What Is Meant By Clear Title Ownership?
Clear Title Ownership means that you have exclusive, direct, good and marketable legal title to your gold and silver that we administer in your Clear Title Account. Moreover, you enjoy the unfettered right to sell or take delivery of your bullion at any time. We take pride in the fact that the full accessibility and liquidity that you enjoy in your Clear Title Account is always maintained within a transparent environment of absolute security. There are no complicated or vaguely defined collateral relationships.
Strategic Gold warrants that with each bullion bar purchased and stored, a Clear Title is issued verifying the Accountholder’s ownership of specific bullion by weight, hallmark, purity and serial number. Our process ensures that each bar is wholly and exclusively allocated to the owner. This sets Strategic Gold apart, because much of the world’s precious metal purchased or traded today is stored in unallocated or pooled accounts. In the event of a bankruptcy of the custodian, the holders of unallocated or pooled bullion would become unsecured creditors. Since Strategic Gold’s allocated bars ensure that title of the bullion is assigned to the owner from the moment it is purchased to the moment in which it is sold, allocated bullion cannot form part of Strategic Gold’s assets or the custodian’s assets, and therefore is not subject to any third-party claims.
Does My Clear Title Account Work Like A Regular Bank Account?
No. There is a very important difference between your Clear Title Account and a bank account.
Most investors worldwide incorrectly believe that when they deposit their money into a bank account, the bank is simply safe-keeping that money. The reality is quite different. Money deposited into a bank account becomes the legal property of the bank. The bank accountholder has lent the bank his money and through that act has become an “Unsecured Creditor” of the bank.
All contracts with commercial banks explicitly state that deposits of funds are a full title transfer of ownership to the financial institution. The fact that funds can be ‘repaid’ to you ‘on demand’ is incidental. When you make any bank deposit, you are giving up title to your funds to the bank, and the bank may do what it pleases with those funds. Your funds become the immediate property of the bank, in return for what is essentially an IOU.
With your Clear Title Account, you always maintain exclusive, direct, good and marketable legal title – Clear Title – to your gold and silver assets. Your specifically identified bullion assets always remain your exclusive property; we simply administer them on your behalf and according to your instructions.
Today more than ever, it is extremely important for all investors to look at the meaning of ownership in investing. We believe that a vast majority of wealth is highly vulnerable to financial failures and systemic risks.
To protect capital, we believe that prudent portfolio allocation and wealth stewardship must include gold that is owned outright and held outside the financial system.
What Is A Clear Title Account’s Legal Structure?
The Clear Title Account is founded on the common law principle of bailment. Every prospective Clear Title Account owner must complete an Application and execute a Bailment Agreement with the Company. In executing the Account Agreement which includes the Application, Supplemental Identification Documents and the Bailment Agreement, the Clear Title Account owner agrees to the Terms and Conditions of the Clear Title Account ProgramTerms and Conditions of the Clear Title Account Program. All bullion held in a Clear Title Account is the exclusive property of the account owner. A Clear Title Account’s direct ownership of the specific bullion in the account is never in doubt. Through the Bailment Agreement, Strategic Gold is able to take possession of the Clear Title Account owner’s bullion for the sole purpose of administering the bullion.
Bailment is defined as the temporary placement of control over or possession of personal property by one person, the bailor (you), into the hands of another, the bailee (Strategic Gold), for a designated purpose upon which the parties have agreed. The term bailment is derived from the French bailor, “to deliver.” It is generally considered to be a contractual relationship since the bailor and bailee, either expressly or impliedly, bind themselves to act according to particular terms. The bailee receives only control or possession of the property while the bailor retains the ownership interests in it. During the specific period a bailment exists, the bailee’s interest in the property is superior to that of all others, including the bailor, unless the bailee violates some term of the agreement. Once the purpose for which the property has been delivered has been accomplished, the property will be returned to the bailor or otherwise disposed of pursuant to the bailor’s directions.
The requirement that the bailee have physical possession of the property is interpreted to mean either actual or “constructive” possession. While the vault custodian has actual possession, Strategic Gold Corporation has constructive possession because it has exclusive control over what a custodian/vault facility can do with it.
What Is Required For The Establishment Of A Bailment Contract?
Three elements are generally necessary for the existence of a bailment: delivery, acceptance, and consideration.
