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Why invest in GOLD

2019 Brochure

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History of Gold

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Gold and its use in civilisation can be traced

back almost 6,000 years. Gold as a currency

can be traced back 2,000 years to the Romans.

Even up until 1971 the world’s reserve currency,

the US Dollar, was backed by gold. It is because

of this longevity that gold is embedded in

society’s DNA as a trusted, safe store of value,

and, as result, in a deteriorating financial

environment or geo-political instability

there is a flight to safety into gold.

Following the collapse of Lehman Brothers

and the resultant near meltdown of the financial

system the Dow Jones dropped from 14,000

to 7,000; a 50% fall. In total, $10 trillion dollars

was wiped off global stock markets. Gold, on

the other hand, saw its price rise from $850 per oz.

to $1900 per oz.; a 131% increase in value as

investors moved into gold as a trusted

store of value.

How Gold resists a downturnin the markets

Gold is rare, so rare in fact, that the world

pours more steel in one hour than it has

produced gold since the beginning of

recorded history.

This rarity and finite supply of gold is what

gives it value over other major currencies

such as the US dollar, the British pound,

the Japanese yen and the European euro,

all of which can be printed at will.

The Rarity of Gold

1

Why choose gold as an investment

2

The US dollar, the British pound, the Japanese yen,

and the European euro are all known as fiat currencies.

This is the name given to a currency that a government

has declared to be legal tender, but is not backed by a

physical commodity.

The value of fiat money is derived from the relationship

between supply and demand rather than the value of the

material the money is made of. It is worth noting that the

history of fiat money, to put it kindly, has been one of

failure. In fact, almost every currency since the Romans

first began the practice in the first century has ended in

devaluation, and in most cases collapse.

According to a study of 775 fiat currencies by

Dollarday.org there is no historical precedence for a

fiat currency that has succeeded in holding its value.

The report found that of the 775 currencies examined

The Failure of Fiat Currencies

Even the British pound cannot claim to have escaped

this fate. Founded in 1694, the British pound sterling

is the oldest fiat currency in existence. At a ripe old

age of 317 years it must be considered a highly

successful fiat currency, right ?

24%Monetarily reformed

23%Still in circulation, awaiting outcomes

21%Destroyed by war

20%Failed through inflation

12%Destroyed by independence

I am afraid not so, success is relative.

3

Gold is the currency that stood the test of time.

The British pound was defined as 12 oz. of silver, so at today’s

value it is worth less than 1/200 or 0.5% of its original value.

In other words the most successful long-standing currency

in existence has lost 95.5% of its value. So gold is not only the

oldest currency, but also the only currency that has stood

the test of time.

Examples of fiat currencies

that have failed through inflation, been destroyed

by war or independence, or that have been

monetarily reformed include:

Germany 1923 (mark)

Turkey 1937 (lire)

Greece 1943 (drachmas)

Hungry 1945 (pengo)

Central Bank of China 1947 (CGU)

Chile 1975 (pesos)

Chile 1975 (pesos)

What all of this information on fiat currencies

highlights is that they are not as solid as people

believe, and that if history is anything to go by

they are incredibly vulnerable. Therefore, if the

global economy continues on its current path,

gold provides the most protection.

Argentina 1985 (pesos)

Peru 1989 (intis)

Nicaragua 1990 (cordoba)

Russia 1992 (rubles)

Zaire 1992 (zaire)

Brazil 1993 (cruzeiros real)

Bosnia 1993 (dinar)

Brazil 1993 (cruzeiros real)

Bosnia 1993 (dinar)

Ukraine 1995 (karbovantsiv)

Georgia 1994 (iaris)

Romania 2001 (lei)

Venezuela 2002 (Bolivar)

Zimbabwe 2006 (dollar)

The Failure of Fiat Currencies(continued)

MONTH

Between 2008 and 2016 the US Federal Reserve printed $12.3

trillion dollars as part of its quantitative easing initiative in a bid to

restore confidence in the economy and kick start growth following

the financial crisis. The US Federal Reserve announced the end of

its historic quantitative easing programme in 2017.

This level, of what amounts to no more than money printing, has

always had very bad consequences for governments that have

tried it in the past. Quantitative easing damages the value of the

US dollar. Each time you add a new dollar into the system, it

decreases the value of each existing dollar by just a little bit.

