Who and what is behind BullionVault ?
The Company
Business history
People
Who is BullionVault's regulator ?
Is there a compensation fund to compensate me in the event of loss ?
Does BullionVault report my gold trading activity ?
BullionVault is owned by Galmarley Limited [name origin], which is company number 4943684 registered in Great Britain.
As at November 2006 the company has 49 shareholders. For a modest fee you can obtain a full and formal shareholder list, updated annually, from Companies House on http://www.companieshouse.gov.uk.
Galmarley's offices are in West London (UK) and we welcome callers by appointment. Our contact details are here.
Our services are delivered to you by our own computer machinery hosted in separate locations in Britain and USA, which we connect to and manage from our London offices.
Galmarley is involved exclusively in gold and gold related information technology. It owns not only www.BullionVault.com but also www.galmarley.com
The www.galmarley.com site is a free educational resource for researchers seeking information on gold's monetary history, its modern role, and how it is traded around the world. It was developed and published in 2001/2 and has grown to become one of the most visited and studied gold resources on the Internet.
Feedback from Galmarley's many tens of thousands of visitors inspired the BullionVault service.
Resulting from the Galmarley site feedback an original £275,000 [$500,000] of seed capital was injected at the incorporation of Galmarley Ltd in October 2003, and it funded the early planning and development of the BullionVault service.
After completing software development and immediately prior to opening for business, in March 2005, a mixture of external and management funding was invested to finance the gold bullion inventory which the business needed to operate. A total of £2m was raised.
£1m of that was convertible, redeemable debt owned by 29 external shareholders. £0.8m was a 7% irredeemable debt invested by management. £0.2m was new equity which was issued at a substantial premium to the nominal value to the same 29 external shareholders.
This £2m enabled the business to acquire the 'float' of gold bars which is at the heart of the way BullionVault works. The accessibility, safety and value of gold bought through BullionVault quickly made the service popular, and the business soon traded profitably. Its revenues come from a mixture of four sources:-
The major expenses of the business are:-
In the first full trading year to October 2006 the revenues just exceeded the expenses, and the company traded at a small profit. The underlying revenue growth is strong as the BullionVault way of owning gold catches on all over the world - currently active customers come from 62 countries and between them they own approximately $60m in stored bullion.
Meanwhile costs - although increasing as we expand our operations - are increasing more slowly than revenues.
The financial performance of the business has exceeded expectations, leading to a decision to expand the operational base through the creation of identical services in several languages. Accordingly in November 2006 the equity base was expanded by 20% in order to raise a further £2m - thereby funding the cost of creating foreign language services. The number of external shareholders is now 46.
The company now has a bank balance sufficient to operate the business according to the expansion plan for three full years even in the absence of any revenue, and at the end of that time it would still have resources to pay back all its debt. As revenues already cover unexpanded operating costs, and because they continue to grow, the substantial cushion of operating cash is unlikely to reduce materially during the current phase of expansion.
Currently [Jan 07] the net assets per £1 ordinary share have grown to £9. Those £9 of net assets are securely held as currency or as gold bullion. In line with cautious accounting policies the BullionVault software system, which is the property of the business, has been expensed rather than capitalised, and is attributed no value in the company's accounts.
BullionVault's Director, Paul Tustain, founded BullionVault as a response to a widespread perception of increasing systemic risk in the financial world. He remains in full day-to-day control, and in his view global systemic risk has become still more acute. He is committed to directing the business in the way which at every step retains its first objective of using gold to secure customers against the threats in the international financial system.
BullionVault will continue to be run within exceptionally safe parameters.
BullionVault achieves its significant cost savings for you through automation, which enables Galmarley to operate with an exceptionally small full time staff - currently seven. The founding staff are Paul Tustain (Director), Alex Edwards and Kris Jenkins.
All three are very experienced computer professionals with backgrounds in banking and accounting systems, internet and telecommunications networks, operating systems and security. Between them they own 64% of the fully diluted equity of Galmarley.
Naturally we regard ourselves as both trustworthy and capable. But we well understand that many people considering buying gold are justifiably ultra-cautious. This is why we have made BullionVault records open and accessible for your audit; so that all our visitors can see at any time that we are running our business honestly, efficiently and accurately.
Paul Tustain introduces himself and the BullionVault team:
"Here's some background about us. Because of what we're doing I believe introducing the people behind the company is important.
I graduated as a Computer Scientist. From 1980 to 1986 I worked for an investment company in London as an equities analyst, and then for four more years, to 1990, I specialised in computer systems for financial instrument administration, regulation and risk measurement.
