How do banks view silver and gold when assessing assets?

House · 2012-06-04 12:58:48

Good morning everyone

I've recently started buying silver (mainly 1kg bars) and will be buying gold soon too. I'm thinking of converting a large part of my savings into these two metals but as I will be buying my first investment properites within the next year, I'm wondering how the banks would assess a large amount of these PM's in terms of asset class...

Would $50k worth of PM's be equal or less than $50k worth of stocks or cash in their eyes? With rumours of gold possibly moving up to a Tier 1 asset class in some countries, would silver follow suit? Anybody have experience with their banks assessment of PM's?

Cheers

SULLA · 2012-06-04 13:22:23

Because it is an highly volatile market I doubt that a bank or similar will look at it favourably.

Others will know more.

Nugget · 2012-06-04 13:25:42

They don't like it because you can put $50k of gold in your carry on luggage and jet.

finicky · 2012-06-04 13:40:04

House wrote:

With rumours of gold possibly moving up to a Tier 1 asset class in some countries, would silver follow suit? Anybody have experience with their banks assessment of PM's?

No, no experience of this, but interesting idea. Some banks have vaults for hard assets at their major premises, e.g Westpac in Brisbane CBD I believe, as I think Ainslie (shudder) use this facility. Therefore maybe a customer could store for a fee and arrange a lien over the silver as collateral for a loan? System probably not agile enough to provide that service though

Big A.D. · 2012-06-04 14:06:59

Banks do not place any value on physical precious metals holdings at all. If you put "(Gold bars) $50,000" in the "Assets" column of your loan application they will simply ignore it or, if you're lucky, put it in the same category as your personal belongings (couch, TV, laptop) and discount the value of it by a huge margin.

Seriously, try plonking a kilo bar down on the counter and ask if they'll take it as security.

JulieW · 2012-06-04 16:01:47

Interesting.
I assumed they'd have a sort of "we buy gold" formula. i.e. about a 20% valuation, but perhaps they're hedging that golden meteor shower. lol
How about numis collections?

rick_au · 2012-06-04 16:19:34

I wonder if the bank would reconsider PM in the case of a borrower going bankrupt

boston · 2012-06-04 16:23:42

JulieW wrote:

How about numis collections?

Slightly off topic, but still somewhat pertinent.

True story. Last year an associate needed some cash in a real hurry, and ended up going to Cash Converters with his numi collection. The collection, amongst other very valuable items, included a 1930's penny. They loaned him $1000.

spannermonkey · 2012-06-04 16:57:03

boston wrote:

JulieW wrote:
How about numis collections?
Slightly off topic, but still somewhat pertinent.
True story. Last year an associate needed some cash in a real hurry, and ended up going to Cash Converters with his numi collection. The collection, amongst other very valuable items, included a 1930's penny. They loaned him $1000.

Should have told me ,I have a friendly pawnbroker I use,he know the true value of pre dec & regullary sells sov's for $700-$1000

Silvertronic · 2012-06-04 17:09:13

Hi House,

Went through the same process very recently.

Long story short - left it off. The fact that all your contents, car etc. (i.e. rapidly depreciating non-pm assets) are counted in the banks eyes, offsets your pm nicely them never having to know about your growing stack.

Even better? In doing your own budgeting YOU know the value of your PM so you can safely use this method to know you can get yourself out of hotwater if to came to it

Most folks round here despise letting the banks know any such information anyway - surprised we got 10 posts without this mentioned!

S-tron

Contrarian · 2012-06-04 20:43:32

As ridiculous as it is they wouldn't value precious metals.

Whats even more ridiculous is that I got a valuation done on a block of land so I could borrow against it. They did a paper valuation based on recent sales in the area and didn't even look at the block. Valued it at $180,000 and were willing to lend me 80%.

Little did they know that the block had some fairly significant shortcomings and would only have been worth about $120k.

And yet they wont value PM's with a known spot value.

C

Nugget · 2012-06-04 21:16:58

Contrarian wrote:

As ridiculous as it is they wouldn't value precious metals.
Whats even more ridiculous is that I got a valuation done on a block of land so I could borrow against it. They did a paper valuation based on recent sales in the area and didn't even look at the block. Valued it at $180,000 and were willing to lend me 80%.
Little did they know that the block had some fairly significant shortcomings and would only have been worth about $120k.
And yet they wont value PM's with a known spot value.
C

And the government claim our banks use sound banking practices

Kawa · 2012-06-04 21:33:43

Only one way to beat them and that's own part of them.

nonrecourse · 2012-06-04 21:36:17

Last year I had a discussion with my bank manager about hedging my properties using gold bullion. I suggested that I'd store the bullion in a safety deposit at their head office. I wanted a term loan in which I was happy to also give a personal guarantee.

