Speculators Out

Terry Flanagan

One platform for physically backed metals shrugs at wining over speculating traders.

Half a century ago, gold was used as the U.S. currency base via the “gold standard.” Since then, gold’s value has manifested itself through a variety of forms far from what it used to be.

As gold futures hover near 1800 an ounce, speculators have made bets on how high the commodity will rise given the heightened volatility in the equity markets. Commodities, such as metals have often favored a “flight to safety” reputation, and an inverse relationship from equities and other instruments.

Even further removed from physically backed gold is the amount of gold exchange traded funds (ETFs) outstanding. The SPDR Gold ETF at 70 billion in assets.

Institutional investors who use hard assets to provide inflation protection have often used derivatives for gold exposure, or bought shares of gold mining equities for protection.

Gold Bullion International (GBI) is a metals provider which aims to connect investors back with physically backed assets.
“We are not going after the speculator market and as such are not focused on losing share to this segment,” said Sunil Annapreddy, vice president at GBI.

“We focus on the investment community that wants the exposure and diversification of owning physical assets. With the recent financial crisis and on-going uncertainty in the global markets, we feel the shift to physical assets will continue to rise, especially for precious metals.

The mission at GBI is to democratize investing in physical precious through our technology and logistics platform, according to a GBI spokesperson.

GBI purchases metals on behalf of clients from London Bullion Market Association (LMBA) approved dealers and insures them through global vaults.

For retail investors specifically, the firm advocates distribution manly through financial advisors, and allows end users to store their holdings.

Related articles

  1. Authorized Participants want to simplify and automate trading workflows.

  2. Six ESG ETFs are the first step in MSIM’s development of a robust ETF platform.

  3. Growth in ETF assets has outpaced growth in hedge funds since 2008.

  4. SPY, the first US-listed ETF, made its debut in January 1993.

  5. Active funds had their worst year on an organic growth basis.