By David Morgan
1 February 2006
We spoke with James Turk of www.goldmoney.com and asked him some key questions about now having silver available. James and this writer have spoken about this several times and we did not report it because we wanted to have our facts correct and not anticipate something that might not take place. Below are our 11 questions, with answers from Mr. Turk.
Morgan: First, is the silver allocated?
Turk: Yes, all silver in GoldMoney is in allocated storage, just like all gold is in allocated storage. They are stored in the name of the customers of GoldMoney.
The metals are stored in specialized bullion vaults near London, England, that are owned and operated by Via Mat. In addition, the same governance procedures applied to gold are also applied to silver. These include the regular audits and controls as well as the other measures explained on the GoldMoney website.
Thus, with silver you have the same assurances of integrity as you do with your gold. Your metals are safe.
Morgan: Is the silver insured?
Turk: Yes, all the gold and silver in GoldMoney is insured through a policy underwritten at Lloyd's of London. The total value of this metal is approximately $80 million.
Morgan: Can a client actually take delivery of the silver?
Turk: Yes, provided the customer has at least 1,000 oz. of silver in his/her account. We can deliver silver to the customer in the form of 1,000 oz. bar(s). When a customer requests delivery, the weight of the bar is removed from his account, and is then made available at the Via Mat vault. We do not charge a fee for this service, but once the bar(s) is removed from GoldMoney, the customer then becomes responsible for any costs, which of course depends on what the customer wants to do with his bar(s).
Morgan: What is the minimum to open an account?
Turk: There is no minimum. Whether you buy $50 of silver, $50,000 of silver, or for that matter, any amount you purchase, the silver you buy is allocated and insured.
Morgan: If a person or company already has a GoldMoney account is it necessary to open a new account for silver?
Turk: No, both gold and silver are recorded in the same account.
Morgan: What is the spread on a silver purchase versus a gold purchase?
Turk: The spread for silver ranges between 2% and just under 5%. For gold it's 0.97% up to just over 3%.
The spread you pay depends on the size of the purchase. Larger purchases are completed at smaller spreads.
Morgan: What is the fee when you sell?
Turk: There is no fee when you sell. And all customers get the same rate, which is the prevailing spot rate.
Morgan: Why is the spread higher on silver than gold?
Turk: Basically, the economics of silver are different than gold. At current prices it's approximately 60-times the volume for the same amount of dollar value. That means silver has extra costs you don't incur with gold. We have to therefore past these costs on to our customers. Nevertheless, GoldMoney offers one of the most economical ways to buy physical silver, and I'm not aware of a more convenient way to buy allocated silver.
Morgan: How do you pay for your silver purchase?
Turk: You can purchase silver in the same, convenient way you now purchase gold. You can have the money debited directly from your bank account. You can also pay for your purchase with a bank wire. Purchases can be made in US dollars, Canadian dollars, British pounds or Euros. GoldMoney customers can also use their goldgrams to purchase silver. And you can receive any of these five currencies when you sell your silver.
Morgan: Can you spend your silver as an online currency like you can do with gold?
Turk: No, not at this time, for a couple of reasons. First, we're not sure whether our customers want this feature. Also, few online merchants are prepared at this time to accept silver. However, as people become more familiar with silver, those things could change. So if our customers want to use silver as an online currency, we would be prepared to give them the same ability they now have with gold, namely, to use it as an online currency.
Morgan: Are you bullish on silver?
Turk: Absolutely. I'm bullish on gold, and I expect silver to do even better. In other words, the gold/silver ratio falls in precious metal bull markets. The ratio now is around 60, which is pretty much the level it's been stuck at for the past few years. In the years ahead the ratio will I expect fall considerably. Remember, it took only 17.5 ounces of silver to buy an ounce of gold at their record highs in January 1980. We should expect a similar performance by silver this time around as the metals move higher in the years ahead.