why gold why now

Why Gold, Why Now?

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ContentsIntroduction

Overview The Road From Barter To Fiat Money - Commodity Money

- The Introduction Of Goldsmiths And Paper Money- The Road To Modern Banking

- Fractional Reserve Banking As A Tool - Abolishment Of The Gold Standard - Introduction To Fiat Money Economic Crises And Their Impact - Overview Of The Sub-Prime Mortgage Crises - Global Impact

This is where your real wealth lies. www.WealthPreservationSociety.com

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- Light At The End Of The Tunnel Why Is Gold The Answer? Key To Investment Decisions Money Vs Gold Vs Currency The Current Economic Situation And Why You Should Buy Gold Gold Stocks Vs Actual Gold A Lesson From History So What Do You Buy?

IntroductionWe are a small group of ordinary people that have become frustrated at the way our savings seem to be disappearing. This has clearly been getting worse at an accelerating rate over the last few years. Put simply: Why is there no bank account where you can invest your money for a return greater than inflation? Banks make a profit from your money. Can’t they share some of the profit! We have spent a ridiculous amount of time, and have reviewed and collated financial advice from a large number of expert sources. It seemed crazy not to share this knowledge so we present it to you how it was broadly presented to us. Where we appear to make recommendations, these are simply the conclusions we draw from the many experts we have listened to. With this in mind we will clearly restate that we are NOT financial advisors and we would suggest you read the following in a way that will allow you to draw your own conclusions.

BackgroundGold has always been an essential ingredient of an investment portfolio. In recent times it has fallen out of fashion somewhat, but has become








increasingly popular in recent years due to a combination of factors. Most notable of those include lack of confidence in the financial markets, governments printing currency to pay off debt (basically rendering it worthless) and the recent property crises. Gold is seen as an investment which protects the investor’s store of wealth. It is a useful asset to have in your portfolio as a means to hedge against losses recorded on other assets. In addition, large potential capital gains are also expected over the coming years. The sub-prime mortgage crises in the US that occurred in 2008 kicked off a change in attitude of investors. Property, historically considered a safe investment has disappointed retail and institutional investors who are now wary of putting their money into this asset class again. Property prices are picking up again in parts of the US and Germany, but in many other areas the risk of further falls in price are just too great. To counter the effects of the recession that followed the sub-prime crisis in the US, governments are printing additional money in an attempt to revive respective economies. Printing currency without any increase in real GDP or output, erodes the purchasing power of currency, ultimately resulting in inflation. To add to this, overspending by governments on wars, unemployment benefits, pensions, and excessive bureaucracy and so on like has resulted in huge public debts. As a result, many governments are finding it near impossible to pay off, or even just to reduce their debts. Public sector securities or Government Bonds are no longer considered a safe bet by many experts. This has led to even more doubts about private sector debt. Consequently, this has caused a fall in confidence in financial markets around the world and has severely impacted capital markets in developed countries.








Back in November 2000, gold was trading at less than $300 an ounce. Over the past decade, this precious metal has outperformed all its competitor asset classes such as stocks, bonds and property. Property had always been considered as one of the most lucrative asset class but as an example, capital gains for UK residential property holders was 100% from August 2000 to August 2010, while gold rose by 340% within the same period. Frankly speaking, gold’s upward or ‘bullish’ trend is expected to continue. With the global economy still quite volatile and susceptible to shocks coupled with governments pumping artificial money into their economies, there are likely to be many more financial challenges ahead. Investment in gold seems to be the only rational choice given such a situation. This article will discuss all the reasons why gold is not only an essential ‘insurance policy’, or ‘hedge’ against inflation, but also potentially the most lucrative investment opportunity available today. The report will also cover the factors that have led to a decrease in attractiveness of other asset classes.

