Why & Where to buy Gold & Silver by Steve Netwriter 2nd Jan 2010
Sat, 02/01/2010 - 01:36
Why everyone should hold some gold & silver
It used to be 'common sense' for investors to hold 5 to 10% of their liquid portfolio in gold and silver, just in case something catastrophic occurred. It was insurance. That 'common sense' has been lost by most people, and so very few people hold any gold or silver. It's as if most of population has forgotten what house insurance is for, and are now uninsured.
But, 'common sense' is returning, due to the recent financial events. And with that return is the inevitable extra demand for gold & silver, and with the very limited supply, the inevitable rise in price.
In my opinion the case for holding at least 10% of your liquid portfolio in gold and silver is very strong.
I think you should apply the "don't put all your eggs in one basket" rule.
Here are two options for at least some of your gold and silver holdings that I think are excellent.
Places to buy and store gold and silver
These two firms offer very reasonable charges on buying and selling real physical allocated gold and silver. That is VERY important. With these companies you are buying the real physical metal, not a paper promise.
They also store your gold/silver for you at very low costs.
Bullion Vault .......... and .......... Gold Money
They are the best options I have found.
With Bullion Vault you also get a free gram of gold, so you can register and try out the system completely without charge.
Only Gold Money used to offer silver, which offered the advantage of being able to swap between gold and silver. But soon Bullion Vault will also offer silver.
Personally I consider selling gold or silver at the moment quite inappropriate. But, it is a reasonable idea to swap some gold for silver at what you consider to be dips, and to swap some silver for gold at what you consider to be peaks. That way you maintain your ownership of real money while trying to benefit a little from the volatility of the long-term bull market.
Even if you are not sure about buying gold and silver, I think it is a very good idea to open an account with both of these companies. It won't cost you anything but a little time, and if you do decide that owning some gold and silver is a sensible precaution, then you can do so very quickly.
I've written a lot about gold and silver here:
Steve Netwriter's Gold and Silver Articles & Predictions
http://neuralnetwriter.cylo42.com/forum/17
and I have also listed some excellent economic books, including some of gold & silver here:
Economics Books
http://neuralnetwriter.cylo42.com/forum/28
A really good and inexpensive way to learn about a lot of the current situation and why gold & silver are a good idea can be found in this one book:
Guide to Investing in Gold and Silver By Michael Maloney
http://neuralnetwriter.cylo42.com/node/26
Sat, 09/01/2010 - 03:43
#2
A more risk averse portfolio
Thanks Apples,
I've not had time before to read those.
This point I very much agree with:
Quote:
Rule #13: Keep some assets outside the country in which you live.Don’t allow everything you own to be where your government can touch it. By having something outside the reach of your government, you’ll be less vulnerable — and you’ll feel less vulnerable. You’ll no longer have to worry so much about what the government will do next.
For example, maintaining a foreign bank account is quite simple; it’s little different from having a mail or Internet account with an American bank or broker.
http://crawlingroad.com/blog/2008/12/17/the-permanent-portfolio-and-the-...
However, I think one must remember that all fiat currencies are linked, and are specially vulnerable to the US Dollar.
So all assets that rely on a fiat currency, are vulnerable, and IMO are a risk at the moment.
So from your summary:
Quote:
The basic idea is that you have 25% in gold, 25% in a wide spread of equities, 25% in bonds and 25% in cash deposits.
and the 2nd article:
Quote:
In a prior post we talked about the Permanent Portfolio allocation which is:25% – Stocks (in a broad based stock index fund like the S&P 500)
25% – Long Term Treasury Bonds
25% – Gold Bullion
25% – Cash (in a Treasury Money Market Fund)This allocation will provide protection when the economy shifts through the cycles of prosperity, inflation, deflation and recession.
I see 25% in gold, and 75% in some sort of fiat based investment.
Even spread over a number of fiat currencies, given the current competitive devaluation going on, I think that is too risky a balance, and is doomed to result in wealth loss.
I would think a better risk-averse portfolio would be something like (off the top of my head):
40% in gold
10% in silver
30% in a variety of commodities
10% in some form of property (if possible)
10% in cash for day to day living
As you can see, I see no place for bonds or equities at the moment, and the more risk averse would decrease the commodity % in favour of more gold.
