Why you should Buy Precious Metals...now Taxes * Investments * Insurance 1
Edward G. Rizzotto, Owner 2
Why you should Buy Precious Metals...now Agenda: Precious Metal Asset Class Benefits to you Precious Metals How to get started today! 3
Gold and Silver...What comes to mind? What Makes Precious Metals Precious? Wealth Jewelry Money Beauty Security Beauty! Utility! Rarity! Durability! Portability! Inherent Value! 4
The Precious Metal Asset Class The Four Precious Metals: Gold (Au) Silver (Ag) Platinum (Pt) Palladium (Pd) 5
G O L D Gold Gold is the perfect money for the following reasons: Durability Gold does not rot, break, crumble, decay, corrode or tarnish, and it is unaffected by air, water and most acids. Divisibility Gold can be divided into smaller amounts, which allows investment at lower entry points. Consistency One ounce of pure gold is exactly the same as any other ounce, enabling worldwide trade and enhancing gold s liquidity. Demand Gold has a wide variety of uses and due to its relative scarcity, the supply of gold is limited and is likely to remain so. Gold Uses In addition to its reputation as a store of wealth, is used in many industries Electronics - Computers, Cellular phones, Telecommunications and Health care. 6
S i l v e r Silver Silver, the least expensive of the precious metals is primarily mined and produced in Mexico, Peru, the United States, Australia and Chile. History Silver has served as a medium of exchange, as early as 700 B.C. In 1792, silver assumed a key role in the United States monetary system when Congress based the currency on the silver dollar and fixed its relationship to gold. Today, silver is also an appealing precious metal investment option, and several countries issue silver bullion coins, among them the Unites States and Canada. Silver Uses Jewelry, Batteries, Photography, Bearings, Soldering, and many others. 7
P l a t i n u m Platinum Platinum is a sister metal to gold and silver and in 1751 was categorized as a precious metal. Platinum supply remains limited, with the majority of production occurring in South Africa and Russia. Early Use Platinum s discovery in Russia in 1822 eventually resulted in the government s decision to use it in the country s currency. The Russian government minted almost 500,000 oz. of platinum, and introduced the notion that platinum, like gold, could be a store of value. Modern Use The number and scope of platinum s industrial uses have skyrocketed during this century to include neurosurgical and dental apparatus, drugs for cancer treatment, computer and automotive equipment, and jewelry.. 8
P a l l a d i u m Palladium Palladium is a member of the platinum group of metals and is produced from the same ore. Uses include: Auto catalysts Automobile catalytic converters are the largest driver of palladium demand as palladium is useful in eliminating harmful emissions. Dentistry Palladium-based alloys are used in dentistry for dental crowns and bridges. Jewelry Palladium is used in jewelry primarily as an alloy with platinum to optimize its working characteristics and wear properties. Fuel Cells Palladium-based alloys are actively being researched for applications in fuel cell technology. Coinage Palladium is an attractive metal for producing coins, although Canada is the only country to mint palladium currency. 9
Basic Terms Fineness The purity of a precious metal measured in 1,000 parts of an alloy: a gold bar of.995 fineness contains 995 parts gold and 5 parts of another metal or 99.5% pure. The American Gold Eagle for example is.9167 fine, which means it is 91.67% gold. A Canadian Gold Maple Leaf has a fineness of.999, meaning that it is 99.9% pure. Troy Ounce The Troy ounce is the traditional unit weight for precious metals. Conversion: 1 Troy ounce = 31.1035 grams = 1.09711 conventional ounces. Spot Price The current price in the market for immediate delivery of physical precious metals. Premium The market value of a coin less the value of its metal content. Premiums are set by issuing authorities (e.g., U.S. Mint) and/or bullion dealers and vary by product. 10
The Basics Coins, Rounds, and Bars The basic difference between a coin and a round is that a coin is officially minted (US Gold American Eagle) and is legal tender, while a round is not legal tender and is usually privately minted. A bar on the other hand is a quantity of metal of any shape, usually rectangle, that is made by a bar producer meeting standard conditions of weight and purity. Larger bars are usually available at the lowest premiums over their metal value; smaller bars tend to cost more. There is a trade-off however, in that larger bars are not as flexible when it comes to selling. Allocated/Unallocated Storage An allocated account is an account where the investor owns the metal outright and actual coins/bars are set aside by the institution/depository in the investor s name. In an unallocated account, the investor has legal right to a certain amount of metal that s part of the institution s liquid reserves. The institution uses metal that you ve bought as part of its liquid reserve. 11
The Basics Hallmark A stamped impression on the surface of precious metal bars that identifies the producer and often includes the serial number, weight and purity of metal content. Numismatic The study of and collection of money in the form of coins and bars that are considered rare and coveted by collectors. Coins and bars with numismatic value will generally sell for significantly more than their metal per ounce spot price. 12
