Silver Bullion Reports First Year Results for Gold & Silver Secured P2P loans

Silver Bullion Pte Ltd in Singapore reported today, on the anniversary of the launch of their bullion secured peer-to-peer(P2P) loan platform, that the platform has funded over S$11 million across more than 400 successfully matched loans. There were zero occurrences of borrowers defaulting on their loans. One hundred percent of lenders, with loan tenures expiring within the first year, received their principle with interest on time.

Launched on 5th August 2015, Silver Bullion offers a p2p marketplace that allows borrowers to obtain a loan using physical gold and silver bullion as collateral. This gives lenders, seeking a good rate of return, confidence that their investments are safe.

Silver Bullion’s CEO, Gregor Gregersen, commented: ‘The first year results of our P2P loan platform shows that owners of physical gold and silver like to have the option to be able to borrow short term funds at good rates with the bullion that they store with us. Now, they are able to reinvest with the borrowed funds whilst continuing to own bullion and benefit from rising gold and silver prices.’ conducted an interview with Gregersen earlier this year.

silver-bullion-vaultDue to the safety that Silver Bullion’s loan platform gives to lenders, 72% of the matched loans were initiated by borrowers. The company has seen more than 30 loans matched consistently each month since March 2016 – a rate of more than 1 matched loan per day. Interest rates across all loan tenures currently hovers between 2.5% and 4.5% per annum.
Unlike unsecured P2P lending platforms, loans matched by Silver Bullion’s lending platform are fully backed by physical gold and silver. Loans with tenures longer than 6 months begin with a collateral-to-loan value of 200%. The exceptions are loans with the 1 month tenure which have a lower collateral-to-loan value of 160%.<

Borrowers’ collateralized bullion is stored at Silver Bullion’s vault, The Safe House. They are covered by one of the most comprehensive insurance policies in the industry that also insures against inside jobs and any unexplained losses.


Interview with Gregor Gregersen, CEO of Silver Bullion

What is Silver Bullion about?

Silver Bullion buys, sells, authenticates and stores physical gold and silver. Since mid-2015 we also launched the option for customers to securely lend and borrow to each other using their bullion as collateral.

What are the three main advantages for investors?

Physical bullion buyers receive the best protection possible (in jurisdictional, counterparty and storage risk terms) against systemic crises by being owners of insured physical property under Singapore law rather than bank creditors exposed to financial crises. They also have a long position in gold / silver. They profit from a financial collapse, hyperinflation or foreign nationalizations.

Alternatively, as lenders they receive a safe return (very low risk) by lending their funds to owners of insured and authenticated bullion stored with us. Lender funds are collateralized by a minimum 200% worth of gold and silver and, should during the duration of the loan, the collateral fall to 125% the borrowers will get a margin call. At 110% we will liquidate (sell) the borrower’s silver and gold to ensure the lender’s funds are always fully covered by liquid collateral.

Lenders can offer their funds at an interest rate and duration of their choosing. Borrowers are then free to accept the best rates and vice versa, thereby creating a Bid/Ask exchange which lets lender and borrowers determine their own interest rates. The system is also inexpensive (0.5% fee) and easy to use as borrowers do not need to be rated or scored due to their collateral.

What are the three main advantages for borrowers?

Because the loans involve so little risk (due to collateral) lenders are willing to accept comparatively low interest rates. Therefore borrowers can borrow cheaply (e.g. 4% p.a.) and unlock their bullion liquidity without selling it. The low rates allow for arbitrage opportunities vs. customer in high interest countries.

Because we have an abundance of lenders Borrowers can quickly and easily get a loan whenever they need it, without any usage restrictions and minimal additional paperwork.

Borrowers can choose to easily roll-over /refinance a loan before maturity. So they could roll-over as needed, giving them flexibility and a source of optional liquidity when needed.

Investors are required to open a storage account first. Doesn’t that deter those that only want to invest?

A storage account is required to do our AML and KYC checks and an account number is the pre-requisite to do P2P transactions. A customer / lender does not need to buy or store bullion and there is no cost associated with opening an account. So there is no downside.

Gregor GregersenWhat ROI can investors expect?

P2P Lenders have received secure returns ranging from 3.5% to 7% p.a. depending on currency, duration and borrower/lender demand. The nature of the bullion collateral also means are also well protected against both a borrower default and systemic defaults in a crisis.

It depends on the lender whether and how he values this risk diversification.

Is the technical platform self-developed?

Yes. It is highly specialized platform that is integrated with our bullion storage system which stores around 120 million SGD worth of physical bullion.

A word about the people who designed this P2P system might be in order. Gregor Gregersen (primary architect) was a senior data architect for Commerzbank (the second largest German bank), Otbert de Jong headed the global risk advisory department at ABN AMRO Bank and was a partner in PricewaterhouseCoopers and Simon Black is the founder of Sovereign Man, which is one of the best resources on internationalisation and spreading your risk. Continue reading