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Going for Gold 1
Going for Gold 2
An Exploration of Alternatives Going for Gold
Alasdair Macleod
Head of Research, GoldMoney
25 October 2012
Going for Gold 3
Introduction
“Money is gold and nothing else.”John Pierpont Morgan, 1912
Going for Gold 4
Introduction
“Gold still represents the ultimate form of payment in the world.”
Alan Greenspan,1999
Going for Gold 5
Introduction
“The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many
U.S. dollars as it wishes at no cost.”
Ben Bernanke, Federal Reserve Chairman
Going for Gold 6
Introduction
Going for Gold 7
Gold versus Paper Money
Gold
• Global stock 155,244 tonnes (GoldMoney Foundation estimate)
• Annual increase 1.7%• Accepted as money
everywhere
Going for Gold 8
Gold versus Paper Money
Paper Money
• Global stock growth has no limitations
• Annual increase: USD 7.3% (True Money Supply to September 2012)
• Accepted only within national boundaries / payment unions
Going for Gold 9
Gold versus Paper Money
Gold is and always has been, with silver, the money of society’s choice. Paper, or fiat money
is governments’ choice.
It is a means of raising revenue without raising taxes.
Going for Gold 10
Gold versus Paper Money
Gold
• Retains its purchasing power over time
• Under-owned (<2%)• Restricted supply (2,750
t/y)• Uncorrelated to other
portfolio assets• Protects against
monetary debasement
Going for Gold 11
Gold versus Paper Money
Paper Money
• Loses purchasing power over time
• Backs 98% of portfolios• All “conventional” asset
classes depend on paper-money-based credit
• Monetary debasement accelerating
Going for Gold 12
US Money Supply
Going for Gold 13
Gold only represents 4.3% of the US True Money Supply
Going for Gold 14
Gold versus Paper Money
Gold pays no interest, only because it has been driven out of circulation (Gresham’s Law).
Paper money pays inadequate interest to compensate for debasement.
Going for Gold 15
Gold versus Exchange Traded Funds (ETF)
ETFs
• Exposure to financial markets• Often synthetic / futures-based • Arbitrage risk• Need to track the trading day of
the relevant stock exchange• Liquidity risk • Fees and commissions can be
substantial
Going for Gold 16
Gold versus Exchange Traded Funds (ETF)
Gold
• No exposure to financial markets
• No fund, trust or securitised structure
• No arbitrage risk• Direct ownership of physical
metal • Transparent, low cost fee
model • Option to register specific
bars• Full insurance cover
Going for Gold 17
Gold and Crude Oil Prices
Today, it takes almost the same amount of gold to buy a barrel of oil as it did 60 years ago.
Going for Gold 18
Crude Oil Prices (Base of 100) – Jan 1950 to Aug 2012
50 55 60 65 70 75 80 85 90 95 00 05 10 150
2000
4000
6000
8000
British pound
US dollar
euro
goldgram
Going for Gold 19
Gold and Currencies
“Paper money eventually returns to its intrinsic value – Zero.”
Voltaire
Going for Gold 20
Gold Price in Four Currencies (Base of 100) – 3 January 2000 – 14 September 2012
01 02 03 04 05 06 07 08 09 10 11 12 13 14
100
200
300
400
500600700
US dollar
euro
Britsh pound
Swiss franc
Log Scale
Going for Gold 21
Annual Change of Gold Price against Selected Currencies
USD AUD CAD CNY EUR INR JPY CHF GBP
2001 2.5% 11.3% 8.8% 2.5% 8.1% 5.8% 17.4% 5.0% 5.4%
2002 24.7% 13.5% 23.7% 24.8% 5.9% 24.0% 13.0% 3.9% 12.7%
2003 19.6% -10.5% -2.2% 19.5% -0.5% 13.5% 7.9% 7.0% 7.9%
2004 5.2% 1.4% -2.0% 5.2% -2.1% -0.0% 0.9% -3.0% -2.0%
2005 18.2% 25.6% 14.5% 15.2% 35.1% 22.8% 35.7% 36.2% 31.8%
2006 22.8% 14.4% 22.8% 18.8% 10.2% 20.5% 24.0% 13.9% 7.8%
2007 31.4% 18.1% 11.5% 22.9% 18.8% 17.4% 23.4% 22.1% 29.7%
2008 5.8% 33.0% 31.1% -1.0% 11.0% 30.5% -14.0% -0.3% 43.7%
2009 23.9% -3.6% 5.9% 24.0% 20.4% 18.4% 27.1% 20.3% 12.1%
2010 29.8% 15.1% 24.2% 25.5% 40.2% 25.3% 13.9% 17.4% 36.3%
2011 10.2% 8.8% 11.9% 5.1% 12.7% 30.4% 3.9% 10.2% 9.2%
11-YearAverage
17.7% 11.6% 13.7% 14.8% 14.5% 19.0% 13.9% 12.1% 17.7%
Going for Gold 22
Interesting Facts – LBMA Good Delivery Bars
• LBMA Good Delivery Bars weigh about 400 troy oz. or 12.5 kg
• A bar is worth about USD 690k*
• A pallet of gold holds about 1 ton of gold or about 80 bars, worth around USD 55m*
*As of 22 October 2012
Going for Gold 23
GoldMoney – Transforming and preserving your wealth
• 22,500 customers*• USD 2.2 billion worth of assets owned by customers*
• Founded in 2001 by James Turk & Geoff Turk
• Storing metals at vaults in 4 countries (CA, CH, HK, UK)• LBMA/LPPA Good Delivery Bars only• Regular vault audits
• 3 Offices in Jersey, London & Hong Kong• 48 Full-time employees• Multi-lingual 16-hour customer support
*as of October 2012
Going for Gold 24
Questions?
Going for Gold 25
Disclaimer
Please note that the information contained in this presentation is only intended to provide a very general overview of the matters to which it relates. It is not intended as financial advice and should not be relied on as such. Potential investors should, before acting on any information contained herein, consider its appropriateness having regard to their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their situation before making any investment decisions.
GoldMoney is regulated by the Jersey Financial Services Commission for the conduct of money services business under the Financial Services (Jersey) Law 1998.
© by Net Transactions Limited 2012