There is much talk today about gold and silver being profitable investments. Although to the savvy investor this is clearly a reality, if investment is the only employ one has for gold and silver, then many of their greatest attributes and values have been hastily overlooked.
At The Shanklin Financial Group we uphold the rightful place of gold and silver in disclosure of their full spectrum of traditional uses, and submit that these unique precious metals have unremittingly sustained their appeal and function, as proficiently in AD2009, as they did in AD1009, AD9 or 5009BC.
Gold predates coins* by four and a half millennia and paper money* by five and a half millennia, and yet gold is still seen in 2009 by central banks, as their preferred means of support to government issued coin, paper notes, and “invisible money”. (Collectively referred to as M1*.)
Throughout history, whenever there has been economic, political or social instability within a community, the ability of gold and silver to repel the attrition of such uncertainties is without parallel.
Professor Roy W. Jastram formalised this observation in his work “The Golden Constant”. His research entailed studying the purchasing power of Gold in our Modern history, from 1560 until 1976. His conclusions were that the purchasing power of gold not only granted stability in times of economic peace, but increased significantly1 in times of economic turmoil.
By taking a brief walk down the memory lane of gold and silver as currency, history will quickly flaunt memorable examples that reconfirm the constant purchasing power of these unique precious metals.
Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes. Nothing has changed.
At the time when King Solomon ruled the House of David (1000BC), we find that he was often in the market purchasing horses to be trained for his army. We know from historical records that this King had thousands of stables2 for these horses, that he purchased from Egypt for the price of 150 shekels* of silver.3
In today’s unit of weight this would equate to 55 troy ounces of silver. In Australia, thoroughbred horses, off the track, can still be purchased for the equivalent of 55 troy ounces of silver. Nothing has changed.
The Islamic world, ever since the birth of Islam in AD600, have embraced gold and silver for the traditional benefits these metals offer, and have granted these metals their rightful and prominent role as units of exchange. The Gold Dinar* and the Silver Dirham* are their chosen currency. In the Middle East, a chicken at the time of Mohammad (AD600) would cost a family one silver Dirham. Today 1,400 years later, a chicken in the Middle East would still cost a family one silver Dirham.... nothing has changed.
In modern Islam, Gold and Silver still enjoy their traditional roles, one of which is an astounding hedge against inflation. The advertising slogan for the International Gold Dinar Exchange is “zero inflation in 1400 years”... and they are right.
Roosevelt Silver Dime (1946-1964) A more modern example of the hedging abilty of precious metals can be drawn from the American experience. On July 6th 1785, the U.S. Congress unanimously voted to adopt the Spanish Silver Dollar as the official monetary unit of the United States of America. The Coinage Act of April 2nd 1792 (granted by Section 8,Article 1 of the U.S. Constitution) defined the US dollar as being 371.25 grains of silver. Therefore, America's foundational application of monetary policy, was that of a silver standard. However, in time this precious metal standard became debased, and then eliminated entirely. For example the Silver Dime (10 cents) was a coin made up of 90% silver and 10% copper, and the actual silver weight per coin was .07234 of an ounce. (These Silver Dimes were last minted in 1964.) In 1963 a gallon of gasoline in America sold for 31 cents. This meant that 3 Dimes could buy a gallon of gasoline. The total weight of silver in 3 Silver Dimes is .217 of an ounce, which today would buy a gallon of gasoline anywhere in the USA..... nothing has changed.
But why are silver and gold referred to as “precious metals”?
There are 23 billion troy ounces of silver above the ground worldwide. By dividing these evenly among the 6.6-billon people on the earth, we find there is less than four troy ounces of silver per person. Additionally, the above ground worldwide supply of gold totals only 4.6 billion troy ounces. If we were to evenly divide all the gold above the ground worldwide between the people on our planet there would be less than 8/10ths ounce of gold per person! Gold and Silver are truly precious metals.
Throughout history, gold and silver has always returned to a stabilised ratio of approximately 14 to 1, which means that it would take 14 measures of silver to buy 1 measure of gold. This is not totally surprising when we understand that silver is found in the earths crust at a ratio of 73 parts per billion and gold at approximately 5 parts per billion. When we divide these two figures we find a ratio of 14.6 to one. Historically, this has been the ratio of comparative "worth" between the two metals, however, today that ratio hovers over 70 to 1.
