1. Episode III Investing in Precious Metals of Physical Market
Friday, the 6th of February 2015 1
2. Who Are We? Four Metals Market is a trademark of ISC sarl,
and registered with Ministry of Economy and Trade in Lebanon. Four
Metals Market is the Online Store that facilitates commercial
activities over the internet between retail shops and individuals
in Lebanon. The Online Store is not a trading platform but a normal
online shopping cart. Four Metals Market Club was formed to focus
on educating club members on the industry of precious metals. ISC
sarl is the exclusive agent of NBH (National Bullion House) in
Dubai, UAE for Lebanon covering wholesale market and trading
activities in the physical market. ISC sarl acts as an Introducing
Broker for NBH in Lebanon to whoever interested in operating a
Trading Account. 2
3. We believe in "value" not in "price". We believe that gold
and silver maintain "value" whereas currency raises "price". We
believe that gold and silver worked without a fail for more than
5,000 years whereas paper money was newly invented and failed
several times. We believe in the fact that gold and silver are real
money with intrinsic value, and can not be produced infinitely
whereas paper money is nothing but a printed promissory note or IOU
that can be printed unlimitedly. 3 What is New?
4. Precious Stones Coming Soon! 4 What Else?
5. 5 Are you free economically?
6. Wealth! What is the definition of Wealth? 6
7. Wealth? Definition of Wealth A measure of the value of all
of the assets of worth owned by a person by Investopedia. Wealth is
your time and freedom. Freedom is the practice of the right to
choose a particular productive activity, and set the time to spend
practicing that chosen activity in order to generate Economic
Energy, Such Economic Energy is stored in a container called Money,
Money acts as a token to trade the stored Economic Energy for goods
and services. 7
8. Facts of Wealth The law of Conservation of Energy states
that the total energy of an isolated system cannot be changed.
Similarly The law of Conservation of Wealth states that the total
wealth of an isolated economic system cannot be changed by 4MM.
Wealth can neither be created nor destroyed, but transferred from
one state to another - crisis to opportunity - either voluntarily
or involuntarily. Life is not fair and even The Economic System
which brings inequality in wealth concentration. Wealth
concentration is a process by which newly unearthed wealth, under
two factors, can become concentrated in the possession of few
individuals or entities. Factor I: an unequal initial distribution
of wealth. Factor II: unequal knowledge of the mechanics of the
economic system. Freedom is to choose when and for what to trade
your money. 8
9. Money vs Currency 9 Money Currency medium of exchange unit
of account portable long-lasting mutually interchangeable stores
value leaks value away intrinsic value faith finite infinite
10. Your Money! If your Money is the currency created by
nations What is the nations Money? 10
11. Your Playground! 11
12. Nations steal wealth from people! Nations reward the
domestic economic energy by paper money known as fiat currency.
Fiat Currency is a currency declared by a government by law to be a
legal tender within its territory, and backed solely by faith. Fiat
is the Latin word for "it shall be". The risk which people are
running is that such fiat currency will become one day or another
worthless due to hyperinflation and loss in faith. Result is that
the economic energy will ultimately vanish (Wealth Destruction).
12
13. Prices 13 When currency pool expands, prices sucks them to
inflate. Inflation is the result of expansion in currency supply.
Deflation is the result of contraction in currency supply.
14. Motivations for Investing! What are your motivations to
invest in precious metals? 14
15. Motivations for Investing! Motivations for investing in
precious metals: Financial Concerns: When the financial system
becomes unstable or faith in a currency becomes questionable.
Inflation: When cost of living skyrockets or purchasing power
evaporates. Unstable Political Environment: When the political
environment becomes unstable because of war, civil war or breakdown
of political system. 15
16. Case of Switzerland On September 6th 2011 the SNB (Swiss
National Bank) sets a floor for EUR/CHF exchange rate at 1.20 The
SNB will enforce this minimum rate with the utmost determination
and is prepared to buy foreign currency in unlimited quantities.
SNB Press Release on December 18th 2014 The SNB reaffirms its
commitment to the minimum exchange rate of CHF 1.20 per euro, and
will continue to enforce it with the utmost determination. SNB
Press Release on January 15th 2015 The Swiss National Bank (SNB) is
discontinuing the minimum exchange rate of CHF 1.20 per euro. 16 Do
Central Banks lie?