The Road From Barter To Fiat MoneyCommodity Money:Since ancient times people have used barter as a means of trade. That is, people swap goods and services for other goods and services in return. Many things have been exchanged over the years such as weapons, livestock, grains and cutlery and this system has favoured the participants because the transaction is hard to account for by tax departments. However, there is one major drawback: with barter there has to be ‘a double coincidence of wants’. Suppose you own a goat as your only possession and in return you want to buy wheat. Now the problem with barter is that once you have found someone who owns wheat, you need to make sure he or she would want a goat.








To add to the predicament, the other person should be willing to accept the goat for the amount of wheat you require. With livestock there was an added problem in the ancient times when there was no cold storage: it would not make sense to barter a fraction of an animal and let the remaining rot and go to waste. Timing in barter is also very crucial. Suppose you want to trade oranges for carrots, you can only do this if the oranges and carrots are both available at the same time and place. Different growing and harvesting seasons might imply that this may never be the case. This is quite a major drawback of using the barter system and the only way to circumvent this is to have a means of store of value; a way to allocate “credit” to the sellers. So suppose you sell your oranges when they are ripe and store the value. You can then use that store of value or credit to buy carrots when the carrot harvest comes in. Even in prehistoric times people had developed some kind of payments system. Prehistoric currency involved easily traded goods such as weapons, animal skins and salt. These traded goods served as medium of exchange and therefore were the early forms of “money” as we know today. Sometime around 1100 BC the Chinese moved from using actual tools as a medium of exchange or ‘money’ to replicas of the same tools made out of bronze. Ultimately, the most successful forms of money were gold and silver as these could be formed into coins with standard metal content, purity and weight. The Introduction Of Goldsmiths And Paper Money:








As gold and silver were cumbersome to store, carry and travel with, the general public needed a place to save their gold and silver, so they turned to local goldsmiths who issued certificates to the depositors as proof of their claim. Initially if you decided to buy a commodity you had to go to the goldsmith, withdraw your gold and silver and then purchase the commodity. Over time people started trading commodities in return for the goldsmith’s certificates rather than the actual metal itself and this was how paper money was introduced into the economy. As the certificates issued against gold deposits became more and more popular as a means of trade, people rarely withdrew the physical gold from the goldsmith’s vaults. Goldsmiths saw this as an opportunity to earn an extra income and lent out receipts against depositors gold, basically earning money by lending out against the assets of their depositors. These receipts created out of ‘thin air’ could be used to trade for commodities, but obviously gave the current holder or ‘creditor’ a right to the original depositors gold! As long as all the depositors and ‘creditors’ did not claim their deposits at the same time, also known as a bank run, the depositor’s gold was safe in the goldsmith’s vaults. However, once depositors realized that their wealth was being used by goldsmiths to earn money, they too demanded their rightful share of the interest income. The goldsmiths had a responsibility to keep the gold safe and in return they earned a spread equal to the interest rate charged to borrowers minus the interest rate paid to depositors. The Road To Modern Banking:This practice gave birth to the conventional system as we know it today, and is known as fractional reserve banking. This was introduced when goldsmiths started lending out more gold than had been left in their care.








The only potential problem that could arise as a consequence would be a bank run when too many depositors and creditors would lay a claim to their gold deposits at the same time. However, this would only occur if the general public lost confidence in their local goldsmith triggering a tidal wave response from investors. Fortunately or unfortunately, the system was robust and enabled local economies to grow stronger as it steadily contributed to the GDP in the form of an increase in consumption and investment. As this system expanded in volume, it gave rise to commercial expansion in Europe and eventually the Industrial Revolution. Once the importance of this institution was recognized, it was promptly regulated and legalised and the ‘goldsmith’ evolved into what we recognise as our ‘High Street bank’s. As a means to protect investors, ratio limits were set on the amount of gold that could be lent out artificially. To prevent against the disastrous consequences of the dreaded bank run, Central Banks of relevant economies provided backing and guaranteed a supply of emergency gold to the affected bank. The only weakness that was left exposed and perhaps impossible to provide a contingency plan for was when there would be a run on a large number of banks. Fractional Reserve Banking As A Tool:As explained above, the present day banking system revolves around ‘fractional reserve banking’, which allows banks to hold only a small percentage of deposits to be held as liquid assets. These are mainly in the form of cash and government securities. There are separate limits assigned for each of these asset categories and are set by the Central Bank of each economy and all commercial banks offering deposit services are required to follow these directives so that they are able to provide sufficient cash to depositors who wish to withdraw on their accounts.