If the trend towards hard monetary assets continues as I think it will, we will see gold & silver continue to rise towards a more realistic price relative to the over-priced fiat currencies (due to their excess quantity), and also as a result their will be reduced demand for equities and bonds, and their prices will fall.
I think bonds are close to the riskiest option right now, having been in a multi-decade up-trend / Fed induced bubble.
The Marginal productivity of debt described here makes me think we are close, if not past, a critical point:
A Critique of the Quantity Theory of Money. Further Evidences of the Onset of Great Depression II by Antal Fekete 15th Apr 2009
http://www.neuralnetwriter.cylo42.com/node/2307
The more I read the more I disagree with. Take this:
Quote:
The Permanent Portfolio strategy works because it has very wide and true diversification. You have exposure to assets that can grow your money safely at all times without having to predict the future. You also have protection in the diversification against losing large amounts of money which can cause you to abandon the strategy in bad markets.
I disagree. It is not a truly diversified portfolio if most of the investments are in the investment arena!
It's like a second hand car salesman who wants to sell a car, any car, as long as you buy a car.
It very much smacks of an investment person writing for people to invest, who has a limited vision.
It also exposes the lack of basic understanding of what money is. Gold is money. All else is currency. The misuse of the words exposes a lack of true knowledge.
I think a far better approach is to look at very long-term trends, the swings between real assets and financial speculation.
Any fool can make a buck in an equities bull market. And many a fool comes a cropper when the bull market turns to a very long-term bear - in real terms.
No, I prefer to look at this:
Dow-Gold Ratio: One of the most important ratios to understand
http://www.neuralnetwriter.cylo42.com/node/2166
After decades of an equities bull-market, it is very difficult for those who have reduced their horizons to that market, because it was always the best option, to now realise that the whole equities market is a bad option. They have to readjust their thinking to a view which maybe they have never held before.
Thus, the swing from financial speculation to hard assets takes time.
And that is why the gold bull market is at the very early stages.
But the tide is turning, as it inevitably must do because the financial reality says that equities cannot continue up.
Sun, 10/01/2010 - 00:04
#3
Unfortunately, in SOME
Unfortunately, in SOME respects I have to disagree with your disagreement!
Although I fully take your point that fiat currencies are vulnerable to loss of value relative to other assets, especially at a time when money has been printed without regard to linking its volume to that of other non-fiat assets, the key tenet of the crawlingroad argument remains intact:
All things can go up or down, unpredictably, and no asset or pseudo-asset can be guaranteed to rise or fall when it is logical for it to do so or when you want it to. As Harold Macmillan put it in about 1960 when he suddenly reversed a policy: 'Events, dear boy! Events!'
In the present situation, it SEEMS clear and logical to hold most of one's assets in gold and silver. But then, not long ago (1999), it SEEMED most profitable to have all one's assets in the form of Tech shares; and in the 19th century, railways were the thing, when it wasn't gilts. And so on.
Times change, people pin too much hope on certain assets outperforming, while ignoring better value in the unloved asset ranges, and suddenly there is a tipping point, and the investors in the 'sure thing' are suddenly pushing on string, while the 'totally unloved' assets are suddenly 'the best thing since sliced ........'.
This is what the Permanent Portfolio concept is trying to prevent. A spread of assets, INCLUDING THOSE THAT LOOK AWFUL, does in practice tend to outperform jumping on the bandwagon, because after a while other 'golden rules' applies:
REVERSION TO THE MEAN and ARRIVAL OF THE NEXT BLACK SWAN.
I might add that gold, fiat currencies, shares, property, tins of baked beans and cowrie shells are ALL trading counters. The only problem is setting a permanent exchange rate between them.
Finally, if a group of governments decide that they don't want private individuals to hold gold (or gilts, or cash, or cowrie shells, or ........), it is difficult for the individual to beat the system. I do like gold as a concept, but if world governments decide to steal all the gold, I'd like to have a fall-back trading counter to help me survive!
This is why I like shares, private house ownership, gold, cash (and just occasionally, loans to the government - but usually only once every 30 years or so!)
Mon, 11/01/2010 - 04:50
#4
I take your point about diversification
I take your point about diversification.
I guess one could argue that the least informed investor should spread most, and the more informed one becomes, the more one can anticipate secular changes.
Unfortunately for the less informed, I see the result as less than favourable.
I think the Farewell Address given by the great Andrew Jackson best describes my views on this:
Farewell Address of Andrew Jackson VII President of the United States 1829-1837 - The fight against the banksters
http://neuralnetwriter.cylo42.com/node/2556
I find it quite stunning that he described so well the situation we are now in.
