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Gold Price: USD 65,000/oz in 5 years? Speech by Torgny Persson
- 1. BOOTH 321 FREEDOMFEST LAS VEGAS 2017 Torgny Persson www.bullionstar.com
- 2. Money System of Today Singapore - #1 for Asset/Wealth Protection BullionStar – Offshore Bullion Protection 1 Gold Manipulation – Price of Gold2 3 4 © 2017 BullionStar Pte Ltd
- 3. What is Money? US Dollar is NOT Money! • Not Divisible • Not Durable • No Intrinsic Value Fiat money does not possess characteristics necessary for money © 2017 BullionStar Pte Ltd
- 4. What is Money? What is Money? Definition: Object that is accepted as payment Purpose of Money © 2017 BullionStar Pte Ltd 1. Medium of Exchange 2. Unit of Account 3. Store of Value
- 5. What is Money? Gold & Silver is Money! Definition: Object that is accepted as payment Characteristics of Money © 2017 BullionStar Pte Ltd 1. Durability 2. Possible to move 3. Divisible 4. Fungible 5. Intrinsic Value
- 6. What is Money? 92% of the US Dollar does NOT exist! 8% of Money: Bills & Coins 92% of Money: Electronic Fractional Reserve Banking Banks are creating money out of thin air when extending loans. © 2017 BullionStar Pte Ltd
- 7. Inflation Inflation: 99% Purchasing Power Lost in 100 years © 2017 BullionStar Pte Ltd
- 8. Price of Gold Where/How is the Price of Gold set? London OTC market: 88% of global volume Comex: 8% of global volume © 2017 BullionStar Pte Ltd
- 9. Price of Gold London Gold Market Unallocated Gold Trading = Paper Gold Gold created out of thin air as bookkeeping entries. Gold deposited to a bullion bank is leased out or sold – Bullion banks do not keep or segregate customer deposits of gold. Fractionally reserved similarly to the fractional reserve currency system. © 2017 BullionStar Pte Ltd
- 10. Volume LBMA Unallocated Gold Trading Average of about 6,000 tonnes traded each day in London! = 1,500,000 tonnes annually Compare against annual global gold mining: 3,200 tonnes 188% of the annual gold mining traded in one day! © 2017 BullionStar Pte Ltd
- 12. COMEX Gold Futures Only 1 in 2500 gold futures contracts delivered physically. 2499 in 2500 = 99.96% of the COMEX futures are cash-settled. 41x more gold is traded annually on COMEX than mined globally each year. © 2017 BullionStar Pte Ltd
- 13. Paper Gold Market sets the Price of Gold Leveraged and fractionally backed synthetic paper gold trading sets the price of gold. Physical gold market inherit the price = Physical gold priced inaccurately. International gold price is an artificial gold price – NOT based on physical supply & demand Paper markets keep the price of gold low because paper gold are created out of thin air. If the physical market would set the price, it would be much higher. © 2017 BullionStar Pte Ltd
- 14. Gold in the East Chinese/Asian Gold Rush Asians know that the fiat currency system is doomed Vaccuming the world for physical gold Huge flow of gold from West last 5 years Mentality of saving in gold rather than in paper assets © 2017 BullionStar Pte Ltd
- 15. Price Disconnect • Not enough physical gold mined to satisfy Asian demand • Bankrun on gold in slow motion When we run out of physical gold with widespread shortages appearing The price of physical gold will disconnect with the real price revaluing © 2017 BullionStar Pte Ltd
- 16. Price of Gold What is the Real Price of Gold? Total USD Money Supply: 18 Trillion US Treasury claims to hold: 8133 tons = USD 0.34 Trillion 50:1 US Dollars to US Gold Reserves For the US Money Supply to be backed by gold, it would require a gold price of $ 65,000 per troy ounce © 2017 BullionStar Pte Ltd
