Gyroscopic Investing

If you were designing a gold storage option to appeal to Permanent Portfolio aficionados, what features would it have?  Where would it be located?  Tell me your Dream gold storage solution.  Everything on the wish list.

One thing I like about a safe deposit box is that nobody else knows what's in there.  It could just be important documents or keepsakes that I have in there.  My dream gold storage option would have the same feature but be in a different, stable country than the U.S.  In other words, it wouldn't just be for gold storage, but for storage of any type of valuables.  And I could either ship stuff there, or I could come in person to put stuff in or take it out.

I think that it's best to diversify your gold (and other) holdings, so you hedge your risk.  Have some physical, some in an ETF/close ended fund or two, some overseas, some in a safe deposit box, etc.

LC475 wrote: If you were designing a gold storage option to appeal to Permanent Portfolio aficionados, what features would it have?  Where would it be located?  Tell me your Dream gold storage solution.  Everything on the wish list.

Das Safe

Complete Anonymity.  Secure.  Easy Access from anywhere in Europe.  Not an outrageous flight from the USA.  Reasonable Prices.  Not a Financial Institution.  Easy buying and selling of widely traded gold coins at local banks.  Possible downside is that it must be administered in person.  I think that is an upside.

AdamA wrote: I think that it's best to diversify your gold (and other) holdings, so you hedge your risk.  Have some physical, some in an ETF/close ended fund or two, some overseas, some in a safe deposit box, etc.

Right, everything has some risk, you can't get rid of all risk.  But some things are more risky than others.  It seems universally accepted here that, for instance, gold ETFs are more risky than gold stored in allocated storage at the New Zealand Mint.

So what are all the different risks and how could one minimize them?  That would let us figure out: what would be the least-risky, most-safe storage solution.  Not that even then one would want to concentrate all his holdings there, even though it's the best, because there would still be some risk, and diversifying risk is generally wise.

So what about the Perth Mint as an option? And is a Perth Mint certificate as acceptable as allocated storage?

Australia is a stable and law-based nation, but if the Chinese ever stopped importing Ozzie raw materials, Australia would be in deep trouble. That is when desperate politicians would gaze upon the Perth Mint's vault with eyes thirsting for pillage of the "foreign plutocrats."

What about "global gold"?

Canadian cousins. I would pay them to use their safety deposit box. Only thing is, they're getting old.

LC475 wrote: If you were designing a gold storage option to appeal to Permanent Portfolio aficionados, what features would it have?  Where would it be located?  Tell me your Dream gold storage solution.  Everything on the wish list.

We cover this in our book very extensively. There is also a long thread about various options that you'll find interesting:

http://gyroscopicinvesting.com/forum/go ... sifcation/

goodasgold wrote: That is when desperate politicians would gaze upon the Perth Mint's vault with eyes thirsting for pillage of the "foreign plutocrats."

We hold around $3 billion, most of which is unallocated and tied up in our inventory, so can't be "gotten" without shutting us (and our refining of newly mined gold) down. $3b isn't going to help the govt at all, they will go for pension savings first IMO if they need money.

I don't trust the banks as far as I can throw them. As well, I can see the US making gold ownership illegal again, their balance sheet is bad news, "We're coming..after...you!"  On a serious note, does anyone have a list or link to where I can research if other countries have done gold confiscation?

I'd recommend CEF or other closed end funds, and get a share certificate to minimize brokerage bankruptcy risk, register the shares with a direct registration service.
I'd then keep some small denominations in a safe hiding place on your property.

Beyond those two I'm stuck, not sure where else to store it . Overseas storage is a huge leap of faith that I can't wrap my head around.  Maybe it works for others, but IMHO-  if you can't hold it, you don't own it , as they say? 

Cyclesguy wrote: I don't trust the banks as far as I can throw them. As well, I can see the US making gold ownership illegal again, their balance sheet is bad news, "We're coming..after...you!"  On a serious note, does anyone have a list or link to where I can research if other countries have done gold confiscation?

I'd recommend CEF or other closed end funds, and get a share certificate to minimize brokerage bankruptcy risk, register the shares with a direct registration service.
I'd then keep some small denominations in a safe hiding place on your property.

Beyond those two I'm stuck, not sure where else to store it . Overseas storage is a huge leap of faith that I can't wrap my head around.  Maybe it works for others, but IMHO-  if you can't hold it, you don't own it , as they say? 

Holding stock certificates in a foreign company (like CEF) is effectively overseas storage.

Libertarian666 wrote:
Holding stock certificates in a foreign company (like CEF) is effectively overseas storage.

Unless you're Canadian that is 

Cyclesguy wrote:

Libertarian666 wrote:
Holding stock certificates in a foreign company (like CEF) is effectively overseas storage.

