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The BullionGold Facility

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  • 1. The BullionGold Facility & Financial Advisor Support
  • 2. Product Definition
    • The BullionGold Facility creates an enabling environment for investors to accumulate funds in order to acquire physical gold bullion . The platform provides investors with the lowest acquisition costs for bullion , while providing a complete solution to the traditional concerns related to the vaulting, insurance and liquidity of physical gold bullion
    The BullionGold Facility and Financial Advisor Support
  • 3. The Shortcomings of the Retail Market
    • Only manufacturing jewellers or numismatic dealers may acquire gold bullion from Rand Refinery Limited
    •  
    • The retail market for Gold Bullion relies solely on the imposition of upfront and redemption margins on gold.
    •  
    • As such retail margins for Krugerrands are typically 10% above the wholesale supply price at acquisition and varies between 10%-15% on redemption.
    •  
    • Therefore, typical friction charges amount to some 20%-30% through traditional channels for gold bullion Krugerrands
    •  
    • This is clearly an unfeasible investment proposition.
    The BullionGold Facility and Financial Advisor Support
  • 4. Product Rationale
    • The objective of the product is to provide the market with a feasible investment proposition surrounding physical gold bullion.
    •  
    • This has been achieved through the disintermediation of the retail supply chain
    •  
    • And has lead to the creation of a gold supply for investment demand and a gold bullion management chain
    •  
    The BullionGold Facility and Financial Advisor Support
  • 5. The BullionGold Facility and Financial Advisor Support
  • 6.
    • Title owned call accounts held on behalf of each client to manage funds
    •  
    • Preferential wholesale interest rates payable from 1 st Rand held on call
    •  
    • Client receives monthly statements , annual IT3 certificate and log-in access to account
    •  
    • Advisors receive single point of access to view/monitor all clients call accounts
    •  
    • Contributions via recurring debit order or ad-hoc lump sums
    •  
    • Gold Price queried daily against call balance for possible purchases
    The BullionGold Facility and Financial Advisor Support
  • 7.
    • Deposits receipted by 1pm eligible for gold purchase the following day
    • Clients may request SA Bullion to purchase on instruction only
    •  
    • Call Balances may be withdrawn at any time
    •  
    • All transfers to client nominated bank accounts effected by real time transfer
    •   
    • First R7.50 of interest earned payable as a bank charge – no capital diminishment
    • Perfectly transparent record of all cash movements in the facility – investments, gold purchases, fees and gold redemptions
    The BullionGold Facility and Financial Advisor Support
  • 8.
    • SA Bullion operates a bullion desk which processes all gold transactions
    • Gold bullion purchases and redemptions are processed daily from the Bullion Desk on behalf of clients
    • Transaction advices in respect of gold purchases and redemptions are remitted to the client and advisor following each transaction
    The BullionGold Facility and Financial Advisor Support
  • 9.
    • Bullion acquired from RRL at the previous days LBMA PM Gold Price Fix ($) ( www.lbma.org.uk )
    • SARB releases applicable exchange rate to Rand Refinery Limited at first light daily
    •  
    • Resultant price is Rand Gold Price for Bullion ( www.randrefinery.co.za )
    •  
    • The Wholesale rate for refining and minting obtained by SA Bullion is currently 4% . This is at a discounted rate than is available to the retail market. SA Bullion passes on this rate to the client.
    • Retail Minting Premium Comparison:
    • 1-49 Krugerrands 6.5% ( 38% discount to small quantities of retail supply )
    • 50+ Krugerrands 4.5% (11% discount to large quantities of retail supply)
    The BullionGold Facility and Financial Advisor Support
  • 10.
    • The bullion is stored at RRL in Germiston in an allocated vault on behalf of clients
    • The bullion is held in the clients title
    • The bullion is insured through Lloyds of London while vaulted
    •  
    • Reconciliation of bullion holdings occur between SA Bullion and RRL
    •  
    • RRL auditors – Deloitte confirm reconciliation by physical stock count
    •  
    • Costs related to Vaulting and Insurance are included in ongoing platform fee
    The BullionGold Facility and Financial Advisor Support
  • 11.
