Physical Gold in Pensions

1. Physical Gold in Pensions Declan Cosgrove ACII GoldMadeSimple.com Ltd

2. Physical Gold • Why such interest in gold? • Different types of gold • Risks of physical vs ETFs / gold grams • SIPP / SSAS controls • Storage considerations and costs • The buying process

3. Question? - Ask the Audience What % of investments handled by your organisation, are in gold? • Zero • Under 1% • 1-2% • Over 5% • I have absolutely no ideaI would love to answer but can’t resist going for the highest number!

4. What is the Queen doing? • Cazenove Capital Management is thestock broker to the Queen • Robin Griffiths Private Wealth Strategisthas 44 years investment experience • He is regarded as one of the besttechnical analysts in the world “Not owning gold is a form of insanity” R.Griffiths - Cazenove

5. Not owning gold and your mental health

6. Robin Griffiths’ ultimate target for gold? “ If you adjust the old all-time high in gold...if you use the RPI, you come up with a figure near $8,500 as the genuine price for gold, the old all-time high adjusted for inflation. I think we have to own it. Obviously it won’t go there in a straight line, it gets a little overbought and has setbacks... ” R.Griffiths July 27th 2011

7. PIMCO and gold • PIMCO are the largest private investors of bond on the planet • PIMCO has $1.4 TRILLION assets under management • In March 2012 Gross said the following after being askedabout if investors should buy gold: “I think so [buy gold], but in terms of what percentage you should own I think that’s delicate in terms of risk for each individual portfolio. But I think that it has a place [buying gold] in a mildly inflation world… then gold has a protective insurance element that every investor should at least look towards.”

8. 1999-Today Gold Bull Market Gold 1999 -Today • Bull Market 13 years • Price in 1999 around £170 • Price today around £1000 • That’s an increase of approx 600% • Gold has increased on average around 17% each and every year of the bull market

9. 1966-1983 Gold Bull Market Gold 1966 -1983 • Bull Market lasted 17 years • Price went from £12.5 to £280 • That’s an increase of 2250%

10. Comparing the % rise of both bull markets Gold 1966 -1983 • In terms of % rise, the red dot is where the current bull market is compared to the ’66-’83 vintage • Factors underlying the bull market are greater this time round (eg quantitative easing, sovereign debt, banking crisis) • Current bull market expected to at least match if not betters the previous gold bull run 600% rise from £12.50

11. Gold vs Cash • Since 1900 sterling’s buying power hasdecreased by 98.5%Gold has risen 27,400%(House of Commons Report) • Since 2001 sterling’s buying power hasdecreased by over 20%Gold has risen over 300%

12. Different types of gold • Two types ‘Paper’ gold - ETFs, options, futures, mining shares, certificates .... Physical gold - coins, bars, gold grams • Pension Approved Physical Gold Gold bullion LBMA bars in storage • Segregated gold in storage • ETFs • Gold Grams in storage • Capital Gains Tax Free Gold (CG78308) • Sovereign coins (after 1837) • Britannia coins

13. Risks of Physical vs ETF & Gold Grams • Highest Risk - ETFs • Higher counterparty risk - value depends on viability of ETF provider • You are NOT buying physical gold - only exposure to the gold price • No access to or control over physical gold • Medium Risk - Gold Grams • Medium counterparty risk - value is affected by viability of GG provider • No access to or control over physical gold • Restricted to selling gold back via the GG provider • Lowest Risk - Segregated Gold • No counterparty risk - directly own individual bars • Absolute control over physical gold & storage provider • Able to sell gold to anyone

14. Risks of ETFs • Insolvency / Insurance / Access to the investment • “Gold ... will not be segregated from the Custodian’s assets. If the Custodian becomes insolvent, its assets may not be adequate to satisfy a claim by the Trust or any Authorized Participant. In addition..... there may be a delay and costs incurred in identifying the gold ....”(GLD prospectus) • “The Custodian may not maintain adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust’s gold which is not covered by insurance and for which no person is liable in damages.”(GLD prospectus)

15. Pension funds already buying gold • The University of Texas Investment Management Co • Second-largest U.S. academic endowment fund • Fund worth $20bn • In 2011 bought £1bn in physical, delivered gold. NOT ETFs

16. SIPP / SSAS Controls • ‘Investment’approved gold (not silver or coins) • LBMA Storage (not delivery) • Funds only returned to the approved bank account • Approved administrator access • Full record of transactions

17. Storage Considerations and Costs • LBMA approved storage (only 5 in UK) • Via Mat - Europe’s largest independent bullion vault • Central bank level security • Independent of bullion merchant or banks • Storage & ins. costs 0.36% gold value p.a. (ETF typically 0.4%) • Gold purchase costs approx. 1 to 2% (similar to ETFs)

18. The Buying Process Sign Trustee Form - authorises administrator and bank account Register Account online - view live prices and account details Prefund account - bank transfer Place order online - order and bar serial numbers confirmed Sell Gold - view live sell prices / request funds withdrawal

19. Question? - Ask the Audience What % of investments do you think SHOULD be invested in gold? • Zero • Under 1% • 1-2% • Over 5% • I have absolutely no idea • What’s for lunch?

20. More Resources • Info on gold: www.gold.org • ETF Risk Report: email declan@GoldMadeSimple.com • Live gold prices: www.goldmadesimple.com • Analysis and forecasts: www.GoldMadeSimpleNews.com • Trustee Form:www.goldmadesimple.com/gold-sipp-pension • CGT exempt info:www.hmrc.gov.uk/manuals/cgmanual/cg78308.htmandwww.hmrc.gov.uk/manuals/cgmanual/CG12602.htm