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Glossary of Financial & Economic Terms |
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Glossary of Financial & Economic Terms |
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Account (Certificate) gold
A certificate storage, is a method of holding gold without the need to take delivery. Issued by individual banks they confirm an individual's ownership while the bank holds the metal on the client's behalf. The client thus saves on storage and personal security issues, and gains liquidity in terms of being able to sell portions of the holdings (if need be) by simply telephoning the custodian Certificates can be used as leverage, whereby a client could put down 20% deposit and use a loan from a bank of up to 80% of the value of the gold holding, this process allows a client access to a larger holding of gold at a fraction of the cost, however there is a risk attributed to this process, should the price of the gold fall after the clients purchase, the bank has the right to sell the gold holding to cover any losses which is usually at the clients expense.
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About Precious Metals.com 2005 |
