PRECIOUS METAL PORTFOLIOS
The Definition of ‘Auctus’: a Latin word meaning ‘to grow’, the act of increasing, enlargement and prosperity. This is the guiding principle for our company and the overriding mandate we apply to the management of our clients’ Precious Metal portfolios.
The following frequently asked questions about Auctus Precious Metal Portfolios include responses to common questions asked by our clients including professionals within the financial industry, investment funds, family officers and banks regarding our Provectus Models and their respective performances.
If we do not cover all of your queries here, please do contact us via: firstname.lastname@example.org
FREQUENTLY ASKED QUESTIONS
Please contact us directly to request our Account Opening Forms that you will need to complete. You may call: +65 9459 5211 or email: email@example.com with your enquiry and we will get back to you immediately. Clients will need to confirm in writing whether they are bringing over an existing metal allocation into the vault or wish to inject cash capital into a physical holding or indeed, a combination of both. Clients will need to complete our Account Opening Forms and choose their preferred portfolio model and method for holding, as described above, i.e. Segregated Account or Singapore Managed Portfolio. Several documents are required to identify the client including passport copy, address confirmation and combination of other necessary details required for absolute identity verification and KYC.
Read More About Investing in Precious Metals
IS AUCTUS METAL PORTFOLIOS A REGULATED SINGAPORE BULLION DEALER OR A LICENCED FINANCIAL INVESTMENT FUND?
Auctus Metal Portfolios is not a ‘fund management group’. Our target client is a sophisticated (or accredited) investor according to the Monetary Authority of Singapore’s (MAS) definition, hence our initial investment size. We are a physical metal bullion advisory service – we advise our clients on the specific percentage weightings they should hold in each of the 5 precious metals: Gold, Silver, Platinum, Palladium and Rhodium to effectively garner the greatest returns. Re-weightings are done (under a Power of Attorney provided by the client) when our models trigger diversification events, usually between 2 and 4 times per year.
Our clients hold the physical metals in their own wholly segregated vault. The client retains complete ownership and control of their bullion, under their family (or company / trust) name within Le Freeport Singapore. The client’s precious metal has no 3rd party liability. The portfolio is independently audited and fully insured by Lloyd’s of London. The client has the option to liquidate their physical holding of metals, or part thereof, at any time without any penalty whatsoever.
We are not required to hold a financial license or be regulated by the MAS as it is physical metals in your own vault. The difference in our offering is that our clients have an active rather than a passive portfolio of metals. We are however regulated by the Ministry of Law for purposes of anti-money laundering and countering the financing of terrorism.
Q: IS THERE ANY HUMAN OVERSIGHT OVER THE ALGORITHM AND PROCESS OF TRADING WITHIN THE PORTFOLIO MANAGEMENT SERVICE?
We have conducted an exhaustive audit with BDO Global, one of the world’s largest auditing companies. Their actuaries fully backtested our models using 50 years of daily metal data and covering every aspect of our algorithm logic including every possible economic event, from bear markets in metals to extreme global inflation as well as deflationary events, wars, the banking crisis, oil crisis and the Global Financial Crisis. The Provectus Models’ results speak for themselves without any mathematical doubt during both bull and bear markets. Please feel free to contact our Auctus Sales Team for the full details of our BDO Global Audit Certification.
We have developed sophisticated mathematical algorithms designed to generate maximum returns for our client’s portfolios. With over 55 live data variables, we have an acute understanding of precisely what metal weightings should be throughout the investment year. The sole purpose of the algorithms is that they are irrefutably consistent, immutable and able to measure across multiple variables, processing enormous swathes of data. Major trade trigger events are always analysed by management, but the algorithms are rigorously adhered to. As our algorithms are run on a consistent and daily basis, any input anomalies are picked up instantly.
Q: WHY IS INVESTMENT INTO AUCTUS CONSIDERED IMPORTANT AT THIS TIME FOR THE BENEFIT OF CLIENT’S RETURNS, WHY DO YOU SAY THIS?
