1. Going for Gold 3

2. An Exploration of Alternatives
Going for Gold
Alasdair Macleod
Head of Research, GoldMoney
25 October 2012
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3. Introduction
“Money is gold and nothing else.”
John Pierpont Morgan, 1912
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4. Introduction
“Gold still represents the ultimate form of
payment in the world.”
Alan Greenspan,1999
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5. Introduction
“The U.S. government has a
technology, called a printing press
(or today, its electronic equivalent),
that allows it to produce as many
U.S. dollars as it wishes at no cost.”
Ben Bernanke, Federal Reserve Chairman
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6. Introduction
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7. Gold versus Paper Money
Gold
• Global stock 155,244
tonnes (GoldMoney
Foundation estimate)
• Annual increase 1.7%
• Accepted as money
everywhere
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8. Gold versus Paper Money
Paper Money
• Global stock growth
has no limitations
• Annual increase: USD
7.3% (True Money Supply
to September 2012)
• Accepted only within
national boundaries /
payment unions
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9. Gold versus Paper Money
Gold is and always has been, with silver, the
money of society’s choice. Paper, or fiat money is
governments’ choice.
It is a means of raising revenue without raising
taxes.
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10. Gold versus Paper Money
Gold
• Retains its purchasing
power over time
• Under-owned (<2%)
• Restricted supply (2,750
t/y)
• Uncorrelated to other
portfolio assets
• Protects against
monetary debasement
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11. Gold versus Paper Money
Paper Money
• Loses purchasing
power over time
• Backs 98% of portfolios
• All “conventional” asset
classes depend on paper-
money-based credit
• Monetary debasement
accelerating
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12. US Money Supply
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13. Gold only represents 4.3% of the US True Money Supply
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14. Gold versus Paper Money
Gold pays no interest, only because it has been driven out of circulation
(Gresham’s Law).
Paper money pays inadequate interest to compensate for debasement.
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15. Gold versus Exchange Traded Funds (ETF)
ETFs
• Exposure to financial markets
• Often synthetic / futures-based
• Arbitrage risk
• Need to track the trading day of
the relevant stock exchange
• Liquidity risk
• Fees and commissions can be
substantial
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16. Gold versus Exchange Traded Funds (ETF)
Gold
• No exposure to financial markets
• No fund, trust or securitised
structure
• No arbitrage risk
• Direct ownership of physical metal
• Transparent, low cost fee model
• Option to register specific bars
• Full insurance cover
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17. Gold and Crude Oil Prices
Today, it takes almost the same amount of gold to
buy a barrel of oil as it did 60 years ago.
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18. Crude Oil Prices (Base of 100) – Jan 1950 to Aug 2012
8000
6000 British pound
US dollar
4000
euro
goldgram
2000
0
50 55 60 65 70 75 80 85 90 95 00 05 10 15
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19. Gold and Currencies
“Paper money eventually returns to its
intrinsic value – Zero.”
Voltaire
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20. Gold Price in Four Currencies (Base of 100) –
3 January 2000 – 14 September 2012
700 Log Scale
600
500
400 US dollar
300 euro
Britsh pound
200
Swiss franc
100
01 02 03 04 05 06 07 08 09 10 11 12 13 14
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21. Annual Change of Gold Price against Selected Currencies
USD AUD CAD CNY EUR INR JPY CHF GBP
2001 2.5% 11.3% 8.8% 2.5% 8.1% 5.8% 17.4% 5.0% 5.4%
2002 24.7% 13.5% 23.7% 24.8% 5.9% 24.0% 13.0% 3.9% 12.7%
2003 19.6% -10.5% -2.2% 19.5% -0.5% 13.5% 7.9% 7.0% 7.9%
2004 5.2% 1.4% -2.0% 5.2% -2.1% -0.0% 0.9% -3.0% -2.0%
2005 18.2% 25.6% 14.5% 15.2% 35.1% 22.8% 35.7% 36.2% 31.8%
2006 22.8% 14.4% 22.8% 18.8% 10.2% 20.5% 24.0% 13.9% 7.8%
2007 31.4% 18.1% 11.5% 22.9% 18.8% 17.4% 23.4% 22.1% 29.7%
2008 5.8% 33.0% 31.1% -1.0% 11.0% 30.5% -14.0% -0.3% 43.7%
2009 23.9% -3.6% 5.9% 24.0% 20.4% 18.4% 27.1% 20.3% 12.1%
2010 29.8% 15.1% 24.2% 25.5% 40.2% 25.3% 13.9% 17.4% 36.3%
2011 10.2% 8.8% 11.9% 5.1% 12.7% 30.4% 3.9% 10.2% 9.2%
11-Year 17.7% 11.6% 13.7% 14.8% 14.5% 19.0% 13.9% 12.1% 17.7%
Average
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22. Interesting Facts – LBMA Good Delivery Bars
• LBMA Good Delivery Bars
weigh about 400 troy oz. or
12.5 kg
• A bar is worth about USD
690k*
• A pallet of gold holds about 1
ton of gold or about 80
bars, worth around USD
55m*
*As of 22 October 2012
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23. GoldMoney – Transforming and preserving your wealth
• 22,500 customers*
• USD 2.2 billion worth of assets owned by customers*
• Founded in 2001 by James Turk & Geoff Turk
• Storing metals at vaults in 4 countries (CA, CH, HK, UK)
• LBMA/LPPA Good Delivery Bars only
• Regular vault audits
• 3 Offices in Jersey, London & Hong Kong
• 48 Full-time employees
• Multi-lingual 16-hour customer support
*as of October 2012
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24. Questions?
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25. Disclaimer
Please note that the information contained in this presentation is only intended to provide a very general overview of
the matters to which it relates. It is not intended as financial advice and should not be relied on as such. Potential
investors should, before acting on any information contained herein, consider its appropriateness having regard to
their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their
situation before making any investment decisions.
GoldMoney is regulated by the Jersey Financial Services Commission for the conduct of money services business
under the Financial Services (Jersey) Law 1998.
© by Net Transactions Limited 2012
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