What’s the best method to own gold?
You want to deal with an LBMA member (London Bullion
Market Association), and actually purchase the bars. We deal
with ScotiaBank, which is an LBMA member and we deal with
investment gradebars which meet LBMA specs. We have a
program where you can buy any number of gold, silver or platinum
bars, and either put them in storage, or take delivery. You can do
whatever you want with your bars. But we facilitate the process to
accomplish that. Lately we’ve had an influx of investors coming
to the realization that they thought they owned bullion but in fact
they had a bullion proxy or a derivative. In addition, our mutual
funds are 100% backed by physical bullion and offer a lower
initial investment. An Offering Memorandum allowing EMDs to
purchase bullion is forthcoming.
Is gold in a bubble or was gold in a bubble and it popped?
The gold bubble talk has always been silly to me, because
by definition, a bubble has mass participation, and we have not
yet seen that in gold, at least not in this country. It would be
the first bubble in recorded human history which had fractional
percentage participation. When gold reached $800 in 1980, gold
and gold mining stocks comprised 26% of all financial assets.
Today, the figure is approximately 1%. It’s extraordinarily under
owned and rare. When investors reallocate out of stocks and
bonds into gold, the laws of supply and demand come in and the
price of gold will rise. Expect additional demand to come from
investors switching out of their “paper” gold and into physical
gold to escape counterparty risk.
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