How title to gold works with Bitgold and Brinks

jmr5djmr5d Posts: 218 Bronze ✭✭✭
Our Corporate By-Laws require the company to secure all gold at LBMA or COMEX approved Vaults under fully allocated, segregated, accounts for the benefit of customers.
So this question has been in the back of my mind -- my understanding of "segregated" is that there is some method of separating my own gold in the vault from every other Bitgold customer's gold in the vault. And yet I've seen elsewhere that gold is held in the vaults in certain sized bars (1kg I think?), which I have not yet deposited enough to meet the minimum size of. So my first question is, where does that leave someone like me? How are small account holders and fractional gram values handled?

Also, in an extreme scenario, such as if Bitgold were to go under, if I show up to Brinks New York and present my ID, are they able to deliver my holdings then and there? In other words, is title really in my name? Or would they hassle me over delivery of the gold I've purchased?

Best Answer


  • GoldmattersGoldmatters Posts: 4,074 Admin
    @jmr5d Great questions. As I understand it your second question, you do own the gold in the brinks vault. Bitgold doesn't own any gold and doesn't even have access to it. They are just the software that transfers ownership. So in theory I do believe you could go to the vault and ask for your gold if Bitgold were to fold. This is unlikely as Bitgold is very well capitalized for a public company, maybe even more so than whichever bank you used to purchase your Bitgold gold :)
  • GoldmattersGoldmatters Posts: 4,074 Admin
    @jmr5d I should add that an independent company prints physical copies of the ownership ledger every day so if there were some kind of cyber meltdown eventually you would get your gold back as well.
  • zulu1520zulu1520 Posts: 294 Bronze ✭✭✭

    I think what bitgold is trying to say is it allocated in the since that you share a bar of gold until you reach a threshold, lets say 10 Grams. At that point your gold is Segregated and you personal own that cube of gold or bar of gold and it's not owned by anyone else.

    Allocated Storage:

    Commingled or allocated storage. This kind of storage is where your precious metals may be combined and pooled with other positions of clients of the storage company. Basically, the precious metals are just recorded under your name.

    This will work for investors who are not looking for delivery at any near time and just looking for representations of your investments.

    Segregated Storage:

    From the word ‘segregate,’ segregated storage means a type of storage where precious metals are stored separately or apart from others. There is usually an exclusive individual storage box assigned to each client.

    This means the precious metals you will receive are the very same ones you stored in the storage. As the owner, you can view and audit your metals any time. The legal title for your metals is not transferrable, so the storage company is not entitled to change or use them if you have not allowed it in the storage agreement.
  • GoldIsCurrencyGoldIsCurrency Posts: 1,820 Gold ✭✭✭✭✭
    edited May 2016
    @jmr5d The gold is 100% owned and allocated by you, deeded in your name. Absolutely nothing to worry about. This is safer than a bank.
    For anyone that has this concern you can read an in-depth post made by Roy Sebag back in January on this subject. Cheers.
  • GoldmattersGoldmatters Posts: 4,074 Admin
  • rohanibuang61rohanibuang61 Posts: 2,379 Gold ✭✭✭✭✭
    @jmr5d When human created and enforced law, the will make sure the law will always biased and benefit themselves. Sometimes I wonder how law and order doesn't fit to everyone but suit to someone. :)
  • nigelmarkdiasnigelmarkdias Posts: 1,323 Silver ✭✭✭✭
    "When designing the legal architecture for BitGold Corp., we were guided by the following mantra: We wanted the legal construct to survive virtually any possible negative event as far as the segregated gold was concerned. We wanted the metal to be completely segregated, allocated, and redeemable and we wanted this to be 100% obvious to any bankruptcy judge. There should be zero doubt in the mind of the judge that any assets were commingled. "
    "Roy Sebag"
  • jmr5djmr5d Posts: 218 Bronze ✭✭✭
    Thanks so much guys, just learned a lot from those 2 comment links.
    4) Most importantly, Aurum is automatically allocating metal denominations to you as you fill a bucket. In other words, if you have 999 grams of gold one night and a recurring deposit causes you to now own 1,005 grams the next day, Aurum will have allocated to you a specific 1kg bar with the balance or delta being shared with others. This is after-all, one important component for why our technology has been so revolutionary. 5) So now you decide to redeem your physical interest. If you redeem a 1kg Bar or a 10 gram cube, you are redeeming a direct allocated physical interest ... It was always your metal the moment you crossed that denomination trigger (10 grams, 1kg or 400oz).
    So basically it sounds like "segregation" in this case is being accomplished automatically through the software whenever you reach a denomination threshold, but in the meantime there is a shared ownership for fractional amounts. The threshold is actually really low for segregation though -- 10g -- so as you make deposits, the gold is very quickly meeting these thresholds and being segregated into specific bars/cubes with your name assigned to them. So in this case I've learned that I have actually reached the threshold for segregated gold, even with my small initial deposits, which, when you think about it, it's pretty incredible that they can offer such a benefit to new customers who are just starting to accumulate! Wow.

    In regards to showing up at a Brinks in the event of a zombie apocalypse scenario ( :smile: ), because of how fractional amounts are handled, there would likely be a little difficulty or delay in recovering fractional amounts ... or you could theoretically accept your fractional values in the form of cash. But in the event of a bankruptcy, the process makes complete sense and is all spelled out in those links.

    Anyway, thanks again, I think that cleared up a lot!
  • 79Au19779Au197 Posts: 4,047 Gold ✭✭✭✭✭
    @jmr5d - For what it is worth, I personally have begun making my deposits in multiples of 10g

    @SpontaneousOrder - my accountant will be filling out an FBAR for me next year … B)
  • nigelmarkdiasnigelmarkdias Posts: 1,323 Silver ✭✭✭✭
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