May 12, 2020

How Physical Gold will Protect your assets from economic crises!

Banker J.P. Morgan once said that “gold is money and everything else is credit.”  It is very close to truth! We recommend that you consider the opportunity to purchase physical gold (and other precious metals like silver, platinum and palladium) thus acquiring the most secure insurance against possible future crises.

Gold vs fiat currencies

Most national governments in the world print their own money. Paper money is sometimes referred to as ‘fiat currency’ – where ‘fiat’ comes from the word for ‘order’ or ‘promise’ in Latin. What does the name ‘fiat currency’ suggest to you? To me, it suggests that the national government that issues the banknotes promises that they shall have certain values and every note can be exchanged for a certain amount of goods or services.

Now, a promise is not a cast-iron guarantee, and even if it were, would you trust a guarantee from the government? If the government that issues the banknotes fails, the national currency will fail as well. WE all know there are numerous examples of hyperinflation in recent history when the banknotes became worthless pieces of paper within a few days.

Inflation can have diverse causes: from political instability to economic underperformance, to military conflicts to acts of God. At the same time, it is generally believed that low inflation is an indicator of a prospering economy. If prices rise slowly, it shows that the demand for goods and services is growing and thus the economy is on the rise. Thus, low inflation is a ‘natural’ and a ‘beneficial’ phenomenon in the macroeconomists’ opinion. Hmm. 

Besides, export-oriented countries (Switzerland for example) do not want their national currencies to be too strong. When they are, the cost of production gets higher and the return on the chocolates and watches is lower. For this reason, governments of these countries try to manipulate the national currency exchange rates and bring them down. Why? In order to increase the ‘real’ profits from the goods and services that the country sells abroad.

These macroeconomic beliefs and strategic manipulations lead in the longer term to the permanent decrease of the worth of all national currencies in the world. At the beginning of the 20th century, 1 US dollar, for example, was worth about 30.5 times more than it is worth today. The British pound has been doing even worse: it is worth about 120 times less now that it was around 1900 in terms of purchasing power.

You will often hear that you should put your savings into different currencies. In this way, the rise in the worth of one currency will compensate for the fall in the worth of another one. The matter is that it is hard to predict what is going to happen in the modern world and how it can affect the forex rates.

For example, some five years ago, few people would have thought that Great Britain might want to leave the European Union. Now it has and when the Brexit initiative was launched, the pound sterling fell considerably. Its exchange rates have been growing slowly since that time in relation to the euro and US dollar but the pound has not regained the purchasing power that it had prior to Brexit anyway.

Besides, the trade war between the United States and China apparently continues. The recent news has it that the Chinese authorities are thinking of selling the US state debt and if they do, the dollar is going to be worth much less than it is now. Again, it is difficult to say how much less. This shows that the so-called ‘hard currencies’ are not as hard as they would like to appear.

Gold, however, is a universal currency. When you have a few bars of gold, you do not worry how much this or that national fiat currency is worth. You know that you can sell your gold if such need arises and you can sell it in exchange for the currency of your choice.

Even though historically the price of gold has been generally growing, we do not recommend buying gold for investment purposes. First and foremost, we advise that you put part of your assets into gold for the sake of acquiring insurance against the hard times that may well come in the future.

Gold after Covid-19

After coronavirus, national economies will begin to pick up and within a year or two, things will be back to normal. At least, this is what many people would like to believe!

However, what will it take to bring national economies back to the levels they enjoyed before the pandemic broke out? It doesn’t take a genius to figure that out: it will take printing more fiat money!

Many national governments such as the USA, for instance, are currently giving money away in order to support the people who have lost their jobs due to the pandemic. Isn’t it obvious that ‘free money’ is going to come at a cost? And it is as obvious that a larger amount of paper dollars, euros, pounds, francs, etc. will mean lower ‘real’ worth for every currency.

The coronavirus pandemic will come to an end one day but smarter doctors warn that it may well have long-lasting health effects. The self-isolation requirements make people stay away from public places – including hospitals. But, besides the coronavirus, there are numerous other diseases that a large number of people suffer from. These people are suffering because they have to stay home. In particular, experts warn that the quarantine will have a serious negative impact on the fight against TB. In the near future, we may see the same number of TB cases that there were some in bygone times.

Generally speaking, it is reasonable to expect that the world is not going to be the same after the pandemic ends. We must prepare for new challenges. We cannot predict how tough these challenges are going to be. If you can afford it, it would be precious indeed to have some reliable insurance against the highly probable problems that the future is going to bring. Physical gold will provide, without any doubt, such a Plan B.

Where should you keep the gold that you buy? Clearly, putting it under your bed is asking for trouble! At the same time, it would certainly be a good idea to have a few gold coins locked up in a safe that is close at hand. If you do, you will have easy access to some sure money whatever happens to your national currency.

At the same time, it would not be a good idea to keep all your gold in the safe or even in the country where you live. Should a political crisis break out at home, you may want to flee to another country as soon as you can. In this case, it would be a blessing indeed to have a few gold bars stored in a bank vault or in a special depository that is located in a safer country. We have repeatedly tried to show that diversifying your assets geographically is as important as having a diverse share portfolio.