- 17. Singapore’s Story Singapore’s Story • Independent 52 years • Independent after being kicked out from Malaysia • No natural resources Today: • Center for wealth/asset preservation • Ranks #1 in the world for business friendliness • Stable government • No crime • Strong property ownership rights • Bastion for Free Trade © 2017 BullionStar Pte Ltd
- 18. Bullion in Singapore Bullion in Singapore • Singapore has no taxes on bullion • No reporting requirements when you buy/sell/store bullion. • Pro-Gold government creating a gold trading hub in Singapore • One of the safest countries in the world = Low insurance fees • Strong property ownership rights © 2017 BullionStar Pte Ltd
- 19. BullionStar Combining online convenience with physical accessibility © 2017 BullionStar Pte Ltd
- 20. BullionStar Buy & Store Bullion with BullionStar in Singapore • Easy to get started. Open account in 1 minute • No documentation requirements • Buy, sell or physically withdraw 24/7 • Full portfolio control online 1. Place order 2. Make payment (Bank transfer, Bitcoin, Cash, Cheque) 3. Full control online to sell or physically withdraw anytime © 2017 BullionStar Pte Ltd
- 21. BullionStar Vault Storage BullionStar Vault Storage • 5 Audit Methods • Full insurance protection • Allocated with direct legal title to the physical metal • Sell, physically audit or physically withdraw anytime • Competitive storage fees: Segregated/allocated physical gold bullion: 0.39 % p.a. © 2017 BullionStar Pte Ltd
- 22. Bullion Retail Shop & Vault Walk-in Bullion Center in Singapore • Accessible physical shop full of bullion on display • Transact on the spot. Cash transactions allowed • Vault integrated with the shop • Walk-in audits of physical bullion holdings allowed • Walk-in withdrawals of physical bullion holdings allowed © 2017 BullionStar Pte Ltd
- 23. Cash & Bullion Account Cash & Bullion Account Hold both bullion and cash funds on your BullionStar account • In Singapore, it’s allowed for us to hold funds for you on account without being regarded as a financial institution. • You can hold funds on account in USD, EURO and SGD. • Easier to trade in/out of physical bullion. Avoid fees. • Alternative to banks if you don’t trust the banks/banking system. © 2017 BullionStar Pte Ltd
- 24. Cash & Bullion Account BullionStar Bars Trade physical gold & silver bars without any spread between the buy and sell price! • Buy price = Sell price • The BullionStar gold bar weighs 100 gram, has a purity of 99.99% gold and is produced by the Swiss refiner Argor-Heraeus. Inscription “Money since 4000 B.C” on the bar. • The BullionStar silver bar weighs 1 kg, has a purity of 99.99% silver and is produced by the German refiner Heraeus. © 2017 BullionStar Pte Ltd
- 25. Summary BullionStar BullionStar Offshore Bullion Solutions • No taxes on bullion in Singapore. • No reporting requirements or ties to foreign governments • Full control online combined with physical shop • Easy to get started. 1 minute process. • Cash & Bullion on the same account • Allocated/segregated bullion – Physical metal only – No paper promises • BullionStar Gold & Silver Bars with No Spread • Audit, sell or withdraw your bullion anytime • Most competitive storage fees in the industry © 2017 BullionStar Pte Ltd
- 26. BOOTH 321 FREEDOMFEST LAS VEGAS 2017 Torgny Persson www.bullionstar.com
- 27. Bullion Why diversify internationally? • Exchange/capital controls • Taxation/Confiscation risks • Litigation • Currency collapse and bank runs • Bureaucracy • Reporting requirements • Government spying © 2017 BullionStar Pte Ltd
