The Risks of Investing in Precious Metals with GoldRepublic
An investment in physical precious metal at GoldRepublic offers a form of wealth insurance and an opportunity to realise good returns; however, it also entails risks and is therefore not suitable for every investor. It is important that you gain a good understanding of the characteristics and risks of investing in physical precious metal before you take an investment decision. In addition, you should also carefully consider whether an investment in physical precious metal is suitable for you in view of your experience, investment horizon, other investments, financial position, risk appetite and other relevant circumstances.
In this section an indication is provided of the risks involved when investing in precious metals with GoldRepublic.
The price development of precious metal depends on the movements in the market. As a result, the value of precious metal can fluctuate and the price of your precious metal can be lower than the price for which you purchased it. If the value of your precious metal drops to zero, you could even lose the value of your whole investment.
The price of the precious metal at the time that you enter an order via your account and issue it to GoldRepublic is not necessarily the price at which the order shall be executed as a delay in the execution can occur. This applies in particular - but not exclusively - to orders that are placed outside of business days.
Exchange Rate Risk
Worldwide, the value of precious metal is expressed and traded in US dollars. As you purchase your precious metal in euros, the value or your investment is influenced by exchange rate effects. An appreciation of the US dollar versus the euro has a positive effect, whereas a depreciation has a negative effect.
Bankruptcy of Bank
Cash that you maintain in your cash depot is held via SBDG at the Rabobank in The Netherlands or ING DiBa in Germany. Both well reputed banks with a high, stable creditworthiness. Nevertheless, these banks could go bankrupt or experience financial problems as a result of which you can lose (part of) your money. SBDG is not a bank and is not subject to the deposit guarantee system.
Due to special circumstances it can occur that trading is not possible and as a result physical precious metal cannot be purchased or sold via GoldRepublic. After trading is resumed, the prices can differ from the prices that were issued before the trading interruption.GoldRepbulic's (computer) system, website, the Internet, etc., could be (temporarily) inaccessible or your own computer could malfunction. As a result, it is possible that you are unable to carry out a transaction or unable to carry out a transaction at the desired time or at the desired price.
This is the risk that due to a shortcoming in the working of the procedures of GoldRepublic errors are not observed timely or fraud could even occur. GoldRepublic aims to counter this by means of a sound division of tasks, a well-documented administration organisation and supervision of the compliance with the agreed procedures.
If your password does not remain confidential and is obtained by a third party, you run the risk that a third party can gain access to your account. In principle, this third party can only carry out transaction or transfer your cash to your contra account. As it is not possible to transfer cash to another account. The risk that you run is therefore: a violation of your privacy and the placing of ghost orders. The first matter is a nuisance; but the second matter can also lead to losses due to price differences.
GoldRepublic ensures that your precious metals are adequately insured against theft and damage. Exclusions apply to each insurance policy. If an exclusion occurs as a result of which no insurance payment follows, GoldRepublic is not liable for the damage. The cover that the insurance offers is specified in the insurance policies that are published on the GoldRepublic website.
Termination of GoldRepublic
In exceptional circumstances, GoldRepublic has the right or may be forced to terminate its activities. This situation could also occur when it is no longer possible for GoldRepublic to adequately hedge its risk in connection with the buying and selling of physical precious metal; for tax-technical reasons; if the Custodian no longer acts as custodian and no suitable replacement can be found, if GoldRepublic enters into a moratorium of payments or bankruptcy, etc. In the event that GoldRepublic terminates its activities the precious metal repurchase guarantee by GoldRepublic shall become null and void.
Laws and Regulations
Amendments to the applicable laws and regulations can be implemented, government measures can be announced or new interpretations of the supervisor of investments can be published that can have consequences for the business operations of GoldRepublic and can also lead to an increase of the rates for buying and selling transactions via GoldRepublic.