to learn too late in this gold bull
market, that you were merely saving counter-party risks with a bank?
If you have
a passbook gold account, also known as paper gold, it is highly likely a risk
filled exposure to the spot gold price is all you own.
Over the
last few years, we have had the opportunity to speak to a myriad of gold
investors in Asia, particularly when establishing our segregated gold vault
options in Hong Kong and our
upcoming Singapore location.
When
speaking about gold investments with Asian investors, one has to always
clarify the specific type of gold investment vehicle in question.
Throughout
Asia, although gold investing is seemingly prevalent and a culturally
accepted phenomenon, one must always ask the direct question...
Do you own paper gold
OR physical gold ?!
You see in
Asia, many large banks offer what are popularly referred to as paper gold
accounts or passbook gold accounts.
Unlike outright
physical gold bullion ownership, paper gold accounts and passbook gold
accounts are anything but bullion.
 
What is "Paper Gold"?
The term paper
gold means you have a piece of paper acting as a substitute for physical
gold.
With paper
gold, you don't own gold; in most cases you don't even own a promise to
receive physical gold.
In plain english, it means you are a creditor of the party issuing
the paper gold certificate or account, and thus subject to a myriad of
counter-party risks and potential bankruptcy.
Examples of
paper gold are gold certificates issued by banks and mints, passbook
gold accounts, pool accounts, futures accounts and many of the well known ETFs or exchange-traded funds.
Although
paper gold accounts may give you short term price exposure to the gold spot
price, if paper gold demand dries, it will become worthless since many of
these vehicles give investors no right or abliity
to redeem gold metal or bullion.
Unlike
passbook gold or paper gold, physical gold bullion in hand cannot go bankrupt
and has no dependency on any other entity(s) fullfilling
promises made.
Asian banks offering Paper Gold or
Passbook Gold Accounts
In this
article, we will concentrate on the true shortcomings of paper gold and
passbook gold, specifically citing eight examples within the Asian banking
system.
Below, we explicitally cite content linking directly from
Asian bank websites illustrating potential paper gold
scams and potential passbook gold scams which Asian gold investors should be
extremely wary of.
1. Hang Seng
Bank - Paper Gold Account
Risk Disclosure Statement
- Credit risk of the Bank. Trading in paper
gold through the Accounts is subject to credit risk of the Bank. There is no
assurance of protection against a default by the Bank in respect of its
payment obligations. In case of insolvency of the Bank, investors may lose
their entire investment.
- Not protected deposits. Your
investment under the Accounts is not principal protected. The Accounts are
not protected deposits and are not protected by the Deposit Protection Scheme
in Hong Kong. Repayment under the Accounts is not guaranteed by the Hong Kong
SAR Government's Exchange Fund.
Goldsilver.com
only offers fully insured segregated gold vault options.
Customer's
segregated gold bullion holdings are never held on the books of
GoldSilver.com and are an asset solely for the beneficiary(s) of the
sub-account.
If
GoldSilver.com were to ever go out of business, customer's gold sub-account
holdings would remain unaffected.
2. Shanghai Commercial Bank - Paper Gold
What are the Major Features of Paper Gold?
- No physical gold delivery is involved in
all purchases and sales, so no security, insurance or storage problems.
Risk Disclosure Statement
- Paper Gold is not the same as nor should it be treated as a
substitute for normal deposits or physical gold.
- Paper Gold is not principal protected and is not protected by the
Deposit Protection Scheme in Hong Kong.
- Investing in Paper Gold is subject to the credit risk / insolvency
risk of the Bank. Upon insolvency of the Bank, you may lose your entire
investment amount and will become an unsecured creditor of the Bank
regardless of the performance of the Reference Asset.
- Paper Gold does not involve delivery of physical gold. You have no
right to obtain physical gold. The balance of your Paper Gold maintained at
the account is not representing that you have any right, ownership and
possession of physical gold.
GoldSilver.com
only offers physical gold bullion and physical silver bullion, no paper.
All
segregated sub-account gold holdings have rightful ownership and possession
of physical gold, including the right to demand and take physical delivery.
3. HSBC - Gold
Passbook
A10: How do I invest in precious metals?
Precious metals have been a source of investment for hundreds of years.
Gold is the most widely used precious metal investment in many countries, but
it is also possible to deal in silver and platinum, and even copper and tin.
Because of the popularity of gold, there are many ways to invest in
it:
- Physical
gold. You purchase actual pieces of gold, which can take the form of coins, taels, bars or jewelry.
- Paper gold.
To minimize the risk of keeping physical gold, you can instead buy and sell
gold in the form of certificates. These certificates will carry your name, so
only you can sell them.
- Gold passbook
account. This is where you save gold as if it were money. Instead of
earning interest, you gain a return when the price of gold rises.
Different
from most commercial banks, we fully understand that gold is true money.
