THE CHALLENGE
How small bullion seller can strike gold against big banks
BRYAN BORZYKOWSKI
Special to The Globe and Mail ( Corrected version ) Published Wednesday , Sep . 19 2012 , 6:00 AM EDT Last updated Thursday , Sep . 27 2012 , 5:07 PM EDT
Like many Canadians , Danny Kroll is hoping to cash in on the enduring popularity of gold . But rather than buying the yellow metal for himself , he ’ s selling it to other commodity-hungry investors .
Mr . Kroll is the founder and operations manager of Toronto-based Canadian Bullion Services Inc ., which sells physical bars of gold , silver , platinum and palladium to Canadian investors . Investors can take the bars home or pay to have them stored at CBS ’ s facilities .
Since the nine-employee company was created last year , it ’ s found many of its buyers among those who want to own precious metals as an alternative form of currency ; they believe that if the world ’ s economic system were to collapse , they ’ d have physical bullion with which to buy goods .
Now , the company , which expects this year to double its 2011 revenues of about $ 2.5-million , wants to expand its reach to average investors who seek gold to diversify their portfolios .
The problem for the small company is that it is competing for the business from investors who are already buying their gold from the big , brand-name banks .
The company wants to grab some of that share , says Mr . Kroll , who claims his firm ’ s fees are cheaper .
Few big-name institutions — including ScotiaMoccata , a division of Bank of Nova Scotia , and TD Canada Trust – actually sell physical bars ; the other banks sell through exchange-traded funds . There are also other smaller companies selling physical bullion . CBS doesn ’ t have the marketing budget or the brand-name recognition to go up against bigger players to compete for bullion buyers or try to convert ETF investors . “ The banks and brokerage firms have close to unlimited marketing dollars ,” Mr . Kroll says . “ The challenge is in educating the public that there are alternatives .”
Mr . Kroll has held seminars , invested in Internet marketing and set up booths at financial-related events . Yet , the company is still finding it tough to convince investors to buy from CBS . “ They ’ d rather go through a name they know than one they don ’ t ,” he says . “ In our minds , it ’ s obvious why people should buy with us , but it ’ s not easy to get that across .”
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