McAlvany Wealth Management, a well-known financial planning firm with roots as the first seller of gold bullion to Americans after it was legalized in 1975, has developed an app to bring the selling of gold into the 21st century.
The firm has been located in Durango since 1991, when its founder, Don McAlvany, moved it here from Denver. It currently has 35,000 mostly high-income clients across the country. Now, it’s new product, Vaulted, an app that allows people to buy gold in increments as small as $10, may bring the firm wider recognition with the middle class.
“What we did with our Vaulted program was make gold very easy to buy and sell,” said David McAlvany, CEO of McAlvany Wealth Management and son of the founder.
David McAlvany said the idea behind Vaulted was to bring the gold market into the 21st century by making it more transparent, simpler and easier – available in a few clicks in a digital world.
“It was very important to us to modernize our approach to our business,” he said. “And so what we created was something that meets the demand for a more transparent, affordable and simple way to invest in physical gold
“The market demands simplicity and ease of use, and that’s what we capture with the Vaulted web path. It’s something that is totally accessible. I had my kids in mind.”
It’s unrealistic, he said, for his children to save $1,500 to buy an ounce of gold, but with $10, they can begin learning about saving and personal finance.
“If they can put $10 into it, whether it’s from mowing the lawn or delivering the paper or what have you, all of a sudden, I can teach them about saving, and they have a tool to help them save in what for thousands of years has been real money,” he said.
Besides providing price transparency, Vaulted’s transaction fees, which are never more than 1.8%, McAlvany said, are lower than competitors. Transaction costs to buy physical gold bars usually start at 2% and can be as high as 10%.
McAlvany Wealth Management is partnering with Royal Canadian Mint for the Vaulted app, with its investors’ share of gold kept at the mint in Ottawa, Canada.
The app creates a virtual gold kilo bar and indicates what share of a kilo bar Vaulted users own based on their individual investments. The app is designed to provide not only convenience for gold investors but a simple method to diversify a personal financial portfolio – McAlvany Wealth Management broadly recommends investors should be 75% in stocks and 25% in gold.
If an investor prefers physical delivery of gold, that, too, is possible through Vaulted.
“What we find, having been in business for almost 50 years now, there is a certain set of clients who want to take physical delivery of their gold,” McAlvany said. “And then the new generation, the younger generation, would say, ‘don’t encumber me, don’t complicate my life.’ ... There’s a generation that’s interested in owning gold but not interested in the inconvenience with figuring out what to do with it.”
McAlvany Wealth Management has 1,000 new clients since unveiling Vaulted in August, and it expects to add an additional 10,000 to 11,000 new clients through Vaulted in 2020.
“These are new people. These are people who are interested in gold, but who would not have been in touch with us to buy it. And they’re interested in it because of the format it’s in. Because it’s easy to buy, it’s easy to own, it’s easy to sell. The program is entirely transparent, which is a huge part of the criticism I think that you can bring to the entire industry, hidden fees, taxes, things like that,” McAlvany said.
Besides expanding McAlvany Wealth’s client base among younger and the middle-class investors, Vaulted allows the firm to service clients outside the United States.
“Now, sitting here in Durango, Colorado – because we have secure storage with the Royal Canadian Mint and an app that can be used anywhere in the world – we can have a global client base, and if anything, I think my expectations for growth are too small,” McAlvlany said.
Gold prices, which tend to move in the opposite direction of the stock market, have recently been strong despite a strong stock market, which might be an indicator that the economic recovery from the Great Recession is aging and not likely to last much longer.
McAlvany noted that as of July, the current U.S. economic expansion is the longest in history.
“We’re kind of in no man’s land, and perhaps you’d agree there is a business cycle. And there’s times of growth. There’s also times of contraction and consolidation. So, we haven’t had a serious contraction or consolidation in almost 10 years. (The expansion) is long in the tooth, which would argue for hedging some bets and maybe increasing an insurance component.
“And so the role that gold plays today, although for thousands of years it’s been money, just plain vanilla money, today as a reliable store of value, it plays a role of insurance. And you really see how that insurance characteristic plays out during periods of economic stress.”
parmijo@durangoherald.com