    • Cash Redemptions
    • Perfectly liquidity for redemptions into Rands (underwritten by SARB)
    •  
    • Rand Redemption instructions received by 1pm are eligible for redemption the following day
    •  
    • The price received on redemptions is the previous days LBMA PM Gold Price Fix ($) expressed in Rand
    •  
    • Settlement is receipted in clients call account within two working days and paid into the clients nominated bank account
    The BullionGold Facility and Financial Advisor Support
  • 12.
    • Physical Bullion Redemptions
    • Physical gold redemptions are subject to a 3 year holding period
    • SA Bullion is authorized by SARB to create an investment not retail proposition
    • SA Bullion dispensation from SARB provides guaranteed supply and below retail acquisition costs for bullion – this would be subject to exploitation in retail markets
    • Clients may request earlier redemption, however an exit fee may be imposed (this charge will never exceed the equivalent of 3 years fees)
    • Gold deliveries are via RAM couriers Valuable Cargo Delivery option at preferential rates negotiated between SA Bullion and RAM Couriers
    •  
    • Courier costs are for the clients account and is quoted upfront on physical redemption request
    The BullionGold Facility and Financial Advisor Support
  • 13. Fee Structure : Upfront Fees
    • Levied on initial investment amounts
    • Fixed 1.5% Platform Charge
    • Advisor Fee 0% - 3.5%
    • Fees excl. VAT
    The BullionGold Facility and Financial Advisor Support
  • 14. Fee Structure : Ongoing Fees
    • Levied on Gold Bullion holdings
    • Fixed 2% Platform Charge
    • Rebate 0.5%
    • Calculated daily on market value of Gold Bullion holdings
    • Levied monthly in arrears and payable by debit order
    The BullionGold Facility and Financial Advisor Support
  • 15. Fee Structure : Redemption Fees Cash Redemptions Perfect Liquidity - No fee applies No time restiction applies Physical Redemptions Perfect Liquidity – No fee applies in respect of redemptions after 3 years Redemptions within 3 years from date of acquisition subject to an early redemption fee (max 6% excl. VAT) The BullionGold Facility and Financial Advisor Support
  • 16. Large Transactions
    • Phase In Option
    • Minimum initial investment R100 000
    • Phase in over 3/6 months
    • Redemption of Gold to offset fees
    • Subject to minimum gold holdings of R350 000
    The BullionGold Facility and Financial Advisor Support
  • 17. Reporting
    • Client
    • Activity notifications - remitted with each investment or withdrawal from the call account
    • Transaction Advices - remitted following each gold transaction
    • Quarterly Statements - reflect both market value of Gold and Call Balances
    • Quarterly SA Bullion Gold Report – publication
    • Online access to view call account
    • Financial Advisor
    • Single point of access to view all client call accounts
    • Weekly commission runs and statements
    The BullionGold Facility and Financial Advisor Support
  • 18. The Investment Proposition
    • The BullionGold Facility has enabled the following proposition:
    • Significantly reduced the friction charges associated with trade in physical gold bullion
    •  
    • Imposed a maximum upfront charge allowable of 5%
    •  
    • Integrated all the cumbersome aspects relating to title ownership of bullion into a seamless facility wherein insurance, vaulting, redemption and liquidity are all addressed.
    •  
    • The platform charge is fixed at 2% pa on the value of gold bullion held in the fully integrated facility
    www.sabullion.co.za The BullionGold Facility and Financial Advisor Support
  • 19. The Investment Proposition
    • The BullionGold Facility has enabled the following proposition:
    • Ensures that there is no cost leakage on sale of bullion since the platform provides perfect liquidity for gold under management
    • Provides perfect transparency of all cash movements
    •  
    • Ensures title ownership of all assets contained in the product
    •  
    • Creates an enabling environment for the accumulation of Rands in order to acquire gold bullion
    The BullionGold Facility and Financial Advisor Support
  • 20. Def n : the process of adding value to a metal, mineral or commodity. Gold Beneficiation Chain : Role Gold Mining Companies Rand Refinery Limited & SA Mint SA Bullion SA Bullion Financial Advisor Extraction Manufacturing Wholesale/Retail Distribution & Sales Regulated By: The SA Bullion Gold Beneficiation Chain The BullionGold Facility and Financial Advisor Support Department of Minerals & Energy South African Reserve Bank Financial Services Board South Africa