Unless you're Canadian that is 

Good point.

bronsuchecki wrote:

goodasgold wrote: That is when desperate politicians would gaze upon the Perth Mint's vault with eyes thirsting for pillage of the "foreign plutocrats."

We hold around $3 billion, most of which is unallocated and tied up in our inventory, so can't be "gotten" without shutting us (and our refining of newly mined gold) down. $3b isn't going to help the govt at all, they will go for pension savings first IMO if they need money.

Wow, are you actually from the Perth Mint, Bron?  If so, it's an honor.

craigr wrote:

LC475 wrote: If you were designing a gold storage option to appeal to Permanent Portfolio aficionados, what features would it have?  Where would it be located?  Tell me your Dream gold storage solution.  Everything on the wish list.

We cover this in our book very extensively. There is also a long thread about various options that you'll find interesting:

http://gyroscopicinvesting.com/forum/go ... sifcation/

Yes, I read all about them in the book.  Thank you for writing it, by the way!  And I will check out that thread.

This is more asking for a wish list than actual existant options.  If I were thinking about starting a gold storage company to provide some kind of gold storage solution to believers in the PP, what would be especially valuable and useful to you all?

One possibility might be to partner or work in conjuction with the Perth Mint or New Zealand Mint to provide some kind of additional services or security.  What would people want?  Gold-backed debit card (would that even be possible)?  Easy shipping and receiving?  What?  Every option has downsides and upsides.  What could be added or done to eliminate downsides that the existing options may have?

LC475 wrote:Wow, are you actually from the Perth Mint, Bron?  If so, it's an honor.

Yep I'm for real, but I wouldn't call it an honor, just an average guy.

LC475 wrote:Gold-backed debit card (would that even be possible)?

Peter Schiff is already doing a gold backed debit card http://europacbank.com/our-products/met ... d-account/

bronsuchecki wrote:

LC475 wrote:Gold-backed debit card (would that even be possible)?

Peter Schiff is already doing a gold backed debit card http://europacbank.com/our-products/met ... d-account/

I wish that you could offer a tour to Australia for potential investors from the States. It would of course have to include the Perth Mint after stops in Hawaii, NZ, and Melbourne!

Reub wrote:

bronsuchecki wrote:

LC475 wrote:Gold-backed debit card (would that even be possible)?

Peter Schiff is already doing a gold backed debit card http://europacbank.com/our-products/met ... d-account/

I wish that you could offer a tour to Australia for potential investors from the States. It would of course have to include the Perth Mint after stops in Hawaii, NZ, and Melbourne!

Bron was nice enough to tour me around the mint when I visited during research for the book. The Perth mint is the real deal and they refine a good part of the world gold supply each year. I think they are a great way to do overseas storage and have the financial and political clout to protect their clients if needed against any kind of mass gold seizure attempts, etc. The mining industry is huge business in Western Australia where Perth is located and they aren't messing around in wanting to protect their reputation.

For folks in America, opening a bank account at a Canadian bank and storing gold in a safe deposit box there would seem to be an effective approach to geographic diversification. I noticed that in an earlier forum thread this option wasn't highly recommended, and it's not really discussed in Rowland & Lawson's book. Why not? It seems cheaper than the gold storage options in places like Australia, New Zealand, or Switzerland, and relatively easy to put into practice (just take a pleasant vacation north of the border). Am I missing something in terms of legality, safety, or some other factor? Thanks!

(Admins: I posted this message to start a new thread under the general PP heading, but then realized that was the wrong place. Please delete the other thread if possible. Sorry for the bad netiquette!)

You can open an account in Canada if you'd like. I'm not sure of the requirements now. Many foreign banks want nothing to do with Americans now and that likely includes Canada with the new FATCA rules. But I'm not fully up on the current situation.

The main reason we don't talk about it much for US persons in the book is because Canada is so close to the U.S. that they are heavily influenced by laws and demands of the U.S. government. In the event of a major financial emergency, I wouldn't be surprised to see Canadian banks comply with any U.S. request for assets.

For better or worse, the Canadian economy is tightly coupled to the U.S. and that makes it heavily influenced by what the U.S. wants. The further away you have your assets, the less likely that jurisdiction is to jump up and salute unreasonable requests from the U.S. government.

With that said, I see a *ton* of bad advice on foreign jurisdiction asset storage. I would much rather see someone put their foreign assets in Canada than some of the various corrupt third-world locales I see commonly advocated by various offshore "gurus" in their seminars.

My basic rule is this: Don't put money in places where you can't drink the water.

I also think that Transparency International's Corruption Index provides a handy guide on where not to put your money. Basically, the more corrupt a country, the less you should put there in terms of investment capital:

http://www.transparency.org/cpi2013/results

craigr wrote: You can open an account in Canada if you'd like. I'm not sure of the requirements now. Many foreign banks want nothing to do with Americans now and that likely includes Canada with the new FATCA rules. But I'm not fully up on the current situation.