Gold
bullion is very different than any paper machinations banks or governments
have ever invented. Unlike their always dying fiat currencies, gold is
money for it holds its value over the longterm ( thousand upon thousands of
years ).
4. UOB Singapore - Gold
Savings Account
Gold Savings Account
- You can buy and sell unallocated gold - through a passbook - at
prevailing market prices and transact any time during banking hours from
Mondays to Fridays.
- Investments in gold are not deposits. This product is therefore not
an insured deposit within the meaning of the Deposit Insurance Act (Cap 77A).
GoldSilver.com
offers fully insured, fully allocated, and fully segregated gold vault
options including a soon to be available Singapore
gold vault option.
5. Maybank
- Gold Investment Account
10. PURCHASE PRICE
- The price per gram at which each purchase will be made by me shall
be the selling price as quoted by the Bank to me at the time of the placement
of the purchase order. The selling price so quoted shall be determined by the
Bank at the Bank’s sole and absolute discretion taking into account all
factors the Bank shall deem relevant including the prevailing world and local
market conditions for gold, the exchange rate between United States Dollar
and Malaysian Ringgit and the gold fineness.
- 11.1 The Bank shall not be under any duty and/or liability in any
circumstances to appropriate set aside and/or allot any gold for the time
being from time to time held by the Bank to me and/or any of my MGIA and I
shall have no right and at no time be entitled to demand and/or request such
appropriation setting aside and/or allotment,
The prices we offer
you for your gold bullion are set by prevailing market
rates. Although we always offer competitive bid prices, customers can not
only sell their segregated sub-account gold bullion to us, they can also
choose to sell their gold bullion to anyone in the market.
At
GoldSilver.com, gold sub-account holders can always demand physical delivery
of their sub-account's gold bullion holdings.
6. ICBC - Industrial and
Commercial Bank of China - Paper Gold Scheme
Schedule 6: Paper Gold Scheme Account
3. Delivery
- 3.1 We will not in any circumstances deliver any physical gold to
you, and will not hold any physical gold for your account. The allocation of
units in your Paper Gold Scheme Account is notional. You have no right to any
physical gold but only a right to receive the proceeds of the Paper Gold in
your Paper Gold Scheme Account on settlement of relevant Contract(s) to sell
the Paper Gold.
With
GoldSilver.com, gold sub-account holders can always demand physical delivery
of their sub-account's gold bullion holdings.
7. ANZ Singapore - Gold
Account
Why invest in an ANZ Gold Account?
Safe and secure gold investments
- Unlike physical gold, bullion coins and gold bars, you need not
worry about purity levels, storage costs or security risks with an ANZ Gold
Account. The ANZ Gold Account provides you with a simple, secure and
convenient way to hold and transact paper gold.
Minimum investment quantity
- 30 troy ounces for purchasing, selling and maintaining
GoldSilver.com
stands 100% behind the authenticity of every ounce of physical gold and
silver bullion we sell.
Only 1 oz of gold is required to begin a gold vault storage
account.
8. Bank of China - Precious
Metals Passbook Account
Risk of notional precious metals passbook account
- Your purchase of precious metals for the account does not represent
a purchase of physical metals or a deposit of money. You will not have any
interest in any precious metals owned or held by us or be entitled to
physical delivery of precious metals.
Your
purchase of precious metals for your gold or silver vault storage account
always represents a real purchase of physical precious metals.
You will
have 100% interest in precious metals purchased, delivered, and owned from
our website.
Your
precious metals can be held by a third party vault storage facility, while
you remain entitled for physical delivery of your metals at a future date, if
you so choose.
***
GoldSilver.com - Segregated Gold
Vault Options
GoldSilver.com
offers the safest, most cost effective, and secure
gold vault storage services in the precious metals industry.
Our strategic partnerships provide GoldSilver Insiders the
ability to attain third party, fully insured segregated gold vault storage
around the world.
With segregated gold vault storage the gold bullion products you purchase are
held solely in the beneficiary title(s) you elect. The original bullion
products you buy are always stored separately never swapped nor comingled with other accounts.
Gold vault storage customers receive custody certificates documenting
holdings and account inventory levels. All physical gold vault storage
bullion holdings are a secure phone call away from door delivery or can be
quickly sold at a competitive sellback price.
 You deserve to own physical
gold bullion outright!
Click
here for more information on our gold vault options.
The information, opinions, and
financial data presented are for educational purposes only and are not
intended as investment advice. No guarantees are made as to the accuracy of
the information provided herein. Situations can change from day to day. Every
investor should do their own due-diligence to determine which investments are
best for them.
You must assume the responsibility and liability for all decisions that you
make on the basis of the information herein contained. GoldSilver.com, makes no warranties,
expressed or implied, as to the fitness and accuracy of the information
provided or for the results obtained by using the information. Those making
investment decisions based on any of the information presented should do so
in the knowledge that they could experience significant losses. In no event
shall GoldSilver.com be liable for direct, indirect, or incidental damages
resulting from the use of the information.
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