how to buy gold the right way
TRANSCRIPT
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P u b l i s h e d B y Q W e a l t h L t d w w w . Q W e a l t h R e p o r t . c o m
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2 HOWTOINVESTINGOLDTHERIGHTWAY
TableofContents
WhyShouldIInvestInGold? ...........................................................................................................................
ShouldIInvestinGoldNow? ...........................................................................................................................
TheRightWayToBuy,Own,andInvestInGold...............................................................................................
PhysicalGoldorDigitalGold? ..................................................................................................................................................
WhatAboutTheZKBGoldETF? ...............................................................................................................................................
TimeToGoPhysicallyAllocated...............................................................................................................................................
BestWayToBuyPhysicalGold-GlobalGold....................................................................................................
BuyandStoreGoldOffshoreOrAtHome? ......................................................................................................
BenefitsandDrawbackstoBuyingGoldAtHome................................................................................................................
WhyBuyGoldOffshore?..........................................................................................................................................................
2011QWealthLimited,PortVila,VanuatuAllrightsreserved
Thisguidecontainsconfidentialproprietaryinformationandisnotdesignedforthegeneralpublic.ItisproducedexclusivelyformemofTheQWealthReportfortheirexclusivepersonalandprivateuseandknowledge,andundertheirownresponsibilityassophistic
investors.Usingordisseminatingthisinformationforanyotherpurposeotherthanforwhatitisintendedisabreachofcopyrightw
maybesubjecttocriminalandcivilpenalties,includingimprisonment.Disclosure:theauthorsowngoldlotsofit!
QWealthCommunicationsOffice:
Tel+44203384199
QWealthReportWebsite
http://www.qwealthreport.com
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HOWTOINVESTINGOLDTHERIGHTWAY 3
WhyShouldIInvestInGold?
Forcenturies,goldhasattractedinvestorsseeking
toprotecttheirwealthandprovideasafehaven
introubledoruncertaintimes.Thisremainsa
realityformoderninvestorstoo,althoughthere
arealsoanumberofotherreasonsthatunderpin
thewidespreadrenewalofinvestorinterestin
gold.Goldcanaddanelementofpotentially
outstandingcapitalgainstoyoursafety-oriented
portfolio.And,ifstructuredadequately,goldwill
entailaminimaldownsiderisk.
WeatQWealthReportconsiderbuyinggoldthe
rightwaytobeaHOTtopic.Hereswhy:
Diversification:Goldallowsyoutodiversifyout
ofcontinuouslydevaluingfiat(paper)currencies,
therebyprotectingyourassetsagainstlossof
purchasingpowerAND,atthesametime,settingit
upforcapitalgains.
Retainingliquidityandpurchasingpower:Gold
willalwaysretainitsvalue.Yourpurchasingpower
willnotbediminishedforthenextupturnin
businesscycles(whichinourviewhasNOTarrived
yetandwillnotarriveforquitesometime),
therebysecuringtheopportunityoftakingpartandbenefitingfromit.Itisimportantthatthegold
formatonechoosesissupportedbyaliquid
market,i.e.youwanttobeabletobuyandsell
rapidlyifneedbe.Moreonhowtoachievethis
laterinthisreport.
Safehaven:Involatileanduncertaintimes,
expectaflighttoqualityasinvestorsseekto
protecttheircapitalbymovingitintohardmoney.
Goldisamongahandfuloffinancialassetsthatdo
notrelyonanissuerspromisetopay,offeringrefugefromdefaultrisk.Itprovidesinsurance
againstextrememovementsthatoftenoccurinthe
valueoftraditionalassetclassesinunsettledtimes.
Papercurrencyhedge:Goldisoftenusedasan
effectivehedgeagainstfluctuationsinfiat
currencies.Inparticular,acloserelationshiptends
toexistwiththeU.S.dollar.Whenthegreenback
appreciates,thedollargoldpricefallswhileafall
inthedollarrelativetotheothermaincurrencies
producesariseinthegoldprice.Whilethismay
alsobetrueofotherassets,goldhasconsistently
provedamongthemosteffectiveinprotecting
againstdollarweakness.
Itisourviewthatthedollarwillcontinuetoweaken
overtheforeseeablefuture.Theinternational
centralbankerswilltrytoseetoitthatthedollar,theeuroandtheyendevalueatmuchthesame
rate,soexchangeratesstayconstantandmost
peoplewillnevernoticethedevaluation.Wecallthisstealthdevaluation.
Addedassetprotectionandprivacy:Structuring
yourstrategyappropriatelycanprovidea
considerablelevelofprivacy.Dependingonthe
formatgoldisboughtin,thereareconsiderable
privacyandsafetyrelateddifferences.More
specifically,buyinggoldtherightwaycanmean
legallybypassingreportingrequirements,aswellas
minimizingrisksofconfiscationbythegovernment
Itiswellknownthatafterthelastmajorfinancial
crisis,inthe1930s,theUSgovernmentconfiscated
allprivatelyheldgoldintheUSA.Privatebullion
ownershipwasnotpermittedagainuntilthe1970sThesamethingcouldhappenagain.