- Actual possession of or control over property must be delivered to a bailee in order to create a bailment. The delivery of actual possession of an item allows the bailee to accomplish his or her duties toward the property without the interference of others. Control over property is not necessarily the same as physical custody of it but, rather, is a type of constructive delivery. The bailor gives the bailee the means of access to taking custody of it, without its actual delivery. The law construes such action as the equivalent of the physical transfer of the item.
- A requisite to the creation of a bailment is the express or implied acceptance of possession of or control over the property by the bailee. A person cannot unwittingly become a bailee. Because a bailment is a contract, knowledge and acceptance of its terms are essential to its enforcement.
- Consideration, the exchange of something of value, must be present for a bailment to exist. Unlike the consideration required for most contracts, as long as one party gives up something of value, such action is regarded as good consideration. It is sufficient that the bailor suffer loss of use of the property by relinquishing its control to the bailee; the bailor has given up something of value—the immediate right to control the property.
Why Is Bailment Important?
Simply put, through bailment, your specific physical bullion is your outright property. The specific bullion (identified by hallmark, weight, purity and serial number) is your personal property and is safeguarded by fundamental property rights through the bailment agreement.
In law, a bailment is restricted to physical goods which can be owned outright through possession. Therefore, entitlements evidenced by stock certificates, trust deeds, unallocated accounts, futures or other bookkeeping entries do not grant the basic property rights that a bailment confers, because the actual value of what is owned is abstracted from the paper itself.
Strategic Gold has structured your Clear Title Account as a bailment for the purpose of arranging the strongest and simplest legal protection for your bullion within a professional bullion vault, and for no other reason.
Owning bullion in this way gives you the soundest protection from the unlikely event of Strategic Gold Corporation’s insolvency or the insolvency of a Custodian.
- ADDITIONAL RESOURCES:
- Clear Title Terms and Conditions: Bailments and business failure.
What Are The Advantages Of Clear Title Ownership?
Your Clear Title Account enables you to maintain liquid reserves that, unlike financial claims, do not rely on financial counterparties or functioning capital markets. You can tailor the geographic diversification of your assets by allocating your physical bullion holdings across non-financial vaults of your choice in Canada, England, Switzerland, Singapore, Hong Kong, and the United States.
By owning physical gold or silver outside of the financial infrastructure in your Clear Title Account you enjoy:
- Direct ownership of specific, credentialed bullion bars protected by bailment law
- The right to take physical delivery of your bullion at any time
- Immediate access to the Primary Bullion Market
- No credit, management or counterparty risk
- Order execution at the Interbank Spot Market Price
- Absolute liquidity; the ability to sell and receive cash proceeds within a 2 day settlement period
- Secure global custody options within the Chain of Integrity and Good Delivery System
- An asset insured to its full current market value
- Secure online account access
- Independent account inventory audits
- Independent account transaction audits
You can rest easy knowing that you remain in control of your assets at all times. Your gold remains free of credit or counterparty risk, is always liquid and is insured and audited.
What Kinds Of Risks Does My Clear Title Ownership Protect Me From?
The Clear Title Account Program addresses liquidity risk, leverage risk, market risk, counterparty risk, operational risk, and compliance, legal and regulatory risk. Below is a description of how each risk has been addressed by Strategic Gold within the Clear Title Account Program:
- Liquidity Risk: the ability to convert bullion to cash. All gold and silver bullion purchased in a Clear Title Account is investment grade bullion held within the LBMA Chain of Integrity. Bullion is one of the most liquid assets available and can be quickly sold into the global Primary Market for cash settlement on a T+2 basis.
- Leverage Risk: the practice of using borrowed funds to trade and invest. A Clear Title Account is not a security. All bullion owned in a Clear Title Account is the sole and exclusive private property of the account owner. Strategic Gold Corporation does not engage in any derivative, hedging, or leveraging activities. Clear Title Account ownership is held directly in the account owner’s name.
- Market Risk: the financial risk resulting from changes in the market price of bullion. The gold and silver markets are one of the largest and deepest capital markets in the world. Bullion trades daily across the globe. Gold is considered to be both a global reserve asset and a safe haven asset.
- Counterparty risk: the risk of loss due to the change in creditworthiness or solvency of brokers, custodians, trading, and depositor counterparties, as applicable. A Clear Title Account conveys direct ownership of the bullion holdings owned in the account. There are no unallocated or pooled accounts in the Clear Title Account Program. Each bullion bar is fully allocated to one Clear Title Account. They are the legal property of the Clear Title Account owner and defended by private property and bailment law. No third party including the Company and the vault custodian or either of their creditors retain any claim against a Clear Title Account’s bullion holdings. Neither Strategic Gold nor the custodial vaults keep and Clear Title Account assets on their own balance sheets. In the unlikely event that Strategic Gold or one of the Company’s custodial vaults was to become insolvent, no one other than the Clear Title Account owner(s) has a claim to the bullion.