That is why I see this as a fight. A fight between the honest and the minority who wish to benefit at the expense of others. Playing the banksters game only benefits them.
Every person should own gold and silver and demand honest money and fair representation.
Sat, 16/01/2010 - 21:34
#5
More thoughts on the
More thoughts on the CrawlingRoad website and your own preferred spread of assets:
1) They back-tested using gold only or gold and silver, and there was no long-term improvement by adding in silver. The whole purpose of the gold was to provide a maximum non-correlation with fiat currencies, and gold did this better than silver, with less volatility.
2) I have thought of a flaw in using the CrawlingRoad rebalancing method in some extreme circumstances: If the fiat currency suffers from hyperinflation, the other asset types in the portfolio mix would gain against the currency if you measure the fiat currency's proportion by purchasing power. This would lead you to cash in gold, property, shares in order to buy cash which then depreciates further, causing a spiralling need to cash in further gold, property and shares to top up the dwindling cash element (measured in purchasing power terms), to the point that, like a black hole, all the assets would be replaced by a worthless fiat currency.
This means, therefore, that in the case of the fiat currency, it is important to use the nominal value, not the purchasing power in these rare but extreme conditions.
Of course it could be argued that fiat currency always declines in value, so perhaps the percentage of assets held in fiat currency should (as you say) be lower than 25% in general terms. (Elderly people with low total assets may well need more, simply from a shorter-term practical viewpoint, unless fiat currency is on the slide and gold and silver are a feasible alternative in normal day-to-day transactions).
I think that my 'normal conditions' mix would vary from the CrawlingRoad 25%/25%/25%/25% spread as follows:
Property 25%
Cash 10%
Fixed interest 15%
Shares 25%
Gold 25%
Then, after MAJOR rises in property, shares or gold, top slice these and add to cash and fixed interest as long as inflation is not a bigger threat than normal; BUT if high inflation or hyperinflation seem to be present or imminent (if you can tell!) reduce the fixed interest, shares and property to the original percentages and add to the gold.
No doubt the reality will then be that this will increase volatility when the world doesn't behave as theory dictates, and cause the owner of the assets to go entirely into cash just when hyperinflation strikes, and all is lost, despite the best of intentions!
Tue, 09/02/2010 - 00:34
#6
Bullion Vault
Information from Bullion Vault
Quote:
Dear Mr. X,
BullionVault is set up to make it extremely clear - in its formally filed Balance Sheet, in its Storage Agreement with ViaMat, in its Terms and Conditions, and through the payment of a commercial safekeeping fee - that your gold is your property. No liquidator can get his hands on it. None would even try because there is no ambiguity and it would be
futile to waste time and scarce money on the attempt. We can therefore say with as high a degree of confidence as any business in the world that we have secured your property for you - regardless of what happens to us.The following quoted passages come from our Terms and Conditions:
http://bullionvault.com/help/terms_and_conditions.html#What%20is%20a%20b..."Your gold is held in vaults controlled by ViaMat pursuant to a Storage Agreement [the "Storage Agreement"] BullionVault has executed with them. In that agreement ViaMat acknowledges that your gold is the subject of a
bailment..."BullionVault confirms that your gold safekeeping is structured as a bailment for the purpose of arranging the strongest and simplest legal protection for your gold within a professional bullion vault, and for no other reason...
"BullionVault acknowledges that the gold you own exists, is in the vault, is yours, and that being physical it is ultimately capable of being sub-divided into measurable amounts of material which you could take into your possession subject to paying the fees for the withdrawal
service."These defined property rights are strong and have been thoroughly reviewed by our own lawyers who have been briefed to make sure you are protected. Were there any perceived documentary weakness, then further evidence -- which previously has proven decisive in defining the custody
relationship -- has been the payment of a fee by the owner to a custody service provider. In the courts this persuasively marks the relationship as a custodial one, and it too is in place on BullionVault through the monthly storage and insurance fee you pay.That our company name (Galmarley Ltd) appears on the Bar Lists is simply because the custodian needs to identify the account. ViaMat do not know, and cannot list, each BullionVailt user individually.