In 1990 - as European share markets were moving to electronic depositories - I founded SAM Systems, to further develop a new type of software which I had designed for administering the electronic settlement of immobilised stocks and shares. My product was selected and used by several of Europe's major banks as their bulk settlement and custody solution. It grew to process occasionally $120bn a day through CREST - the UK's Central Stock Depository.
I remained a major shareholder and non-executive director of SAM until it was sold in 2005.
In 2000 I became an early shareholder in a company called 'Betfair'. It was founded by my bridge partner who had invented the concept of the 'betting exchange'. Betfair allowed gamblers to back and lay horseracing bets direct with each other, through an innovative internet based exchange system. Although I know nothing about horses I thought it was both fairer and more efficient than the alternatives. In 3 years it grew to dominate 90% of Europe's on-line horse betting and now turns over approximately $20bn a year. It has become one of the world's biggest internet success stories with a valuation of approximately $3bn.
From 2000-2003 I developed a growing interest in gold. I have been published widely on the internet on economics, economic history, gold and currencies. I am the editor and publisher of www.galmarley.com which (according to Google) is well regarded as a free educational resource on the web for prospective gold buyers. From its inception this site has been collecting data about services gold investors are looking for.
Much of the feedback from Galmarley's web visitors backed up my personal experience of how incredibly difficult it is for private buyers to set up the facilities to buy gold. This bothered me because the history is clear: accessible bullion ownership has regularly provided the essential defence for people who have saved some money, and would rather not surrender it to the riskier financial practices which tend to develop over time.
So in 2003 I decided the gold market would benefit from the exchange techniques I'd seen work so well at Betfair, compounded with a strongly beefed up approach to efficient administration and investor protection for bullion owners.
The result - BullionVault - brings together my experiences in administration and risk management systems, immobilised assets, electronic settlement, internet based exchanges, and gold.
BullionVault is designed to be something I would choose for myself, with complete confidence, even in times of real international financial crisis. I wanted it to be extremely secure; I wanted it to be transparent and offer very good value. I believe it now offers by a considerable margin the best method of buying and securing bullion for gold purchasers all over the world. I use it myself as a secure store of wealth, and I willingly underpin its security for you through our management bonds which guarantee your security against any dishonesty or error at BullionVault.
Let me now introduce the BullionVault team:
Alex Edwards: Chief Operations Officer
Kris Jenkins: Chief Technical Officer
Adrian Ash: Head of Research
Catherine Little: Cash Manager
Sonia Franchini: European Operations Executive (German & Italian)
Nittin Saheekoo: European Operations Executive (French)
Robert Nigg: European Operations Executive (German & French)We are approachable. Let me take this opportunity to invite our users to contact us whenever you like via email, and in person should you choose to visit London.
As the head of the board and majority shareholder Paul Tustain accepts responsibility within the company for organising BullionVault's system controls and arranging individual responsibilities within the BullionVault team, and its custody providers, so as to maximise the security of customers' gold and cash.
In addition to development capital Paul Tustain has provided management bonds to the company which is held as gold and cash segregated in favour of customers. These management bonds are non-refundable except in final liquidation, in which circumstance they rank behind all other customer property for repayment.
The value of equity in the company and this loan would therefore be lost before any BullionVault customer incurred any loss resulting from breaches of faith or security on BullionVault.com.
This arrangement is structured to underpin the meaning of 'accepting responsibility'.
BullionVault's objective is to create the world's most cost-effective, secure and accessible market in professional grade gold bullion.
We want to do this because :-
BullionVault is regulated under English Law.
Regulatory responsibility rests on three mutually independent arms of law enforcement: (i) the investigating authority, (ii) the prosecuting authority and (iii) the Criminal Courts.
Bringing a criminal case is not something you would have to do yourself. You would report - for example - a theft, and the investigation and prosecution is the duty of these civil bodies.
In addition you have recourse to the civil law, which would rule on trade disputes between you and us if, for example, you were to allege that we were acting in breach of our stated Terms and Conditions - which form the basis of the business arrangement between us. Bringing a case under civil law would ordinarily incur costs for you.
You should understand that together with the whole of the London Gold Bullion Market BullionVault's regulatory status is markedly different from the financial services industry, and we believe this to be a thoroughly good thing.
Modern financial services businesses throughout Europe and America tend to be companies which deal in paper based instruments generally called 'securities', and these are subject to increasing legal sophistication.
As a result of growing complexity too many instances of loss to investors have occurred, where victims have been told that the cause of their loss was regrettable management error, not dishonesty. Yet frequently the managers responsible are insured against personal lapses and many of those responsible for costly error have actually received substantial sums of money on the termination of their employment, while investors have suffered losses.