Portfoliodiversification:Mostinvestment
portfoliosareinvestedintraditionalfinancialasset
suchasstocksandbonds.Thisappliesparticularly
toretirementsavingsandpensionplans.
Governmentsaretryingtopersuadepeoplethat
governmentbondsaresafeassets,wheninfact
governmentsaroundtheworldareeffectively
bankrupt.Itisonlyamatterofhowlong
governmentscankeepupthischarade.The
reasonforholdingdiverseinvestmentsistoprotec
theportfolioagainstfluctuationsinthevalueof
anysingleassetorgroupofassetsthatreactinacommonfashion.Portfolioscontaininggoldare
generallymorerobustandsecure.
Physicalorvirtualownership:Youcanbuygold
initsphysicalformandstorethecoins,goldbarso
jewelrythatyouhaveacquired.Oryoucanhold
goldthroughvirtualmeansincludingETFs,digital
gold,andservicessuchasGoldMoneyand
BullionVault.
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4 HOWTOINVESTINGOLDTHERIGHTWAY
ShouldIInvestinGoldNow?
Gold,duringthepastfewyears,hasbeenoneof
thebestinvestmentsouttherewhenmeasuredin
fiatcurrencyterms.During2010,despiteweakness
ingeneralcommoditiesmarkets,goldkeptmoving
up.Thisisbecausegoldisnotreallyacommodity,
butalongtermsafehavenstoreofvalue.
Whateverscenariowemoveinto,beitdeflationary
orinflationary,webelievethistrendwillcontinue.
Goldhasbeenrecognizedbyagrowingnumberof
investors.Moreandmorepeoplearecatchingon
tothefactthattherecoverystoryisnotforreal
afterall.EconomistswhoprojectedtheU.S.
recoverywouldgainspeedinthesecondhalfof
lastyeararenowscalingbackthoseforecastsone
byone.Moreandmorepeopleareconcernedover
growingfiscalandmonetaryimbalances,
particularlyinwesterneconomies.Moreandmore
investors,therefore,arelookingforsafetyinhard
assets.Goldistheobviouschoice.
Whencomparingstockmarketperformanceswith
thatofgold,itiseasilyvisiblethatstockmarkets
haveformedaprettysoliddownwardtrend,while
goldhasconfirmeditstrendontheupside.
Investorsareaccumulatingenoughbulliontofillall
Switzerlandsvaultstwiceover.Someofthemost
respectedgoldanalystsagreethatthelongestgold
rallyinatleastninedecadeshasalotfurthertogonomatterwhattheeconomyholds.Accordingto
anarticlefromBloomberg,analystsraisedtheir
2011forecastsmorethanforanyotherprecious
metalthepasttwomonths,predictinga10th
annualadvance.Awidelyheldoptionongold
futurestradedinNewYorkisfor$2,000anounce
byDecember2011.
WhenGoldhit$700anouncesomepeopleaskedus,ShouldntIwaitforapullbackinthegoldprice
beforebuying?Theyarestillasking
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HOWTOINVESTINGOLDTHERIGHTWAY 5
TheRightWayToBuy,Own,and
InvestInGold
Analmosthystericalantagonismtowardthegold
standardisoneissuewhichunitesstatistsofall
persuasions.Theyseemtosense...thatgoldand
economicfreedomareinseparable.
~AlanGreenspan
Forthoseofyouwhoareconcernedaboutthe
healthofourworldsfinancialsystem,Istrongly
urgeyoutoreadthisreportthoroughly.Ibelieve
thatwehavereachedacrossroads.Formanifold
reasons,financialmarketsaheadpromisetobe
sluggishandbumpyatbest,catastrophicatworst.
Youneedtoprepareforthat.Today,morethan
ever,gold--and,toalesserdegree,silver--
ownershipneedstobepartofyourwealth
preservationplan.Ifyoualreadyownprecious
metals,thatisgood.However,themessageIwant
todrivehomeinthischapterandthisreport,is
thatyoumustownitTHERIGHTWAY.
Iregularlytalkwithinvestorswhosaythatthey
ownphysicalgoldandsilver.Myfirstquestionto
thatstatementis:"Areyousure?"
Ifyouranswerisno,pleasereadon.Ifyour
answerisyes,Iwillaskyouagain:"Areyou
sure???"
PhysicalGoldorDigitalGold?
Howyoubuygoldorsilverdependsverymuchon
yourbeliefsystemandyourobjectives.Ifyouare
notconcernedatallaboutthecurrenteconomic
climateandthestateoftheinternationalfinancial
system,thenyoumaybemuchlesspickyabout
HOWyoubuyyourgold.
