Precious Metals

 

 

 

 

A look into monetary history shows that people, when given freedom of choice, opted for precious metals as money. This doesn’t come as a surprise. Precious metals have the physical properties a medium must have to serve as legal tender: They are scarce, homogenous, durable, divisible, mintable, and transportable. They are held in high esteem and represent considerable value per unit of weight. Gold fulfills these requirements par excellence, and this is why it has always been peoples’ first choice in terms of money. Gold has proven its merits as money for millennia: it is the ultimate means of payment.

Gold is arguably the most controversial widely held asset in the global financial markets and has never been more compelling.

Financial professionals are largely split on gold. On one hand, you have the bulls who praise it as a store of value, a safe-haven, or a “currency” that cannot be manipulated by the whims of policymakers. On the other hand, you have the bears who argue that the bull’s case is complete nonsense. Indeed, gold has been anything but a stable store of value in recent years. But even Warren Buffett acknowledges that gold is a play on fear and uncertainty.

There is a lot going on in the world – from the UK unexpectedly voting to leave the EU, Donald Trump being elected in the U.S. to turmoil in the Middle East, the China Sea, and Turkey, Russia is flexing it’s still considerable might, North Korea’s flinging its nukes helter-skelter, Japan’s rearming, disease runs rampant and fear escalates about virus mutation, there are shortages of freshwater with many rivers not reaching their former endpoint and of course climate change is rearing its head to destabilize natural rhythms or cycles. It’d be hard to go back in history and pick a period of time when things weren’t so combustible. And all of this has central bankers around the world keeping monetary policy easy, which has a tendency to devalue currencies causing gold prices to rise.

Gold positions have more endurance and stability. The UK’s vote to leave the EU further underpins gold’s macro narrative, reinforcing the themes of further dovish shifts in monetary policies, consequently lower yields, and higher uncertainty. Some of the biggest banks started in making a bullish call on gold. Key drivers include low/negative real rates, the view that the dollar has peaked against (developed market) currencies, and lingering macro risks.

Even money managers no longer hate gold. The latest Bank of America Merrill Lynch survey of nearly 200 money managers worldwide, controlling more than half a trillion dollars in investment assets, shows a sudden and rare burst of bullishness about the yellow metal. They’re worried about inflation, stagflation, and global protectionism, and they think gold is the best insurance against all three. And at less than $1,300 an ounce, they also think, for only the third time in a decade that it is undervalued…

The macro story for gold today is more compelling than ever, isn’t it?

The world is full of golden rules. There is one for every field – ethics, communication, fashion. But there is only one that counts: the golden rule of money, “Whoever has the gold makes the rules.”

Buy gold if you believe in math.

We trade in physical gold bullion bars to assist our institutional investors, financial institutions, family offices, banks, and trading houses in supplying this precious commodity.

We do global mining search and offer gold bullion bars in bank transactions based on currently dated assay from the refinery.

Mining is famously boom and bust. Money and patience are mandatory. In bad times, companies sell assets and close mines. In booms, they buy up all they can. Mining is a capital-intensive activity, which involves significant costs across its lifecycle to find and extract the gold while maintaining production levels. These costs are not entirely predictable and can blow out at any given moment, eating into margins and a miner’s profitability. We act as financiers for gold miners. In exchange for providing upfront financing, we receive the right to a royalty payment on every ounce of gold produced, or the right to acquire a portion of a miner’s production at a price well below the market value. As a result, our costs are fixed, making us far more predictable and lower than those incurred by miners.

We work exclusively with refineries registered and accredited by the London Bullion Market Association (LBMA), present on the current Good Delivery List of LBMA.

Good delivery bars that are held within the London bullion market (LBMA) system each have a verifiable chain of custody, beginning with the refiner and assayer, and continuing through storage in LBMA recognized vaults. Bars within the LBMA system can be bought and sold easily. If a bar is removed from the vaults and stored outside of the chain of integrity, for example, stored at home or in a private vault, it will have to be re-assayed before it can be returned to the LBMA chain. This process is described under the LBMA’s “Good Delivery Rules”.

The LBMA “traceable chain of custody” includes refiners as well as vaults. Both have to meet their strict guidelines. LBMA members trade bullion products from these trusted refiners at face value without assay testing. By buying bullion from an LBMA member dealer and storing it in an LBMA recognized vault, customers avoid the need for re-assaying or the inconvenience in time and expense it would cost.

 

Publications

06/15/2016 Gold like a chameleon
03/23/2016 Is reserve currency status a blessing or a curse?

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