Meanwhile the effectiveness of straightforward property law has continued to enjoy the full power of the state to identify, prosecute and punish people who steal and defraud.
Because BullionVault offers a credit-free environment, and because it deals in the absolute ownership of physical metal, and not paper based contractual rights, it falls outside the defined scope of formal financial services regulation, as does the rest of the genuinely physical gold bullion industry.
The London Gold Bullion market - which is the biggest in the world - is instead regulated by traditional English property law, and not by the United Kingdom's Financial Services Authority.
We believe this offers a regulatory environment better understood by our customers than is the formally regulated securities industry. They own their gold, and not a piece of paper evidencing an entitlement under a trust, or a liability on a corporate balance sheet. The property rights customers enjoy are simpler, better established, and less subject to change than modern securities law.
Although it is not regulated by the Financial Services Authority BullionVault adopts many of the duties which have been applied by FSA to businesses which have responsibilities for other, less tangible, stores of private wealth. These include:-
BullionVault is a rigorous adopter of these good practices and seeks to maintain an environment where its compliance with these principles is visible and proven.
It is up to you to decide whether you want to raise an informal complaint or a formal one. The key difference between the two is that BullionVault itself resolves informal complaints. Formal complaints are resolved by independent parties.
The informal complaints procedure is usually more accessible and responsive for you because our managers can act immediately, as they think appropriate. Consequently all complaints ordinarily start off as informal and BullionVault seeks to act favourably with every fair-minded customer with a genuine grievance.
Complaints get promoted to formal complaints when a customer is dissatisfied with our response or proposed resolution.
A formal complaint is addressed to a committee of independents which meets infrequently - and then only if formal complaints are outstanding. You will be advised when the next planned formal complaints committee meets in response to your formal complaint.
Formal complaints would ordinarily concern unresolved informal complaints arising from apparent unfairness or breaches of BullionVault Terms and Conditions by BullionVault with direct loss to a customer resulting.
Informal complaints can be made by emailing to the informal complaints email address on our contacts page.
Informal complaints will be acknowledged by BullionVault within 2 working days and will be the subject of management investigation and response within 1 week. A failure to reach a satisfactory resolution within 2 weeks shall entitle the complainant to raise a formal complaint on the issue at any time during the following six months, but in any event the complainant and BullionVault may continue seeking redress on an informal basis.
Before you make a formal complaint ...
If the answer to either of these questions is no your complaint will not ordinarily cause the formal complaint procedure to be initiated.
Formal complaints can be made by emailing to the formal complaints email address on our contacts page.
Formal complaints will be assessed and adjudicated by an independent council of BullionVault users unconnected with the shareholders or management of BullionVault but appointed because of their experience of the market and its technology.
A BullionVault representative will have an organising role and the right to represent the BullionVault position to the council, but no powers of adjudication.
The findings of the council will be posted on the BullionVault website. The council may at its discretion identify the Customer — but ordinarily will not. The council's findings will not be binding in law on either BullionVault or the Customer but its findings can be used by either party in any submission that either party might make to court.
Formal complainants will be required to post $100 (or other currency equivalent) to the BullionVault compensation fund, which will be forfeit in the event of the complaint being deemed by the council trivial or an idle nuisance. This sum will always be returned in the event of a complaint being upheld, and also returned if the complaint is ultimately rejected but deemed made seriously and with a reasonable expectation of being upheld.
Do you believe a crime has occurred on BullionVault?
In most circumstances of suspected crime it would be prudent to contact BullionVault first if you believes BullionVault management would be capable of acting to minimise the effect of any criminal activity.
Nevertheless allegations of criminal theft, or fraud, or other crimes, can be made directly to the London Metropolitan Police. There is no need for such an allegation to be preceded by a complaint to BullionVault and any such requirement would deny customers their civic right to the protection due to them under statute law via the appropriate forces of law enforcement.
BullionVault maintains a compensation fund out of its commission and contributes at a rate of 10% per commission charged, to a maximum of 10 cents per order. The value of the compensation fund is currently capped at $4m which is a total maintained under review. The independent council for adjudicating on formal complaints has the exclusive power to distribute benefits from this fund.
Currently there is no reporting of your BullionVault business while your gold is maintained within a Via Mat vault in the normal BullionVault way. Wherever you live your trading activity and gold ownership are not reported to any authorities, anywhere in the world.
Nevertheless there are some issues you should understand.
Do not place the proceeds of crime in a BullionVault account. Do not attempt to launder them through a BullionVault account (which the linked bank account would render unworkable anyway). BullionVault is committed to keeping crime out of the professional bullion markets, out of London, out of New York, and out of Zurich.
© BullionVault.com 2008 - Buy gold online at live gold prices.