So, let’s say you’ve decided to add physical gold or silver to your portfolio. This means you’re taking a huge step forward in protecting your wealth and safeguarding it from the turbulence of paper-based markets. But, it’s important to note that not all gold investments are equal.
Let’s talk about CUSIP and non-CUSIP assets.
What is a CUSIP asset?
CUSIP is an acronym for the Committee on Uniform Security Identification Procedures. The American Bankers Association formed this governing body in 1964 to standardize the identification and tracking of financial transactions. This was implemented to increase security and efficiency within the investment world.
Originally, CUSIP ID codes were solely attached to paper-based assets. However, that changed in 2016 when the U.S. banking industry expanded its reach to include precious metals. Certain gold, silver, platinum, and palladium products were tagged with CUSIP numerical codes. So, with this layer of oversight, the precious metals industry could become a bit more secure, right?
While transparency and accessibility are certainly advantages, the tracking of gold and silver products creates its own set of problems. Traditionally, precious metals have operated outside of the control of Wall Street and the banking system. While paper can be manipulated, a physical asset cannot be hacked or erased.
The gold ETF market, which is the subject of a concerning level of tampering, has enough market share to affect the prices of the physical metal. And while that effect is limited to the short term as day traders take advantage of the frequent fluctuations, longer-term investors have been able to steer clear…so far.
With a firm knowledge of the amount of physical gold in the portfolios of many investors, Wall Street and the banking system have an even greater ability to artificially alter prices. Using verifiable supply and demand principles, prices can be suppressed by increasing the number of ETF contracts. Strangely enough, since CUSIP has been expanded to include precious metals, there has been a surge in the number of ETF contracts per ounce of gold, with estimates of around 330 back in March of 2021.
Having a CUSIP identifier attached to various metal investment vehicles also inherently eliminates the privacy many seek in precious metals.
With institutions able to digitally access what you own, your finances are no longer just your business, hence the common term “public metals.” If you have CUSIP metals, are you truly outside of the system?
What is a Non-CUSIP Asset?
But there is another way. Non-CUSIP precious metals retain the anonymity many are looking for while protecting themselves against the uncertainty of paper-based investments. Also known as “private metals,” these assets are much less responsive to the ETF market and, without ID codes, are outside of the reach of the banking system and Wall Street.
So, if you would like a hedge against dollar-based investments, why would you indirectly tie it right back into the dollar? If you would prefer a degree of privacy, why would you give access to your portfolio to anyone outside of your trusted circle? The choice is simple. While getting physical gold and silver is great, non-CUSIP assets are even better.
Have questions about CUSIP metals? Give our Client Success Managers a call at (844) 307-7123 for your free, no-obligation, one-on-one consultation.