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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