Real transfer of ownership of gold and silver through bullion allocation

Dr. Franz Hölzl, Board Member of Auvesta, expresses his views regarding transfer of ownership of gold by means of bullion allocation at Auvesta.

Benedikt Hausler:

Why is the concept of bullion allocation so important to you as a board member of Auvesta? And how does Auvesta transfer property to the clients in reality?

Dr. Hölzl:

So, if I want to have a transfer of ownership - now it's getting a bit legal - I have to represent the transferred thing exactly and comprehensibly for a third party who is not involved in the process.

For example: That means, I can say that you own 50 grams of the 50 kilograms that are stored here or there. In my opinion, that would not be an effective transfer of ownership. You have, for example, any 50 grams of these 50 kilograms. But which ones? When I buy a car, the car dealer doesn't say you bought a car. There are five of that type you bought in the yard - and one of the five cars is yours. Then you say: Which one, which key do I get? If the car dealer then would said: I don't know. - Who among us would say that this is a valid transfer of ownership?

In our scenario this means that I have to specify exactly which 50 grams of the 50 kilograms that are lying back there belong to client A and which 49.95 kilograms do not belong to him. It is always a matter of differentiation what belongs to him and what does not belong to him! And I can only achieve that if I can say: Where is the bullion stored? Which specific bullion is it, i.e. manufacturer and bullion number? Which grams - how many grams of this specific bullion belong to him and how many grams belong to other clients?

The client receives all documents in his online depot as agreed when the contract was concluded. As a matter of course, this includes the proof of ownership showing the amount of grams of the bullion with the number XY, refinery Z was the manufacturer of this bullion, and it is stored at the warehouse A. Then the customer knows:

I and, for example, another 32 clients own this bullion. How many grams belong to me, how many grams belong to other gold buyers and how many grams belong to Auvesta (for sale to other clients). This allocation is dynamic. That means it is automatically updated when Auvesta sells metal from a bullion to a client or buys it back from a client.

It's always about which grams of which bullion are affected. Otherwise, it's a claim against a collective stock of precious metals. I don't know if the ownership allocation will apply in a worst-case scenario.

Auvesta is a mid-sized public limited company. When we were strong enough in terms of turnover and legally made the step from a small to a mid-sized public limited company and therefore had to have our financial statements audited by the auditor due to the legal situation, this was the very first thing he examined.

His first question was: "You hardly have any precious metal stocks on your balance sheet, where are the metals?" He took a close look at this legal construction and also checked it out with specialist lawyers. He said, when I, as an auditor, sign the report afterwards, I need to know exactly why the clients' metal is not included in the Auvesta's balance sheet. And no, it is not recorded in Auvesta's balance sheet because it is the property of the clients. And it must not be there either, because it is the property of the clients.

I don't want to bear responsibility as a board member in a company that has no ownership allocation.

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