In the middle of one of the biggest commodity supercycles in history, Rosland Capital, a large bullion dealer in the United States, has filed for bankruptcy.

If your first instinct is to blame the metal, I'd push back on that straight away. This wasn't a demand problem. It was a risk-management problem, and it happened at exactly the worst time imaginable.

What Actually Happened?

So what it looks like is that Rosland Capital took customer money upfront but didn't actually place the order with its own suppliers until much later, sometimes months later. Now I have absolutely no idea why they would do that, and, unfortunately, there aren't any details at present on why they didn't place their customers' orders. In a market where gold and silver were tearing higher week after week, that gap became the undoing of the whole business model.

At its core, a bullion business is as simple as any other: sell stuff for more than you paid for it. But the price movement of precious metals throws a bit of a curveball for bullion dealers.

How I run Liberty Bullion is that if a customer places an order for 1oz of silver at a spot price of $70 USD per ounce, we would sell that product for $70 USD plus a bit of a margin to pay the supplier and make some profit (depending on the type of product). We then either fill that order from what we already have in stock, or place an order immediately with a supplier if the product is available on backorder. (Revolutionary business practices here I know.)

But if I wait months to place an order, the spot price of silver could move in any direction. We saw Silver go from $50 USD to over $120 USD an ounce in a matter of a few months. Can you imagine if I were placing orders with my suppliers at $120 USD to fulfil orders placed when silver was at $50 USD? Not the smartest idea in business, I'll tell you that for free.

So this is what I gather happened to Rosland Capital, probably amongst a number of other reasons, as the full reports hasn't come out yet. What the court filings do tell us, though, is that the deferred revenue owed to their customers is roughly $49 million, with a further $11.8 million tied up in unfulfilled buyback obligations. Additionally, the company reported liabilities of up to $100 million against $1 to $10 million in assets. But also, by the time it filed for Bankruptcy, it held no bullion inventory at all.

Why Would They Wait Months to Place Orders?

This is the part that genuinely puzzles me. Because when you strip it all the way back, there are only two reasons a dealer would sit on an order for months instead of hedging it straight away.

They wanted to "short" silver

If they thought silver was going down, they could've pocketed more profit from each sale by waiting to purchase from their suppliers. Sell silver at $70 USD, wait for it to come down to $60 USD, place the order, and then make about 14-15% more profit on each ounce sold. In theory, happy days.

"I don't have the balls to do this." - Me

This is something I actively advise people against because no one truly knows what these metals will do day to day. Silver and platinum, in particular, can be incredibly volatile at the drop of a hat, as we've just seen. If someone claims to know exactly what's going to happen day to day, they either have insider information or they don't know what they're talking about.

The old "whoops sorry, I forgot"

When you're taking hundreds of millions of dollars in customer money over the years, "we didn't get around to placing the order" isn't a rounding error. It's a systemic failure in how the business was being run.

How We Do It at Liberty Bullion

Whenever an order is placed through Liberty Bullion, we've either already placed the matching order with our suppliers to cover it, or if we haven't, we place it within the hour.

If I'd "forgotten" to hedge orders over the three years we've been in business, we could have lost tens of millions of dollars and be forced to close our doors. Plus, I'd also risk getting in trouble with my fiancée. 

Anyone who follows me knows I'm long term bullish on precious metals, silver especially, and I believe it's got a genuine path to $300 USD within the next two to three years. But I also say not to day trade silver, as silver can go up and down double digits within the same day. We're highly aware of the level of diligence our clients require to trust us as a counterparty, and we treat a story like this one as a reminder of exactly why that diligence matters.

What This Means for You

This is the part I want you to actually sit with. Rosland Capital's collapse isn't just a headline, it's a lesson in counterparty risk. When you pay a bullion dealer, you're trusting that they'll actually go and secure your metal, not sit on your money and hope the market comes back their way.

Not every dealer runs risk management the same way. Some are disciplined about it. Some, evidently, are not, and their customers are the ones left holding the bag for demands for money they may never fully get back. This is exactly why I've always said physical possession and dealing with a reputable, well-run counterparty matter as much as the decision to buy gold or silver in the first place.