There clearly exists today a great disparity in this “time established” ratio of equilibrium between silver and gold that ultimately will be revisited, to provide the conservative investor with a phenomenal opportunity for gain.
Although The Shanklin Financial Group endorse to the broader populace the role of gold as being more akin to insurance than investment, it is universally accepted that any investment should be valued and measured by its ability to offer the greatest return, when it’s needed the most. This objective is achieved in no other investment better, than in Gold and Silver. They alone, stand supreme.
The ability of private silver and gold holdings to serve as a reliable insurance policy and a sound investment strategy, particularly during the economic storms of life, are without question and worthy of consideration.
It is the view of The Shanklin Financial Group, that without detracting from the present occasion to invest in gold and silver, that if investment is all one sees in these precious metals, then the holder has been short changed and has missed out on their broader and more personal designs.
For 7000 years now, since man first walked in the Garden of Eden, gold and silver have established themselves as a sound medium of exchange, a store house of wealth, a true measure of value, a secure protection of heritage, an adornment of beauty and a means of transferring the efforts and rewards of ones labour, from his generation to the next.
Further, gold has no "use by date".... it can’t be counterfeited... it can’t be deflated by the printing of paper money.... it has no time limits or shelf-life.... it’s internationally excepted.... trans-cultural.... trans-lingual.... trans-political.... trans-geographical.... and trans-millennial. Fire won’t burn it.... water won’t ruin it.... it can store much wealth in a small space.... it requires no maintenance.... does not need feeding...it’s not affected by inflation...or subject to weather conditions...its duration will last for thousands of years.... it's easily transported, and they are not making any more of it!
But most importantly, it is a private, God given asset.
WHY AM I BUYING GOLD?
When considering a purchase of gold or silver, you should ask yourself the question.. "What is my reason for buying gold?"
If your answer is either ….
1. Investment
2. Insurance
3. Transfer of Wealth
INVESTMENT
When investing in physical bullion be it gold or silver, you would generally purchase what is called "London Good Delivery Bars". These are either a 400 troy ounce gold bar with a minimum purity of 995 (that is 995 parts in 1,000 are pure gold), or a 1,000 troy ounce silver bar, with a purity of 999. (Dan El also offer a one kilo gold bar at 999.9 purity)
As these bars are big, heavy and expensive (approximately USD360,000 for a 400 ounce gold bar, and USD11,000 for a 1,000 ounce silver bar), investors often prefer to have the bars held in vaults, and obtain title to the bars. Investors then trade these bars off when the market has favored their position. Any profit realised, is then the investor’s return on investment. Because the investor rarely takes possession of these bars, he can enjoy the saving of costly shipping, multile handling fees and transit insurance which affords the investor opportunity to maximize profit.
The Shanklin Financial Group provides this service to its clients, and acquires these bars direct from bullion refineries at very low margins over spot. Our clients then purchase these bars at our cost, which allows them to enter the bullion market on the same footing as the big players in the industry. We then transfer these bars to private vaults where they are stored at extremely competitive rates. Our clients pay transport to and from the vault, which over a shipment of numerous bars, in miniscule. Dan El currently charge a fee of .009 of metal purchased per annum for this service, paid in bullion from the vaulted bars. A Certificate is issued to our Client for their bars stored in the Vault.
This program is one of the finest in the world, and possibly the market leader on low fee private bullion acquisition and storage.
INSURANCE
For those who see benefit in providing "insurance" for times of economic upheaval, privately minted coins and jewelry are the time tested logical “policy” to hold. We suggest that this form of bullion holding should be stored securely by their owner in a safe and private "under the bed" facility, where the bullion can be accessed if needed. History has shown time and time again, that when there is a major (and in many cases not too major) economic downturn, gold and silver have increased dramatically in their purchasing power.
Coins (and select jewelry) by their very nature of creation, carry a greater premium above spot price than say the investors 400 ounce bar. This is because gold coins start their life as a 400 ounce bar…. the bar is pressed into a flat sheet…. artwork and design is created and machined onto a die…. and then say 800 half ounce coins are punched from that sheet. Now instead of one pouring fee as in the 400 ounce bar, we have to add the collective costs of one pouring fee, fabrication costs to make the sheet of gold, 800 striking fees, artwork and design, die manufacture, and additional handling and machine costs. If the coins were to be one tenth of an ounce then there would be 4,000 strike fees. This is why coins (and jewelry) demand a higher margin per ounce than a bar. But this is also the reason for the advantage small denominated (by weight) coins possess, as they become more tradable in time of economic catastrophe, as we have seen in history. It is for this reason that we suggest gold coins, as an insurance policy, should be as small as 2.5grams and no bigger than 1 ounce.