These limits are more formally known as the fractional reserve ratio or simply the reserve ratio. This ratio is the key to controlling the monetary policy of an economy by directly manipulating the money supply. To put this in perspective is a tables which shows a number of countries and their recent reserve ratios.

Country Required Reserve (in %)

Australia None

Canada None

United States 0 - 10

Eurozone 1

Switzerland 2.5

United Kingdom 3.1

Poland 3.5

India 4.5

Turkey 8

Israel 9

Sri Lanka 8

Bulgaria 10

Costa Rica 15

Hong Kong 18

China 20.5

Lebanon 30








Consider a fall in the reserve ratio for example from 15% to 10%. This implies that a lower chunk of the deposits would have to be set aside for potential withdrawals or in other words banks can now reduce their cash reserves from 15% of total deposits to 10%. Therefore for each new deposit, money supply would increase by a further 5%. This would have an expansionary impact on the economy as a result of increased currency in circulation in the economy. Note that many countries, especially in the West set very low reserve ratios leaving banks more vulnerable to a bank run. The table below shows a few countries and how the reserve ratio has changed over the years. Required

reserve (in %)

Country 1968 1978 1988 1998

United Kingdom

20.5 15.9 5 3.1 (Average) Voluntary

Turkey 58.3 62.7 30.8 18

Germany 19 19.3 17.2 11.9

United States

12.3 10.1 8.5 10.3

Note that in many countries this ratio has been reducing over the years. This has put more currency into circulation, reducing its value, and leaving the banks more vulnerable to a bank run. Is this really a sign of sensible thinking?








This reserve ratio explains why, if you default on a mortgage and the bank ends up with your property, it is no use to them. They would rather get just 10 cents on the dollar for it, than have it sitting around a non-liquid asset, that cannot be instantly converted to another asset such as currency. Abolishment Of The Gold Standard:By the 20th Century, fractional reserve banking dominated the banking system as economies came under pressure to further their growth. While Central Banks are required to be independent from the government, both agencies saw printing money as a way to record inflated growth figures. This move particularly favoured the politicians as it deceived the public into believing that the economy was indeed growing. In fact, what the fractional reserve system effectively did was reduce the ratio of gold backing per unit of paper currency, reducing the value of the paper currency further. By 1944, apart from the US Dollar and Swiss Franc, all major currencies were off direct gold backing. With banks giving no rest to the currency ‘printing presses’, gold backing continued to shrink. This exponentially increased the risk of a bank run and exposed the vulnerability of banks in meeting their liabilities. When in 1944 the US Dollar became the global reserve currency, it was pegged to gold at $35 an ounce. This pseudo gold standard worked for most currencies as they were traded directly with the US dollar and a degree of exchange rate stability was required to be maintained. However, during the 1960s, the USA was printing many more dollars relative to the gold they had in their reserves. This was done primarily to finance the Vietnam War and their expensive welfare system. As word spread in the market that the US Dollars were basically just pieces of paper








without any worthwhile gold backing, immense pressure was exerted on the US government to buy back the Dollars in return for gold at the pegged rate of $35 an ounce. Eventually the US could not sustain this pressure and President Richard Nixon removed the dollar from the gold standard altogether on August 15th 1971. This had a significant global effect as any currency that traded against the US Dollar, was now also no longer effectively tied to gold. Introduction To Fiat Money:Fiat money is currency that has been declared by the government as legal tender. It has no intrinsic value as it is not backed by any reserves. Modern money is the liability of governments and there is nothing tangible behind it. The interesting question is that if fiat money is not convertible to anything tangible, then how is its value determined? Fiat money has no fixed value and the value for an individual fiat currency is determined by how it trades against other fiat currencies on international currency markets. The value tends to be high if the country has a tight money supply, is productive and has a high demand worldwide for its commodities produced by its domestic economy. Originally the idea behind moving to fiat money for most governments was to expand the economy. Print more money and increase the circulation of money within the economy to pay for infrastructure, weapons etc. There is a finite amount of gold in the world. With gold as money, such expansion would never have been possible because there would not have been the gold to pay for it.








