Bullion Funder and Knox Nuggets
Where is the underlying gold stored?
The short answer
Under the Bullion Funder terms, no gold is held against your account while you are still funding a coin: each nugget is a part payment, not a holding of metal. Once the full price has been paid, Knox retains the coin in its insured vault at 1 River Street, Houghton Estate, for up to three months while you arrange collection; after that, storage is charged at 1% of the coin's value per month.
What underlying gold means
For a product that counts towards physical gold, the underlying gold is the metal that backs customers' balances. Some providers buy and hold gold as customers buy units; others hold stock and allocate it only when a customer converts to a coin. Which approach applies determines what is actually held on your behalf at any time.
How custody generally works
Where gold is held for customers, good practice generally includes keeping it separate from the provider's trading stock, recording which holdings belong to which customers, reconciling records against physical stock and having independent checks. Insurance may sit under the provider's own policy, which protects the provider, rather than a policy in your name. These features are matters of the provider's terms and procedures.
What depends on Knox policy
Once a coin has been paid for and is held in Knox's vault, it is covered by insurance Knox has arranged with Hollard Insurance Company Limited, limited to R1 million (clauses 2.10 and 12.1.2). The cover is Knox's policy, not one in your name: Knox does not guarantee that a claim will be met, you may take out additional cover of your own, and the policy excludes, among other things, dishonest acts by Knox's staff, loss covered by other insurance, war and political risks, and unexplained loss or shortage found on taking inventory (clauses 12.1.3 to 12.3). A part-funded account is not a holding of gold, so this cover does not apply to it.
What this means in practice
- While you are funding a coin, your protection is contractual: Knox owes you the coin once the full price has been paid.
- Once paid for, the coin is in Knox's vault under Knox's Hollard cover, limited to R1 million, until you collect it.
- After collection, the coin is at your own risk (clause 11.2), so arrange your own storage and insurance.
- Keep your invoices and statements, which the terms say are sent electronically (clause 5.4), and ask Knox for written confirmation of your balance whenever you need it.
Ask Knox for the current terms before you buy. Once you collect the coin, you can decide separately how to store it, including in a Knox safe deposit box.
How Knox handles this
Ready for the next step?
Speak to the Knox team about your situation. They will confirm current pricing, availability and requirements before you decide.