The same is true for silver coins, but silver coins currently provide a challenge due to the relative low price of silver. Currently, the strike fee to make a small silver coin (10-15 grams) is approximately the same as the precious metal content of that coin, which places a 100% premium on the coin immediately it is struck. To many however, this is of no great concern as it is a widely held view that silver has a long way to go to return to the 14:1 ratio (Silver : Gold ) that appears to be its natural equilibrium throughout history. Today the ratio of silver to gold is approximately 70:1.
Even considering these larger premium over spot for silver coins, they are still purchased by many who consider such premiums will in time prove to be inconsequential, and “par for the course” in the acquiring of private issue small silver coins.
Having said all of the above, in the promotion of coins as insurance rather than an investment, it should be remembered that the return on coins as measured by their purchasing power in times of economic upheaval, may well outstrip many traditionally accepted investments. The purchasing power of gold from 1929 to 1935 increased by 129%. Not a bad return for any investment, and certainly one that would outstrip the 20% premium over cost that our coins and jewellery currently sell for.
Coins then become the preferance for "insurance", and Good Delivery Bars, the choice for investment.
TRANSFER OF WEALTH
We advise our clients to hold bullion for both insurance and investment, and counsel that the investment bars should be stored in a jurisdiction outside of the country where the investor lives. This providess an additional facit to asset diversification.
Having examined the reasoning behind Gold and Silver as Insurance and Investment, it becomes clear then how simply Private Bullion Holdings can serve as a means of transferring wealth from one generation to the next, or one jurisdiction to another.
GETTING STARTED
To many, activating this concept of international diversification with their bullion holdings is out of reach economically. To some even our minimum purchase of USD5,000 for gold/silver as "insurance," is difficult. One solution to this hurdle has been that friends and family have "pooled" their resources to make the USD5,000 minimum purchase, and even to acquire the larger investment bars offered by Dan El for international diversification.
At The Shanklin Financial Group we uphold the rightful place of gold and silver in disclosure of their full spectrum of traditional uses, and submit that these unique precious metals have unremittingly sustained their appeal and function, as proficiently in AD2009, as they did in AD1009, AD9 or 5009BC.
Gold predates coins* by four and a half millennia and paper money* by five and a half millennia, and yet gold is still seen in 2009 by central banks, as their preferred means of support to government issued coin, paper notes, and “invisible money”. (Collectively referred to as M1*.)
Throughout history, whenever there has been economic, political or social instability within a community, the ability of gold and silver to repel the attrition of such uncertainties is without parallel.
Professor Roy W. Jastram formalised this observation in his work “The Golden Constant”. His research entailed studying the purchasing power of Gold in our Modern history, from 1560 until 1976. His conclusions were that the purchasing power of gold not only granted stability in times of economic peace, but increased significantly1 in times of economic turmoil.
By taking a brief walk down the memory lane of gold and silver as currency, history will quickly flaunt memorable examples that reconfirm the constant purchasing power of these unique precious metals.
Under the rule of the Roman Empire at the time of Christ (1st Century AD), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes. Nothing has changed.
At the time when King Solomon ruled the House of David (1000BC), we find that he was often in the market purchasing horses to be trained for his army. We know from historical records that this King had thousands of stables2 for these horses, that he purchased from Egypt for the price of 150 shekels* of silver.3
In today’s unit of weight this would equate to 55 troy ounces of silver. In Australia, thoroughbred horses, off the track, can still be purchased for the equivalent of 55 troy ounces of silver. Nothing has changed.
The Islamic world, ever since the birth of Islam in AD600, have embraced gold and silver for the traditional benefits these metals offer, and have granted these metals their rightful and prominent role as units of exchange. The Gold Dinar* and the Silver Dirham* are their chosen currency. In the Middle East, a chicken at the time of Mohammad (AD600) would cost a family one silver Dirham. Today 1,400 years later, a chicken in the Middle East would still cost a family one silver Dirham.... nothing has changed.