Undersuchcircumstances,youmight,forexample,
beperfectlycomfortablewithoneofthevarious
metalsaccountsorcertificatesofferedbybanks.
Youarethen,ofcourse,vestingyourtrustina
financialinstitutionanditscapacitytoselland/or
deliverthemetalsthatyouhaveaclaimto
wheneveryousaytheword.And,undernormal
marketconditions,yourassumptionsmaygenerally
befine.Butyoumustrealizethatyoudontreally
ownthemetalsinthesescenarios.Youjustowna
claimagainsttheissuer(bank)foracertain
amountofgold.Iftheissuercannotpayforany
reason,yourclaimisworthless.
Tous,thiskindofdefeatsthewholepointof
havingasafehavenandavoidingexposuretothe
globalfinancialsystem.
Similarly,ifyouareinterestedinahigh-turnover,
in-and-outmetalstradingstrategy,youmay
bebestoffusingETFs(ExchangeTradedFunds),or
possiblyoneoftheother"digital",internet-based
preciousmetalsprogramsavailabletoday.
Youare,insuchprograms,atbestinvestingin
fractionsofbullionbars,generallythe12.5
kilogramformat(GoldMoneyorBullionVault,for
example)-ormoreofteninunallocatedownership
orclaimsthatarenotentirelybackedbypreciousmetalsatall(GLD,theworldslargestgoldfund,is
themostprominentexample).
Theadvantageofsuchstructuresisthat
transactionswillobviouslybequickerunder
normalcircumstances.Youcanbuyandsell
cheaplywiththeclickofyourmouseprovided
marketsarefunctioningnormally.
Ofcourse,ifacatastropheofanykindstrikes,
marketswillbeclosed(ashappenedinthedaysafterSeptember11th,2001)andyouwontbeable
tobuyorsellanythinginthismanner.
However,ifyouarelikemeandyouwanttomake
sureoftrue,allocated,directownership,ifyou
wanttoprotectyourselffromacrisisduringwhich
goldandsilverpricesshootup,whenthe
availabilityofphysicalmetalswillbelimitedor
non-existent,orwhenthefinancialsystemstalls
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6 HOWTOINVESTINGOLDTHERIGHTWAY
andsellingpreciousmetalsthroughthebanking
worldsimplywontwork,thenGLDandthelikewill
notdo...notevenclose.
10ReasonsToStayAwayFromDigitalGold
liketheGLDExchangeTradedFund
1.DependenceontheNewYorkStockExchange-
Forthosewhoacquirepreciousmetalsasan
insuranceagainstacrisissituationandasahedge
againstfinancialcrisis,accessandfluidtransaction
capabilityatalltimesiscritical.GLDdoesnotallow
forthat.ItistradedexclusivelyontheNYSE.During
periodsoffinancialcrisis,theNYSEstopstrading,
andhasevenbeenknowntounwindandreverse
transactions.Therefore,accessandtheabilityto
buyand/orsellpreciousmetalsatexactlythetime
whenitismostimportantmaywellberestricted.
2.ThefunddoesNOTallowin-kindredemptions
ofitsgoldbullion-GLDsrefusaltofacilitateanin
kindredemption--inotherwords,thedeliveryof
physicalgolduponrequestoftheinvestor--does
atleastraisequestions.
OfallthepreciousmetalETFsoutthere,weare
awareofonlytwoworldwidethatinfactallowforphysicaldistributionandwhicharealmostentirely
physicallybacked.TheyarebothSwiss.Oneof
themistheGoldETFissuedbytheZrcher
Kantonalbank(ZKB),whichwewilldiscussinmore
detaillater.ThisETFcomeswithconsiderable
limitationstoo.However,ifyouabsolutelywantto
useanETF,thisistheonewewouldrecommend.
3.GLDdoesNOTappeartohavestorageissues-
Oneofthekeychallengesofaphysicallyallocated
goldprogramistoprovideforsecureandcost-
efficientstorage.Thisisaproblemthatwas
encounteredlastyearbyZKB,forinstance.When
theirGoldETFreachedaround70tons,theyhadto
findmoregoldstoragespace.Itwasalloverthe
news.Nosuchnewsistobefoundanywhereon
GLD.Thatdoesraisesuspicions.
4.TheGLDgoldholdingsareNOTaudited-There
arenoauditsonGLD!?!?Asreflectedinthe
excerptsfromthefunds10-Kformbelow,even
monitoringislimited.Infact,thesub-custodians
dontevenhavetoprovideanydocumentationfor
proofoftheexistenceoftheunderlyinggold.The
obviousquestionthenbecomeshowisan
investorsupposedtoknowthereisactuallyany
goldinthevaultsatall?
