May 29, 2013

You May Not Know Where Gold Is Going, but You Can Aggregate Its Value for Clients

In recent months, the price of gold has dropped considerably, and where it goes from here is anybody’s guess. According to Bloomberg, gold futures inNew Yorkhave fallen 18% in the past three months. Consider, too, that in August, 2011, gold was priced at $1,888 an ounce, while today, as I write this blog, it’s at $1,462.50. 

My point? Simply to state that the 12-year rally in gold may be over, although I will leave a more definitive assessment to the experts in the field. Nevertheless, as uncertainties about the world economy continue to fester, and as geopolitical risks continue to escalate, gold will continue to be an integral part of many investors’ portfolios. It’s certainly an alternative investment that today’s RIA may wish to discuss with his or her clients. 

In the past few years, investments in gold have skyrocketed. Since the year 2000, the actual amount of new investment in gold has amounted to approximately $250 billion. For the first time, privately held investments in gold have surpassed government holdings. And investment demand in gold has exceeded jewelry demand for the first time since 1980. 

Gold: Still Tough to Track

Whether the investor is holding physical gold or paper, the process of acquiring and compiling the data on gold investments (and all precious metals for that matter) has traditionally been a laborious, manual operation that hasn’t changed much in recent years. It seems that the data is quite literally or figuratively “locked in the vault,” which can make extricating it quite difficult. 

That’s in contrast to much of the data flow on equities and other types of investments, which RIA firms have largely succeeded in automating and streamlining. 

The good news is that today, RIAs can move beyond the traditional flow of data on gold investments. At my company, ByAllAccounts, for example, we aggregate financial account data on precious metals investments for delivery to portfolio management and trust accounting systems.    

Our work with Strategic Gold Corporation is a case in point. Operationally, it all flows very smoothly. Strategic Gold offers bailment accounts whereby its clients have the ability to directly own specific, investment grade gold or silver bars and store these assets in a variety of national or international vaults.

Strategic Gold administers these assets and inputs the data. We electronically access the data and feed it to advisory firms without any manual processing required on the advisor’s part. Advisors are then able to deliver client reports with more ease, speed and accuracy than ever before (a real competitive advantage). Investors receive the critical information and insights they need to move forward.

Through it all, the barriers that have always stood in the way of reporting on physical ownership of precious metals as an asset class are removed. 

Michael Williams, president of Strategic Gold, told me that “expert collaboration drives superior products and services”. Michael says that by partnering with ByAllAccounts, “their fully integrated technology platform allows RIAs, private banks and other wealth management professionals to manage the oversight of every aspect of their transactions and holdings within their existing wealth management workstations and to view their precious metals allocations alongside an overall investment portfolio.” 

Recent price slump aside, gold still glitters for many investors. Add a new means of data aggregation and reporting, and you have a win-win-win for precious metal firms, investment advisors and their clients.

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