The Federal Reserves plans of quantitative easing and injecting

trillions into the economy clearly had a significant impact. A

number of analysts warned that the programme could result in a

decline of the US dollar of up to 20%, in turn leading to inflation,

something we know gold reacts positively to.

Between 2008 (when the financial crisis occurred and the Federal

Reserve embarked on a quantitative easing programme) and

2018 inflation increased by more than 15%.

In�ation has hit struggling

US consumers really hard.

Since 2008, investors have

been �eeing from the US

dollar and other paper

currencies and have been

�ocking to commodities,

precious metals and oil.

That means that the price

of food increased by over

16% between 2008 and

2017. American families

found their budgets

stretched even more.

Once an in�ationary spiral

gets going it is really hard

to stop. Just ask anyone

who lived through

hyper-in�ation in Germany

in 1923 or Zimbabwe

in 2006.

$12.3 Trillion Dollars

Quantitative Easing

Between 2008 and 2016 the US Federal Reserve printed...

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Tens of millions of people have worked incredibly hard to

save up a little bit of money.

These people are counting on that money to pay for a home or retirement.

Inflation is like a hidden tax on all of those savings, as the amount of

currency we have saved remains the same, but its purchasing power

decreases dramatically.

Further quantitative easing threatens to destabilise the global financial system. We have already

entered a time of increasing global financial instability, and governments around the world are not

going to help things by introducing trillions of new currency into the game. Over the past two decades,

bubble after bubble has caused tremendous economic problems, and now all of this new money that’s

been introduced over the last decade could give rise to new bubbles. It is going to become more

expensive for the US government to borrow money. At present the US government has been able to

borrow money at ridiculously low interest rates, but as the Federal Reserve keeps buying up hundreds

of billions in US Treasuries, the rest of the world is going to start refusing to participate in

the ongoing auctions.

Inflation is a hidden tax

Germany tried ‘abnormal’ money

printing in the early 1920’s

after WW1 and the result was hyperinflation,

collapse of the German economy, and the

rise of Hitler.

It is clear to see then, how, with the injection of

$12.3 trillion into the economy, hyper liquidity

can become hyperinflation, affecting the

economy while simultaneously driving up

the value of gold and other precious metals.

Peter Schi�, the CEO of Euro Paci�c Capital,

previously commented, “One of the big reasons

for more quantitative easing is because the US

government is already starting to have difficulty

finding enough people to borrow from.

At the end of the day, all of this de�ation

talk is a red herring, the true purpose of

QE is to disguise the increasing ability of

the Treasury to �nance its debts.

5

While the job market is considered robust and

house prices are rising, these figures are

masking issues with poor trade data, weaker

growth overseas, and the impact of a weakening

oil industry in the US. Projections suggest that

the US will continue on the path towards

recovery, with growth gradually picking up. But

the rising gold prices and the falling value of the

dollar tell a different story.

Gold prices are traditionally linked to the value of

the dollar, with investors opting to place their

liquidity into the commodity as a protective

measure against economic crisis or inflation.

Low gold prices signal that the economy is

healthy.

It’s a trend that’s been seen throughout history.

In 1973, as President Nixon was preparing to

detach the US dollar from the gold standard in a

bid to lower inflation, gold prices soared. For an

ounce of gold, price quickly went from $42 to

$120 in 1976. The recent financial crisis showed

a similar trend. Just three years after the new

financial collapse and ongoing global economy

woes, gold reached its peak of $1,895 an

ounce, an increase of close

to 90% since 2009.6

So, what does this mean now? Gold prices have

been increasing again, edging up to values not

seen in the last five years. Leading analysts

Thomson Reuters GFMS, expect the price of

gold to reach $1,500 in 2018 amid fears of

inflation. In the past, investors and commodity

traders have successfully use gold to maintain

their value and the recent shift suggests that the

US currency is not as stable as it first appears

when glancing at the official statistics.

Eventually, the reality of the weakness of the

economy is going to hit, and as a result, bonds,

equities and other financial assets, will decline

along with confidence in the US. That along with

a weakening dollar and increasing inflation will all

be positive for gold, as investors seek a trusted

store of value.