For commercial and security reasons, you will understand that the full Storage Agreement with ViaMat is not made public. This quoted passage, however, comes from the Storage Agreement between ViaMat and BullionVault:
"Account Creation and Bullion Ownership: Galmarley warrants that where it is not itself the owner of the gold it is the authorized agent of Owners of the gold and empowered to enter into this agreement on the Owners’ behalf. VM will establish within vaults in each of London, Zurich and New York, an Allocated Gold Account in the name of "BullionVault Clients" for the purpose of maintaining physical custody of the Owners' gold...
"All gold held in an Allocated Gold Account shall remain the property of Owners at all times. The gold in each Allocated Gold Account is the subject of a Bailment with VM being the Bailee, and the Owners being the Bailor.
"Definitions: Allocated Gold Account means a gold storage arrangement whereby individually identified Good Delivery Gold Bullion Bars belonging to BullionVault Clients are segregated and stored by VM in their vaults. Bailment means an arrangement under which a Bailee accepts a paid role as a custodian whereby physical gold bullion is placed in
the Bailee's care without in any way causing the gold to become the property or asset of the Bailee, and without in any way causing the gold to become a thing of use to the Bailee, and where the Bailor remains the owner albeit without current physical custody of the gold. Bailee means
a party who accepts a role as a custodian of another person's property in return for a fee, and who undertakes to safekeep that property with professional levels of expertise, care and attention. Bailor means a party who owns property and places it under the care of a Bailee for the purpose of professional safekeeping, without effecting a transfer of title or ownership to the Bailee. Owners means both Galmarley itself and all BullionVault Clients who own gold through the BullionVault service.
BullionVault means the service offered by Galmarley through website domains under BullionVault.com, and potentially other websites, whereby BullionVault Clients are able to buy, own, store and sell gold bullion.
BullionVault Clients means clients of Galmarley who have an account at BullionVault held open under the prevailing Terms and Conditions of the BullionVault service."Kind regards,
Adrian--
BullionVault.com
Buy & Sell GOLD Online - at Your Price - Today
http://www.BullionVault.comMain office: +44 20 8600 0130
Brook House
229 Shepherds Bush Road
London W6 7AN
UNITED KINGDOM
and
Quote:
Owning physical gold bullion as your property is very different to holding cash on deposit at a bank. In that instance, you are in fact an unsecured creditor of the bank -- just one more claimant if they're liquidated, queuing up with every other depositor behind secured lenders and commercial creditors. Hence the need for those government insurance schemes (such as the FDIC in the United States, and the FSCS here in the UK) which seek to underwrite a certain portion of cash deposits, provided the account meets certain criteria.For instance, BullionVault users' money -- when not in gold -- is held in segregated client accounts at Lloyds TSB. Formerly one of only four banks worldwide rated "triple A", Lloyds Banking Group's senior debt rating has now been downgraded by Moody's to Aa3, several grades below where it was. For what it's worth, that rating remains on a par with other UK banks, and it's ahead of several big names worldwide. It also leaves only three banks rated as "triple-A" worldwide.
As regards your individual cash deposit, we have been given to believe (please note the legalese...) by both Lloyds TSB and the UK government agency – the Financial Services Compensation Scheme (FSCS) – that your money *may* qualify for statutory insurance up to the £50,000 limit (approx. $78,000). We keep live, real-time records of each individual balance within the pooled client account. Those records more than match the FSCS's stated requirements for solicitors' client accounts, which are indeed underwritten for £50,000 per client. If compensation were paid in the event of Lloyds' failure, it would be netted off against any other Lloyds' deposits you may have.
Your BullionVault gold, in contrast, is protected by property law. The investigating authority would be the London Metropolitan Police, not the Financial Services Authority (FSA), because your gold is your property and is not a credit balance or financial instrument in any way. Having taken immediate delivery, inside the vault, at the point of purchase, you are not then exposed to the creditworthiness or failure of any supplier -- neither BullionVault nor your custodian (ViaMat International, the vault operator). Were either to fail, their liquidator could not touch your gold. This is the legal essence of employing a custodian to look after your gold, and not depositing it in a bank as unallocated metal. Fully allocated at all times, your property is physically present inside the vault and is never lent or leased, as stated in our Terms & Conditions:
* "Your property is an identified part of a reconciled pool of all users' property, held at arms length from BullionVault";
* "BullionVault undertakes that your gold will not be subject to any kind of lending, collateral or derivative transaction of any type and will remain your property in the safekeeping of ViaMat until sold or withdrawn according to your instructions received via BullionVault."That your property is owned by you alone is demonstrated each day by the Daily Audit. No double accounting is possible, since the sum total of individual client holdings reconciles down to the very last gram with the volume of gold identified by the formal Bar Lists.