In modern Islam, Gold and Silver still enjoy their traditional roles, one of which is an astounding hedge against inflation. The advertising slogan for the International Gold Dinar Exchange is “zero inflation in 1400 years”... and they are right.
Roosevelt Silver Dime (1946-1964) A more modern example of the hedging abilty of precious metals can be drawn from the American experience. On July 6th 1785, the U.S. Congress unanimously voted to adopt the Spanish Silver Dollar as the official monetary unit of the United States of America. The Coinage Act of April 2nd 1792 (granted by Section 8,Article 1 of the U.S. Constitution) defined the US dollar as being 371.25 grains of silver. Therefore, America's foundational application of monetary policy, was that of a silver standard. However, in time this precious metal standard became debased, and then eliminated entirely. For example the Silver Dime (10 cents) was a coin made up of 90% silver and 10% copper, and the actual silver weight per coin was .07234 of an ounce. (These Silver Dimes were last minted in 1964.) In 1963 a gallon of gasoline in America sold for 31 cents. This meant that 3 Dimes could buy a gallon of gasoline. The total weight of silver in 3 Silver Dimes is .217 of an ounce, which today would buy a gallon of gasoline anywhere in the USA..... nothing has changed.
But why are silver and gold referred to as “precious metals”?
There are 23 billion troy ounces of silver above the ground worldwide. By dividing these evenly among the 6.6-billon people on the earth, we find there is less than four troy ounces of silver per person. Additionally, the above ground worldwide supply of gold totals only 4.6 billion troy ounces. If we were to evenly divide all the gold above the ground worldwide between the people on our planet there would be less than 8/10ths ounce of gold per person! Gold and Silver are truly precious metals.
Throughout history, gold and silver has always returned to a stabilised ratio of approximately 14 to 1, which means that it would take 14 measures of silver to buy 1 measure of gold. This is not totally surprising when we understand that silver is found in the earths crust at a ratio of 73 parts per billion and gold at approximately 5 parts per billion. When we divide these two figures we find a ratio of 14.6 to one. Historically, this has been the ratio of comparative "worth" between the two metals, however, today that ratio hovers over 70 to 1.
There clearly exists today a great disparity in this “time established” ratio of equilibrium between silver and gold that ultimately will be revisited, to provide the conservative investor with a phenomenal opportunity for gain.
Although The Shanklin Financial Group endorse to the broader populace the role of gold as being more akin to insurance than investment, it is universally accepted that any investment should be valued and measured by its ability to offer the greatest return, when it’s needed the most. This objective is achieved in no other investment better, than in Gold and Silver. They alone, stand supreme.
The ability of private silver and gold holdings to serve as a reliable insurance policy and a sound investment strategy, particularly during the economic storms of life, are without question and worthy of consideration.
It is the view of The Shanklin Financial Group, that without detracting from the present occasion to invest in gold and silver, that if investment is all one sees in these precious metals, then the holder has been short changed and has missed out on their broader and more personal designs.
For 7000 years now, since man first walked in the Garden of Eden, gold and silver have established themselves as a sound medium of exchange, a store house of wealth, a true measure of value, a secure protection of heritage, an adornment of beauty and a means of transferring the efforts and rewards of ones labour, from his generation to the next.
Further, gold has no "use by date".... it can’t be counterfeited... it can’t be deflated by the printing of paper money.... it has no time limits or shelf-life.... it’s internationally excepted.... trans-cultural.... trans-lingual.... trans-political.... trans-geographical.... and trans-millennial. Fire won’t burn it.... water won’t ruin it.... it can store much wealth in a small space.... it requires no maintenance.... does not need feeding...it’s not affected by inflation...or subject to weather conditions...its duration will last for thousands of years.... it's easily transported, and they are not making any more of it!
But most importantly, it is a private, God given asset.
WHY AM I BUYING GOLD?
When considering a purchase of gold or silver, you should ask yourself the question.. "What is my reason for buying gold?"
If your answer is either ….