- 28. Singapore: Gold Friendly Environment Singapore Government’s booklet about Precious Metals “The Singapore Government is dedicated to making Singapore a precious metals trading hub” “Removal of tax to facilitate the development of IPM (Investment Precious Metals) refining and trading in Singapore” “Singapore is well-positioned to accommodate the growing demand for physical precious metals” “There’s no licensing requirements for import/export of gold” “Grow your Precious Metals Business in Asia Pacific with IE Singapore (gov. trade agency)” © 2017 BullionStar Pte Ltd
- 29. Why own gold? 1. Value retaining for 6000 years 2. Security and insurance 3. Resists Inflation 4. Fiat money systems are inherently fragile and fails while gold while gold is robus and will persist. 5. Gold is measured in weight – not through a number set by a politican or central bank. 6. Gold has been the most stable form of money through thousands of years. 7. Gold is always returning as money after failed episodes of fiat money. 8. Gold can not be controlled by governments. 9. Guld is valuable because of its metallic characteristics. 10. Unpayable debts lead to depreciation and destruction of fiat currency. 11. Gold can not go bankrupt, can not become insolvent, is not reliant on an agent, can not be stolen by deleting a number in a computer. © 2017 BullionStar Pte Ltd
- 30. Why own gold? 12. Physical gold does not have any leverage or time risk as opposed to paper gold. Paper gold can be annulled or worthless. 13. There’s vastly more paper gold in form of unallocated LBMA gold, futures, certificates etc. than there are physical gold. 14. Gold can be stored anonymously. 15. Gold can not be counterfeited as it can always be controlled. 16. Physical gold is free of counterparty risks. 17. Real money does not grow on trees. Paper money has no intrinsic value. Gold is money! © 2017 BullionStar Pte Ltd
- 31. Bullion Why own physical Gold? • NOT an investment. Gold is money & store of value. Holding gold = saving in the ultimate value preserving wealth class • Mitigates risk in investments • Fungible and anonymous • Not a financial product. Gold is a physical good that can be held outside the financial system • Gold is not dependent on central banks or governments. Gold is a hedge against the system. © 2017 BullionStar Pte Ltd
Editor's Notes
- What have I got here?It’s a 10 dollar note. Is this US Dollar bill money though?Let’s find out by doing an experiment. If a split a 10 dollar note into two about equally sized pieces, what to I get? Do I get two 5 dollar notes? Now, before I do this, someone may point out that destroying legal tender in the US is illegal. To them, I’d like to say that if freedom is outlawed only outlawys are free. And also, the law is unconstitutional. Therefore I will go ahead. Did I get two 5 dollar notes? No, I don’t. I get two worthless pieces of paper. This is significant because it shows that our currency of today is not money in the true sense.
- So that was an introduction to my speech today where I’m looking to cover the following topics The money system of today. How does it work? Do US Dollars have any value? Gold manipulation and the price of gold. How is the price of gold dictated and why is today’s price of gold artificially suppressed. Singapore – The very best country in the world for asset and wealth protection What we offer at Bullionstar in terms of offshore bullion protection.
- It shows us that the US Dollar is not divisible. I can’t split it and because if I do, it loses it’s value. It obviously shows that it’s not durable. And as I will have no use for half a ten dollar note and the value of it is neglible, it shows that the US Dollar has no intrinsic value.