The main problem with gauging

the health of the US economy is the ability

to get reliable data. However,the official statistics

show that the US economy is still recovering from the

financial crisis. In fact, in 2016 the US recorded itsslowest

period of economic growth in five years, recording just 2.5%.

The main problem with gauging

the health of the US economy is the ability

to get reliable data. However,the official statistics

show that the US economy is still recovering from the

financial crisis. In fact, in 2016 the US recorded itsslowest

period of economic growth in five years, recording just 2.5%.

The United States Economy

US government debt is currently over

$20.7 trillion ($20,700,000,000,000) and rising.

By 2022 it’s expected that the figure will

have climbed to over 23.3 trillion if current

rates of spending and borrowing continue.

This is debt that has to be paid back at some

point, maybe not in our lifetime, or our children’s

lifetime, but ultimately if the world is continue to

have confidence in the US dollar, it has to be

paid; otherwise it means defaulting, and that

would be catastrophic.

The problem is that it is almost impossible to

envisage a scenario whereby the government

can pay this back at any point in the future.

For the fiscal year 2016, the US government

spent $3.9 trillion but only brought in revenue

of $3.3 trillion, highlighting the significant gap

and why debt continues to spiral. It’s an issue

that’s worsening rather than improving.

For the 2017 fiscal year the budget deficit

totalled $666 billion, $80 billion more than the

previous year. Measured as a share of GDP,

the 2017 deficit rose to 3.5%, this is compared

to the 2.4% recorded in 2015. It does not help

the situation either, that both the Democrats and

the Republicans seem more interested in point

scoring than addressing and implementing the

hard measures needed to correct this, even to

the point that the US federal government shut

down for 17 days in 2013 because the two

parties could not agree.

Tension have continued to rise between the

two parties, leading to another shutdown

between the 20 and 22 January 2018 and

rising concerns that it could happen again.

To put the level of US debt into perspective,

it is the equivalent of giving every man, woman

and child on the planet $2,957 each. Or put

another way, each person in the United States

needs to contribute over $64,000 to pay it off,

and this figure is on top of what they already pay

in taxes, living expenses, credit cards, mortgages,

and other expenses. When just taxpayers are

factored in, that amount rises further to over

$171,000. Given that the median wage for US

workers is around $44,500 according to the

Bureau of Labor Statistics, this looks like a tall

order. Perhaps the most frightening thoughts of

all though is what the debt means in terms of

interest. Net interest on debt is one of the largest

budget items, totalling in excess of $284 billion,

a number that’s rapidly rising. Should US rates

return to their historical average, as forecasts

suggest, the interest figure is likely to soar

even further. It is easy to see just how close

the US is to the edge of potential financial

oblivion. However, this is not a forgone

conclusion, and it is possible that over time the

US could manage the situation and bring it under

control; whatever the measures to achieve this,

they will be financially painful regardless of the

form. It is also easy to see how just a single

economic or geo-political event could

tip the scales and cause a major

financial panic...

The United States Economy

Either way, gold as a reliable,

safe store of value, should prosper.

Imagine what Greece, Portugal and Spain went

through and then multiply it by a factor of about 1,000.

Imagine what Greece, Portugal and Spain went

through and then multiply it by a factor of about 1,000.

7

(continued)

The United States

US government debt is currently over

(continued)

Take the Russian-Ukrainian conflict as an

example. When Russia invaded Ukraine in

2014 and subsequently annexed Crimea, both

the US and Europe had their hands tied, even

though the Ukraine is part of NATO, they could

not intervene militarily unless they wanted to

risk World War 3. Instead, they chose

economic confrontation and placed sanctions

on President Putin’s inner circle.

US funds also withdrew around $64 billion

from Russian investments and the resulting

fallout put pressure on an already struggling

Russian economy. So what started as an

armed confrontation became economic with

Russia retaliating by threatening to cut off gas

supplies to Ukraine under the guise of

non-payment, which would affect Europe,

and Germany in particular which relied on

Russian gas for 70% of its energy needs.

While much of the tensions related to the

Russia-Ukraine conflict have reduced

somewhat, this case makes it clear that

military conflict and economic conflict

cannot be considered separately...