But with modern money that can be endlessly issued, there was no such restriction. What stops the government from printing more and more money is the depleting value of its currency and inflationary pressures. Like most commodities, the idea of demand and supply also exists in the currency markets. As the supply of a currency rises, its value starts to fall – that is the purchasing power of that currency falls internationally. For an import oriented country, this could be extremely hazardous. Now the country would be paying more local currency just to get the same amount of goods they were previously getting. As demand for domestically produced goods and services, rises, inflationary pressure kicks in and their prices also increase. This is a real threat for economies since fiat money is not backed by anything tangible and therefore hyperinflation is a very real risk. Hyperinflation and would make the currency worthless. This means that every extra Pound, Dollar, Euro or Yen the government issues effectively devalues the value of Pound, Dollar, Euro or Yen in your wallet. Since 1971, debt has grown exponentially. Business and economic activity within the economy creates revenue but doesn’t create new money. New money is created only through new debt. This therefore means that to service already existing debt, you would have to issue more debt and then to service that debt you would need to issue some more debt. As debt rises, the cost of servicing the debt rises as well. Governments around the world are trying to keep the system going by encouraging excessive lending but frankly this just moves one step closer to the greatest financial disaster of all time.








It doesn’t hurt to emphasize again that the issuance of new debt weakens the currency with subsequent increases in inflationary pressures on the economy. As governments print their way out of debt, the characteristic of money as a store of value is depleted. A dollar today is worth far more than it will be worth tomorrow. This has enhanced the demand for gold as a store of value and the stage is set for the price and ultimately the value of gold to continue to rise.

Economic Crises And Their ImpactOverview Of The Sub-Prime Mortgage Crises:For the longest time, property has been considered a very safe investment. By 2005, sub-prime mortgages had been introduced all around the USA and had made it quite easy for people with extremely poor credit histories or those from low income backgrounds to afford a home. The demand for houses was high and property prices became superficially inflated. Typically, the bank uses its deposit base to issue mortgages to customers but this obviously restricts the number of mortgages the bank can sell out. The sub-prime mortgages model became really popular as banks would sell mortgages on the bond market and pay off bond holder from the money paid to them by the home buyer. This proved to be really profitable for the banks initially as they tried to increase their sales of sub-prime mortgages. What the banks failed to effectively communicate with home buyers was that unlike conventional mortgages, sub-prime mortgages were Adjustable Rate Mortgages (ARMs). According to this the interest rate on the mortgages remained fixed for the first 2 years, after which it became both higher and dependent on the Fed or the Federal Reserve, (US Central Bank), which incidentally also rose substantially during that period.








As mortgage payments began to rise, the sub-prime mortgage market collapsed as debtors didn’t have the resources to pay off their mortgages. This resulted in millions of people being evicted from their homes. As those homes entered the property market once again, real estate prices slumped thus eroding any confidence investors had in this asset class. Although the sub-prime mortgage crisis has significantly played out in the US, the equivalent catastrophe has to play out in other countries, where easy mortgages have led to over inflated house prices. The most significant of these, where the effects have only started to show, is the UK. Everyone ‘knows’ that property is unaffordable, but with government ‘help’, prices stubbornly remain highly inflated, particularly in the South East. This cannot, and will not, remain this way for ever. House prices will either collapse or the currency will. The latter is highly possible and the effect would be that prices appear to remain somewhere near their current levels. In reality the same amount of currency they are priced in will buy far less day to day goods and services. At this time, the collapse is being held at bay by the ultra low interest rates. As a consequence of all the ‘money printing’, rates cannot stay low for ever. Once they start to rise, many people will find themselves in financial ‘deep water’. The US crisis did not just affect the home buyer. Buyers of the sub-prime mortgage bonds also suffered since the value and marketability of these bonds depreciated to a large extent. Banks made significant losses through these debt obligations and struggled to pay off the bondholders as the mortgage payments from homeowners had all but dried up completely. This connection between the debt market and property crises further created doubts about the stability of the capital/financial markets.