The Basics Offer/Bid The offer price is the price at which a dealer offers to sell a commodity. The bid price is the price at which a dealer will buy a commodity. The difference between an offer and a bid is called the spread. Assay The act of testing the purity of precious metals. 13
Ways to Purchase Precious Metals Precious Metal Vehicles Exchange Traded Products Includes ETFs (Exchange Traded Funds) and ETNs (Exchange Traded Notes) which are traded like shares on the major stock exchanges. Can include management expenses of 30-40bp+. Derivatives Include Forwards, Futures, and Options. Can offer leverage to the investor but can carry significant risk. Mutual Funds Invests in a range of companies from mining to refining. Diversified but can carry large management fee expenses. 14
Ways to Purchase...cont d Precious Metal Investment Vehicles Mining Stocks While often correlated to metals prices, mining shares are typically more volatile and influenced by a broader set of issues. These do not represent metal, but rather are shares in mining companies. Physical Precious Metals (Bullion Coins and Bars) Efficient way to gain access to precious metals No management fees, No accountants, No CEOs, CFOs, etc. Direct correlation to metal prices Tangible asset, not a piece of paper No counterparty risk 15
Why Buy Precious Metals Agenda: Precious metal asset class Benefits to you Presenting precious metals 16
Benefits to you Demand for precious metals is growing The major drivers of demand for precious metals are jewelry, industrial use, and investment. Global demand for gold in 2011 rose to 4,067.1 tonnes (t) worth an estimated US$205.5 billion - the first time that global demand has exceeded US$200 billion. You need advice People want advice from their advisor, agent and/or representative. They want to know how much to purchase, what metals to include, and want to make sure they are buying legitimate coins and bars. 17
Benefits to you Here are some FACTS: Flexibility Precious metals are liquid investments Everyday (24/7), they are bought and sold in dozens of markets throughout the world. Gold, Silver, Platinum, and Palladium in many forms can be held in an IRA. There are no minimum or maximum investment requirements so it is easy to build a precious metals portfolio. Asset Allocation Diversification is a key reason to include Precious Metals in an investment portfolio due to their low correlation to other asset classes. Appropriately weighted, the addition of precious metals can improve risk-adjusted returns. Unlike many other investments, Gold and the other precious metals have performed well during economic downturns and periods of financial uncertainty. 18
Benefits to you Cost Effective With physical metal ownership, there are no on-going management fees. There are several low-cost methods of holding and safeguarding metal. There is no tracking error with owning a physical commodity It s the real thing! Tangible Asset Physical precious metals can be touched, weighed and measured. There is a wide variety of bullion coins and bars offering investors an attractive way of investing in precious metals. Store of Value Physical Precious Metals are no one s liability. There is no credit risk with holding Precious Metals. They are the only universally accepted currency that cannot be debased by governments. 19
15 Year History * Diversification * Low Correlation to other asset classes * As a hedge against inflation. (protect your lifestyle) * As a hedge against a declining dollar (protect your nest egg) * Safe haven in times of geopolitical and financial market instability * As a store of value. 20
Precious Metals Agenda: Precious metal asset class Benefits to you Precious metals 21
Precious Metals Gold American Eagle 1 oz, 1/2 oz, 1/4 oz, 1/10 oz Silver American Eagle Gold Canadian Maple Leaf 1 oz, 1/2 oz, 1/4 oz, 1/10 oz Gold Krugerrand Silver Canadian Maple Leaf Silver Bars 1 oz, 10 oz, 100 oz, 1000 oz Platinum Coins & Bars Gold Bars 1 oz to 1 Kilo Palladium Coins & Bars 1 oz, 10 oz, 100 oz, 1000 oz 22
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Here s what you need to do now Call us today for an appointment: (727) 683-9119 Taxes * Investments * Insurance Physical precious metals are non-regulated products. Precious metals are speculative investments, which may experience short-term and long-term price volatility. The value of precious metals investments may fluctuate and may appreciate or decline, depending on market conditions. If sold in a declining market, the price you receive may be less than your original investment. Unlike bonds and stocks, precious metals do not make interest or dividend payments. Therefore, precious metals may not be suitable for investors who require current income. Precious metals are commodities that should be safely stored, which may impose additional costs on the investor. This presentation is not intended to give either tax or investment advice. Each client should consult his/her personal tax, investment, insurance and/or legal advisor to learn about any potential tax or other implications that may result from acting on a particular recommendation. Past performance is no guarantee of future results. This is not an offer, solicitation, or recommendation to purchase any product or service of any organization. 29