Our portfolio algorithms are focused exclusively on obtaining optimum returns for clients by identifying breakdowns in the correlations between precious metals, which in turn presents a trading / investment opportunity. We have identified several extreme imbalances in precious metal prices which represent immediate and profitable opportunities for our clients. We do not measure our models against US$, but rather the value of metals against one another. The returns against US$ takes care of itself. The longer-term investment opportunities are currently signalling huge generational entry levels and this presents a very exciting opportunity for our client base.
All trade costs are reported to our clients in their respective allocation reports and comply with our terms and conditions that clearly set these out. With regards to the spreads, we always endeavour to improve our prices using our multiple supplier contracts and given that we are dealing in the wholesale market. It should be noted that market conditions and liquidity factors may well change buy and sell prices; and therefore we cannot commit to specific guaranteed spread prices.
Although this is not information we are obliged to release as we are not a fund per se and in consideration of our super strict client confidentiality clauses. Our mandate is to offer a market performance beating precious metals portfolio management system. We have substantial funds under management circa US$100 million and this is growing very rapidly month-on-month
Q: I AM NOT SURE HOW PHYSICAL METAL SWAPS BETWEEN GOLD, SILVER AND PGM’S CAN ‘TAKE ADVANTAGE OF SERIOUS PRICE ANOMALIES’. THE CORRELATIONS BETWEEN THE PRECIOUS METALS ARE EXTREMELY HIGH ON MOST DAYS AND ARE NEGATIVELY CORRELATED TO THE US$ AND EXPECTED REAL INTEREST RATE OVER INFLATION. I AM NOT SURE HOW ROTATING WITHIN AN ASSET CLASS WITH SIMILAR BEHAVIOUR PROVIDES BETTER RETURNS?
The points raised above are not correct. The precious metals move in amplitudes of value against each other in clearly defined ranges over differing economic periods; and they absolutely have unique, determinable pricing relationships. Auctus Metal Portfolios’ algorithms are focused entirely on extracting-out optimum returns from an already acceptable performing asset class (precious metals); by identifying such investment opportunities that are not recognised through standard analysis.
Although typically, paper gold and paper silver are negatively correlated to the US$, participation in the other more volatile PGM’s (platinum, palladium and rhodium) that usually thrive during high economic growth periods or supply driven shortages (due to mine production declines) tend to offset what are normally slow growth periods gold and silver. It is true that silver underperforms gold when both of their prices are falling against the US$, but historically the exact opposite is true when the metals are rising against the US$. Silver historically outperforms gold by over 100% in these periods of price rises and our models constantly take advantage of these pricing situations, which effectively generates a return for our clients that far exceeds the returns on a purely static metal holding.
Q: WHEN CONSIDERING THE FACT THAT THE MAJORITY OF CLIENT’S PHYSICAL METAL HOLDINGS ARE ONLY A SMALL PART OF THEIR OVERALL INVESTMENT PORTFOLIO AND IS PROBABLY ACTING AS SOME TYPE OF HEDGE AGAINST CRISIS OF SOME KIND; WOULD APPLYING TECHNICAL TRADING TO THEIR METAL HOLDINGS SEEM COUNTER-INTUITIVE?
We can agree that many of our investors treat physical precious metals as a non-yielding insurance policy to cover and protect against counter-economic cycles that affect their portfolio value. Potential adverse economic circumstances like stock market crisis, financial crisis, war, currency debasements and collapses, sovereign government debt crisis. The average physical metal investor is typically extremely cautious, since investing in physical precious metals provides insurance against the paper and digital markets breaking down.
That’s why we never move our investors out of their allocated physical holdings at any time. We are not implementing a trade intensive platform as we only conduct on average between 2 to 4 portfolio adjustments per year. It’s really more about identifying the infrequent price anomaly opportunities to maximize and build the total metal value of the original holding. By doing this we achieve a growth yield over and above a static metal holding. Clients will traditionally only hold a small part of their overall investment portfolio in physical metals and balance the rest of their wealth in chasing higher yielding investments such as stocks markets, properties and bonds. Auctus Metal Portfolios provides a bridge between these two methodologies, allowing them to allocate a higher percentage of their overall portfolio into this physical metal ‘hybrid’ investment growth portfolio.