The legal situation describing your ownership is that BullionVault users have an undivided interest in gold held in bulk. The gold is fully allocated (i.e. physically delivered inside the vault; never lent or leased), but each individual user's share is not then physically segregated, nor does it need to be. The fine gold is held within that bulk, itself consisting of large 400-oz Good Delivery bars.
In English law (under which BullionVault and its users operate) it's the Sale of Goods Act 1994 (amended 1995) which confirms your ownership in this situation. The Act came about because of common practice in the commercial world, not least the oil industry. There, several owners would have an interest in crude oil being shipped by tanker, but their individual "barrels" were co-mingled. Common sense said this should work just fine, but until the legislation, this invited problems in the event of shipping loss or the carrier's insolvency, because the ability to own an undivided interest in bulk goods was not formally recognized.
As the updated edition of English law's standard reference text now puts it, commercial practice "led to amendments to the Sale of Goods Act so that the pre-paying buyer of an undivided share of an identified bulk could acquire a property interest in common with others prior to ascertainment." Indeed, Goode on Proprietary Rights and Insolvency in Sales Transactions (2009), edited by Simon Mills QC, acknowledges interviews with and a close study of BullionVault, since it offers a new form of investment, "enabling retail investors to invest in the precious metals markets by purchasing the commodity itself, but without the inconvenience and cost associated with taking possession." Our innovation "relies upon the ability to buy and sell a part-interest in an undivided share of an identified bulk" -- and that ability is enshrined in law.
BullionVault users owning enough gold to make up a full Good Delivery bar (typically weighing 400 ounces) have the right to reserve a bar exclusively against their name, removing it from the general pool until such time as they choose to sell their metal. Their reservation is stated on the Daily Audit, and is reconciled with the formal Bar List issued by Via Mat, the custodian. Their ownership and property rights are not improved, however, since those are already absolute.
Tue, 09/02/2010 - 22:50
#7
Gold Money
Information from Gold Money
Be Sure You Own Metal, Not Paper
from essays-own-metal.html by James Turk
Copyright © 2005-2006. All Rights Reserved.
Quote:
"Does anyone really believe that in the industrial countries of the West, after the experience of the last half-century, anybody trusts the value of government-sponsored money more than he would trust money issued by a private agency whose business was understood to depend wholly on its issuing good money?"
-- Nobel Laureate F.A. Hayek, Denationalisation of MoneyIt has been my view that we are in a bull market for tangibles and a bear market for promises. You therefore want to own physical things because their value derives from their tangibleness, and conversely, avoid financial assets because their value is based upon promises.
These diverse trends for tangible and financial assets began a few years ago when the stock market peaked (particularly the stocks of financial companies and banks), and gold began to rise. These trends have many more years left, so when viewing your assets, consider gold to be the bedrock asset of your portfolio.
You do not want to take any chances with your gold because gold provides unrestricted liquidity. That is its greatest advantage. It other words, it is money that is not contingent upon someone's promise. Gold is unique in this regard because it is the only money that is a tangible asset; in contrast, all national currencies are contingent upon the promise of some counterparty.
We are now seeing with the Refco collapse that promises can be broken. So in a financial crisis, you want to absolutely make sure that your gold is not dependent upon anyone's promise. You do not want to end up being an unsecured creditor - never.
Importantly, you will never become an unsecured creditor with Gold Money. Your gold is safe and secure, which leads to the following email I received.
Hello,
I'm hoping this message will find its way to James Turk.
I am a satisfied Gold Money user and I have recommended Gold Money to several
other people. Someone recently asked Chris Laird at the Prudentsquirrel.com
about digital gold and received this response:> Digital gold is literally worse than paper money. It
> is completely electronic and is really just a
> promise of others...... not better than paper, to me
> it is worthless in a crisis... subject to lies and
> confiscation by the govt as well... JMO...If possible, I would like to hear your response to his criticisms.
Thank you!
JBI hope that every Gold Money user has read thoroughly the entire Gold Money website. The website explains why your gold is safe, but I would like to provide some important background information before addressing the above email.
