The market starts with a reference.
Gold, silver, platinum and palladium have widely followed spot prices.
That reference establishes a market starting point, but it does not automatically determine the final price of a physical product.
A specific bar or coin may carry a premium based on form, fabrication, quantity and availability.
The quote defines the actual trade.
A physical quote identifies the metal, product, quantity and price quoted by the desk.
A two-way market may include both a price to buy from a client and a price to sell to a client.
Firm quotes remain valid only for the period stated because the underlying market continues to move.
At Alloy Capital Commodities, commercial quotes are handled directly by the desk.
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Agreement becomes a record.
Once the parties agree on price and quantity, the transaction should be documented.
A trade confirmation establishes the key commercial terms and creates the reference for settlement.
Physical-metal transactions therefore involve more than an informal price discussion.
Settlement requires confirmed payment.
Before purchased metal can be fully allocated or released, the agreed funds must be received according to the settlement terms.
The commercial desk confirms receipt against the transaction reference.
The exact payment method and settlement requirements belong to the individual transaction.
Ownership needs documentation.
A custody record or vault receipt provides documentary evidence of the metal attributed to the holding.
It can include relevant details such as:
Serial number where applicable
Account or ownership reference
The exact documentation depends on the custody arrangement.
Where the metal sits matters.
In a segregated arrangement, client metal is maintained separately rather than being treated solely as part of a pooled balance.
This differs from a pooled structure, where an account may represent a claim against a shared holding.
Understanding this distinction is fundamental to understanding physical custody.
Custody must be verifiable.
Professional physical custody involves more than putting metal behind a secure door.
Relevant controls can include:
Documented withdrawal procedures
Alloy Capital Commodities states that its allocated holdings are insured at full replacement value and independently audited twice yearly.
Physical ownership also has an exit process.
Selling physical metal back requires identifying the product, confirming its condition and establishing the applicable bid price.
Metal originally supplied by the same desk may have an existing product history.
Third-party metal can require additional verification.
Metal must be what it claims to be.
Assay refers to testing used to determine or verify the composition and purity of metal.
Weight also needs to be confirmed.
These steps are particularly relevant for:
Coins requiring verification
The value ultimately depends on verified metal content, not simply the appearance of an item.
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Metal-backed liquidity
Ownership does not always require an immediate sale.
Physical metal may, under an appropriate commercial arrangement, be used as collateral for financing.
In that structure, the metal remains in custody but becomes subject to a lien while the financing remains outstanding.
The commercial terms, eligibility and risk of such arrangements require direct discussion with the metals desk.
Discuss Metal-Backed Liquidity
