What is a Gold Bailment?
In English law a "bailment" occurs when a person [the bailor]
delivers physical property (gold bullion bars) into the possession of
another person [the bailee] on condition that the goods (gold bullion bars)
are either returned to the bailor at some later agreed date, or disposed of
in accordance with the bailor's instructions. The essence of a bailment is
that the bailee [a custodian] has physical custody of goods but they remain
the outright property of the bailor [you].
The bailment is founded on old and well established trade laws. Ancient
courts decided that transferring goods to a custodian did not grant a
property right to the custodian, or to its creditors in the event of the
Instead the property remains that of the original owner until it is
delivered according to the bailor's [your] instruction. Failing successful
onward delivery the property would be returned in full to the bailor [you].
If you've not heard of a bailment it's because they are now uncommon -
especially in the investment world. In law a bailment is restricted to
physical goods which can be owned outright through possession. A
bailment cannot apply to entitlements evidenced by stock certificates, trust
deeds, unallocated accounts, futures or other bookkeeping entries.
With these the possession of a piece of paper does not grant the basic
property right, because the actual value of what is owned is abstracted from
the paper itself.
So bailments - and the outright property rights they confer - are not
widely applicable to modern securities like stocks, shares and even gold
certificates. Instead modern securities law is based on contracts,
trusts, deeds and increasingly complex case law.
All of these constructions are far more complicated than owning some
physical material. Indeed key clauses in contractual and trust
agreements are frequently struck out by the courts, which insist on their
right to interpret complex documentation and its wider legal meaning.
There is simply not the same potential for future argument with a
bailment of physical goods. It remains the legal property of the
bailor [you] and this inalienable property right is soundly established and
tested in law. Over several centuries there is very much less case law
on the subject of custody bailments than on the subject of trusts, because
there is much, much less to argue about than with a trust or deed.
The text above was copied from
Gold Bailment at iGolder
You are welcome to bring your gold bars for bailment, and we will issue
the equivalent of fine gold in your iGolder account. For instance, if
you bring a 400 oz gold bar having 99.5% purity, then iGolder will add to
your account 398 oz of gold. Bar purity is measured, and only the
purity multiplied by the gross bar weight is added to iGolder inventory
records. So your gram of 'fine gold' is guaranteed 100% pure gold held.
Since iGolder only works in milligrams, your account will receive exactly
12,379.183 grams of gold for your gold bailment.
There are no fees for gold bailments, unless we suspect the gold bar
needs to be verified by a third party for authenticity. If such the
case, we will inform you and you will have to pay the fees associated with
verification. Please bear in mind that a
gold redemption has a fee up to 5%.