Could this idea work? (Buying bulk OBO small private investors)

SunSandSurf

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Hi All,
This is my very first post and although I’ve been surfing your forum as a guest for some time now I can’t seem to find the information that I’m looking for so I’m reaching out to the community for help and advise.

A brief background about myself so that you may understand what I'm getting at.
I’m am a Swiss/Australian living in Zurich for the past 18 years. I use to work for a hedge fund company before being retrenched in 2015, since then I started my own business (which failed miserably) and now, I’m starting again from scratch.

I’ve been investing in Gold and Silver for a while now (mostly ETFs and fund allocation through traditional banking system) and for some reason, up until now, I never thought to buy physical gold. When my company went bankrupt (and because of my own stupidity), I had to liquidate ALL my private assets just to survive. So I am starting all over again from scratch.

I strongly believe that we are heading into one of the greatest financial upheavals ever. I don’t know what will trigger it, but I think it’s going to be sooner rather than later and when it does hit, it’s going to be catastrophic. I also believe that there will be a surge on gold and silver.

That's Great news!
I’ve just lost everything! And need to rebuild before the ensuing storm. Hmm... :flushed:

So now that you know a little bit where I'm coming from, let's look forward.
I’m trying to rebuild my assets as quick as possible, and really do not want to be on the wrong side of the fence when the Fiat mess starts to unwind.

What ever is left of my miserable income. I’m still disciplined enough to allocate 10% each month to buy physical gold & silver bullion in small quantities.

Thankfully, as it just so happens, its very easy to buy physical Gold and Silver in Zurich. Unfortunately with quite steep premiums, especially for a small investor like me.

Because every cent counts. I started to investigate a "better way" to buy. Other small investors must be feeling the same pain.

And so the search began. Were there communities who knew how to buy small volumes of gold at discounted premiums safely? For example are any of these communities pooling their purchases to take advantage of the lower premiums when buying in bulk.

Go figure I found nothing in or around Switzerland or for that matter anywhere else.

Not wanting to give in, I started to do some more digging and that is when I came across a type of “Club” in the US. It worked by paying a small annual membership fee. That fee gave you the rights to buy gold or silver at wholesale price, or what they claim zero premium over spot.

Wow This is great… Or so I thought! To join there is a small entry fee followed by an annual membership apparently for administration etc. Gold and Silver was purchased directly at the wholesaler and the saving passed onto you without any additional fee.

But when I started to look deeper into these companies. My first impression was they look very dodgy and I’ve seen that these clubs no longer exist or have been shut down? If they do still exist I can’t find any information about them. Of course this is when alarm bells start going off, and not finding any satisfactory answers, I gave up.

BUT. The core idea still intrigues me, if done correctly could this concept actually work?

Here is my out-of-the-box thinking and where I would like your collective expertise and help and to point out why this should or shouldn’t work.

My question is this; 
Why isn’t there a co-operative or a foundation set up already to help the small to medium investors buy physical metal? The way I see it, the sole purpose of this foundation would be to bundle smaller purchase orders into one large precious metals order? Then buy in bulk directly from the wholesalers or the refineries and redistribute the smaller orders to the original buyers.

My arguments “For” such a foundation
  • We all want is to buy Gold & Silver etc. at the best possible price
  • Small individual purchases are very expensive
  • We all know that the more you buy the better the discount
  • If we buy as a collective, than “In theory” one should be able to obtain Gold and Silver at a better premium
  • If bought through the foundation, your PM purchase would remain 100% in your ownership
  • The gold can either be stored in a vault or sent to the buyer


My Arguments “Against” such a foundation

  • Risk: Not enough people in the circle to reach the volume necessary to benefit from the discount
  • Risk: How do you mitigate the volatility of the PM spot price? For example if you take delivery of gold only once a month but are taking daily purchases orders, the price could move dramatically in-between those periods.
  • Concern: Legal rights and obligation to start something like this
  • Is such a service even necessary?

Do you think this could work? Your thoughts would be very much appreciated?
Stephan
 
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rblong2us

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Hi Stephan
Not many would be as honest as you in their introductory post.
I respect this.

In regard to creating collective purchasing power, I suspect that the issue of trust will be the driver.

I'm pretty much 'all in' split between Bullionvault and GoldMoney with them both storing 'my' gold in Brinks vault not far from you.
Yes there are risks but the costs of transacting seem acceptable and while I can take posession, it seems to be an acceptable balance of risks to keep in in a non bank vault.

I have also strongly believed that we are heading into one of the greatest financial upheavals ever but having been in this mindset since 2001 and still the show goes on, I can see why so many feel they might as well carry on dancing as long as the music continues.
 

pmbug

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Hi Stephan, welcome to the forum. :wave:

I think a lot of people who are looking to acquire physical metals prefer to get the metal ASAP upon payment. When reading through the forum space devoted to PMs, it's a pretty common theme in threads discussing PM dealers to harp on delivery times. Adding middlemen to the process delays the receipt of metal and adds another potential point of failure in the exchange (and another database where your transaction is recorded).

Maybe the potential discount where you live would make this idea feasible, but here in the USA, I don't think the potential discount is attractive enough to outweigh the negatives. I personally would rather pay a couple of bucks extra for the privacy and security of a direct sale.
 
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