TheabilityoftheTrusteetomonitorthe
performanceoftheCustodianmaybelimited
becauseundertheCustodyAgreementstheTrusteemayonlyuptotwiceayearvisitthepremisesofthe
CustodianforthepurposeofexaminingtheTrusts
goldandcertainrelatedrecordsmaintainedbytheCustodian.
Inaddition,theTrusteehasnorighttovisitthe
premisesofanysubcustodianforthepurposesof
examiningtheTrustsgoldoranyrecords
maintainedbythesubcustodian,andno
subcustodianisobligatedtocooperateinany
reviewtheTrusteemaywishtoconductofthe
facilities,procedures,recordsorcreditworthinessof
suchsubcustodian.Source:SECForm10-K,September30th2009
5.ThegoldholdingsofGLD(iftherewereany?)
areNOTinsured-The"Trustsgoldmaybesubjecttoloss,damage,theftorrestrictiononaccess".
Theseareobviouslyriskfactorsthatanyallocated
goldprogramwillface.Solidgoldprogramsdeal
withitbyinsuringthevalueofthegoldinstorage.
InthecaseofGLD,allriskispassedontothe
investor.
TheTrustsgoldmaybesubjecttoloss,damage,theftorrestrictiononaccess.
ThereisariskthatsomeoralloftheTrustsgoldbarsheldbytheCustodianoranysubcustodianon
behalfoftheTrustcouldbelost,damagedor
stolen.AccesstotheTrustsgoldbarscouldalsoberestrictedbynaturalevents(suchasan
earthquake)orhumanactions(suchasaterrorist
attack).Anyoftheseeventsmayadverselyaffect
theoperationsofthetrustand,consequently,aninvestmentintheShares.
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HOWTOINVESTINGOLDTHERIGHTWAY 7
TheTrustmaynothaveadequatesourcesof
recoveryifitsgoldislost,damaged,stolenor
destroyedandrecoverymaybelimited,eveninthe
eventoffraud,tothemarketvalueofthegoldat
thetimethefraudisdiscovered-Source:
ProspectusSPDRGoldTrust
6.ThequalityofthegoldisNOTconfirmed-
"NeithertheTrusteenortheCustodianconfirms
thefinenessofthegold..."Ourconclusiontothis
statement?Youarenotonlyunsureofanygold
beingthereatall,butnowyouarenotsureofits
purity.IftherewereANYTHINGphysicalheldin
storage,youstillwouldntknowwhetheritis
investmentgradegoldorjustaheapoftungsten!
GoldbarsallocatedtotheTrustinconnectionwith
thecreationofaBasketmaynotmeettheLondon
GoodDeliveryStandardsand,ifaBasketisusedagainstsuchgold,theTrustmaysufferaloss.
NeithertheTrusteenortheCustodian
independentlyconfirmsthefinenessofthegold
barsallocatedtothetrustinconnectionwiththe
creationofaBasket.-Source:ProspectusSPDRGoldTrust
7.TheissuersareNOTinterestedinprotectingthe
strengthandvalueofGLD-Mostgoldandsilver
ETFsarecreatedbysuchfinancialgiantsasJPMorgan,HSBCorBarclaysBankthatalsoserveas
custodiansandsub-custodians.Theyhavehuge
conflictsofinterest.
Thesearetheveryfirmsthathavebeeninvolvedin
theprocessofshortsellinggoldandsilverinhuge
quantities.Thattheywouldbeinvolvedincreating
ETFsthatarephysicallybackedbyREALprecious
metalshastobeconsideredasmostunlikelyunless
theyhadahiddenagendaandhighlyquestionablepurposes.
8.ThegoldisNOTprotectedfromthecustodians
insolvency-Inthecaseofthecustodians
insolvency,yourinvestmentisnotprotectedor
insuredinanyway.Youbeartheriskentirely.Itis
notsegregatedfromthecustodiansbalancesheet
andthusisexposedtothebankscreditor
obligations.
Thisneedstobetranslated:Iftherewereanygold
instorage(whichatthispoint,youwillrealizeis
questionable),YOUdontreallyownit.Contraryto
investinginastock,forinstance,whereyouown
anactualshareofacompany,withGLDyouown
nothingmorethanaclaimtogold--apromise--
whichcompletelyandentirelyhingesonthe
financialhealthofthecustodianorsub-custodian,
thirdandfourthpartiesoverwhichthe
administratorsofGLDhavenocontrol.
Ifyouwanttoinvestingoldinordertoprotect
yourselffromafinancialcrisis,thethingyouwant
leastistodependonthepromiseofabankand
survivalofthelikesofJPMorgan.
GoldheldintheTrustsunallocatedgoldaccount
andanyAuthorizedParticipantsunallocatedgoldaccountwillnotbesegregatedfromthe
Custodiansassets.IftheCustodianbecomesinsolvent,itsassetsmaynotbeadequatetosatisfy
aclaimbytheTrustoranyAuthorizedParticipant.
