Forex Magnates reached out to Bullion Capital to talk with Tom Coughlin, CEO at Bullion Capital, about the company's disruptive approach to precious metals trading and well as the unique prospects of gold in today's markets. Mr. Coughlin's full length interview can be read below.
1) Can you describe the services Bullion Capital provides and what makes your organization unique?
We have developed the MetalDesk2 exchange platform that enables traders and investors to buy, sell and store spot allocated physical precious metal such as gold, silver, platinum and different products within those metal groups, including bars and coins and in various locations globally. Our global trading locations are known as trading hubs and includes trading, storage, and delivery points for clients to vault and deliver their metal investment. Currently we have trading hubs in Sydney, Singapore, Hong Kong, Shanghai (Free Trade Zone), Bangkok, London, Zurich and New York, with Istanbul and Dubai slated for future expansion.
There are many ways to trade gold, but what sets our company, Bullion Capital, aside from all the others is that we do not deal with paper metal, only allocated metal and for this we have developed a centralized electronic platform that enables our traders to find the precious metal of their choice, physically purchase it and take full ownership on that metal, including having it delivered or vaulted. This is very unique and offers the investor full control and ownership of their investment.
2.) What is the inspiration or rationalization to launch Bullion Capital?
Back in 2008 I tried to get into buying precious metals. I called up and sat on hold for roughly two hours. Having waited for a while and finally connected, it became apparent that the buy/sell spreads at the time were going to be up to 15% for a kilo bar. This was simply not a viable investment option with these spreads, in addition to transport, storage and a wide range of the specific mechanics involved with the handling of the metal itself.
So I thought, there’s no such facility in Australia for wealth managers, stockbrokers, and online brokers to offer physical precious metals for their clients, which I saw as an opportunity. I decided to start putting together standardized systems, mechanics and rules, along with an automated platform for precious metal trading and roll it to brokers in Australia. This is really what we embarked on doing. Then we went out to Liquidity providers, though this ultimately proved to be a hard feat given the existing market structure in place – then we realized that this is something very disruptive we are creating, though we were not going to receive universal support on our home soil.
So I jumped on a plane and went to Singapore for three weeks of meetings and realized the true appetite for such a service, subsequently developing from a domestic Australian vision to a global vision. We ended up traveling around the world, working with precious metals markets and industry participants. As such, we have developed a comprehensive marketplace and platform from scratch, while working with the precious metals industry.
To get to where we are now, we are commercializing the business and gaining some really good traction around the world from retail and wholesale providers. Our MetalDesk2 platform can be fully White Labeled and offers our partners the ability to diversify their product offering to their clients.
All sorts of individuals are now using our platform, which includes Forex Brokers, IBs, bullion dealers, jewelers and manufacturers, who take liquidity from and supply liquidity into the market, as well as elements of the wealth management industry, i.e. stockbrokers, financial advisors, etc.
We provide the ability to their clients to diversify their portfolios into physical allocated precious metals. Ultimately this is what precious metals are, a really good diversification benefit into a portfolio that improves the risk to return ratio. Empirical evidence suggests that once you introduce gold or precious metals into a portfolio, it improves the risk to return as it is a largely uncorrelated asset or inversely correlated to equity markets, etc.
The latest target market where we are gaining significant traction is in the online broking space. This includes online Forex brokers, CFD brokers, equity brokers, and even binaries. We offer a great solution and complimentary service offering that they can easily roll out to their clients. Invariably, our platform allows these clients to gain additional wealth management and cross-sell it into their own respective solution to sit alongside their existing suite of services. Moreover, it makes perfect sense for Forex brokers to tie into our platform and interface their clients’ wealth held in our platform with their existing services.
3.) Have you detected an uptick in appetite radiating from Asia for your services?
We have recently opened a Bullion Capital office in Shanghai – China. We are seeing in Asia presently that there is a huge appetite for our services. Of these particular types of clients, the Asian market has a cultural affinity with holding physical gold that goes back to the foundation of their civilizations. The typical Asian family will invest 20-30% of their wealth into gold or precious metals. These clients also see it as a currency that’s a store of value over time.
