During the age of digital transformation, fintech apps, neobanks, and the accelerated development of all industrial segments, the digitalization for most bullion market players usually means a single webshop and related services. In parallel, new firms have emerged, offering tokenized gold but lacking key factors: regional branding, organization with real responsibility, existing offices, physical stock management, and auditable transparency. In other words, these players lack trust, infrastructure, and high-quality services. It is undoubted that gold dealers must keep pace with the development and modernization of the market, for which there is a growing customer demand.
As dealers experience these dynamics of development, they are considering the introduction of digital transformation and replatforming. The backbone of this transformation is IT, which is generally complex, expensive, and challenging, requiring long-term commitment and substantial investment. In order to avoid this unpleasant journey we have created Vaulter.
Vaulter is a white-label platform for retail gold dealers to offer online services for their customers, such as day-and-night buy/sell in any size with precious metals accounts, allocated and pool-allocated vaulting at accredited locations, transforming metal balances to bars and coins, VAT-free silver and platinum, saving programs, real-time lending, market forecasts, and more.
The selling point of using Vaulter for a gold dealer is the opportunity to grow and expand without any complex, challenging, and expensive IT development, in addition, since Vaulter is a SaaS solution with an unparalleled subscription pricing, there is no any long-term commitment and investment to introduce online services. The guaranteed profitable pricing model lets even the smallest gold dealer to phase in Vaulter and start offering modern services for their customers to accelerate the business, and to keep up with the dynamics of the bullion market’s digital transformation. This subscription-based pricing model means that the operational cost will always be less than the income of the trade markups and fees.
Trust is one of the most important cornerstones of the bullion market. Vaulted bars, which cover the entirety of precious metals balances, are clearly identifiable with a serial number and manufacturer, and are allocated to individual investors or a group of investors. This means that each customer can see in real time their vault screen what percentage they have of a given bar, where exactly it is stored, and who the manufacturer is. If the dealer has multiple vaulting location for a metal, the customer is able to choose their location preference and the operator tries to fulfill the customers’ request for a certain fee. This service allows customers to manage their location, as well as their geopolitical risks and fears. Vaulted bullions are allocated, which means that they are held as the customer’s property in explicit physical form. They are not used to support a lending program, or any other financial device. They are held away from company balance sheets under a safekeeping or custody program, so they cannot be accessed by a liquidator in the event of company failure, because the customers are the owners, not a creditor. Allocated metal is the only form that can build trust in customers because it is very well protected in general.
During a purchase or sale, the overall customer balance as their right claim is affected is handled right away by Hedge Manager in order not to have rate risk. If the bullion coverage is incomplete or has a surplus, the mismatch will be hedged on the FX market. The execution of opening a position is not order driven like in the case of stock exchanges, as most orders can’t be linked directly to a particular position, because the asset behind the successfully-executed order is usually a part of a vaulted bullion. So, Hedge Manager calculates the metal position from the balance of claims, vaulted bars, and current net open position and acts when needed independently of any event or execution. This principle guarantees that the balance of customers’ right claims and metal coverage is kept up continuously, and the two side are strictly equally expressed in net value.
Hedging means that small part of customers can be unallocated temporarily until an operator covers the mismatch. However, when monitoring the incoming bank transfers, the operator can prepare for metal purchases and can buy bullions in advance, which will be offset on the FX platform in order not to have any rate risk on the precious metals surplus.
Hedge Manager handles every aspect of metal trading, and Vaulter can run also any currency accounts for customers to purchase from or sell using a particular (usually their domestic) currency. Hedging the foreign currencies is very similar to metals, but the main difference is that the asset behind the customers’ balances are bank accounts with probable FX positions, not bullions. These FX positions allow the settlement to be exact, as every precious metals transaction’s value is automatically followed at the foreign exchange market. The accounting, performance measures, and other metrics expressed in the chosen settlement currency are usually determined by the location of the dealer’s headquarters. FX positions are closed by the Hedge Manager when a treasury transaction is executed successfully at the dealer’s bank accounts, which means that keeping the position for foreign currencies is no longer needed as the deliverable currency balance becomes available. This process is very similar to bullion stock management, where a wholesaler purchase closes an FX metal position.
Purchasing, selling, and vaulting gold and other metals is only the beginning of moving towards the digital transformation. By reaching at least 5,000 customers, it is worth it to consider introducing a mobile app. A traditional offline dealer with an integrated, online purchasing, vaulting and home delivery service, offering a smartphone app, would be a complete and unmatched service worldwide.
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