Inaddition,intheeventoftheCustodians
insolvency,theremaybeadelayandcostsincurred
inidentifyingthegoldbarsheldintheTrusts
allocatedgoldaccount.-Source:Prospectus
SPDRGoldTrust
9.GLDdoesNOTexcludethepossibilityofleasing,
shortsellingorpledgingthegoldthatit
(supposedly)hasinstorage-Furthermore,the
trustsstorageislocatedinLondon,wheremostof
theworldsgoldleasingoccurs.Iftheissuersof
GLDhadwantedtoinspireanyconfidenceinits
goldholdings,theycertainlychosethewrong
location.Londonhasahistoricroleasthemarket
ofchoiceforcentralbankseffortstosuppressgold
prices.Thefactthatmuchoftheworldsgold
leasingoccursinLondononlyaddstotheuncertainty.
10.GLDisNOTprotectedfromthewhimsofUS
government-Asmentionedabove,GLDisaWall
Streetproduct,whichtranslatesintohighexposure
toWashington.TheinstitutionsonWallStreetare
backedbygovernment.Programsrunbythem
provideforZEROprotectionfromconfiscation,
taxation,orregulatoryshenanigans.
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8 HOWTOINVESTINGOLDTHERIGHTWAY
Insummary,GLDsownprospectusmakesvery
clearthatyouarenotprotectedfromanything.
YOUbearalltherisks:
-thelackofadequatesourcesofrecovery
-thefailuretomeettheLondonGoodDelivery
Standards
-thefailureofsub-custodianstoexerciseduecare
intheirsafekeeping
-therisksofleasingoutgold,whichisallowedin
theprospectus
-theinsolvencyoftheCustodian
-etc.etc.etc.
Assumingyouareinterestedintruegold
ownershipandsolidpreservationofwealth,GLD
andmostotherETFsareNOTwhatyouneed.GLD
isissuedbytheinstitutionsthatgaveussubprimeCDOs,auctionrate,andothersupposedlysafe
securities.RememberAAAsecuritiesthatare"as
goodascash..."?WhatarethechancesofGLD
turningouttobeas"safe"astheirAAA-ratedtoxic
waste?
WhatAboutTheZKBGoldETF?
Asmentionedabove,ifyoupreferanexchange
tradableproduct,forwhateverreasonsyoumight
have,thenatleastinvestinanETFthatisinfact
(largely)backedbygold.Inthatrespect,and
despitethedrawbacksthatwewillcommenton
below,theETFissuedbytheCantonalBankof
Zrich(ZKB)canbeconsideredasgenerallysolid.
TheZKBGoldETFisbackedbyphysicalmetals,or
gooddeliverybarsasdefinedbytheLBMA
(LondonBullionMarketAssociation).Itoffersall
fourpreciousmetals-gold,silver,platinum,
palladium.Storageisregularlyauditedandthegold
isfullyinsured.
However,aswithanyotherETF,youdontreally
OWNthephysicalpreciousmetalsinstorage.You
onlyhaveaCLAIMtothemetalsheldinstorage.
Therefore,yourinvestmentdependsonthe
financialhealthofthefinancialsystem.
Furthermore,youdonthaveadistinctlyallocated
product;youdonthaveaclaimtospecificpieces,a
1kggoldbaror1oztKrugerrandcoin,forexample.
Youownunits/fractionsofbullionbars.Inthecase
oftheZKBGoldETF,its12.5kilogoldbars.
Physicaldeliveryisonlypossibleinthisformatof
12.5kilobars(currentlyworthapprox.USD
500,000).
And,likeallETFs,theZKBETFissubjectto
considerablelackoftransparencywhenitcomesto
pricingandthepercentageofactualholdingofthe
underlyingmetalsperunitofthefund.
WhileETFsliketobragabouttheirtransparencies,
weinviteyoutocontacttheissuersandaskfor
detailsontheactualspreads,productcostsor
weightofpreciousmetalsofyourtransaction.Youwillrunintoahostofquestionmarks,justaswe
did.
Finally,justlikealltherest,thisETFhascash
settlementclausestoo.Inthecaseofacrisisor
"irregularmarkets",itisatthefundsdiscretionto
payyouincashinsteadofphysicalmetals.TheZKB
prospectusmakesveryclearthatitisnotgearedto
investorsinterestedinsolid,crisis-proofprotection
Whathappens,forexample,ifalotofinvestors
wanttoselland/ordeliveratonce?[thatsthe
precisescenarioonewouldexpectinafinancial
meltdown,forinstance...]
