Originally, Regia Russia Agro Investment (the fund I launched to invest in Russian agriculture) was planning on using Goldmoney to receive subscriptions. Unfortunately, that didn't work out, and we are now using PFG Precious Metals instead.
Horrible experience with Goldmoney
Opening an account at Goldmoney was a slow, difficult, frustrating process which took three months. Then, a month after finally getting the account open, Goldmoney's compliance department suddenly decided to raise further questions about Regia Russia Agro Investment. Below is an email from Goldmoney sent November 23, 2009.
Further questions have been raised by the compliance department, and these questions are summarized in the agenda below.
1. Explanation of & rationale for legal structure of the fund, to include the names of all entities managed and controlled by the fund.
2. Procedure for the fund to create new controlled entities
3. Legal arrangements for land purchases by the fund
4. Names of all parties making / influencing investment decisions by the fund or any of its controlled entities
5. Walk-through of the complete cash flow & gold transaction sequence:
- from fund investors through to the fund
- from the fund through to fund controlled entities
- from fund controlled entities through to land vendors
A few days after raising these new questions, Goldmoney decided they couldn't work with Regia Russia Agro Investment (too complicated, not worth it) and notified us that they were closing the fund's Goldmoney account. This decision came at the worst possible time, as I was packing and getting ready to move to Russia.
If Goldmoney had decline at outset, it would have been understandable, if slightly disappointing. However, it took Goldmoney five months to come to this decision. As a result, an enormous amount of time and energy was spent answering questions and meeting stringent due diligence requirements only to have Goldmoney's compliance department back out and undo months of work.
There was no warning that Goldmoney was getting cold feet. Even when they raised new questions in November, it was never suggested that Goldmoney was considering closing the fund's account. This lack of communication is not only unprofessional, it undermines Goldmoney credibility.
The KEY element with any investment in gold is reliability, and closing accounts with no warning is simply unacceptable.
For over a year now, I have been one of the loudest proponents for investing in gold. I have written and published several major articles which have been read by hundreds of thousands (for example, see Risks in owning GLD or Gold Market Reaching The Breaking Point). The point here is that I can't for the life of me figure out how Goldmoney expects to stay in business by misleading and mistreating the biggest proponents of gold as an investment.
The conduct of Goldmoney compliance personnel over the last few months has left me with no confidence. I can say with certainty that Goldmoney isn't a viable alternative for businesses and funds. For retailer investors, Goldmoney might work as a safe investment, but keep in mind that Goldmoney's compliance personnel don't have a clue what they are doing, which could lead to a major headache down the road. It is not fun scrambling for an alternative after having your Goldmoney account closed without warning.
Blessing in disguise
Thanks to Goldmoney unreliability, we found PFG Precious Metals, which turns out to be a much better alternative.
1) People at PFG Precious Metals are actually aware of what is going on in the gold world. They know something is going wrong in gold markets and understand the desire the desire to use gold as an alternative to dollars. In contrast, Goldmoney's compliance personnel seemed confused by the desire to use gold to receive subscriptions.
2) My contact person at PFG Precious Metals, Peter Thomas, knew who I was when I mention MarketSkeptics.com. Nobody at Goldmoney did.
3) PFG Precious Metals has been helpful and easy to work with, whereas Goldmoney was a bureaucratic nightmare. They have already set up a landing page for international investors.
4) Unlike Goldmoney, PFG Precious Metals is part of a global operation that has a presence in Moscow.
It is so refreshing to work with someone who is competent, knows who you are, and understands what is going on.
I recommend PFG Precious Metals for any large investment in physical gold. They can even help you take delivery of Comex gold futures, if you are comfortable with the risk.