What We Achieved
Our approach to the bank is; we are only drawing some of your paper money against our real gold. The bank was actually going to improve their worth by entering into this contract with us. We could see we brought value and security to the bank, and accordingly it was extremely cost effective to simply draw down an alternative money from one account, while holding twice that amount in another account at the same branch. USD from our dollar account was in deficit, to about half the monetary value of our gold account.
Any bank which struggled to understand this concept will probably not last very long in the complex world of global finance.
The next course of action was to invest the cash into something which gave a return, with minimal risk. This was when we realised the opportunity which naturally occurred to us. The option of what currency we wanted against our gold was presented to us. We could take any major global commodity currency against it, and then redeem the account with any other major global commodity currency. Gold is quoted every day in all the majors, and naturally pegs itself to the strongest.
Currency management made sense and if done correctly was the way to generate income. We had to find and engage a currency manager. We did not want FX (foreign exchange trading) and we did not want leveraged transactions. All we required was the movement of our money on a one to one basis, unleveraged around the 8 major global commodity currencies to generate income.
Sending our money off to a hedge fund or entering into a complex financial product was not what we wanted. We needed it only to be managed on a discretionary basis around the world’s most liquid currencies, in a strategic and professional way. The global currency market is driven by numerous factors and we realised now that the market place was perhaps even more predictable for the right organisation.
Currency values rise and fall relative to other nations fiat money, and in relation to that nations performance economically. This is normal and driven by fundamentals, such as employment statics, crop yields, domestic and export output performances in manufacturing, construction, natural resources, mining and any number of quantifiable and measurable factors.
There was however one major unpredictable factor that always weighed heavily on currency value, and could by many be considered a false value, and is perhaps now missing from the table. Government’s control or heavily influence their central banks, and they were once able to manipulate the value of their currency to suit their own agenda’s at home. With global growth teetering on the edge of the precipice for the last 8 years and central banks with rates at zero or less, they are no longer able to manipulate the market in the way they used to at the behest of their bosses.
An election looming would be a good reason to play around with interest rates, to make short term gains in domestic popularity. Unfortunately, with everyone’s economies so finely balanced, all the major currencies are facing the same issues and the primary objective of the central banks is now to stave off a disaster, and so makes them more predictable and requires them to be driven by the fundamentals, as opposed to the whims of governments.
The founders of GoldSafe found the right currency manager for them. The organisation is based in Switzerland and is a very private and well managed firm, with a demonstrable track record of unleveraged performance, operating a highly technical contrarian currency management system in only USD, GBP, CHF, EUR, JPY, AUD, NZD and CAD. The firm Mercury AG ticked every box for GoldSafe and more.
The calculator we show on the home page gives a representation of what we were able to achieve with our choice, based on average historical data and guidance notes are herein as to how the numbers are achieved:
Enter the amount you would like to invest in the ‘investment value’ box and choose the ‘term of investment’ in years.
Gold against USD has average 362% over the last 15 years*, so therefore the annual capital growth base calculation model uses 362% as the total capital growth over 15 years. This equates to an average annual growth figure of 9% p.a. when compounded to the original asset value.
Goldsafe suggest a maximum of 60% of capital asset to be allocated to the Swiss Asset management team for the income generation program. The twenty one year average income for the Swiss Asset Manager is 16.9%. This figure is then adjusted to represent the return on the entire capital, although the entire capital is not allocated to the program. The annual rental yield therefore is expected to achieve over 10% of capital value p.a.
The total profits made are calculated and displayed in the profit field. And is the sum of the compounded annual revenue from Switzerland added to the average annual capital gold growth compounded, year on year.
The total return is then added to the original capital to demonstrate the value of the investor’s total stake at the end of the chosen term and appears in the final box, Total Value.
Reinvestment of the annual revenue and adjustment of capital asset value, to increase the 60% included in the scheme is a discretionary choice for the investor. The Investment program income may be drawn quarterly as cash or gold.
Generate annual revenue from your gold while it accumulates in value – It really is that simple.
*Figures quoted are available for review at Gold Price.org