HeresanexcerptfromtheProspectus,whichwe
unfortunatelyonlyfoundinGerman:
"DieFondsleitungkannimInteressederGesamtheitderAnlegerdie
RckzahlungderAnteilevorbergehendundausnahmsweiseaufschieben,wenn:
(a)"DerGoldhandelinNewYork,welcherGrundlagefrdieBewertungdesFondsvermgensbildet,geschlossenistoderwennderGoldhandelinNew
Yorkbeschrnktoderausgesetztist;
(b)"Einpolitischer,wirtschaftlicher,militrischer,monetreroderanderer
Notfallvorliegt;
(c)"WegenBeschrnkungendesDevisenkursesoderBeschrnkungenderbertragungoderVerusserbarkeitvonGoldoderflssigenMitteln
GeschftefrdenAnlagefondsundurchfhrbarwerden;
(d)"ZahlreicheAnteilegekndigtwerdenunddadurchdieInteressender
brigenAnlegerwesentlichbeeintrchtigtwerdenknnen."
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HOWTOINVESTINGOLDTHERIGHTWAY 9
ForthoseofuswhodontspeakGerman,letme
summarizewhatthistellsus:
Thefundmaybesuspendedtemporarilyatthe
discretionofthefundsmanagersifgoldtradingin
NewYorkisinterruptedforsomereason;ifa
political,economic,military,monetaryorother
emergency(thisprettymuchcoversitall)occurs;if
alotofredemptionsareplaced,whichmightin
turnharmtheinterestsoftheotherinvestorsin
thefund.
Obviously,althoughamoresolidETFsolution,the
ZKBETFtooisonlyanotherbanksolutionthatwill
absolutelynotmeettheneedsofprudentinvestors
lookingtoprotectthemselvesfromaseverecrisis
situation.
TimeToGoPhysicallyAllocated
Basically,itisagoodthingforinvestorswithgold
whenrisingdemandpushesthepriceup.However,
itisalsoasignalthatwemaybeenteringthenext
phaseinthegoldbullmarket,anditshouldalert
youtothegrowingprospectsofanimpending
crisis.Goldhasnotsimplyrisenalongsidestocks
andotherinvestments.IthasrisenCONTRARYtotheirweakness,andBECAUSEofthegrowing
concernsoveraglobaleconomiccrisis.
Wehaverecommendedholdinggoldandsilver
sinceQWealthwasfoundedbackin1996.From
theverybeginning,like-mindedportfoliomanagers
haveinvestedconsiderablepartsoftheirclients
assetsinphysical,allocatedpreciousmetals.
Untilrecently,theyalsoheldpartoftheir
investmentsinamixofunallocatedprogramssuchasthePerthMintCertificateProgram(PMCP).
Manyofourmembershavebeenandstillare
investedinthatprogram.
ThePerthMintalsooffersanallocatedprogram,
whichweconsiderbetterthanothers.However,
still,inthatprogramyouarevestingyourtrustand
wealthintheWesternAustraliangovernment.We
arenotsureyoushouldtrustyourfortunetoany
governmentatthisstage.Furthermore,thefeesof
Perthsallocatedserviceareprettyhigh.Goldis
storedat1.5%perannum,silverat2.5%per
annum.Thosecostscanaddupovertheyearsofa
buy-and-holdstrategy.
Itisforthesereasonsthatweareadvisingclients
withPerthMintCertificatestoswitchtotheGlobal
GoldProgram.Weareoftheopinionthatneitheranunallocatednoragovernment-sponsored
programoffersthesafetyfeaturesneeded.Asthe
momentumingoldandsilvermarketspickupand
theeconomicconditionsdemandaction,youwant
anon-bank,non-government,100%allocated
program.
Webelievestronglythatitistimetoswitchtoa
SAFE,ALLOCATEDprogram.Youwanttobecertain
nowthatyouownphysicallyallocatedpreciousmetals.Thismeansthatyouwanttobesurethatif
youbought100Krugerrand1oztgoldcoinsthat
those100coinsarestoredsomewheresafely,
ownedbyyou,andcanbePROMPTLYdeliveredto
youanywhereintheworld,orsoldby/foryou
wheneveryoudesire.
Obviously,ifyouareinterestedininvestingin
preciousmetalsforashortperiod,possiblyinaday
trademode,in-and-out,concernedmostlyabout
makingashort-termprofit,thenthatisadifferent
matter.Youwouldbebesttouseanumberofthe
betterETFsorclaimaccounts.Butifyouare
lookingforprotection,forasafenest-egginyour
portfolio,itistimetosecureyourphysicalgold
positionnow.
Whengoingtheoffshoreroute,bewareof
strategiesthatsoundtoosimple.Thinktheprocess
through.Andconsidertheheftyfeesandtaxes
(VAT)youwillpayinsomeEuropeancountries.
Thebackyardsolutionismoreconvenientand
efficient(moreinformationonthissolutioncanbe
foundonpage10ofthisreport).Thekeyrisk,in
caseofaseverecrisis,isgovernmentconfiscation.
Itappears,however,thatifapproachedcleverly,
theseriskscanbeminimized.