- Operational Risk: the risk resulting from inadequate or failed internal processes, people, systems, or from external events. Strategic Gold works on an agency basis and does not take any proprietary risk on transactions. The Company is not a market maker or broker-dealer. Pursuant to its organizational charter, the Company does not engage in speculative trading or market making activities. Strategic Gold has engaged two independent auditing firms to oversee the implementation of our extensive internal and externals controls in order to provide a Clear Title Account owner with the assurance that both their cash and bullion assets are always secure. The Company has established relationships with Best-in Class bullion trading partners, auditing firms, legal firms, and custodial vaults. Our custodial safeguards include full insurance coverage for each and every bullion bar administered by the Company in the Clear Title Account Program.
- Compliance, legal and regulatory Risk: the risk of loss resulting from litigation or regulatory non-compliance. Direct ownership of physical gold and silver bullion in a Clear Title Account is not ownership of a security. As a result it is not subject to changes in regulatory oversight by the U.S. Securities and Exchange Commission (“SEC”) or the U.S. Commodity Futures Trading Commission (“CTFC”).
A Clear Title Account owner has direct, exclusive ownership of a specific, highly liquid, real asset that is held outside of the financial system so as to provide insurance to that Clear Title Account owner against the systemic risks inherent within the global financial system.
- ADDITIONAL RESOURCES:
- Managing risk with a Clear Title Account.
How Safe Is The Cash In My Clear Title Account?
Strategic Gold accepts a duty to receive, hold and maintain funds received from you directly into a segregated Strategic Gold Client Account maintained at the bank for the express purpose of safeguarding uninvested Client money. Strategic Gold confirms that the bank has acknowledged and accepted that the money in the Strategic Gold Client Account is held under a dual signature control by Strategic Gold and is reviewed by the Independent Transaction Auditor. The bank has further acknowledged and accepted that it is not entitled to combine this account with any other Strategic Gold corporate account or to exercise any right of set off or counterclaim against money in this account in respect of any money owed to the bank on any other Strategic Gold corporate account.
On your behalf Strategic Gold is permitted to manage your money in the segregated Strategic Gold Client Account exclusively for the following purposes:
- It may be used to buy physical bullion from the recognized bullion market on your behalf, where you have exercised your right to participate in the bullion market.
- It may be used to pay withdrawals of your money back to you – without delay, upon your written instructions.
The Strategic Gold Client Account statement from the bank shall be fully reconciled to Strategic Gold’s own records every banking day.
Strategic Gold undertakes to operate robust internal controls such that payments of Client money upon withdrawal get authorized only when at least 2 senior officers of Strategic Gold have inspected and approved the payment instructions. Cash movements are further secured through the employment of our Independent Transaction Auditor’s oversight.
Strategic Gold undertakes to maintain at all times within the segregated Strategic Gold Client Account sufficient funds to pay back the gross credit balances of all Strategic Gold Clients, and to have that money held at call for return, if requested, on the same business day. As with any bank deposit, cash in the client account is potentially exposed to a bank failure. In contrast, owning precious metals under the terms and conditions of the Strategic Gold Bailment Agreement eliminates this risk.
- ADDITIONAL RESOURCES:
- Clear Title Account Terms and Conditions: The Safety of Your Money
What Kind Of Controls Are Verified In The Transaction Auditor’s Report?
The Company has engaged an Independent Transaction Auditor to perform a regular periodic review of the following control procedures:
- Verification that all client cash deposits into the Northern Trust Client Cash Account were posted appropriately to the correct client account on the Precious Metals System.
- Verification that all client cash withdrawals (including wire fees) out of the Northern Trust Client Cash Account were posted appropriately to the correct client account on the Precious Metals System, agreed with written instructions received from the client, and were properly authorized by the client.
- Verification that all client cash purchases of precious metal products were properly withdrawn from the appropriate client account on the Precious Metals System, agreed with written instructions received from the client, and were properly authorized by the client.
- Verification that all client cash sale proceeds of precious metal products were properly deposited into the appropriate client account on the Precious Metals System, agreed with written instructions received from the client, and were properly authorized by the client.