Whilst not ignoring what history has taught us about gold’s reaction to conflict, there is

an argument to say that times have changed and the parameters are different, military

An example of this would be when Iraq invaded

Kuwait. The price of gold jumped 15% ahead of

Operation Desert Storm. The price soon reverted

back to the norm when investors realised the

outcome was a foregone conclusion.

conflict and economic conflict

are intertwined, so perhaps

arising conflicts in the future

will have a greater impact on

the global economy.

... In the summer of 2017, as US and North Korean

tensions reached a new height, gold prices rallied

by 2.3% and achieved the best trading level in

months. The boost was buoyed by investor

uncertainly, which resulted in many seeking a

commodity that provides stable value. Analysts

noted that fold prices were likely to remain well

supported, with the potential to climb even further,

until the geopolitical situation evolved.

As of early 2018, gold prices have continued to

hold a slight increase on figures following the initial

tension in North Korea - an issue that is still being

resolved- at over $1,300 per ounce.

More recently, the rising tension emanating from global relations with

North Korea have demonstrated how such conflict, or threat of conflict, can influence

the gold market.

Conflict and the price of gold

Historically gold has reacted to conflict,

but the move tends to occur on

anticipation of the event rather than the

actual event itself. It is historically a

short-lived reaction and the price tends

to correct itself as investors assess the

situation and the ramifications.

8

Tensions between Sunni and

Shiite Muslims.

Continuing civil

war in Syria.

Threat of the Islamic State

of Iraq and Syria (ISIS)

which is continuing to

destabilise the Middle East.

Threat of overseas terrorist

attacks in Europe and the

US by ISIS harming

economies.

Ongoing conflict between

Israel and Palestine and the

threat of escalation beyond

the current fighting.

Rising tensions between the

US and North Korea, and

North Korean conducting

nuclear tests.

Growing political tensions in the

Horn of Africa and Red Sea regions

between Turkey and Egypt and

Saudi Arabia.

The risk of the Iran nuclear

deal falling through as the

deadline nears.

Expected continued political

stand off between Russia

and the West.

Discontent in Egypt between

military controlled

government and the previous

government the Muslim

Brotherhood.

Continuing instability in Libya caused

by a power struggle between rival

militia since the removal of Gaddafi.

Ongoing threat of Al-Qaeda seeking to

expand its presence in Pakistan, Algeria,

Egypt, Kenya, Libya, Mali, Mauritania,

Nigeria, Iraq, Syria and Yemen.

It does not require much imagination to see a significant increase in the flow of money in to gold as investors weigh up the ramifications of geo-political tensions.

When you take a look at all the other geo-political tensions around the world at the moment that could have similar outcomes...

Conflict and the price of gold(continued)

9

The term ‘the worlds’ reserve currency’ refers

to a foreign currency held by central banks and

other major financial institutions as a means to

pay off international debt obligations or to

influence their domestic exchange rate. A large

percentage of commodities, such as gold and

oil, are usually priced in the reserve currency,

causing other countries to hold this currency to

pay for these goods.

Back in 2013 more than 60% of all foreign currency

reserves in the world were in US dollars. But analysts

forecast changes and this shift in power in becoming

more obvious. Some of the biggest economies on

Earth have been making agreements to move away

from using the US dollar, signalling its fall in value

and stability. As more international trade is conduct-

ed in other rival currencies, it will increasingly cause

huge implications for both the US economy

and dollar.

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While the US dollar has been the world’s dominant currency for over seven decades,

China is seeking to supplant it. As of the final quarter of 2017, just 1% of foreign exchange reserves

were held in Chinese yuan, compared to 63.5% in the US dollar. However, a shift is underway.

The Chinese yuan has reached a high against the US dollar and the German Bundesbank has

indicated it would include yuan in its reserves for the first time, reflecting its growing

international role.

The French Central Bank also already holds reserves in yuan and last year the

European Central Bank announced it had exchanged $611 million worth

of US dollar reserves for yuan securities. So far, the change has not

severely affected the US’s dominance but it’s likely that other central

banks will follow suit and the power of the US dollar will

slowly decline.