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10 HOWTOINVESTINGOLDTHERIGHTWAY
BestWayToBuyPhysicalGold-
GlobalGold
Thereisoneprogramthatmeetsallourstandards.
ItiscalledGlobalGoldandisaSwissprecious
metalsprogramavailabletoallinvestorsfrom
aroundtheworld.Itholdswhatotherprograms
promise.WithGlobalGoldyouareinvestedthe
rightway:
1.Yourmetalsarestoredsafelyandfullyinsured-
GlobalGoldstoresitsmetalsinsecure,non-bank
vaultsinSwitzerland,insuredforthefullvalue;the
vaultsareinthetax-freezonetoavoidallVAT
costs.And,theyareusedalsobyotherlargefinancialinstitutionsandSwissbanks.
2.Themetalsacquiredbyyouarefullyandsafely
allocated-atGlobalGold,theyarestoredin-kind
inhighsecurityvaults.Theyarenotleased,pledged
orotherwisefiddledwith.
3.Thevaultsandinventoriesareregularlyaudited
bythirdindependentparties-theGlobalGold
vaultsareregularlyinspectedbytheSwisscustomsdepartment,andtheyareauditedannuallybyone
oftheBigFouraccountingfirms.
4.Youownaspecificamountofaspecificformat-
withtheGlobalGoldprogram,youownaspecific
numberofcoinsorbars,notjustfractionsordigital
unitsdefinedinsomeprospectus,butnottangibly
existent.Youown1oztKrugerands,MapleLeafs,
AmericanEagles,BritanniasorPhilharmonics.You
ownbarsofspecificweights.
Thisisparticularlyimportantfortaxandregulatory
reasons.Forexample,weunderstandthatUSIRAs
mayonlyholdUSbullioncoins.Inthatcaseyou
wouldchooseAmericanEagles.UKclientsshould
chooseBritannias,asunlikeothergoldbullion,UK
coinsarenotsubjecttoCapitalGainsTax.
5.Youcantakephysicaldeliveryorsellpromptly
andconveniently-becausethecoinsandbarsare
there,storedphysically,youcansellordeliver
thempromptlyandconveniently,noifs,ands,or
buts,andnounexpectedback-alleycash
settlementclauses.Youdonthavetoshowupto
takedeliveryorinitiateyourtransactions.Youcan
effectuateallmattersbyfax,e-mail,letter,or
phone.Youarenotevendependentonthe
internet.Allthisisparticularlycriticalinasevere
crisissituation.
6.DeliveryismadeinSwitzerlandor
internationally-GlobalGoldarrangesdeliveries
withinSwitzerlandandinternationallyatanytime
onacostbasis,withaveryreasonable
administrativefee.Transportsarefullyinsuredand
conductedwithleadinginternationalhigh-security
logisticsfirms.Youmightnotbeabletotravel
whenbanksandstockmarketsmaynotallowfor
trading,etc.
7.Youbenefitfromfairandtransparentpricing-
duetoexcellentsourcingcontractswithanumber
ofmintsandwholesalers,GlobalGoldoffers
excellentproductprices.Also,theProgramDealers
arerestrictedinthetransactioncommissionsthey
areallowedtocharge.Thefeesaredisplayed
transparently.Youknowexactlyanddistinctlywha
theproductpriceandbrokeragefeesare.Global
Goldalsooffersaninstitutionalprogramtobanks,assetmanagers,familyofficesandthelike.Thefact
thatSwissfinancialinstitutionsbuyfromGlobal
Goldisproofofthecompanyscompetitivepricing
8.Youhaveconvenientandpromptaccessto
willingbuyers-itisimportantthatyourownership
issetupinawaythat,whenyouwanttosell,you
candosoquicklyandconveniently.Someclients
periodicallyask,"whyshouldInotsimplyburymy
metalsinmybackyardorkeepitinasafedeposit
box,possiblyeveninSwitzerland?"
Frankly,Ihavestrongreservationsabouttheback-
yardstrategy,formanyreasons.However,asafe
depositboxmaywellbeanoption.Thedrawback
tothesafedepositboxisthatyouhaveto
personallypickupyourmetals.Andshouldyou
wishtosell,youmaynothaveabuyerlinedup.It
maytakevaluabletime,particularlyinafast-
movingmarket.Furthermore,intightmarkets,asa
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7/30/2019 How to Buy Gold the Right Way
11/12
HOWTOINVESTINGOLDTHERIGHTWAY 1
privateinvestoryouwillalmostcertainlysellyour
metalsatapricethatistoolow,whereasGlobal
Goldgetsinstitutionalprices.Youcantapintothat
benefitasaGlobalGoldclient.
