An Interview with Adrian Ash, head of research at BullionVault

What is your name and position?

I'm Adrian Ash, head of research at BullionVault.com -- the world's fastest-growing route to private gold ownership. We now look after more than six tonnes of gold bullion, worth more than $175 million, on behalf of 30,000 registered users worldwide. We vault their gold in specialist facilities in New York, London and Zurich, Switzerland, and our clients get to access the professional gold market direct, slashing their costs "dramatically" (as the Financial Times put it in a recent review) by trading real physical gold bullion with each other, live online.

What is your professional background?

BullionVault was launched in March 2005 after more than five years of market research and I.T. system development. I joined in late 2006 after spending almost 10 years at Fleet Street Publications, the UK's largest publisher of financial advice for private investors, where I led the editorial team and also wrote the City column for the Daily Reckoning email, which then went to 500,000 people worldwide.
My background is in equity analysis, but I was progressively drawn more and more to gold and forex trading as the recovery of the Dot Com Crash so clearly turned into a fresh bubble in real estate and structured debt. Foreign exchange never suffers a "falling market" in total; for each side of the pairings which drops, the other side gains -- and gold should be viewed as a currency right alongside them, rather than a raw material or commodity.

Who are your targeted audience?

Our clients at BullionVault, and the readers of our daily gold market analysis, tend to be as concerned as we are about the looming debt-default recession, coupled with surging inflation, that now faces the US, Europe, and all the industrialized G-7 economies. They also tend to be very thorough in doing their own research, most especially when it comes to counterparty risks. They don't, as a rule, trust financial advisors or accept the mainstream view of what's happening to the economy. But beyond that, there's no real demographic, gender or even geographic breakdown to speak of. While our average client deposits US$30,000 into their BullionVault trading account, we have customers ranging from a few hundred to several million in gold.

Is your main focus of your business online or offline, and why should a trader choose BullionVault over another broker?

Ours is a very "real world" business -- vaulting real, physical gold bullion for private investors. Thanks to the cost-savings and instant dealing which the internet allows, however, our online Market Order Board is what really appeals to active traders. We're one of the few companies in the world to let private investors access the trading spread directly, quoting and accepting prices as they choose, live online. Earning the spread is a real break-through for gold investors, and our dealing commissions then cut the cost of active trading still further, starting at 0.8% and falling very quickly to 0.1% and even 0.02% for larger buyers.

To let people see how easy it is to use the online Order Board and start trading real physical gold -- live and direct -- we offer all new registrations a free gram of gold bullion. It's vaulted in secure, professional, market-approved storage in Zurich, Switzerland, and it's part of a large 400-ounce "Good Delivery" gold bar. These are the gold bars traded by professional dealers -- the refineries, central banks, bullion banks, fabricators and wholesalers who make up the 24-hour spot market. Only BullionVault lets you join this market, and share in the huge cost savings it offers, direct. All trades are settled instantly for cash only (no gearing), meaning there's zero risk of counterparty default.

What advice do you have for someone who is just starting to trade the forex market and how different is the forex market today from what it was 2 years ago?

Anyone getting into forex or the gold market today has to accept that volatility is much greater now than it was two or three years ago, and it's only likely to rise further as the stresses of the US economy continue to dent stock prices and bond values the world over. That's why I don't personally recommend gearing your gold investment or trading; the cash losses can be quite big enough to get on with. Gearing also puts you at the risk of margin calls or even being shut down -- as is happening to many hedge fund traders right now -- if your broker opts to close out your credit. Being long spot gold, with no counterparty or leveraged risk, lets you track the deeper trend in gold, and the really big moves have across 3-6 month periods during this bull market so far.

Do you also offer Fund management services? Who are the main competitors of BullionVault in the on-line Forex market?

BullionVault offers no client services beyond running the online gold-market Order Board and vaulting your gold. That's what keeps our fees so low. Your tax obligations and investment decisions are entirely your own concern. Which is just as it should be, I think -- and that's after 10 years in financial advice!

What advice do you have for someone who is just starting out in the forex market ?

Buying and selling gold is rarely made easy for private investors, and it's almost never made cheap. Coins & bars you can hold in your hand – but only if you're willing to pay huge dealing spreads, handling & shipping fees, plus high insurance or safety-deposit costs. Certificates and "pool" programs often charge more in annual storage fees than most mutual funds charge for active stock selection. Futures & options greatly increase your losses on short-term moves in the price, and their hidden costs soon add up. Exchange-traded funds claim to trade like a stock – but rely on complex trust deeds to "track" the gold price, instead of giving any real physical ownership. There are other online "gold ownership" services, but their costs and convenience just don't compare. Only BullionVault gives you direct access to te dealing spread, too.

Where do you see BullionVault 2 years from now?

BullionVault is already a leading supplier of privately-owned gold worldwide today. Two years from now, if our current growth rates continue -- and if our new French, German and Italian language services match our English-language success -- we'll be a serious challenge to the current dominance of the exchange-traded funds. For long-term buy and hold investors, their annual 0.4% storage fees are more than three times our rates. For active traders dealing $60,000 or more per year, the cost of trading at BullionVault -- plus the fact you actually own real, physical gold bullion, rather than just a "gold-backed" trust fund -- really becomes competitive