Global Impact:Since the US is the biggest consumer market in the world, this had to have an impact on the global economy. Businesses were affected worldwide – layoffs peaked, reducing the investment and consumption propensity of the general public. The cause became the effect as lack of spending on consumption sparked off another depression in the global GDP. Investor sentiment was at an all time low as they were extremely cautious with their portfolios. While only the real estate market in the USA was directly affected, this naturally had a ripple effect on the global real estate market. As investors withdrew their investments from the financial markets simultaneously, bonds and stocks also failed to capture investors’ interests. Light At The End Of The Tunnel:Despite the waves crashing all around, gold on the other hand has quite a bullish ride. Prices of this precious metal are continually climbing and are expected to go higher. With financial instruments and property becoming unpopular investment vehicles, gold as an asset class has prospered. There is a saying that goes:

‘Allocate 10% of your portfolio to gold and wish it doesn’t go up.’

You ask why? Because the remaining 90% of the portfolio will probably come crashing down. When gold is bullish, it means there is something wrong in the remaining markets.

Why Is Gold The Answer? Let’s start by considering the alternatives... Since the sub-prime mortgage crises, property prices have slumped in many areas, and even where they remain high, they are no longer considered as safe an investment as they once were.








Most commodities are risky as they can be extremely profitable on one day and completely illiquid the next. As a result of uncertainty in the financial markets, corporate bonds even of blue chip companies are equally considered risky. Government bonds may be a safe investment but relatively low returns make them a pointless investment for the average investor. Many investors would prefer depositing their money in savings accounts in banks as opposed to buying government bonds. This is because a savings account ensures liquidity to an investor which he deems as more favourable despite the slightly higher returns sometimes offered by government securities. Very few investors are relying on government securities, not just because of the above-mentioned factors but also as a result of reduced confidence in the ability of governments to bail themselves out of a crisis. The current European crisis has been a result of governments maintaining huge debt levels and Greek bonds for example, are rated as ‘junk’ in the international market. Are government bonds really a safe investment? Governments will have to eventually pay them back...But, with what?...More debt? Savings accounts also have their disadvantages. First of all the value of currencies is being eroded by governments bringing more money into circulation. Secondly, traditionally strong currencies like UK’s Pound Sterling are either paying a very low return, or their economies are struggling with debt such as the US Dollar and European Euro. Interest rates have also been on a record low, so much so that the effective real interest rate is negative. This is because the rate of inflation is higher than the interest rate and the value of currency is eroding faster than can be compensated by earning the interest on a typical savings account.








In effect, it is better to spend your money today than ‘save it for a rainy day’. Thus the investor is worse off when he decides to hold cash in hand. Superficially low interest rates have encouraged investors to increase their consumption spending forcing prices of all commodities up and initiating another inflationary spiral. When given a choice, governments will always play down the real effects of inflation, and report the lowest number they can. In the case of the UK, for example, there are two main standards, the RPI or Retail Price Index, and the CPI or the Consumer Price Index. The way they are calculated leads to the CPI typically being lower than the RPI, so of course, this is the rate reported. These low figures allow governments to sustain interest rates at depressed levels. Look out for the latest inflation figures to be published, then have a think. Do they feel real? They may be quoted for example, at two or three percent. The average consumer ’knows’ that his essential bills have gone up 5 or 10 or even more percent in the last year! So this leads us to gold. With government debt being a major issue worldwide, gold seems to be a safer, and ultimately profitable investment. Unlike most capital assets such as bank savings and bonds, it does not depend on another’s ability to pay, and its value cannot be decreased by the latest round of Quantitative Easing, or ‘money printing’!

