Going for Gold 1

Going for Gold 2

An Exploration of Alternatives Going for Gold

Alasdair Macleod

Head of Research, GoldMoney

25 October 2012

Going for Gold 3

Introduction

“Money is gold and nothing else.”John Pierpont Morgan, 1912

Going for Gold 4

Introduction

“Gold still represents the ultimate form of payment in the world.”

Alan Greenspan,1999

Going for Gold 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

Going for Gold 6

Introduction

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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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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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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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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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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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US Money Supply

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Gold only represents 4.3% of the US True Money Supply

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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.

Going for Gold 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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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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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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Crude Oil Prices (Base of 100) – Jan 1950 to Aug 2012

50 55 60 65 70 75 80 85 90 95 00 05 10 150

2000

4000

6000

8000

British pound

US dollar

euro

goldgram

Going for Gold 19

Gold and Currencies

“Paper money eventually returns to its intrinsic value – Zero.”

Voltaire

Going for Gold 20

Gold Price in Four Currencies (Base of 100) – 3 January 2000 – 14 September 2012

01 02 03 04 05 06 07 08 09 10 11 12 13 14

100

200

300

400

500600700

US dollar

euro

Britsh pound

Swiss franc

Log Scale

Going for Gold 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-YearAverage

17.7% 11.6% 13.7% 14.8% 14.5% 19.0% 13.9% 12.1% 17.7%

Going for Gold 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

Going for Gold 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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Questions?

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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