- For something to naturally emerge as money, it needs to serve a few purposes. MoE: Intermediary b/w exchange of goods and services – Otherwise, we are back to a medival barter system. I cow. You have chickens. UoA: Standard measurement everyone understands. Frame of reference. Accounting - budgeting SoV: Think about this in terms of a shipwreck. You have a ship that sunk 100 years ago. There were 2 treasure chests on the ship. They had the same value when the ship sunk 100 years ago. X brings up one treasure-chest from the wreck and the Y brings up another treasure chest. X finds 13 dollars in his treasure chest. Y finds a 1 oz gold coin that today costs about 1300 dollars. What can we learn? Whereas the gold coin has kept and even increased its value, i.e. its purchasing power, the paper currency has lost 99% of its purchasing power in a mere 100 years. Something that cost 13 dollars 100 years ago today cost 1300 dollars i.e. 100 times more. This is what inflation does to unbacked money, money created out of thin air, money created electronically by central banks or banks. The monetary system we have today is nothing but legalized counterfeiting, it’s fraud. Buy small treasure chests Picture: shipwreck money – paper fiat – sad person. Gold – Happy person
- Contrary to the fiat paper currency, gold is the opposite. Gold has the characteristics of money. For something to work well as money, it needs to have the following characteristics. Durability: Gold does not corrode, oxidize, burn or can be deleted electronically. Fiat money can be destroyed. Most fiat money doesn’t even exist in the physical realm which I will get back to shortly. Possible to move: Both fiat and gold can be moved c) Divisible: When I just split 10 dollar note, did it become two 5 dollar notes? No, it became two worthless pieces of paper. Now, let’s do a new experiement. I have here a 1 gram gold bar. What happens if I split the 1 gram gold bar into two about equally sized pieces? I 2 gold bars of 0.5 grams which still maintains their value proportionally. d) Fungible: One unit = same as other unit. e) Intrinsic value: Valuable superior metallic characteristics. High density, soft, conductivty for electricty and heat but malleable i.e. can be streched out without breaking. Gold gets its value from the marketplace. Gold is money without government interference. Politicians don’t understand money. They always succum to printing money, trying to create something out of nothing. And what happens? We get debt bubbles, business cycles and savers are robbed of their fair value of production. Instead the early receivers of the newly printed money i.e. banks, CB’s, govt and special interests gain more wealth at the expense of normal people.
- When I tore the 10 dollar note before, I illustrated that our currency of today has no intrinsic value and isn’t even money in the true sense. But for 92% of our money, I couldn’t even have done that because only 8% of the money supply today consists of bills and coins. 92 % are electronic money that doesn’ even exist in the physical realm. Most money of today are created by commercial banks when they extend loans. About 92% of our money today is loaned into existence. Loan is an incorrect term – There’s nothing loaned – To loan somehting you need to have it first but when banks make loans, there’s no counter performance – The money is created when the loan is extended. This is called FRB
- How’s the track record for the FRB system with fiat currency? All fiat currencies become worthless over time. And we can see on the chart above that the US Dollar is well on its way to become worthless with the US Dollar having lost about 99% of its purchasing power in 100 years. Currency that is systematically debased which kills the poor and middle class through inflation and taxation.
- Now, let’s turn to the gold market. To understand the gold price, we have to understand the gold market and understand the difference between the paper gold market and the physical gold market. Let’s first look at market size because market prices are generally set by the trading venue that has the highest volume and liquidity. This is true also for the gold market where the two largest trading venues are the London OTC market making up 88% of global gold trading and the Comex futures market making up around 8% of total market volume.
- It may come as a surprise to many that the London market is much bigger than Comex so let’s take a look at the London market. The London market is a very opaque market, which is controlled by the LBMA, with access only to the bullion banks. What’s traded on the London market is what’s called unallocated gold which is the same thing as paper gold created out of thin air. You see, the bullion banks can create paper gold out of thin air very similarly to how the banks create money by extending loans. When someone deposits physical gold to a bullion bank, the bank doesn’t need to keep the gold but can lease it or sell it. The depositor is no longer the legal owner to the gold but instead a general creditor holding a claim. You thus lose ownership of your gold after you have deposited it to the bullion bank – just like you lose ownership to what used to be your cash after depositing it into a bank.
- So with the London Market hosting 88% of global gold trading, how much is actually traded on the market? Trading data is not published continously. It’s a secretive market but we know based on LBMA’s own surveys that it’s about 6000 tons per day. 6000 tons of gold is an absolutely massive amount of gold equal to 1,500,000 tonnes per year. This can be compared with gold mining where there’s 3,200 tonnes of gold mined each year. Almost double as much gold is traded in the LBMA system in a single day compared to what is mined globally during a whole year.
- How is this possible? Well, it’s not possible because there’s essentially no backing whatsoever for the paper gold trading. The reserves are miniscule. We know that there’s about 6,500 tons of gold vaulted in London. When we deduct the gold held by Bank of England (3,779 tons) and the gold held by ETF’s in London (1,679 tons), we are left with only 87 tons to back up the paper gold liabilities which is ridiculous. 87 tons to back up 6000 tons traded each day or 1,500,000 tons each year.