Financial DecisionsWhen making financial decisions, three main factors need to be considered: Risk, potential return and the individual’s liquidity requirements.








Let’s look at these for gold:

1. Risk – Gold is an excellent store of wealth. As long as you hold gold for the long term, in the current climate it is an unlikely scenario that you would sell the gold at a lower price relative to what you bought it. If you did, you would incur a loss, but your remaining investments would almost certainly have gone up.

2. Return – High capital returns with a bullish market still expected for gold.

3. The individual’s liquidity requirements (ease with which gold can be sold for cash) – The good thing about gold is that it is quite liquid so you could sell it quite easily if need be.

Money Vs Gold Vs CurrencyMoney has two major functions. It is a medium of exchange and it is a store of wealth. Currency is a brilliant medium of exchange and it has greatly helped the trading of goods and services. It does not require a double coincidence of wants as it is accepted by everyone, is easy to carry and is available in small denominations making day to day transactions easier. But currency as a store of wealth has been poor mainly because of an increased supply of this paper. In Zimbabwe, during 2008 the inflation level surged to 231,000,000%. People holding the money lacked confidence in it. What you could buy with a hundred Zimbabwean Dollars today may need five hundred the next month, and 25 hundred a month later. The problem is that currency has no firm basis to give it value. Gold on the other hand is not the most practical medium of exchange. A small gold coin could be worth hundreds of Dollars or Pounds or Euros and the risk of carrying it around would be unacceptable to most. But gold is an excellent store of wealth. Not only does it maintain its purchasing power but the value of the metal also stays intact overtime as it does not deteriorate








physically.

The Current Economic Situation And Why You Should Buy GoldIt is interesting to see gold as just another currency. In 2008, gold was outperformed by the Japanese Yen, but it beat every other currency. In 2009, it lost out to the Australian Dollar, but yet again performed ahead of other currencies. On average, the global money supply has been increased through tools such as Quantitative Easing, which involves government buying back its securities and injecting currency into the economy. All these actions have eroded the value of currencies and their function as a store of wealth. The current European crisis with banks in Spain, Greece, the UK and so on are struggling economically post recession. Coupled with the US debt crises, all are working towards another global crisis. In 2008-09 at the height of the financial crises, gold prices sky rocketed because of an exponential rise in demand. With the global economy still vulnerable to shocks, we are confident that gold will maintain its upward trend. The current economic scenario dictates that investors need to take an active role in managing their portfolios as passive portfolios might suffer due to constantly changing policies and conditions. With the European debt crises and things not looking too bright in the US or the UK, expansionary policies (further QE) are likely to be implemented, further depreciating the value of fiat money. In such an environment it would be prudent to invest in gold.

Gold Stocks Vs Actual GoldApart from physical bullion bars, portfolios can include gold stocks. As a rule of thumb, gold stocks tend to be more risky than actual gold itself as








the micro risk is also involved. Individual stocks can provide phenomenal returns, but as an asset class, physical gold has always recorded more reliable returns than gold stocks as a whole. Consequently, gold stocks cannot be used as substitutes for actual gold bars and coins in an investor’s portfolio. Gold stocks do not always behave in perfect correlation with actual gold – a crucial point to consider when constructing a portfolio. Gold stocks also tend to be cheaper than gold itself probably because it takes into account the inherent risk in gold stocks. Key Strategy: The key point is that if you are more risk averse and are looking to hedge against losses made on other assets then you are better off buying gold. If taking risks is your game and are looking to make big profits then you are better off buying gold stocks.