1. Investment
2. Insurance
3. Transfer of Wealth
INVESTMENT
When investing in physical bullion be it gold or silver, you would generally purchase what is called "London Good Delivery Bars". These are either a 400 troy ounce gold bar with a minimum purity of 995 (that is 995 parts in 1,000 are pure gold), or a 1,000 troy ounce silver bar, with a purity of 999. (Dan El also offer a one kilo gold bar at 999.9 purity)
As these bars are big, heavy and expensive (approximately USD360,000 for a 400 ounce gold bar, and USD11,000 for a 1,000 ounce silver bar), investors often prefer to have the bars held in vaults, and obtain title to the bars. Investors then trade these bars off when the market has favored their position. Any profit realised, is then the investor’s return on investment. Because the investor rarely takes possession of these bars, he can enjoy the saving of costly shipping, multile handling fees and transit insurance which affords the investor opportunity to maximize profit.
The Shanklin Financial Group provides this service to its clients, and acquires these bars direct from bullion refineries at very low margins over spot. Our clients then purchase these bars at our cost, which allows them to enter the bullion market on the same footing as the big players in the industry. We then transfer these bars to private vaults where they are stored at extremely competitive rates. Our clients pay transport to and from the vault, which over a shipment of numerous bars, in miniscule. Dan El currently charge a fee of .009 of metal purchased per annum for this service, paid in bullion from the vaulted bars. A Certificate is issued to our Client for their bars stored in the Vault.
This program is one of the finest in the world, and possibly the market leader on low fee private bullion acquisition and storage.
INSURANCE
For those who see benefit in providing "insurance" for times of economic upheaval, privately minted coins and jewelry are the time tested logical “policy” to hold. We suggest that this form of bullion holding should be stored securely by their owner in a safe and private "under the bed" facility, where the bullion can be accessed if needed. History has shown time and time again, that when there is a major (and in many cases not too major) economic downturn, gold and silver have increased dramatically in their purchasing power.
Coins (and select jewelry) by their very nature of creation, carry a greater premium above spot price than say the investors 400 ounce bar. This is because gold coins start their life as a 400 ounce bar…. the bar is pressed into a flat sheet…. artwork and design is created and machined onto a die…. and then say 800 half ounce coins are punched from that sheet. Now instead of one pouring fee as in the 400 ounce bar, we have to add the collective costs of one pouring fee, fabrication costs to make the sheet of gold, 800 striking fees, artwork and design, die manufacture, and additional handling and machine costs. If the coins were to be one tenth of an ounce then there would be 4,000 strike fees. This is why coins (and jewelry) demand a higher margin per ounce than a bar. But this is also the reason for the advantage small denominated (by weight) coins possess, as they become more tradable in time of economic catastrophe, as we have seen in history. It is for this reason that we suggest gold coins, as an insurance policy, should be as small as 2.5grams and no bigger than 1 ounce.
The same is true for silver coins, but silver coins currently provide a challenge due to the relative low price of silver. Currently, the strike fee to make a small silver coin (10-15 grams) is approximately the same as the precious metal content of that coin, which places a 100% premium on the coin immediately it is struck. To many however, this is of no great concern as it is a widely held view that silver has a long way to go to return to the 14:1 ratio (Silver : Gold ) that appears to be its natural equilibrium throughout history. Today the ratio of silver to gold is approximately 70:1.
Even considering these larger premium over spot for silver coins, they are still purchased by many who consider such premiums will in time prove to be inconsequential, and “par for the course” in the acquiring of private issue small silver coins.
Having said all of the above, in the promotion of coins as insurance rather than an investment, it should be remembered that the return on coins as measured by their purchasing power in times of economic upheaval, may well outstrip many traditionally accepted investments. The purchasing power of gold from 1929 to 1935 increased by 129%. Not a bad return for any investment, and certainly one that would outstrip the 20% premium over cost that our coins and jewellery currently sell for.
Coins then become the preferance for "insurance", and Good Delivery Bars, the choice for investment.
TRANSFER OF WEALTH
We advise our clients to hold bullion for both insurance and investment, and counsel that the investment bars should be stored in a jurisdiction outside of the country where the investor lives. This providess an additional facit to asset diversification.
Having examined the reasoning behind Gold and Silver as Insurance and Investment, it becomes clear then how simply Private Bullion Holdings can serve as a means of transferring wealth from one generation to the next, or one jurisdiction to another.
GETTING STARTED
To many, activating this concept of international diversification with their bullion holdings is out of reach economically. To some even our minimum purchase of USD5,000 for gold/silver as "insurance," is difficult. One solution to this hurdle has been that friends and family have "pooled" their resources to make the USD5,000 minimum purchase, and even to acquire the larger investment bars offered by Dan El for international diversification.