Gold Money was built to the highest standard of a very demanding taskmaster - me. My thinking was (and still is) that I would make Gold Money as safe and secure as possible so that I would use it. After all, why build it if I couldn't use it for the reason it didn't meet my high standards?
After much serious analysis, I decided the best way to make Gold Money safe and secure was to divide the responsibilities within Gold Money among several well-established companies. To explain this point, Gold Money is a process, and we have split the process among several first-class service providers. These companies are our business partners, and they include:
* VIA MAT, the company which owns and operates the vault where your gold is stored;
* ASL, a registered trust company regulated by the Financial Services Commission in Jersey, British Channel Islands, which manages Gold Money's operations and all customer data;
* Lloyd's of London, where underwriters have arranged an insurance policy for all of the gold and silver owned by Gold Money's customers;
* Euro-Dutch Trust Company, which creates goldgrams when it receives instructions from VIA MAT that gold meeting the standards of the London Bullion Market Association has been added to the vault, and removes goldgrams from Gold Money when customers ask to redeem their gold in LBMA bars (which weigh approximately 400 ounces each);
* Deloitte & Touche, which completes audits of the gold owned by GoldMoney's customers in order to ensure that the grams of gold in the vault always equal the quantity of goldgrams recorded in the accounts of Gold Money's customers;
* Foreshore Ltd, which operates several secure servers (including back-ups) from its offices in Jersey, British Channel Islands; and
* Several other companies who provide additional services, such as storage of encrypted backups of customer data.Our business partners have two responsibilities. First, they contribute their expertise to the process which makes Gold Money possible. Second, they work with the other service providers to make sure that the gold owned by Gold Money's customers is safe, both in its physical form as stored in the vault and the way it is recorded in electronic form in customer accounts. With these companies working together in this way, the resulting checks-and-balances between these service providers protect our customers' gold. And what is Gold Money's role?
We manage the process, but we cannot interfere with the process because we don't participate in it. Consequently, Gold Money cannot take customers' gold out from the vault, nor can we create more goldgrams than there are grams of gold in the vault. By splitting the responsibilities of the process among many service providers and by excluding Gold Money management from the process, but giving them the role to manage the process, Gold Money is designed to ensure that our customers' gold is safe. Our governance procedures are second to none, which result in meaningful assurances of integrity.
Having provided this background information, I can now turn to the email above. There are six points that need answering:
1. "Digital gold is literally worse than paper money."
Digital gold currency (DGC) is fundamentally different from paper money. Paper money is a liability of the Federal Reserve, and is thus, a promise. DGC is an asset. It is gold that exists in a safe, secure and insured vault, but can circulate as currency by 'clicking' some part of what you own to others if you choose to do so. You can, however, simply use your gold as a savings account, i.e., saving and accumulating gold instead of any national currency.
2. "It is completely electronic..."
Yes, and that is one of its advantages. You have the convenience of accessing your gold 24/7 from anywhere around the world through the Internet.
3. "It is really just a promise of others..."
No, it is not a promise. This point is very important from both a legal and accounting point of view. It is the difference between "bailment" and "deposit taking", and highlights the point that Gold Money is not a bank. Bailment is the basic legal principle upon which Gold Money is built. Our customers own their gold at all times. Gold Money is storing their gold for them with no transfer of title from the customer to Gold Money. Accordingly, customer gold is booked by Gold Money in its accounts as a memorandum item (i.e., off-balance sheet). In contrast, metal accounts at banks are very different. When a customer deposits his gold in a bank, title transfers from the customer to the bank. Accordingly, a bank will book customer gold in its accounts as a deposit liability. These are promises to pay gold, and are therefore a direct liability of the bank (i.e., an on-balance sheet item). Consequently, the legal and accounting aspects of bailment and deposit liabilities are fundamentally different. Banks occasionally accept gold on bailment (i.e., safekeeping). But because banks earn greater margins from lending rather than safekeeping, their incentive is to create deposit liabilities, which they in turn lend to earn interest income. This process increases the bank customer's risk. Defaults or government imposed force majeure actions may relieve banks of their obligation to pay gold to their customers. Consequently, this reality provides a key competitive advantage to Gold Money. By choosing non-bank vaults such as Via Mat, customers know that their gold is never placed on loan, a result that is never quite so clear when gold is placed with banks. Further, banks typically receive the right of offset against customer's gold placed in safekeeping with them, thus again exposing the gold holder to additional risks.