- Verification that the daily administration fee was properly accrued in each client account on the Precious Metals System during the previous quarter. In addition, verify that the administration fee withdrawn from the client accounts on the Precious Metals System followed the Terms and Conditions Agreement that was signed by the client.
- Verification that the transaction fees withdrawn from the client accounts on the Precious Metals System followed the Terms and Conditions Agreement that was signed by the client.
- Using a sample of clients’ accounts, recalculation of the clients’ accounts to insure that all cash transactions during the quarter were properly calculated, authorized, and recorded in that client’s cash account on the Precious Metals System.
- Verification that at the end of each month in the quarter that the ending balance in the Northern Trust Client Account reconciled to the total of all clients’ accounts in the Precious Metals System.
- Confirmation of the beginning and ending balance in the Northern Trust Client Account.
- Verification that all clients’ precious metal products were properly withdrawn from the appropriate vault facility and recorded on the Precious Metals System, agreed with written instructions received from the client, and were properly authorized by the client.
The review of these controls is conducted each quarter. Upon completion of the review, Livingston and Haynes provides the Independent Accountant’s Report on Applying Agreed Upon Procedures to the Company’s Board of Directors which details any findings.
- ADDITIONAL RESOURCES:
- Clear Title Account Terms and Conditions: Independent Transaction Auditors
How Safe Are The Precious Metals In My Clear Title Account?
Clear Title accountholders have OUTRIGHT and COMPLETE ownership of unencumbered, actual and specific physical bullion bars and coins.
The operation of your Clear Title Account is designed to fully protect you and your bullion holdings. Safety features have been designed to provide the greatest level of security, while maintaining the individual accountholder’s privacy, and ease of account dealings. Strategic Gold warrants that with each bullion bar purchased and stored, a Clear Title is issued verifying the Account Holder’s ownership of specific bullion by weight, hallmark, purity and serial number. Our process ensures that each bar is wholly and exclusively allocated to the owner.
The physical bars of gold and silver, belonging to each Account Owner, are stored and separately allocated at the Secure Vault Facility chosen by the accountholder as follows:
- The Strategic Gold Clear Title Account Program maintained by Strategic Gold and the Custodian (the “Title Register”) will record the serial number, exact weight, refiner’s mark and purity of each bar held in the Clear Title Account Program; and
- The Owner shall have sole legal title and ownership of the gold or silver referenced on the Clear Title and Title Register and lodged in the Storage Facility;
- The Owner’s gold or silver may not be used by any party for any purpose during storage;
- The Owner’s gold or silver is not carried as an asset on the books of either Strategic Gold Corporation or the Custodian(s);
- In the unlikely event of bankruptcy or insolvency of either Strategic Gold Corporation or the Custodian(s), an Owner’s Clear Title to its gold or silver is not subject to any third-party claims.
Ownership of your precious metals in The Clear Title Account Program is outright. It is not anyone’s liability. Simply put, your bullion is your outright property from the moment you buy it to the moment you sell it. The specific bullion (identified by hallmark, weight, purity and serial number) is your personal property and is safeguarded by fundamental property rights.
- ADDITIONAL RESOURCES:
- Clear Title Account Terms and Conditions: The Safety of Your Bullion
What Kind Of Controls Are Verified In The Bullion Auditor’s Report?
Operating within the strictest custodial guidelines, Strategic Gold utilizes BDO International as its independent, external bullion auditors. BDO International performs a quarterly physical inventory of the gold and silver held in the Clear Title Account’s Vault Facilities.
The bullion auditors have been engaged to perform specified auditing procedures in order to ensure that each and every bullion bar administered by Strategic Gold is physically present in the vault facility chosen by the accountholder and that each bullion bar is exclusively allocated to one specific Clear Title Account. This engagement to conduct mutually agreed upon auditing procedures is performed in accordance with standards established by the Canadian Institute of Chartered Accountants.
BDO International verifies the presence of each bullion bar by the following unique identifiers:
- Serial Number
- Vault Facility
The results of these quarterly audits are sent directly to each client in the form of an individual account audit report. Records of these audits are also posted to each client’s online account.
As an additional measure of security and verification of the Clear Title Program, The vault custodians issue monthly reports to Strategic Gold that record bars added or removed from the vault and provide a complete audit trail of all holdings.
Has There Ever Been A Material Restatement Of Statements Or Prior Results?
No. There has never been a restatement of a Clear Title Account statement or prior results by the Company or its independent auditors.