Inconclusion,thesearesomeoftheunique
benefitsofbuyingthroughGlobalGold.Obviously,
youalsoneedtoensurethequalityofproduct,you
musthavetrustworthycounterparty,etc.Global
Goldoffersthistoo.Thatshouldbetakenasgiven
andisinfactthecasewhendealingwithsuch
providersas,forexample,ZKB(ZurichCantonal
Bank).Thecompletepackageofbenefitslisted
above,ontheotherhand,isquiteunique.
Alotofinvestorsarewatchingandwondering
whichdirectionthepriceofgoldwilltakenext.It
canbeverybeneficialtobuywhendemandis
generallylowandliquidityishighinthegoldmarket,particularlywhenyouarebuyinggold
coins.Themarketpricingofsuchcoinscanvary
substantiallyandspreadstendtoshootupwhen
availabilityislow.So,nowisagoodtimetoensure
yourSAFEANDCONVENIENTpreciousmetals
ownership.
BuyandStoreGoldOffshoreOrAt
Home?
Akeyissuethatstillneedstobeaddressedis
whetheraninvestorshouldbuygoldoffshoreor
athome.Theanswerwillnotbethesamefor
everyone.
Dependingonyourspecificobjectivesand
situation,youmaybebetteroffkeepingyour
assetsinyourhomecountryandstoringphysical
goldinyourlocalbanksdepositbox.Youmight,however,bewelladvisedtobuyandstorephysical
goldoffshore.Or,maybe,youshouldconsidera
mixofboth.
BenefitsandDrawbackstoBuyingGoldAt
Home
Obviously,thisis(abit)moreconvenient,simply
forthefactthatyouarenotdealingwithtimeand
languagedifferences.Furthermore,youcanhave
thegolddeliveredtoyourhomeordirectlytothe
localbankorstoragefacilityofyourchoicewith
moredirectcontroloveryourassets.
However,akeyissuearisesandthisappliesto
U.S.investorsinparticularinregardstotheriskofgovernmentconfiscationwhenbuyingand
storinggoldathome!
Howmightagoldconfiscationbepossible70
yearsafterthelastoneoccurred?Thisquestionis
bestansweredwithaseriesofotherquestions:
Firstly,howwillthemassiveU.S.federaldebt
(nearly$6trillionandgrowing)andtheoutstanding
internationaldollarfloat(resultingfromtheU.S.
tradeandbudgetdeficits)bereconciled?
Currently,theU.S.dollar(still)enjoysaspecial
statusaroundtheworldastheprimaryreserve
currency.Thisstatusencouragescentralbanksand
individualinvestorsaroundtheworldtoholdit.
Leavingthevariouscircumstancesandpotential
scenariosaside,whatwouldbetheoutcomeifthe
stiltsthatproppeditupwerekickedoutfrom
underneaththisbuilt-indollarmarket?
HowmighttheU.S.governmentreacttoan
economicemergencyinwhichindividuals,beset
byeitheradevastatingdomesticinflationora
deflationarynightmareorbothwerefleeing
thebanksandequitymarketsforgoldasameans
ofpreservingtheirpersonalcapital?
Historically,confiscationhasalltoooftenbeenthe
optiontakenbygovernmentsbesetbyan
economicbreakdown.Justasgoldistheassetof
lastresortfortheindividualportfoliodoingservice
inthemostfinanciallythreateningtimes,itisoftentimestheassetoflastresortfortroubled
governmentsaswell.Asrecentlyas1998,during
theAsianContagion,bothSouthKoreaand
Thailandimplementedvoluntarygoldcall-ins.
Thetemptationpresentedbyitscitizensgold
holdingswassimplytoofaciletoresist.
Nomatterhowyoulookatit,investorsmust
bewareofgovernmentconfiscationrisksthatrise
exponentiallyintimesofasevereeconomiccrisis
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12 HOW TO INVEST IN GOLD THE RIGHT WAY
(asseenunderU.S.PresidentFranklinD.Roosevelt
in1933).
WhyBuyGoldOffshore?
Theadvantagesofbuyingandstoringgoldoffshore
areprimarilyrelatedtoFINANCIALPRIVACYand
ASSETPROTECTION.However,whatisrequiredtoreapthesebenefitsisastructurethatallowsyouto
re-allocateyourpreciousmetalsrapidlyandstore
themsafely.Ideally,thisisdoneinanefficientand
low-costmodedespiteanygeographicdistance
issues.
Somereadersmaypreferbuyingandstoring
physicalgoldoveravirtualgoldaccountor
certificate.Theyperceiveahigherdegreeofsafety
inthisstrategybecauseofthefactthattheyare
allocatedaspecificandtangiblelotofgold.
However,storingphysicalgoldisobviouslymore
costly.And,itisgenerallylessliquidthanits
virtualsisters.
Despitepotentiallyhigherholdingfeesandless
liquidity,intodaysenvironment,weultimately
recommendholdingphysicallyallocatedprecious
metals,preferablyinbullioncoinorbarformat.
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