He was unsure and when he got back to me the only way they would consider it was if it was a margin loan for shares:lol:

Seems paper equities are preferred and that is why our backing system world wide is farked

Kind Regards
non recourse

EthanEdwards · 2012-06-04 21:46:17

Kawa wrote:

Only one way to beat them and that's own part of them.

EXACTLY Kawa. Every time someone starts whinging about their bank.... I think, "Great... must buy some more of those bastards!"

LTEK4NZ · 2012-06-04 22:41:53

so how do i buy into the banks?

goldpelican · 2012-06-04 22:54:09

Um, ASX?

House · 2012-06-04 23:28:10

Some interesting responses indeed. Basically only tell the banks about your depreciating "assets" and bits of paper for stocks etc! I can imagine the lien idea would work nicely if there was sufficient demand for it.

The more I read about gold and silver the more I'm amazed that they're not considered assets. And how screweed the banking system really is. Wish I hadn't been so oblivious to it all even just 2 years ago.

Silvertronic, I suppose having your buffer as PM's instead of cash would be better as the banks usually are more interested in servicibilty than what you have in reserve in case of trouble.

Might slow down on the stacking until I buy a property and then leverage off that. Although with the amount of bullish predictions out there, I really don't want to slow down even a little!

grinners · 2012-06-04 23:40:55

I guess part of the problem for banks is when someone walks in with $50,000 worth of gold, how can it be proven that the gold is their own and has not simply been lent to them by another to swindle the bank.

I guess you could of any asset really but it is a lot easier with PM's.

Naphthalene Man · 2012-06-04 23:57:36

Keep your stash to yourself and don't tell your accountant or the bank.
In terms of using the stash for a loan to buy property, the bank does not care. Just like stocks, they just want you to sell it so can prove that you have the cash that you claim to have.

Nedsnotdead · 2012-06-05 00:06:18

.

Last edited by Nedsnotdead (2013-03-06 12:06:42)

hotel 46 · 2012-06-05 00:20:18

banks only give you an umbrella when the sun shines. they can go out of business and if you have paper you will burn. so sometimes it may be easier to try and jump through their hoops. silver and gold is anti their modus operandi, they want your feet nailed to the floor and indebted to them. they are after backing of their own type of value hedged in their favour. should you lodge your gold with them its liable to get hypohtecated but then you need more than a couple of 400oz bars to get their interest.

Last edited by hotel 46 (2012-06-05 00:21:04)

House · 2012-06-05 01:04:02

Nedsnotdead wrote:

If your sticking to bars then just sell your stack show the bank you bank balance. Get the loan approved then buy your stack back.
Im sure there would be a few on here that would happily buy your stack. Then sell it back a few weeks later for say... A kilo of silver

Now that's an idea... hope you have $50k to loan me when I come a-knockin' on your door for it!

errol43 · 2012-06-05 01:16:28

The banks themselves are not backed by assets..I posted "are Australian Banks into derivatives?

SS member Nukz posted graphs of the big 4 Australian banks..They showed that all our banks are professional gamblers and are exposed to derivatives in a huge way. They are only solvent while this section holds up.

Regards Errol 43

JulieW · 2012-06-05 03:08:38

boston wrote:

JulieW wrote:
How about numis collections?
Slightly off topic, but still somewhat pertinent.
True story. Last year an associate needed some cash in a real hurry, and ended up going to Cash Converters with his numi collection. The collection, amongst other very valuable items, included a 1930's penny. They loaned him $1000.

I've watched those sort of people, and the 'pay day loan' slitherers and not surprised at all.

Silver Stackers

#1 2012-06-04 12:58:48

How do banks view silver and gold when assessing assets?

#2 2012-06-04 13:22:23

Re: How do banks view silver and gold when assessing assets?

#3 2012-06-04 13:25:42

Re: How do banks view silver and gold when assessing assets?

#4 2012-06-04 13:40:04

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#5 2012-06-04 14:06:59

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#6 2012-06-04 16:01:47

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#7 2012-06-04 16:19:34

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#8 2012-06-04 16:23:42

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#9 2012-06-04 16:57:03

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#10 2012-06-04 17:09:13

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#11 2012-06-04 20:43:32

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#12 2012-06-04 21:16:58

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#13 2012-06-04 21:33:43

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#14 2012-06-04 21:36:17

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#15 2012-06-04 21:46:17

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#16 2012-06-04 22:41:53

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#17 2012-06-04 22:54:09

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#18 2012-06-04 23:28:10

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#19 2012-06-04 23:40:55

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#20 2012-06-04 23:57:36

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#21 2012-06-05 00:06:18

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#22 2012-06-05 00:20:18

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#23 2012-06-05 01:04:02

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#24 2012-06-05 01:16:28

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#25 2012-06-05 03:08:38

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