Physical Gold is not physical gold?

Many investors seem to be unaware that physical gold is by no means a conventional financial instrument. We believe that any investor wanting to invest in physical gold is well advised to understand its significance and to look into its historic background. In this respect, both the global economy and the financial markets are to be analysed before undertaking the first step onto the gold accumulation trading floor. If you are interested in knowing the truth about physical gold investments, please read on. Observing the changes the gold price has undergone over the past ten years, we notice that there has been a price rise year after year and that the gold price expressed in US Dollars has more than quadrupled on a nominal basis since 2001. No wonder Wall Street experts speak of a mania or even a gold bubble and claim that a massive devaluation is to be expected. However, they are ignoring the inherent value of gold. Many experts disregard the fact that gold is not a conventional investment vehicle but rather represents real money that is not underpinned by half-baked balance sheets. Furthermore, unlike paper money, gold can neither be counterfeited nor mechanically multiplied.

These essential features render gold an attractive store of value, taking the place of currencies such as EURO, US Dollar, or British Pound in times of financial and political crisis. Even if the gold price does not rise for the eleventh time in a row, there is no doubt that in the long run the gold price (or rather, gold value) will increase. It is likely that governments will soon restore their monetary systems and once more link paper money to a stable value such as gold in order to regain peoples trust in their financial policies.

Apart from the above-mentioned gold value, we advise you to take into account the following fundamental long-term success factors: As the above title indicates, we must be sure that when we buy physical gold it will be physically obtainable at all times. On the one hand, the term physical gold defines a commodity, and on the other hand, a property. Both conditions
SHARP Advisory Ltd. 168, St. Christopher Street | Valletta VLT 1467, MT-Malta | T +356 2122 8920 | F +356 2122 8921 www.sharpadvisory.com | info@sharpadvisory.com
SHARP Advisory Ltd. is regulated and licensed by the Malta Financial Services Authority (MFSA).

can exist concurrently; they are not mutually exclusive. This concurrency has become possible since 1996 when federal banks started to lend physical gold & silver holdings to Bullion Banks. In this way, precious metal holdings turned into interest-bearing assets. This deal proved to be lucrative even for banks dealing in precious metals, allowing them to refinance very cheaply, thanks to low lending fees and subsequent sales (profits from speculative sales.) Eventually, the gold price was brought down to USD 255.00 per ounce. In theory, gold redemptions to federal banks became cheaper but in actual fact, redemptions were never called in. However, since this procedure appeared to be lucrative for both parties involved, most federal banks started to lend their precious metal holdings to private banks. Experts estimate that the total amount of borrowed physical gold amounts to about 30,000 tons. Unfortunately, since private demand for gold and silver is clearly higher than the amount of gold procured from gold mines and recycling, it is practically impossible to cover this shortage. Hence, whoever buys physical gold via his bank has no guarantee for the physical delivery of this gold, unless the bank has made him such a guarantee, in which case a fee for physical gold holdings is normally charged. It therefore only makes sense for investors to purchase gold from an accredited gold bullion trader and store it at home, with all the inherent risks this involves. Alternatively, if investments are made in physical gold, investors must clarify under which conditions physical gold holdings will be delivered. In this case, a transparent price structure is a must, giving clear information about the purchase price as well as the annual running and administrative costs. Ultimately, investments in physical gold are only profitable if physical gold is held as a medium or long term investment, and considered as a form of reserve fund. A concept fulfilling all requirements stated above will be found on our website www.swissgoldplan.eu. We are confident that our offer stands the test of any physical gold investment products you may have been exposed to to date.

Kurt W. Kamber, Director

January 20, 2011

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SHARP Advisory Ltd. 168, St. Christopher Street | Valletta VLT 1467, MT-Malta | T +356 2122 8920 | F +356 2122 8921 www.sharpadvisory.com | info@sharpadvisory.com
SHARP Advisory Ltd. is regulated and licensed by the Malta Financial Services Authority (MFSA).