A Lesson From HistoryOne key factor for the success of mining companies, is that gold is mined in countries like Mexico and South Africa. Mining costs such as wages and other operating costs are paid in these currencies while the final product will be sold in US dollars. Even discounting any increase in the underlying value of the gold produced Gold Mining companies might still be making a profit at the same time as the US in suffering from a recession or even a depression. For reference, it is interesting to see how gold and other assets performed during and after the Great Depression in 1929. Gold stocks actually outperformed all other asset classes. Homestake was the biggest gold miner back then and it grew by 700% during the 1930s. The New York Stock Exchange index of gold miners more than doubled in








value from mid-1932 to the autumn of 1933. Of course, the stock market was also rallying between 1932 and 1936 which is why gold stocks were able to flourish. During a post recession contraction, governments try to fight deflation by increasing the currency supply within the economy. As currency supply is increased, the value of the currency falls. In such a situation, gold relative to currency acts as an excellent store of wealth. Having your assets stored in currency at such a time would considerably erode the value of your wealth. The current debt crisis is a result of governments not having enough money. As fiat money is just a guarantee from the government without any intrinsic value, the public are likely at some point in the future to lose faith in fiat money and flock towards gold. The prices of gold and anything gold related would then rise. Gold miners would likely make much higher profits.

So What Do You Buy?The point is to optimally diversify your portfolio by balancing risk and return. So in deciding what to buy we look into two major factors:

1. The individuals’ risk level2. The current size and state of their portfolio

Investors looking to hedge against losses on other assets tend to invest more in physical gold. High risk investors who are looking to earn profits tend to put more money in the ‘major’ gold stocks and junior mining stocks. Ideally you would want to include all three in your portfolio. The proportion of the three would again depend on your current portfolio risk profile and personal risk tolerance.








The point is to optimally diversify your portfolio by balancing risk and return. It is advised that you have at least 10% of your net worth in gold and silver, if not more. If you own quite a few tangible assets, where government and corporations are not liable to pay you, then you may not need as much gold. If your investments returns are not based primarily on financial markets or liability payments by vulnerable organisations, your portfolio might currently be quite stable. By diversifying your portfolio further by holding more gold and gold stocks, you could balance your portfolio optimally. Whereas, if you own a lot of paper based assets, namely currencies, stocks and bonds then it is very important that you own a significant amount of gold. This is because this portfolio combination currently is dependent on liability payments of organisations which are quite vulnerable. In light of these conditions, gold is seen as an extremely stable investment. We expect the bullish gold market to continue and suggest investment in gold and gold companies to take full advantage of the expected price rise. In the end, assess the aim of your investment. Is it a means to hedge or a means to make profits? Next gauge your risk level and evaluate the current state of your portfolio. Use those tools to divide your funds between actual gold, gold stocks and juniors. If you have very little currency to invest, aim to convert just 10% of this into gold bullion and coins. This will give you your basic ‘hedge’ against any future financial disaster. You should now have a good idea what action you need to take. But how do you ‘time the market’? The price of gold measured in various currencies is always going up and down, although as stated above, the








fundamental trend is upward. Do you want to go out tomorrow and put 10% of your assets in gold just to find the price pull straight back and leave you at an immediate ‘loss? We do not believe this would be a fundamental issue, as we believe the price of gold still has a very long way to go to the upside, but it would not be a good feeling emotionally or psychologically! Look out for the WPS Strategy, where we suggest what we believe is the best way to minimise this risk. As a reminder the WPS Strategy is your Bonus #1 when you purchased this report. Once you have your gold hedge in place, you can keep adding to it. After this, you only need to know when you should stop adding, and eventually when to sell! The way things are lining up, this could be as little as a few weeks, but is likely to be a few months or a couple of years. WPS membership give you access to the key information without you having to do anything! Your weekly update email, which can be read from the subject line alone, will give you warning when to take note and when to take action. Leave the analysis to all the experts we follow, whilst you get on with your life, knowing your safety net is in place. What if you only have a small portfolio, or even NO portfolio? WPS membership was designed for you too. Just be spreading the word, you can earn a passive income, which we would suggest you convert into gold! Remember, 3 month’s free membership to the WPS was your Bonus #2 when you purchased this report. A final thought for this report:








Gold is not the only precious metal you can use to hedge your portfolio. Silver comes a close second. In fact, historically more currencies have evolved around silver than they have around gold so it is a very respectable monetary metal. The potential gains in silver are far higher than those in gold. To learn more, take a look at WPS membership.

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