Gold and Silver News
Banks are no longer storing Gold
Throughout history the security for storing gold has been challenging. A majority of gold in the world is stored in the central banks of various countries. Due to its inherent value, robust security is the prime requisite in storage. For many years the bank vault was synonymous with the ultimate form of protection.
However, with the advent of electronic commercial transactions, the prevailing wisdom in banking is changing. Storage of physical commodities is becoming less worthwhile for the banks’ bottom line and riskier for customers as banks can redeem the asset if the bank collapses.
HSBC recently provided an insight into the storage of gold as a bygone era when it was rumoured their storage of gold would become obsolete. They pinned the consideration of the change on the lack of return and ongoing costs of managing the holdings of investors.
As banking has shifted to a more mobile and online environment, beginning with the replacement of local branches with ATMs, the profit/cost margin for the banking sector has driven their need to focus attention back on their core business – the lending of money. They have identified, as financial transactions become more embedded with the evolution of connectivity, physical or material storage of assets is becoming less and less viable.
While it may seem another reason to complain about the banking sector, ultimately they are beholden to their shareholders. And within that they are obligated to perform at a level of maximum return for their shareholders’ investment. As a storage facility, physical or material assets ultimately return zero to the shareholders, as banks cannot lend against the assets held in storage. So it’s inevitable that the banks would focus on their core business.
As with all structural changes to fundamental institutions, it becomes an evolving process. Far from material or physical assets being shunned, the reduction in the number of banks holding these assets is being replaced with a more specific and targeted alternative.
Guardian Vaults ideally fills the vacuum for material asset storage such as gold bullion. Answering perfectly to the changing circumstances for clients we offer the perfect combination of storage and security. Guardian Vaults storage facilities are located in Sydney and Melbourne with access 24/7.
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