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Saturday, January 27, 2007

Kitco's Pool Account

NOTE: This article about KITCO's Pool Account is part of a series of posts beginning here.


KITCO's Pool Account

As precious metals prices had been going north, and I found myself desiring to reap some gains, I found that my metals dealer of choice, Kitco.com, had a cool vehicle in place to allow me to sell off bullion conveniently.

Kitco's Pool Account first has you send in your coins, bars, or whatever. Then they apply the physical amount, in ounces, as a notational quantity into your account. The actual metal goes to a Fort Knox type of vault where it is "pooled" with other clients' holdings. Kitco deals with Gold, Silver, Platinum, Palladium, and Rhodium.

If you send them standard, "known" metal such as American Eagle Gold, they'll apply the weight stated on the coin, such as "One Ounce" (not to be confused with the monetary "value" on the coin, such as twenty dollars, which is meaningless in the bullion market.)

If you send them non-standard bullion, such as numismatic gold coins from another country, they will send it to one of their facilities to determine the coin's weight and apply that to your account.

You can add bullion at any time. The metal goes to the vault, and the weight gets added to your account.

When YOU determine that it's time to sell, you can just instruct Kitco how much you want to sell, either in ounces or a specific amount in currency, and they'll cut you a check. It is at that time that the prevailing metals prices comes into play. And I have found Kitco's transaction fees very reasonable.


Benefits

There are several advantages to using Kitco's Pool Account over the local dealer.

· You can sell off any amount when the market reaches a point you desire without worrying about delays. They already have your metal.

· You can sell off fractions of an ounce, say "two tenths of an ounce of platinum," rather than having to sell full coins or bars, and they will debit your account with the fractional amount. That way, you can preserve some of your holdings if the market climbs further. Try THAT with your local dealer and your 100 Oz Mega-bar.

· You can ask them to send you monetary amounts from each of your pools, for example, $150 from Gold and $200 from Silver, and Kitco will determine the physical quantities based on their payout charts and debit your account amounts for you.

· I have not yet tried this, but I imagine you may be able to transfer amounts between the various metals at reasonable transaction fees. For example, you may say, "please sell off $800 of my gold and buy an equivalent amount of silver." In that case, there is actually no physical movement of any metals - as I said, the actual bullion is sitting in a vault - it's just the notational amount in your account that changes.

· You can request Kitco to convert money in your account to actual metal and to send it to you. I have never done this, but I would assume you can instruct how you want the distribution, such as bars, or a specific bullion coin, etc.

The important thing to remember is that the prevailing prices only come into effect when you buy or sell. Kitco is keeping track of physical quantities. That said, whenever you check your account, they show you what your holdings are based on the current prices, but, like the stock market, that's only meaningful if you're thinking of buying or selling. It's a number "on paper."

You don't even have to own metals to get started with Kitco. Send them a check and tell them how much of each metal in which you want to invest and they will calculate how much to credit your account in physical quantities at their current rates. Then just follow the market and make transactions as you would with any other investment vehicle.


Is it a secure investment?

One concern one might have is whether funds are safe. It's easy to feel anxious about mailing a couple of grand in metals to an unknown entity. What if they get my coins and then go out of business? However, I read the information on their website and found their policies in line with what I'd expect from an on-line metals broker. I feel that my money is as safe as it would be using any conventional investment vehicle.

That said, I suppose I should add my own disclaimer. I am not a personal finance advisor and do not work for Kitco. The purpose of this entry is to illustrate how I used their services in hopes that it may benefit other readers. I have found Kitco's Pool Account one of the most valuable resources in my management of my precious metals portfolio.

See all my experiences with precious metals beginning here.

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2 Comments:

Blogger tylerjones said...

Good one! Just stumbled upon it and found it. Thanks a lot for sharing it.

Thursday, March 07, 2013 1:12:00 AM  
Blogger tylerjones said...

Visit http://bullion.nwtmint.com/silver.php

Friday, March 08, 2013 11:37:00 PM  

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