The US Dollar’s Statusas the world’s reserve currency

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As these new trade agreements take hold and increase in value, it will mean that

central banks around the world will have to rebalance their foreign currency reserves,

and since not as many of the transactions are in dollars it will mean they have to sell them.

The second and third largest economies in the world, China and Japan,

struck a deal to use their own currencies, rather than the US dollar, when

trading with each other.

US President Donald Trump’s

‘America First’ policies are

pushing the US out of the

international limelight.

China has a Bilateral Trade agreement with

Russia to use their own national currencies

when trading with each other.

China is Africa’s biggest

trading partner and as a

result Chinese currency

is growing in popularity.

As a result of the US sanctions

on Iran over its nuclear policy, and

there exclusion from the international

banking system India now uses

gold to buy oil from Iran.

European central banks are

increasingly considering using

Chinese yuan as a reserve currency.

It is expected that Saudi Arabia

will begin using yuan pricing of

oil, with the rest of the industry

following suit.

The International Monetary Fund has

been pushing for a new world reserve

currency. The IMF also added the yuan

to its Special Drawing Rights basket in 2016

Loosening of the

US-Europe transatlantic

alliance, with the EU becoming

further independent.

Calls for a reserve currency that’s

disconnected from an individual

nation, and therefore able to

remain stable, have been growing

with particular support from Russia.

The UN has also continued to push for

a new world reserve system that no

longer relies on the US dollar

China is aggressively expanding its use of

the yuan for trading with African nations,

which have high growth potential.

Below are some of the changes

that are occurring globally that could mean

the beginning of the end for the US dollar as

a reserve currency:

Given that there is around $14 trillion outside the US held in cash or near cash, for example

US Treasuries, even the rebalancing of only 20% would mean the sale of $2.8 trillion dollar related

assets, a sale of this magnitude, especially with the current state of the US, would have a catastrophic

effect, resulting in massive inflation and huge increases in gold and gasoline prices.

The end of the US Dollar ?

11

12

Throughout history, debt levels over

90% of GDP are historically linked to

significantly elevated levels of inflation.

Specifically, when the ratio has met or

exceeded 90%, inflation has historically

risen to around 6% compared to the 0.5% to

2.5% range when debt levels are below 90%.

History also shows that the link is not

simultaneous, yet the emergence of higher

inflation has always been an eventuality.

Total US government has crossed this line and

it’s increasing further still. In 2008, prior to the

financial crisis is stood at just 67.7%, crossing

the 90% threshold in 2010. Alarmingly debt

levels to GDP now stand at over 105% and have

gradually increased in the years since apart

from a slight dip in 2015.

This is higher some than countries that are

associated with high levels of debt, such as

Spain, which stands at 99%. Further, the

Federal Reserve and Washington, and leaders

from other countries, are devaluing currencies

in order to reduce the burden of debt

repayment. This is a central thesis to investing

in gold: there is no way out of this level of debt

overhang except currency dilution.

Because the Federal Reserve continues to

pour money into the US economy, it’s difficult

to say for certain when gold will make a

dramatic move. The historical record indicates that a surge in money growth doesn’t impact economic

activity until 9-18 months later. Add another 12 months or so for it to show up in consumer price inflation.

China, which has already overtaken South Africa as the largest gold producer in the world, with an output of

455 metric tons in 2016, is also one of the world’s leading importers of the precious material. In 2016, China

was knocked off the top spot by Switzerland but it still imported an impressive $64 billion in gold while only

exporting $1.2 billion. Continued demand for gold and the outlook for the Chinese yuan means that gold

production and importing isn’t expected to slow down.

To add to this South Africa, previously the world’s largest gold producer, is in terminal decline as known gold

deposits are becoming uneconomical as a result of Labour unrest. There is also a greater difficulty in

extracting the gold as the gold that’s easier to mine has already be extracted.

Gold...The Facts and Figures

2008 2010 2012 2014 2016 201860

70

80

90

100

110

U.S. Gross Federal Debt to GDPSource | Tradingeconomics.com | U.S. Public Bureau of Public Debt

13

Gold...The Facts and Figures

To add to this, the significant new gold deposits that are

needed to replenish world gold production have thus far

failed to materialise.

Gold demand has been much greater than gold supply

for some time now, and at some point this is going to be

a significantly more important fact than the short term

speculation and sentiment that has kept the price low.

