 Why buy
gold
The Best Way to Buy Gold
Chip Hanlon
Euro Pacific Capital
www.europac.net
August 20, 2004
As an investment advisor, I
consistently encounter the same reaction when I tell investors
they should own physical precious metals in a certain portion
of their portfolios. "You mean buying shares in mining
companies, not owning the actual metal, right?"
While this reaction, due to
a 20-year precious metals bear market, is not surprising (and
is, in fact, quite bullish from a contrary perspective), it also
highlights that actually buying physical gold, silver or platinum
still seems daunting to most investors.
What all investors should know
is that buying mining company shares represents a leveraged speculation
on the trend of precious metals prices; physical metals themselves
constitute the ultimate protection against government-created
inflation and the resulting decay in your dollar savings.
As a full service investment
firm, ours [Euro Pacific Capital] offers many ways to gain precious
metals exposure. When it comes to the purchase of physical
gold, silver or platinum, however, one investment stands out:
the Perth Mint Certificate Program.
Here's how the Perth Mint Certificate
Program (PMCP) answers the concerns most investors have about
buying physical precious metals:
Fair pricing
Perhaps the biggest obstacle that prevents most people from buying
physical metals is the question: how do I know I'm getting the
best price? Well, this is a fair, if unnecessary, question.
Do you go down to the local coin dealer and just take his marked-up
rate? If you do, can you trust this stranger to deliver
at the agreed upon price if the market moves substantially in
the interim? While most such dealers, I'm sure, deal honestly,
it is my understanding from investors that this problem does
indeed exist.
How about the familiar-named
gold brokerages or internet dealers? Should you have to
shop around? And when searching for various dealers, do
investors remember to factor the cost of shipping into the price?
Can investors fight the urge, as some brokerages will recommend,
to buy precious metals using leverage? Such margin-type
financing, in my opinion, is poor advice and defeats the very
purpose of buying physical metal in the first place: to hold
the ultimate physical financial security.
In actuality, pricing should
be the least of a gold buyer's concerns; the market for metals
is open nearly round the clock and there's only one price that
matters - that of the spot market. There's no reason, in
my opinion, to pay any other price.
Under the Perth Mint Certificate
Program, investors purchase metals at the spot market ask WITH
NO MARK-UP. The only costs investors need to know about
are, as with any quality investment, completely transparent:
this program charges a 2% service fee and a $50 administrative
fee.
For example: based on the program's
low minimum investment of $10,000, the total cost would be $10,250.
That's it!
Factor in the next feature
we'll discuss, the program's eye-opener regarding storage, and
knowledgeable investors quickly realize why the PMCP is so attractive.
Storage
Here is the big additional cost to owning gold that many investors
don't consider prior to buying or, if they do, is the concern
that keeps them from purchasing physical gold: what do I do with
the stuff once I buy it?
Should one lease a safe deposit
box? Increasingly, banks don't want precious metals in
their vaults. Indeed, many now prohibit the storage of
gold in such boxes thanks to Patriot Act disclosure requirements,
so you probably couldn't even store gold this way if you tried.
Certainly, the annual fees
many bullion banks charge are prohibitive. And how do you
know these facilities are not loaning out your gold once you
deposit it with them?
Do you purchase a safe, dig
a hole in your backyard and take the risk of self-storage?
Here's where the PMCP delivers
its knockout punch: FREE STORAGE.
That's right: choose this program's
unallocated bullion option and you can store your metal at the
Mint for free indefinitely. This feature is particularly
attractive for silver buyers because this metal is so much more
bulky than gold.
Safety
I've heard investors groan, "Oh, I don't trust that those
certificate programs actually have the gold on hand."
The PMCP, however, is not like any other certificate program.
Here's why:
- Every ounce you purchase,
regardless of storage method, remains on the premises of the
Mint at all times and cannot be loaned out. How
can the Mint offer such a remarkable program? Perth's is
a functioning mint. It saves money in its day-to-day operations
by having this excess metal on hand and, therefore, not being
forced at any particular time to lease metal from the market.
.
- Unlike the U.S. Government,
which has confiscated gold from its citizens once and many fear
may do so again in a time of financial panic, Australia has no
such history. Indeed, it could not afford to do so because
the mining industry is too vital a component of the Australian
economy to disrupt in such a manner; this nation could ill afford
to cause investors to lose faith in the security of gold.
Simplicity
Why do so many investors tend to shun physical precious metals
and invest in gold and silver through shares in the mining companies?
In my experience, it seems to be a matter of convenience; log
into your online investment account or call your stockbroker
and the purchase of shares can be completed in minutes.
Here, too, the Perth Mint Certificate
Program answers the challenge - the program's short, 2-page application
couldn't be simpler just complete that form, send it in and wire
funds. That's it - placing your trade is then as simple
as buying a stock: just call to tell your representative when
to pull the trigger.
Anonymity
Part of the obvious attraction of the PMCP for investors concerned
about the direction of the U.S. Dollar is the opportunity to
move some capital off-shore. What those same investors
may also be pleasantly surprised to learn is that the Mint does
not report to any U.S. Government agency; additionally, the purchase
of gold, silver or platinum through the Mint does not constitute
a foreign account that must be reported under current disclosure
rules.
Transferability
Although the program's certificates are non-negotiable (for investor
protection), they are transferable. For a simple administrative
fee of $50, an owner can change title of these certificates at
any time.
In conclusion, although we
at Euro Pacific Capital are the exclusive dealers in all 50 states
of the Perth Mint Certificate Program, we do offer an entire
range of precious metals alternatives to our investors.
When it comes to the purchase of physical metals, however, this
program trumps all others.
For more information, visit
www.goldyoucanfold.com.
Although quite simple, this concise website delivers all the
information an investor needs to learn about investing in the
PMCP. In addition, the Mint itself can be found at www.perthmint.com.
Transparent pricing, safety,
low cost - these features and more represent why I believe the
Perth Mint Certificate Program represents the best way to invest
directly in precious metals.
Aug 20, 2004
Chip Hanlon
email: CHanlon@europac.net
Mr. Hanlon
is the C.O.O. and Chief Domestic Strategist at Euro Pacific Capital,
Inc. in Newport Beach, CA, a full service brokerage firm specializing
in direct trading access to international markets.
Copyright ©2004 Euro Pacific Capital, Inc. All Rights Reserved.
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