- Comex is the world’s largest futures market for gold. It’s well known that Comex only has a tiny fraction of physical gold backing up the trading. It’s also telling that only 1 in 2500 contract on COMEX actually goes to physical delivery. This paper gold trading is the actual opposite to the purpose for holding real physical gold because gold like this gold coins Exists only in finite quantities is intrinsically valuable because of its metallic characteristics resists inflation Cannot be controlled by governments Cannot be delted in a computer Cannot go bankrupt or become insolvent And has therefore kept its value for some 6000 years, longer and better than any other asset known to man.
- But the unfortunate spill-over effect from the paper gold market to the physical gold market is the gold price. The gold price is dictated by the paper markets i.e. the London Gold Market and COMEX, simply because these are the largest markets with the most liquidity despite that they are not trading real gold but imaginary paper gold. The physical gold market then inherits the price of gold from the paper market with the effect that physical gold is priced inaccurately in the sense that the price is not based on physical supply and demand.
- The question is – Are we screwed forever defrauded by the creation of all the paper gold putting pressure on the price of gold? Biggest threat to these unallocated paper markets are people taking physical delivery. We are nearing a shift which will fundamentally change the gold market. This shift is driven by the physical demand for gold is Asia generally and China particularly. China is no longer interested in buying US debt, they instead buy tangible assets (gold). Chinese understand gold stable savings asset – Understand USD as reserve currency unsustainable. The Chinese taking advantage when naive westerners are shunning physical gold. In fact, they are vaccuming the world for gold. The Asians don’t view gold: Investment vehicle – real wealth – savings safeguard inflation/currency destruction – Non-dependence on foreign gov/CB policy – Build a strong center. Chinese understand. Shift gold W to E = shift power. Gold = real wealth. 6000 years. Paper/credit/fiat assets destruct, always has, will again, gold maintains value. Debt/credit is not a suitable SoV for savings. Gold debt free. Gold is equity can’t artifically created. Significant trend which has strong geopolitical implications is the immense flow gold from the west to the east in the last 5 years. Annual gold mining is about 3,200 tonnes whereas the annual Chinese gold demand is about 2,000 tonnes. The Chinese are essentially buying as much gold as they can without breaking the back of the market.
- The Asian buying spree of physical gold means that gold production and gold recycling alone is not enough to satisfy demand but that stockpiles, particularly in London, are used to make up for the shortage. Can you see how this is a bankrun in slow motion. The bullion bank gold reserves are becoming depleted to the extent that there is looming shortage of physical gold. As westerners speculate and trade paper gold, Asian buyers accumulate real physical gold which puts pressure on the gold market. When there is no longer enough physical gold to deliver to the suppressed prices. When it becomes apparent that the paper markets does not have enough gold or barely has enough gold to deliver, holders of paper gold will begin withdrawing physical gold. With China and India together importing close to 20,000 tons of gold since 2001, the global stockpiles are diminishing quickly. When there are no longer any physical gold available at the paper market price, the paper gold markets crash and physical gold is revalued while paper gold becomes worthless.
- We already know that gold has been the ultimate money and store of value throughout history. So what is the value of gold in relation to the value of the US Dollar today? The total amount of US Dollars in circulation is 18 trillion. These dollars can’t be redeemed into physical gold because there wouldn’t be enough. At 1300 dollars per ounce, the US gold reserves at best covers about 2% of the money supply. If we were to go back to a gold standard with full backing, gold would have to increase about 50 times in value to back the outstanding amount of USD currency in circulation today which would be equivalent to a price of USD 65,000 per oz. Even at a 40% backing, a backing which was historically in place in the US monetary system, this would imply a gold price of USD 27,500 per ounce. This is how much the US Dollar and other currencies for that sake has eroded. The US Dollar that was supposed to be the premier gold backed currency of the world no longer has any real value. How can we as westerners protect against the policies of intrusive governments debasing our money?
