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Why Buy and Store Metals Offshore

Published September 13, 2011 | By Swiss Metal Assets
Storage Facility in Zurcher Freilager AG free zone in Switzerland

One of the most common questions I hear in the metals business is, “€œwhere do I store my metals?”. This question is often posed by a person, foundation or trust that is looking to secure their investments. Usually we hear about buyers of gold, silver, platinum and palladium who want to protect their assets but now there is a growing number of clients who are looking to diversify beyond the core metals we all know so well. How do we best protect our assets today with all the uncertainty? Here I will discuss why a portion of your metals should be stored offshore, and in what form works best.

What kinds of Metals can an Entity Store Offshore?
The metals people most often store outside of the country are gold and silver although experienced metals buyers might also buy platinum and palladium. Recently clients have been able to buy other rare industrial metals like tellurium, cobalt, molybdenum, hafnium, indium and tantalum. A few years ago the average investor would not have had the ability to buy some of these metals unless they owned a company that produced items which needed these rare industrial metals.

Why is it Wise to Store Offshore?
In the 1930′s during the Great Depression the US government confiscated all privately held gold. US citizens were not able to possess their own gold again until the 1970′s. Will we have a similar situation this time around with the world in its current state of transition? How is the US government planning on fixing this situation? Many countries are choosing inflation, currency devaluation, low interest rates and austerity measures. When these techniques fail to rein in the problems will governments turn to gold and their populations’ assets? One thing I know is that indium, cobalt, tantalum, tungsten and many of the other rare industrial metals and rare earth metals are on the critical metals list of the USA, EU, Japan, Korea and China. The question is whether rare earth metals and rare industrial metals will ever be deemed so crucial to economic and industrial applications that a country may decide to control the purchase of these metals. We see what China is doing with these metals and one must ask ones’€™ self, “€œCould these control measures spread to my country?”€.

The old saying, “€œdon’€™t put all your eggs in one basket”€, applies here. Clients commonly say, “€œI want to be able to touch my metals”€. This is great, and encouraged but the stress of knowing so much of your assets are under one roof can be too much to handle for the average person. The metals can possibly become a liability and risk to you and your family’€™s safety.

Why would I not take delivery of Rare Industrial Metals and Rare Earths?
Some clients may wish to take delivery of their metals. This can be done just like gold and silver but the big difference is that these metals are used in industry. When the client takes the metals to the broker they will ask for the metals to be assayed. This is the process of taking a sample and sending it to a lab to verify purity. Also when dealing with rare industrial metals the amounts can be quite large and take up a good deal of space. Some elements like hafnium are controlled because of its use in nuclear technologies and it cannot be transported internationally. The metals trader stores the metals for the client and upon request resells the metals.

How do I Store the Metals Offshore?
When researching where to store your metals make sure to do thorough due diligence. There are many options for the investor. The most common choice is a safety deposit box in a bank. Safety deposit boxes are the most widely recognized. They are great for small allocations of metals. Storing in your second home offshore is also a common choice. This is also good for the client who has a small allocation of metals. Offshore bank vaults are also an option but can be rather expensive. The best option for clients with medium to large amounts of metals is an offshore private vault or depository. The prices are reasonable and they offer unparalleled privacy. A good example would be the Zurcher Freilager AG free zone in Switzerland.

What about Taxes?
This is a complicated issue that needs to be addressed by a tax professional. Every country has its own tax rules which are far beyond my expertise. As far as the Zurcher Freilager AG is concerned, as long as the assets are sold within the free zone it is a tax free event.

What are you doing about securing your future? Every day we hear more and more about an unstable financial market, geo political uncertainty, governments overreaching and bad economies. Wouldn’t it be prudent to have your assets spread out across the world?

What is holding you back?

By: Randy Hilarski - The Rare Metals Guy
Source: http://www.buyrareearthmetalschinaprices.com

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Silver to outperform gold

Published February 8, 2011 | By Swiss Metal Assets

Eric Sprott believes that silver is likely to be the investment of the decade and could easily get to $50 per ounce by the end of the 2011. Eric Sprott is the founder of the Toronto-based investment firm, Sprott Asset Management LP. His renowned hedge fund, Sprott Hedge Fund LP, is heavily weighted in precious metals and has generated an estimated 23% annualized return over the past decade.

Silver promises to become the next big buzzword among investors in 2011 and beyond, according to one of the investment industry’s most prescient and successful experts on precious metals. “I think that silver could easily get to $50 this year,” Sprott tells BNWnews.ca.

Meanwhile, Sprott says the big catalyst for surging silver prices in the coming years will be exponentially increasing investment demand, which is already beginning to overwhelm existing silver supplies. The mining industry only produces around 800 tonnes of silver per annum. This is a relatively inelastic supply, regardless of silver prices, he adds.

As household investors are becoming increasingly jittery about the debasement of the U.S. dollar and other major currencies, they are loading up in record numbers on silver bars, coins and silver-denominated exchange traded funds, Sprott says.

However, there’s also a quantum shift in investment demand taking place among big players in the precious metals market, including India (which is aiming to increase its imports by about 77 million ounces per annum), and of course China.

“China’s net imports of silver were 112 million ounces last year. In 2005, they were net exporters of 100 million ounces,” he says. ”That’s a 200 million ounce shift in an 800 million ounce annual market that seldom ever grows because production hardly ever goes up. So where’s it all going to come from? We don’t know.”

In fact, silver promises to outshine gold over the coming years, Sprott says. “Silver is the poor man’s gold. Gold has had a great run for the past 11 years. But I absolutely believe that silver will outperform gold this year. Currently, there’s more investment dollars going into silver than into gold.”