4. "It is worthless in a crisis"
No, DGC excels in a crisis because DGC is totally independent of the world's banking systems. If your bank or brokerage firm closes its doors (like Refco), your gold in Gold Money is still safe, and you will have access to it.
5. "It is subject to lies..."
Yes, this is true. So you must take care to make sure that you are transacting with a reputable DGC operator like Gold Money. You have to make sure that your gold is safe, and I have a warning in this regard. There are companies out there pretending to be safe like Gold Money, but no one - and I repeat this point, no one - has the governance, security, safety and standing of Gold Money.
6. "It is subject to confiscation by the govt..."
Yes, this is true too. But so is every tangible asset subject to government confiscation, and for that matter, every financial asset is also subject to this same risk. With gold, however, you have an important advantage over financial assets. For example, governments can make paper money to be worthless by the stroke of a pen, with today's green-colored notes replaced by notes of a different color. Governments cannot of course make gold worthless, nor even demonetize it. That's what President Nixon tried to do by declaring in August 1971 that the dollar would no longer be defined as a weight of gold. The dollar inflation and monetary debasement since then demonstrates that he has not demonetized gold, but rather, began a process that is slowly demonetizing the dollar.Is Gold Money the proverbial 'silver-bullet' that offers all things to all people? Of course not. But if you want convenience, an economical way to buy gold, the safety of first-class service providers managing and insuring your gold, and international diversification by storing your gold in London, then Gold Money might be for you. Indeed, it apparently is the choice for many people because Gold Money is growing by leaps and bounds. We are presently storing over $62 million worth of gold for our customers. This growth shows that with our strong governance procedures we are obviously on the right track.
Lastly, our Gold Money customer support group and I always welcome feedback about Gold Money. So always feel free to contact us with your comments, like the email above.
Our business philosophy is simple, and grounded in the principles of the Austrian School of Economics. As its leading proponent, Ludwig von Mises, observed so clearly, the "consumer is king". Companies stay in business by meeting customer demands. While we take many steps to reach that goal, we do that first and foremost by making sure our customers' gold is safe.
Wed, 10/02/2010 - 05:42
#8
Gold Money Vault Video
This is strictly only available to those with an account.
The terms are quite explicit.
Click on Governance, and then on the video option.
I'm watching it now. One thing that's pretty obvious is that gold has a high value for a very small volume. So the rooms tend to be big, while the gold tends to be small, but heavy.
It's amazing to see the size and security of the lorry/truck delivering what is a small number of gold bars. It's like a chocolate bar in a tea chest!
If you want to see it, just register an account with Gold Money
430,000 oz of gold is 430x 1000oz bars, with 42 on each pallet, with just one layer of bars, that's under 11 pallets!
But that gold is worth around US$473 million!
The silver is massively bulkier.
I think people will often look at say a 1oz gold coin and say "how can that little coin be worth that much?"
I think that is an understandable reaction. A so called "gold coin" in New Zealand, the 1 Dollar coin, is worth... 1NZ$. But a 1oz real gold coin would cost you about NZ$1551.
I think the real insight comes when you think "Look at how the purchasing power of my currency has fallen. Now I need so much of it to buy a simple coin".
And that is the point. The gold coin hasn't changed. It is still just a gold coin. Nothing special. But the amount of currency you need to get one now is vastly greater than it used to be.
Mon, 12/04/2010 - 06:52
#9
PMs should be in YOUR
PMs should be in YOUR possession, end of story.
On diversifying your portfolio:
I came across the crawlingroad.com website the other day, and thought the advice and backup data most revealing.
http://crawlingroad.com/blog/2008/12/22/permanent-portfolio-historical-r...
http://crawlingroad.com/blog/2008/12/17/the-permanent-portfolio-and-the-...
The basic idea is that you have 25% in gold, 25% in a wide spread of equities, 25% in bonds and 25% in cash deposits.
Then, as events result in changes, so that (for example) shares double that year, you rebalance from time to time to ensure that you sell off what has soared and put the proceeds into what has performed the worst (as in practice most investments revert towards the mean after out/under-performance).
If gold halves and shares double, you would sell the excess from the shares and top up the gold. And so on.
The diversity of assets means that since the future is (even more) unpredictable (than the past!), you try not to put too much on the wrong horse (despite the greatest logic in the world) and get wiped out.
Re silver: Bullionvault already offers this to existing users. Others very soon.