17. Big Casualties Alpari UK, which was the pioneer of the
Forex industry announced insolvency. New Zealand based Excel
Markets basically said that they will not be returning back to
business. Citigroup lost $150/- Million. 17
18. Case of Lebanon Banque Du Liban is announcing a stimulus
package of US Dollar 1 billion to boost local demand where housing
loans will capture the main bulk of loans in the 2015, by
BusinessNews.com.lb dated 8-Dec- 2014. Moody's Investors Service
downgraded Lebanon's government bond ratings to B2 from B1 and
maintained the negative outlook, by BusinessWeek.com.lb dated
19-Dec-2014. The Ministry of Finance launched a medium term public
debt management policy from 2014 to 2016. Increase borrowing in
foreign currency until 2016 30% to cover the duties of the
principal of debt and interest rates in foreign currencies
(refinancing). 70% to cover the obligations in Lebanese Lira. by
BusinessWeek.com.lb dated 8-Jan-2015. 18
19. Lebanese Lira 1964 - Present the local exchange rate of the
lira is partially covered by gold, and foreign currencies that are
convertible to gold, 30% cover of cash and deposits, and 50% cover
of cash. the local exchange rate of the lira is controlled through
market intervention by Banque du Liban when needed. 19
20. Art of Building Wealth Regular capital accumulation is the
key to build wealth. Capital is the financial resource available to
posses real assets. Capital is divided into: Constant capital:
refers to value of physical assets in possession. Variable capital:
refers to employed capital. Fictitious capital: refers to
intangible representation of physical assets. 20
21. Ownership! Ownership is the right to possess assets.
Contracts in general facilitate the transfer of assets ownership
between contracted parties. The devil CFD (Contract for Difference)
was introduced by financial engineers to confuse people and
breakdown the rules. 21
22. Contract for Difference CFD is an arrangement made in a
futures contract whereby differences in settlement are made through
cash payments, rather than the delivery of physical goods or
securities, by Investopedia. Where losses and gains are paid in
cash where CFDs provide the benefits and risks of owning a security
without actually owning it. he financial resources available to
posses the said something assets. 22
23. Risk Profile Suitable Profile: Saver: Regularly putting
aside part of income directly into constant capital. Investor:
Suitably employing capital in goods to produce other goods to build
up the constant capital. Speculator: Preferentially burning
available financial resources in fictitious capital to recover and
generate other financial resources. 23
24. Options Available What are the options available to invest
in? 24
25. Options Available Commodity ETFs (Exchange Traded Funds):
claim on the performance of a particular fund, basically a company
trading in contracts. Common Stocks: direct claim on the
performance of companies dealing in precious metals. Futures and
Options Contracts: offer the benefits of owning without the actual
ownership. Certificates: offer actual ownership minus the hassle of
insurance, transportation and storage. Bullion: offer actual
ownership in addition to the hassle of insurance, transportation
and storage. 25
26. Starting Your Investment Remember Most unsuccessful
investors are slaving the fear of misfortune by jumping into market
when its skyrocketing and getting off when it is falling. Know your
goals and risk profile in order to succeed. Be with markets as
being with friends and deal with falling market as dealing with
discounts season. Action Plan: Put an initial capital in action.
Turn off emotions. Have a Action Plan with targets. 26
27. Your Action Plan Define your profile Set your goal.
Determine your target dates. Turn off your emotions and stick to
your plan. Have firm belief in what you are doing and NOT in what
others are saying. Make friendship with market. Stay resourceful.
Finally, whatever happens keep going! 27
28. Facts About Physical Market 28
29. Your Strategy! When do you buy? How to you buy? What do you
buy? Where do you buy? 29
30. Usage of Precious Metals How to make payments in gold: gold
can be put in vaults you transfer ownership of gold at nanogram
grams and ounces the transfer goes from one account to another
payment method can be by any mean like plastic card or paper
receipt. 30
31. Recommendations 31
32. Things to remember! 32
33. US Dollar Currency Pre World War I: Classical Gold Standard
having 100% reserve ratio. $20 bill = $20 gold receipt. 1913: Gold
Exchange Standard having 40% reserve ratio. $50 bill = $20 gold
certificate. 1943: Bretton Woods System states that every currency
of the nations will be backed by the US Dollar and the US Dollar
will be fixed at $35 an ounce of gold. There was no reserve ratio
established. 33
34. US Dollar Currency The US continued printing its US Dollar
at 0% reserve ratio. 1960: President Charles De Gaulle claimed that
there was not enough gold with the US to back its currency and
asked for the gold. 1960-1971: Phenomenon of rush on the US gold by
France and other countries started resulting in loss of around 50%
of the US gold reserve. 1971: the US had 12 times of printed US
Dollar to the existing physical gold stock. The US created more
receipts for gold that what they actually had of gold. 15th of
August 1971: Fiat currency was born to avoid default on payments.
34
35. Nixon Shock In 1971 the US was unable to meet its
obligations to foreign creditors under the terms of global monetary
system that was negotiated by world leaders and in place since the
end of World War II. That system was based on the US Dollar
redeemable in gold. President Richard Nixon unilaterally withdrew
the US as a party to the agreement citing the actions of
speculators as the reason for default rather than admitting the
inability of the US to meet its obligations under the agreement
because Vietnam War spending was bankrupting the country. 35
36. Nixon Shock 1971 36
37. De Gaulle 1965 37
38. De Gaulle 1965 The french president was opposing the US
monetary policy and having the belief that the base of the world
monetary system must be gold. In 1965 he warned that the
International Monetary System based on the US Dollar was a danger
to the world. The danger he warned about 49 years ago is now too
large to manage. 38 A monetary system based on a single nations
currency is a danger to the world. Tacna | Dreamstime.com -
Memorial Of General De Gaulle Photo