Friday, February 28, 2014

Some Surprising Insider "Goldbugs" Part I

Gold is one of the things we keep an eye on because it is one of the key indicators that major monetary system change might be coming. If the US dollar loses significant value it will do so as compared to the price of gold. A much higher gold price indicates the existing US dollar (Petrodollar) system may be on the way out. 

If lots of high net worth investors are buying physical gold, that is something that indicates they may be attempting to hedge against a possible coming dollar drop (currency reset?)

The mainstream financial press in the US mostly ignores gold or suggests it is of no importance in a modern monetary system. Brokers mostly steer clients away from gold because it is not a product that generates commissions. Gold held in actual physical form is usually just a long term store of wealth for those who hold it. They don't trade it much so there are no sales commissions. The mainstream view is "gold doesn't earn interest".

The pro gold community of course see great value in gold as a hedge instrument against the loss of purchasing power of any fiat currency over time. They point out for example that since the inception of the US FED in 1913, the US dollar has lost a lot of its purchasing power versus gold. 

For example, $1000 in cash in 1913 is still $1000 cash today. In 1913 at $20 per ounce, $1000 cash would buy 50 ounces of gold. Today 50 ounces of gold is worth $65,000 in cash.
So if you owned $1000 cash in 1913 and $1000 in gold in 1913, your gold would be worth 65 times more than your cash today. This happens slowly over time so people don't realize it.

This is the basic idea about gold preserving wealth over the long term. Of course, in any country where the currency suffers a sudden sharp devaluation, gold is one of the few ways the people can protect themselves. Extreme examples are overnight devaluations of currency.

We  are used to long time "Goldbugs" touting this benefit for gold. We are not surprised when people like Eric Sprott, James Turk, or Jim Sinclair advocate gold to protect wealth. Some people may not even be surprised when people like George Soros, John Paulson, Carlos Slim, and Donald Trump invest in gold. Those names might be surprising to people who do not follow the gold market, but most who do follow it know about their investments in gold.

What might surprise most people though (I know this surprised me) are some very high level connected insiders who are associated with a web site that helps high net worth investors invest in physical gold. These are not names I would have associated with gold in any way. Not only are these names endorsing gold on this web site, they say ONLY physical gold purchases should be done by these investors. This is pretty far from a mainstream view of gold you would expect from these people.

So what is this web site? Here is the link to the home page:

Now lets explore this site a little bit. Who is their management team?

Management Team bios     Lets list them:

Steven Feldman, Chief Executive Officer/Co-Founder - former partner at Goldman Sachs

Savneet Singh, President/Co-Founder - former Investment Banker at Morgan Stanley

Peter Custer, Chief Technology Officer  - former Wells Fargo, Lloyds of London, Bill Gates Foundation

Marc C. Scher, Chief Operating Officer - 18 years at Merrill Lynch

Brian Schappert, Head of Business Development - former NYMEX

That's quite a list of banking insiders I wouldn't expect to be selling physical gold.
In Part II of this article we will take a look at the Advisory Board for GBI for some even more surprising names. And we will look at how they promote gold to high net worth investors. It's nothing like we hear on CNBC for sure.

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