Such a game-changing scenario should recalibrate the gold to silver pricing ratio in silver’s favor, thereby eventually restoring it to its traditional level of about 16 to 1, he says. “It’s the easiest call of all time.”

“Silver as a currency always traded in a ratio of around 16 to 1 compared to gold, when it was a currency in the U.S. and the U.K. The current ratio is 48 to 1. If we go back to a 16 to 1 ratio, the implied price for silver would be $85.62 (per ounce).” he adds.

“On that basis, if gold goes to $1,600, then that would value silver at $100. And we certainly think that gold is going to $1,600. In fact, I’m willing to bet that this ratio will overshoot on the downside. It might even get to 10 to one.”

The only reason why silver is still trading at a 48 to 1 ratio to bullion’s spot price is that its price is being “manipulated” by big banks, Sprott says. That’s because they don’t want precious metals to become a popular alternative currency to Fiat money (currencies that are not backed by hard assets).

“Then there’s also a huge short position out there on silver,” he adds.

But time is on silver’s side, he says, as the sovereignty debt crisis deepens in Europe and a continued policy of qquantitative easing in the U.S. continues to undermine the value of the greenback.

To read more click here

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Emerging Market Stocks Fall Second Day on China, India Inflation Concerns

Published January 6, 2011 | By Swiss Metal Assets

By Jason Webb and Saeromi Shin - Jan 6, 2011 9:52 AM PT

Emerging market stocks fell for a second day on concern that China and India may raise interest rates and Brazil’€™s real weakened as the central bank set reserve requirements for short positions in U.S. dollars.

The MSCI Emerging Markets Index traded 0.2 percent lower at 1,158.94 as of 8:57 a.m. in New York. Benchmark stock indexes in China and India fell at least 0.5 percent. Brazil’s Bovespa stock index fell 0.3 percent, and the real weakened 0.5 percent. Turkey’€™s ISE 100 National Index rose 0.5 percent after the government sold $1 billion of 30 year bonds at what the Ankara- based Treasury said was the lowest ever interest rate for that maturity.

Escalating inflation in China and India may prompt officials to curb expansion by lifting interest rates, slowing growth in emerging-market assets. China’s central bank Governor Zhou Xiaochuan said yesterday that inflation pressures in China were rising, in part due to monetary easing in the U.S. and other major economies. India may need to continue raising interest rates to combat price increases, the International Monetary Fund’€™s mission chief to the country said yesterday.

€œIt’€™s inevitable that we’€™ll see interest rates rise,€ Hugh Young, Singapore-based managing director of Aberdeen Asset Management Asia Ltd., said in an interview with Bloomberg Television today. €œIf currencies and interest rates remain where they are today inflation could easily turn into a nightmare.

The Federal Reserve announced plans on Nov. 3 to buy $600 billion of bonds, leading to concern that U.S. liquidity was pushing up inflation in countries such as China. The policy known as “quantitative easing€ is designed to stimulate the world’€™s biggest economy.

Jobless Claims

U.S. initial jobless claims rose to 409,000 in the week ended Jan. 1 from 388,000 the previous week, according to Labor Department figures. That was in line with the median forecast of economists surveyed by Bloomberg.

The real weakened for a third day. The new reserve requirement has a potential to reduce short positions in the dollar to $10 billion from $16.8 billion in December as banks seek to avoid paying reserve requirements on currency operations, Aldo Mendes, the central bank’s director of monetary policy told reporters in Brasilia.

The Shanghai Composite Index declined 0.5 percent.

Ping An fell more than 4 percent in Shanghai after Citic Securities Co. said China’€™s second-biggest insurer may need to raise as much as 40 billion yuan ($6 billion). Citic, the largest brokerage, said the fundraising may cut earnings per- share by up to 15 percent.

Market Speculation

Ping An spokesman Sheng Ruisheng said the insurer won’€™t comment on “market speculation€ and that it has “nothing to disclose.€ The company in October reported third-quarter profit dropped 26 percent due to greater reserves, missing analyst estimates.

India’€™s Bombay Stock Exchange Sensitive Index fell 0.6 percent after the IMF comments. State Bank of India, the nation’€™s largest lender, declined 2.7 percent.

Indonesia’s Jakarta Composite index lost 1.3 percent, the most in Asia, after the central bank kept borrowing costs unchanged yesterday for a 17th meeting.

Turkiye Garanti Bankasi AS, Turkey’€™s biggest bank by market capitalization, rose 0.5 percent in Istanbul. Akbank TAS, the second-largest bank, advanced 0.5 percent.

The Turkish government sold $1 billion in debt maturing Jan. 14, 2041 at a yield to investors of 6.25 percent, the Ankara-based Treasury said in a statement on its website today.

Fundamentals

The issue is reported to have been five times oversubscribed, a reflection of generally constructive investor perceptions of Turkey’€™s fundamentals and also prospects for ratings upgrades,€ Timothy Ash, head of emerging-market research at Royal Bank of Scotland Group Plc, said in a report.

South Africa’€™s rand weakened 0.9 percent against the dollar. The price of gold, which with platinum accounts for about a fifth of the country’€™s exports, fell for a fourth day in London.

The South Korean won rose 0.5 percent against the dollar.

The difference between the yields investors demand to hold emerging-market debt over U.S. Treasuries widened 1 basis point to 2.23 percentage points, according to the JPMorgan Chase & Co. EMBI+ index.

To contact the reporters on this story: Saeromi Shin in Seoul at [email protected]. Ian C. Sayson in Manila at [email protected]

To contact the editor responsible for this story: Reinie Booysen at [email protected]

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