Bailment

2009-05-26

As previously mentioned, I think that one good way to buy gold is BullionVault. When you buy gold from BullionVault, you own some percentage of a gold bar in a secure vault located in Zürich, London, or New York (the most popular location seems to be Zürich, for reasons that are easy to understand). BullionVault is not a bank: your gold doesn't earn interest, they don't lend it out or otherwise put it to work, and in fact you pay them to store it for you. In English common law, this relationship of safekeeping is called a bailment, where the owner of the asset is called the bailor and the keeper of the asset is called the bailee. More familiar examples include valet parking, boat storage, safe deposit boxes, and kennels. A key feature of bailment is that the bailee cannot use or profit from the asset, which is why banks are not bailees. Naturally, whether you think a bailment is worth the fee depends on how much you trust the bailee, but then again trust is a serious matter in any society based on mutual advantage. I think the concept of bailment might have interesting applications in the digital age, but I need to ponder them further before I post about it again. The common law is endlessly fascinating...


Peter Saint-Andre > Journal