I'll do some research on the topic and report back. My initial reading last night indicated that this is still feasible, but I didn't contact any Canadian banks directly.

craigr wrote: The main reason we don't talk about it much for US persons in the book is because Canada is so close to the U.S. that they are heavily influenced by laws and demands of the U.S. government. In the event of a major financial emergency, I wouldn't be surprised to see Canadian banks comply with any U.S. request for assets.

Well, as you know from your work on computer security, it all depends on the threat model. :-)  There are different kinds of financial emergencies, IMHO the increasing threat of cybersecurity attacks (which might make it difficult to access assets on a faraway continent), and of course localized issues like natural disasters.

craigr wrote: For better or worse, the Canadian economy is tightly coupled to the U.S. and that makes it heavily influenced by what the U.S. wants. The further away you have your assets, the less likely that jurisdiction is to jump up and salute unreasonable requests from the U.S. government.

I somewhat agree. However, it seems to me that physical proximity is not the only factor here. Australia, too, is a close ally of the U.S. government, and might be more likely to knuckle under than, say, New Zealand or Switzerland.

craigr wrote: With that said, I see a *ton* of bad advice on foreign jurisdiction asset storage. I would much rather see someone put their foreign assets in Canada than some of the various corrupt third-world locales I see commonly advocated by various offshore "gurus" in their seminars.

My basic rule is this: Don't put money in places where you can't drink the water.

I also think that Transparency International's Corruption Index provides a handy guide on where not to put your money. Basically, the more corrupt a country, the less you should put there in terms of investment capital:

http://www.transparency.org/cpi2013/results

I completely agree. Thanks for the link to transparency.org, too!

stpeter wrote:

craigr wrote: For better or worse, the Canadian economy is tightly coupled to the U.S. and that makes it heavily influenced by what the U.S. wants. The further away you have your assets, the less likely that jurisdiction is to jump up and salute unreasonable requests from the U.S. government.

I somewhat agree. However, it seems to me that physical proximity is not the only factor here. Australia, too, is a close ally of the U.S. government, and might be more likely to knuckle under than, say, New Zealand or Switzerland.

Just keep in mind that in places like Australia we are talking about the Perth Mint in terms of overseas storage. For the Australian government to order them to turn over/sell foreign assets would be a really huge deal. It would likely send the government of Western Australia (that owns Perth Mint) into full panic mode and would likely tie up any such request in a mountain of court filings. It would also be a huge political issue and the government of Western Australia (and their constituents) that rely heavily on the mining/gold sector would be really upset.

Same I suspect for countries like New Zealand, Switzerland, etc. They aren't going to go quietly into the night in terms of blanket repatriation orders from a foreign government.

And if you think about it, how would any of us react if we ran those organizations? Would we allow a foreign government to come in and demand we turn over customer assets in a blanket order? Would we allow this if we also knew it would essentially put the entire business we ran in jeopardy for all customers? Further to this, if the foreign government were acting in a particularly nasty way as we could see on the news (say something really tyrannical), would we want to drag our feet out of pure empathy for citizens of that country with assets stored with us?

I think it's important to remember that on the other side of these companies and banks are people that can see what is going on in the news just as much as we can. If they see something very strange going on why would they want to cooperate?

Lastly in terms of strategy, if there is a currency emergency realize that things move very quickly. For overseas allocation it may simply be enough to give you a 30 day reprieve as the currency or other financial emergency plays out. After that point a lot of damage could be avoided if you are eventually forced to repatriate assets. Or maybe you would have worked out another plan of action before then.

The main thing is you don't want to wake up some Monday morning and find that an executive order signed in the wee hours of the night has locked you (and all your friends and neighbors) out of your entire asset base. By having some assets overseas you can have options to respond during this kind of emergency situation that other people around you will not. And often just having options available nobody else has puts you well ahead in the game.

So given the above, Canada could be a fine option of course. Just realize that that something really bad happening in the U.S. is very likely to spill over to Canada. It's not that I think the Canadians are going to buckle, it's just that we should be realistic about their situation and past actions in terms of complying with U.S. influence and demands.

Thanks Craig. Because of the privacy requirements in our Act, we direct any request, official or unofficial, for information or metal from an account by someone who does not operate the account to our local courts to determine if the request is valid and authorise us to release the information or metal. As Craig says, this gives you some time to react, that is the main benefit. I doubt a blanket order would be accepted, the govt would have to indicate the individuals involved.

Even if a blanket order was accepted, we would have to establish which accounts are covered by it. We identify clients when an account is opened, but we do not determine nationality or residency. So there would be another delay while we worked out which type of persons were covered by the order and then which of our clients met those criteria, which would probably involved contacting them for further information. This will all take a long time.