(a quick intro to the process from AFE’s web site)

AFE Bailment Process

A “Bailment” describes a legal relationship in common law where physical possession of personal property (chattels) is transferred from one person (the ‘bailor’) to another person (the ‘bailee’) who acts as a custodian of the property.

Bailment is distinguished from a contract of sale or a gift of property, as it only involves the transfer of possession and not its ownership.

This is important, as you remain the sole legal owner of your gold and silver, while AFE is only your custodian.

AN EXAMPLE OF THE BAILMENT PROCESS

When clients of AFE order gold or silver bars that exceed treasury bar availability, new bars are ordered from one of several LBMA certified refineries.

The bars are then poured, certified, and transported to the secure vaulting facilities by certified armored carrier and fully insured for the full market value while in transit.

Once the metal is unloaded from the armored trucks, the individual bars are sight inspected and verified against a “weight list” of bars from the refinery by a third party auditor, a representative of AFE, and a representative of the vault.

The reports from this sight inspection as well as deposit receipts from the vault are made available to the Independent Signatory Trustee for verification against the records of AFE and accounts of AFE clients.

By governance contract, no metal can be removed from the vault without the signature of the Independent Signatory Trustee, the presence of the duly appointed third party auditor, and a representative of the vault.

For more info and pics of the process, see their web site here: http://www.anglofareast.com/bullion-accounts/governance/

There is also a great AFE interview in the February 2009 issue of DGCmagazine (below).