Precious Metals: Online Pool Accounts

Precious metals investors have long looked for every conceivable edge in the market to get ahead in times of real price volatility.  It’s often very impractical to store hundreds or thousands of ounces of rhodium, palladium, silver, or gold and finding a safe and secure place to keep them is often a major concern.  It’s also tough to sell or liquidate an entire position in a short period of time, let alone a couple of minutes.  Precious metals ETF’s are wrought with accounting problems and other red flags, leaving investors no other option than to steer well clear of ETF’s when looking for new precious metals investment vehicles.  But pool accounts, which are becoming more and more mainstream, offer an excellent way for those investors looking for liquidity, safety, and security, to invest in the markets.

Pool accounts are popular with investors looking to turn a quick profit in the metals market.  With a pool account, an investor can purchase as much metal as he or she desires, at a slight premium to spot, usually just a few cents.  Once the metal is purchased, the value of that investment, like any other metals investment, is tied to the fluctuating spot price.  If an investor wants to sell some or all of their metals position, all they have to do is make a few mouse clicks and the transaction is completed.  There are no huge spot premiums, no wait periods, and no hassles of sending or receiving the metals through the mail.  All of the action takes place on a computer screen, which can be perceived as a negative thing, depending on the investor’s personal market outlook. 

Pool accounts might make some investors nervous.  After all, their investment seems to exist as a number on a computer screen.  Not so however.  For a small fee, most pool account providers will deliver the metal to the investor in order to back up their purchase with real, tangible assets.  For instance, if an investor purchases $10,000 in gold in a pool account, they could order that gold to be delivered to them for a $29 per ounce delivery fee.  That way, unlike ETF’s, everyone who buys into the pool has real metal backing up their purchase.  Most online pools guarantee that each purchase can be backed up physically, removing any concern of a run on the account where investors are left without anything to back up their good intentions.

Investment pool accounts make sense for those who are not able to contribute large amounts of money to precious metals investing all at once.  Sometimes it is difficult to invest more than $50 or $100 at a time, and given the high spot premiums on physical silver, pool accounts make sense due to their high level of liquidity and extremely low premiums.  Even for the most modest investors, pool accounts possess a direct advantage over physical holdings.  Many investors however, choose to diversify their holdings and will have some of their metals in physical form and some in a pool account.