As of early 2018, gold prices are around $1,300 per

ounce but as supply dwindles and demand rises this is

expected to increase significantly.

Gold mining is a global business, with mining operating

occurring on almost every continent. The majority of gold

no longer comes from South Africa as it did just 40 years

ago. Today no one region dominates supply, although

China ranks in the top spot. Around 16% of the total

gold produced comes from North America, compared to

23% in Asia, of which China accounts for 14% However,

despite growing geographical diversity, gold is dwindling.

Existing mines are increasingly constrained while new

discoveries are occurring less frequently. When you

consider how long it takes for gold mine project

development to progress, often lasting decades, it’s

unlikely that supply will supersede demand even if new

projects receive approval.

Demand for Goldis expected to increase significantly.

This is evidenced by figures from the first quarter of 2017.

During the three month time period, gold supply fell sharply

by 12% when compared to the same period a year earlier.

In recent years, mine production has remained relatively

stable but it’s now anticipated that it will enter a period of

decline, further heightening the limited supply, as the

number of operational mines rapidly falls over the next

decade. As a result prices are expected to rise.

The US currently hold the most amount of gold in reserves

at 8,133.5 metric tons, a figure that has been virtually

unchanged since the turn of the century. Considering that

just 50 years ago, gold backed the entire US dollar,

reserves held today are incredibly low.

( Continued )

1970

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1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

14

Can you imagine what would happen to the price if the small

percentage of the investment world moved into gold?

If it matched the 1980 percentage of 26%, the price of gold

would be beyond the reach of most investors.

Many have been quick to point out that gold was in a bubble

that has burst following its retreat from the 2011 highs of

$1,900, likening the situation to the gold bubble of 1980.

There are many reasons why it would be incorrect to compare

the gold price today against the gold price leading up to 1980.

Gold...The Facts and Figures( Continued )

10000

20003000400050006000700080009000

10000

Firstly, the fundamentals are totally different to the environment in 1980 – the reasons

mentioned above are far more significant than those in the 1980 financial environment.

If you want compare the two events, then you need to compare like with like. The chart

below shows the gold price from 1970 to 2011 adjusted for inflation.

Sometimes a picture is worth a million words, in this case a chart. When you compare like

for like, the gold price is nowhere near its 1980 high. In fact for gold to match the 1980

high allowing for inflation the price would have to reach over $8,000 per oz.

Based on monthly average London PM Fix, March 2014 Dollars

March 2014Dollars Per Ounce

Given all of the fundamental reasons in this document, coupled with the fact that gold

is nowhere near its inflation adjusted high, we believe gold is in phase two of a bull

market cycle. The chart highlights this below.

Gold is the ultimate insurance policy. Throughout the last 1,000 years of history, most

episodes of printing money have been followed by pronounced periods of inflation or

even in extreme cases, hyperinflation, either severely affecting the nation’s stability or

culminating in warfare, dictatorships or political collapse. A simple glance will quickly

reveal that those who capitalised of these unique periods were holders of monetary

metals such as gold.

Even if you believe these possible outcomes are improbable, ownership of physical

gold will not only provide you with the opportunity to protect your wealth, but will

appreciate it significantly.

The opinions and views expressed above are re-enforced by a large number of

trusted market analysts. For more information, live gold prices and up to the minute

gold market analysis please contact the United Kingdom Asset Company on the

details below.

All rights reserved Copyright © 2018 United Kingdom Asset Company Limited, 71-75 Shelton Street, Covent Garden,

London, WC2H 9JQ company registered In England and Wales with company number: 09784057

Tel: 0203 695 9900

Web: www.ukassetcompany.co.uk

Email: info@ukassetcompany.co.uk

United Kingdom Asset Company Limited (FRN 820128) is an Introducer Appointed Representative of

European American Capital Services Limited, a company which is authorised and regulated by the

Financial Conduct Authority (FRN 401897). 15

Conclusion

Gold bullion will never default on promises nor obligations, and in times of financial crisis, gold bullion tends to increase sharply in value.

Gold has been a store of value for over 6,000 years. As track records go, that’s a

fairly good one. In this age of uncertainty, nothing will weather the tests of time

better than gold.