Q: AS YOU KNOW, LARGE QUANT AND MACRO FUNDS, BANKS AND FINANCIAL INSTITUTIONS SPEND HUNDREDS OF MILLIONS OF US$ YEARLY DEVELOPING THEIR ALGORITHMS AND SOURCING THE UNDERLYING DATA WITH SUPER SMART PHDS AND EXTENSIVE COMPUTING POWER LOOKING TO EXPLOIT PRICE DIFFERENTIALS. WHY HAS NO ONE ELSE DONE THIS BEFORE?
The precious metals industry is considered somewhat defeatist when being explored by serious quant investment teams, explaining why it hasn’t been investigated as extensively as other more classic asset classes. We are that gradual burn ‘hybrid’ category providing participation in yielding precious metal investments whilst still maintaining the security of always holding a physical, liquid precious metal portfolio. The major financial institutions often avoid holding physical vaulted metal and choose to only trade in the paper futures markets. While gold, silver and platinum have well established paper futures markets, the other metals palladium and rhodium simply do not. Furthermore, the cost of holding long-term futures or ETF positions that have regular contract rollovers, severely compromises the overall net returns, especially with longer term holdings. Physically holding precious metals is considerably cheaper than holding paper futures. Futures are designed for short and medium-term trading only. Hence long-term invest-and-hold strategies are physical in nature, which generally does not appeal to these quant funds and trading teams.
Q: IN RELATION TO YOUR MODELLED RETURNS FOR YOUR PORTFOLIO… I THINK WHEN YOU LOOK AT YEARS’ OR DECADES WORTH OF HISTORICAL TRADING DATA, YOU CAN FIND A WAY TO MODEL AN ALGORITHM THAT BEATS “SOME” BENCHMARK OR ANOTHER, HOW DOES THE FINANCIAL INDUSTRY VIEW THIS TYPE OF BACKTESTING?
The financial industry including banks and investment funds regularly incorporate financial analysis within a trading strategy by back-testing those investment strategies, or risk modelling. Back-testing seeks to understand and measure the performance of a strategy or algorithmic model as if it had been employed during past periods. This process is extremely important, so long as the testing is executed under the very strictest of criteria. Back-testing refers to applying a trading system to historical data to verify how a system would have performed during the specified time periods.
The majority of today’s financial markets investment models and platforms utilize back-testing. We cannot predict the future, but we can certainly prove if our model’s methodology works historically across many differing market conditions over several decades of price history. Auctus Metal Portfolios’ models have been independently audited by BDO Global. BDO conducted very strict retrospective price back-testing, incorporating all daily metals data going back all the way to 1968. The performances achieved are net after all costs are stripped out, deducting management fees, vaulting costs and bid / offer spreads on the metals swaps of every single trade instigated.
Q: WHO IS TRIGGERING THE TRADING EVENTS? IS YOUR COMPANY AUTOMATICALLY EXECUTING THOSE METAL SWAPS OR CAN I DECIDE ON A DIFFERENT STRATEGY?
Auctus Metal Portfolios fully instigates the metal swaps required based on trade trigger events signalled by our algorithmic models. This proprietary system which analyses the markets daily using live feeds.
Auctus then implements the portfolio adjustment recommended by our algorithm and trades your physical holdings at the very best wholesale prices. We are also constantly cross-checking physical metals market product prices through our extensive partnership network. We have very strong relationships with refineries, wholesale suppliers including mints and bullion dealers and hence this complicated process is taken completely out of your hands. As part of a clients’ Account Opening procedure, they provide Auctus with a Power of Attorney which allows us to effectively execute the metal swaps.
Our clients are notified of prospective re-weightings and immediately informed of any adjustments within their portfolios. Clients can pull away from this service at any time without penalty.
Our clients may withdraw at any time, divesting from the portfolio and withdrawing funds in cash, which will then be transferred to their personal or corporate bank accounts. Instructions to drawdown on the fund, either reducing the size of the allocation or selling out completely is covered specifically in our Terms and Conditions and will depend on the liquidity of the metals invested within your portfolio at that time.
The following information in relation to the taxation treatment of investment in precious metals is of a general nature only and you should seek your own legal / accounting advice specific to your individual circumstances. This information is specific to individual investors who invest in their own names or directly through their superannuation fund, family trust or private company. If you are investing via another entity you should seek further taxation advice.