- Let’s look at Singapore which is unique in this context. New Switzerland - Equity for asset preservation is moving from Switzerland to Singapore Singapore has an extremely business friendly government and is the world’s most business friendly country. Neutral from West and from China. Good diplomats. Too big financial center, trading hub and port to be listed on any grey/black lists because of low taxes and financial protection. Extremely business friendly gov. Targets productivity increases and innovation actively -- Realise private sector the backbone & engine of economy.
- Assume – Hold/want to buy gold - Where buy, how hold? Some own possession - Hide it Rest Diversify risks. Like diversify holding other assets - spread storage gold Singapore is the best country in the world for precious metals. That’s the reason why I set up Bullionstar in Singapore 5 years ago. No taxes – No capital gains tax, no sales tax, no import/export taxes/tariffs, no death tax. No reporting requirements. BullionStar is not regarded as a financial institution as thus not covered by FATCA. Full confidentiality. We don’t need to report your holdings to the US or to anyone else. Imagine if the US government said that it would aim to create a global hub for gold trading/transit and storage. Government agencies will focus on assiting bullion dealers to set up in the US with as little red tape as possible. Not particularly likely right, but this is how it is in Singapore! Singapore is extremely safe. Walk in to our shop with cash, buy bullion, carry it with you without any safety issue whatsoever. Safety = low insurance premiums
- We offer an extremely user-friendly online platform for buying/selling and storing physical bullion BUT we don’t hide online. We run our own bullion center in SG with a bullion retail store and vault in central SG.
- SG is far away though and there’s no need to visit us. In fact, it’s very easy to deal with us online.. Everyone says it’s easy but then they give you seven steps. Not us. Signing up is a one page process with no documentation required. You can literally place an order with us in one minute! We offer you to store bullion with us in Singapore at our vault. You then have full control via the online interface to handle your physical bullion. With us you buy specific products.
- Let’s say you buy a 1 oz gold bar. When you have settled your order, we take pictures of your actual gold bar and upload to your account. If you then withdraw your bullion physically, this is the gold bar you get. It’s you bar and it’s fully allocated and segregated. We make everything transparent for you as customer but fonfidential for anyone else Employing 5 audit schemes. - 3rd party audits by LBMA-approved auditor - You can walk in and audit or withdraw your physical bullion anytime in the shop and we can also ship to you in the US. - LAR: You can anonymously audit all bullion held in the vault online through Live Audit Report. Safest country in world – full replacement insurance coverage. Policy by largest specie insurer world: XL insurance Publish everything online: 3rd party audit document downloaded, the LAR can be done online. Attractive storage fees
- We don’t hide online. Storefront walk in bullion retail shop in Singapore. Although you can handle everything online, you can be reassured knowing that you can walk into our shop and take physical delivery or physically audit your metals at any time. You don’t even have to notify us beforehand. As our vault is integrated in the same venue as our shop, it’s truly a one-stop-shop for everything precious metals.
- Thinking about opening a bank account offshore? With a BullionStar account, you can hold both cash and bullion on your account. You can hold USD on account with us and we’re not regarded as a financial institution. This is what’s called a stored value facility, in a legal sense it’s the same as keeping funds on a paypal account. We don’t operate under the FRB system so it’s much safer to keep funds on account with us than banks.
- To summarize: With BullionStar, you can hold physical bullion and cash on the same account. You have full control of your portfolio online 24/7 but always have the possibility to visit our bullion retail store and vault in Singapore where you can physically withdraw or audit your metal (and cash). We can of course also ship your metal to the US. There’s no red tape. It’s easy to open an account with no documents required – 1 minute process – much easier than to open an email account or book a flight ticket. We deal with physical metal only, no paper shenanigans. We upload pictures of your specific bullion to your account. We don’t report anything to anyone. With us your bullion portfolio is your private business like it should be.
- It’s time for us to free ourselves financially. Visit us at booth 321 or grab me or one of my colleagues in the gold suits to discuss further. Thank you.