Physical Gold in Pensions

Declan Cosgrove ACII GoldMadeSimple.com Ltd

Physical Gold

Why such interest in gold?

Different types of gold

Risks of physical vs ETFs / gold grams

SIPP / SSAS controls

Storage considerations and costs

The buying process

Question? - Ask the Audience

Zero

Under 1%

1-2%

Over 5%

I have absolutely no ideaI would love to answer but can’t resist going for the highest number!

What % of investments handled by your organisation, are in gold?

What is the Queen doing?

Cazenove Capital Management is thestock broker to the Queen

Robin Griffiths Private Wealth Strategisthas 44 years investment experience

He is regarded as one of the besttechnical analysts in the world

“Not owning gold is a form of insanity”R.Griffiths - Cazenove

Not owning gold and your mental health

Robin Griffiths’ ultimate target for gold?

R.Griffiths July 27th 2011

If you adjust the old all-time high in gold...if you use the RPI, you come up with a figure near $8,500 as the genuine price for gold, the old all-time high adjusted for inflation. I think we have to own it. Obviously it won’t go there in a straight line, it gets a little overbought and has setbacks...

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PIMCO and gold

PIMCO are the largest private investors of bond on the planet

PIMCO has $1.4 TRILLION assets under management

In March 2012 Gross said the following after being askedabout if investors should buy gold:

“I think so [buy gold], but in terms of what percentage you should own I think that’s delicate in terms of risk for each individual portfolio. But I think that it has a place [buying gold] in a mildly inflation world… then gold has a protective insurance element that every investor should at least look towards.”

1999-Today Gold Bull Market

Bull Market 13 years

Price in 1999 around £170

Price today around £1000

That’s an increase of approx 600%

Gold has increased on average around 17% each and every year of the bull market

Gold 1999 -Today

1966-1983 Gold Bull Market

Gold 1966 -1983

Bull Market lasted 17 years

Price went from £12.5 to £280

That’s an increase of 2250%

Comparing the % rise of both bull marketsGold 1966 -1983

600% rise from £12.50

In terms of % rise, the red dot is where the current bull market is compared to the ’66-’83 vintage

Factors underlying the bull market are greater this time round (eg quantitative easing, sovereign debt, banking crisis)

Current bull market expected to at least match if not betters the previous gold bull run

Gold vs Cash

Since 1900 sterling’s buying power hasdecreased by 98.5%Gold has risen 27,400%(House of Commons Report)

Since 2001 sterling’s buying power hasdecreased by over 20%Gold has risen over 300%

Different types of gold

Two types1. ‘Paper’ gold - ETFs, options, futures, mining shares, certificates ....2. Physical gold - coins, bars, gold grams

Pension Approved Physical Gold

Segregated gold in storage ETFs Gold Grams in storage

Gold bullion LBMA bars in storage

Capital Gains Tax Free Gold (CG78308) Sovereign coins (after 1837) Britannia coins

Risks of Physical vs ETF & Gold Grams

Highest Risk - ETFs Higher counterparty risk - value depends on viability of ETF provider You are NOT buying physical gold - only exposure to the gold price No access to or control over physical gold

Medium Risk - Gold Grams Medium counterparty risk - value is affected by viability of GG provider No access to or control over physical gold Restricted to selling gold back via the GG provider

Lowest Risk - Segregated Gold No counterparty risk - directly own individual bars Absolute control over physical gold & storage provider Able to sell gold to anyone

Risks of ETFs

Insolvency / Insurance / Access to the investment 1. “Gold ... will not be segregated from the Custodian’s assets. If the

Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant. In addition..... there may be a delay and costs incurred in identifying the gold ....” (GLD prospectus)

2. “The Custodian may not maintain adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust’s gold which is not covered by insurance and for which no person is liable in damages.”(GLD prospectus)

Pension funds already buying gold

The University of Texas Investment Management Co

Second-largest U.S. academic endowment fund

Fund worth $20bn

In 2011 bought £1bn in physical, delivered gold. NOT ETFs

SIPP / SSAS Controls

‘Investment’approved gold (not silver or coins)

LBMA Storage (not delivery)

Funds only returned to the approved bank account

Approved administrator access

Full record of transactions

Storage Considerations and Costs

LBMA approved storage (only 5 in UK)

Via Mat - Europe’s largest independent bullion vault

Central bank level security

Independent of bullion merchant or banks

Storage & ins. costs 0.36% gold value p.a. (ETF typically 0.4%)

Gold purchase costs approx. 1 to 2% (similar to ETFs)

The Buying Process

1 Sign Trustee Form - authorises administrator and bank account

2 Register Account online - view live prices and account details

3 Prefund account - bank transfer

4 Place order online - order and bar serial numbers confirmed

5 Sell Gold - view live sell prices / request funds withdrawal

Question? - Ask the Audience

Zero

Under 1%

1-2%

Over 5%

I have absolutely no idea

What’s for lunch?

What % of investments do you think SHOULD be invested in gold?

More Resources

Info on gold: www.gold.org

ETF Risk Report: email declan@GoldMadeSimple.com

Live gold prices: www.goldmadesimple.com

Analysis and forecasts: www.GoldMadeSimpleNews.com

Trustee Form: www.goldmadesimple.com/gold-sipp-pension

CGT exempt info: www.hmrc.gov.uk/manuals/cgmanual/cg78308.htmand www.hmrc.gov.uk/manuals/cgmanual/CG12602.htm