Posted 30th October 2023

The Importance of Allocated Gold Bullion

importance of allocated gold silver investment

ABN AMRO abruptly closed all weight accounts for platinum, gold, and silver bullion in 2020.

They presented their customers with an ultimatum. They had to sell the platinum, gold bullion and silver bullion in their account by April 1st, 2020. 

If they didn’t, ABN AMRO would sell it for them but they wouldn’t guarantee they’d get a fair price for their gold bullion or other precious metals.

This incident with the Dutch bank reinforced what many seasoned gold and silver investors know. You should only invest in fully audited and allocated gold and silver so you truly own and control your investment.

One of the main issues with unallocated physical gold and silver is counterparty risk, as we explain below.

So, what happened at ABN AMRO?

In 2013, ABN AMRO transferred its weight accounts to UBS and away from Deutsche Bank.

ABN AMRO told investors by letter that UBS would handle their platinum, silver and gold bullion investments ‘in a different way’.

The letter also revealed that customers could no longer redeem gold bullion, silver bullion or platinum.

Gold market expert, Jaco Shipper, provided a worrying analysis of the situation at the time of the Dutch bank’s hushed announcement.

He observed that:

“ABN Amro denominates this account in terms of weight valued in euros. This means that clients can never withdraw precious metals. That means [clients’] denominations are entirely meaningless.”

He believed that ABN AMRO held no actual allocated gold or silver bullion for their clients. He stated the precious metals in ABN AMRO’s accounts were “unallocated” and that “the invested funds may be anywhere and, likewise, the gold.”

The Counterparty Risk

Shipper stated that ABN AMRO had offered its customers no effective counterparty protection. While the investments had some upside potential, they were very exposed to severe downside risk.

Shipper foresaw that a forced sell-off might be a possibility. He stated that nobody would be liable “if these risks materialise.”

He was right. When they did eventually materialise, all counterparty risk fell directly on the investors. The bank forced investors to sell their physical gold, silver and platinum by the end of the month after they made their announcement.

The difference between Kinesis and ABN AMRO’s former gold and silver bullion investment

Kinesis gold bullion and silver bullion are fully audited. We provide a fully allocated gold and silver bullion investment service, with the legal title remaining with you, the holder, at all times.

Why is fully allocated gold and silver important?

Without legal title to your gold and silver bullion, you carry all the counterparty risk.  In such cases, the risk can be high.

The three major benefits of a fully allocated gold or silver investment are:

  • Tangible, physical gold bullion and physical silver bullion
  • Secure bullion vaulting for your precious metals
  • Full legal title remaining over the bullion to minimise counterparty risk

Why are audits important?

Audits provide our investors with the peace of mind they need. First, audits verify the exact quantity of physical gold and silver held in reserves. Second, they prove that your bullion is safely stored in an identifiable vault that an auditor has seen.

Without an audit, you have no independent and external verification of the quality and quantity of your gold and silver. You have no proof it even exists.

Kinesis fully audited gold and silver bullion

Inspectorate International is a global physical commodity audit and inspection specialist. They audit the physical gold bullion and silver bullion backing Kinesis gold KAU and silver KAG digital assets.

Quarterly third-party audits provide valuable reassurance to Kinesis users and prove that investors’ physical gold and silver sit in a secure global vaulting network.  

This means that investors know the precious metals that underpin these digital currencies are fully verified. You can view the results of our latest quarterly audit on our Audits page.

Do your due diligence

ABN AMRO customers are not the first to suffer the consequences of investing in unallocated precious metals. If you don’t see an audit, consider the gold and silver bullion you’ve invested in as unredeemable, unallocated and unverified.

Kinesis has taken every possible precaution to prevent users from the fate that befell ABN AMRO’s customers. Be certain that our fully audited and allocated gold and silver bullion is redeemable at all times.

Fully allocated gold and silver investment with Kinesis

We store your fully allocated physical gold and silver bullion securely in a global vaulting network. This bullion underpins and backs the value of the Kinesis digital gold and silver currencies in circulation.

Legal title remains with you, the holder, at all times. With this approach, Kinesis has all but eliminated the counterparty risk that occurred in the case of the Dutch bank.

Fully redeemable gold and silver bullion

Kinesis users can redeem their gold bullion and silver bullion at any time. We deliver the physical gold and silver that back gold KAU and silver KAG currencies to your door, on request. This is subject to minimum withdrawal requirements.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.