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The What
The first and foremost question is what are you investing in? Are you putting
capital into physical metal that stands alone and outside the monetary
system? This is the primary function of owning precious metals in the first
place yet many we speak with seem to misunderstand or interpret this crucial
factor!
Restated we might ask do you understand the difference between investing and
participating in physical gold and silver. In my view, investing has the
following characteristics:
Invest in a known form of physical gold and silver this can be coins or bars
and sizes up to deliverable commercial silver and gold as held on the Comex.
If you elect to own metal in individual or commercial form make certain of
the following:
Have the precious metal stored in an armored and insured vault.
Have the custodian independent from the financial system.
Provide the investor a choice upon distribution, cash or physical metal.
Offer accessibility to the metal and have prearranged options for delivery if
client wants the metal in hand.
On the other hand, participating offers the following characteristics:
Ability to follow the price of the precious metals.
Settlement is normally in cash or currency with little emphasis on actually
delivering in smaller deliverable form.
The program is directly tied to the financial or bullion dealer system.
Accessibility to the metal is hindered by the custodian in the form of
sub-custodian or bailment relationships. Also, participants have to factor
serious tax consequences if the program offers the ability to take physical
delivery in jurisdictions where Value Added Tax is an issue.
In other words participation programs buy and store mostly large bars of
metal with the focus on cost efficiency and effectiveness for the program
itself.
If your preference is participation then understand the risks to your capital..
If your preference is investing then understand the risks of accessibility.
Programs may have the best intention but if you can not get to your metal or
your metal can not be delivered you may not have it just when you need it the
most!
The Why
With the recent chaos in the financial markets one must examine their entire
portfolio. Yes, that includes precious metals. For those who are involved in
precious metals, what I am referring to is the form in which you are pursuing
(gold and silver). Although, many own the physical metal and store it
“close to home”, many others use conduits to gain participation
in this sector. With all the options in the market place, lack of
understanding can breed mistakes. I believe we are entering a period in which
these mistakes may become very costly. However, for the investors who are
involved in the bullion, the distinctions between the numerous programs are
extraordinary and need to be recognized.
Lets first start with the reasons why you believe in gold or silver. The
basic premise is to diversify from inflation, systemic risk, or political
uncertainty. Ask yourself are my gold or silver investments in bullion
attainable and accessible?
Again, the distinction depends whether you are participating or investing in
the bullion itself. Review your agreements and documents, ask questions that
pertain to you and your portfolio needs(for example understand the difference
between fully allocated and fully segregated), and most importantly ask the
precious metals program what would happen under extreme circumstances.
Understanding your investment and how it operates may avoid unpleasant
surprises in the future.
The How
In this dynamic political and economic climate, what sounds reasonable today
may not be appropriate in the future. For example, capital and exchange
controls could hamper overseas programs and your ability to receive the
metal. How do you know for sure that the bullion vault is not leasing out
your gold? How fast can companies turn large bars of gold and silver into
deliverable ounces?
In other words the program must have already considered issues such as
confiscation, changes in economic/political policy, systemic concerns within
the central banking system, and geo-political events. The precious metal
programs that have built a model that is flexible and adaptable to change
will have the ability to overcome these challenges and protect its investors.
Three years ago, I reviewed nearly every gold and silver program in the
world. None met my stringent standards and fiduciary concerns. A few of which
were:
accessibility and transparency of storage,
clients assets were held in allocated form not fully segregated form, and
communication or delivery between the program or vault and the customer.
Your objective must be to invest in the precious metals not merely
participate in price movement.
Therefore I created a set of unique programs for you – the precious
metals investor.
The structure, which puts the needs of the investor first, is simple yet very
competitive. We offer storage and investment solutions that can be tailored
to each individual throughout world. We have taken into account many common
concerns of precious metal investors such as viewing one’s holdings,
having ideal alternative storage locations, and providing an insured, secured
and fully segregated vaulting environment. Understanding the current
political and economic environment is only part of the foresight included in
our approach.
In summary, part of investing in the bullion markets includes understanding
the market environment, eliminating as much risk as possible, and protecting
your assets in a prudent manner.
To find more information visit my blog at
http://profitsplusecaptial.blogspot.com or send an email to
profitsplus@cableone.net We can answer any of your portfolio questions and
quickly provide you many ways to purchase your very own gold and silver. We
will completely furnish insured, fully segregated, and armored storage for
you. At that point you will realize just how profitable and vital ownership
of physical gold and silver truly is.
Bob Coleman
Dollars
and Sense
Also
by Bob Coleman
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