Gold can be freely transported across national borders. But if you carry a hundred ounces of it on you, you risk being robbed should anyone spill the beans. Thus, you should find a place abroad where you can keep your gold bars or coins. We will be happy to help you find such a place that is perfectly safe and easily accessible at the same time. Please write to us to [email protected] and we will make several suggestions to you.


FAQ:  How Can I Buy Gold bullion bars and coins?

Gold is the most popular metal with jewellers – but jewellery is not what you are after when you want to own some gold for ‘Plan B’ purposes. Investment gold comes in bars and coins. Bars, in their turn, come in ounces or grams. You can purchase five-ounce, ten-ounce, hundred-gram or thousand-gram gold bars and put them into a depository. Each gold bar carries the indication of its weight and official impressions made by the refinery that produced it.

A number of national states mint gold bullion coins as well. These include the United States, South Africa, Canada, Australia, and China and the coins minted in each country carry its national symbol. The US and South African coins (Krugerands) have approximately 91.7% purity while the coins produced in other countries (for example the Philharmonics from Austria) are 99.999% pure gold. Same as is the story with gold bars, you can purchase more gold for a given sum of money if you opt for large coins rather than small ones. 

It goes without saying… When buying gold as insurance against possible future mishaps, please contact only reputable precious metal dealers! We recommend that you should not buy gold from a dealer who does not offer a buyback option. We also suggest that you keep away from numismatic coins unless this is your hobby. Numismatic coins cost a lot more because the value of their historical significance has to be added to the value of gold.

How much gold should you buy?

You may consider purchasing gold now with the intention to sell it at a profit after some time. While gold cost somewhere between US$ 200 and US$ 400 per ounce in the period from 1989 to 2001, it costs about US$ 1,800 per ounce now with nearly US$2,000 being the highest price in history.


What is a better investment? Stocks or Gold?

Most analysts agree that in terms of appreciation, equity markets generally do better than the gold market. In other words, you can make higher profits buying and selling stock rather than gold. Thus, speculative investment into gold is not what we are urging you to consider.

Instead, we suggest that you buy gold in order to feel safe and well protected against whatever might happen in this unstable world. Buy gold, put in a safe place such as a bank vault or a gold depository, and never sell it. Sleep well every night! Well, of course, unless there arises a dire need for that at some time 🙂


What portion of your assets should you put in GOld or precious metals?

How large should your ‘core assets’ be? Of course, everyone will have his or her own answer to this question. Experts’ opinions on this matter also vary as some of them say that 1% of your total net worth is enough for this purpose while “gold bugs” recommend that you lay aside up to 50% or 100% of your savings in physical gold.

Before you can decide how much cash you are prepared to convert to gold, you have to make up your mind about some issues that can hardly be expressed in numbers:

  • How worried are you about possible political instability in your home country?
  • How much do you trust your national government?
  • What do you expect to happen with the world economy after we are through with the present crisis?
  • How much risk are you prepared to take when making or not making a certain type of investment?
  • What is your preferred investment timeline and how flexible can you be about it?

Depending on the answers to these difficult questions, you can decide how much gold you should buy. We believe that it would be wise to put about 25% of your total net worth into gold but we fully realize that this figure is quite arbitrary and every person has to come up with his or her own estimate.

In any case, having insurance as secure as a few gold bars is paramount in the modern world. The present day shows exceptionally well that we do not know what the future has in store for us. Anything can happen. Any national currency can lose its value overnight. The government of any state can theoretically go bankrupt and want to confiscate its wealthier residents’ money. You must protect yourself from all these potential horrors.

Offshore Pro Group has been assisting clients in asset diversification for a great number of years. We are especially good at geographical asset diversification as we cooperate with banks and government agencies in the countries scattered all around the globe.


What do you recommend as a haven for physical gold?

As far as investment in gold is concerned, we can make several interesting proposals to you. For example, we are in regular contact with a precious metals dealer in Zurich, Switzerland, that also allows you as a private individual (or offshore company, trust etc of course) to store your gold and precious metals in the airside, duty-free zone at Zurich airport.

You do not have to visit Switzerland in order to buy gold bars or coins. Put the money into your Swiss bank account and they will buy the gold on your behalf and store it in a secure depository located in Zurich Airport… or if you prefer in other jurisdictions such as Switzerland, Hong Kong, London or Belgrade.

Switzerland is an enemy to no one and it is a very nice country where you can go to in case some nasty things happen in your current country of residence. National economies have collapsed many a time… and many a time governments have expropriated people’s gold when they needed it to rebuild the country. Since your gold will be kept offshore, your national government will have no way of taking it away from you even if it wants to do so. Besides, with the Swiss Bank and Gold Storage option mentioned above, you can have your gold transported to any place in the world. This means that the land of watches and chocolate does not have to be the only escape destination for you!

Please contact us via live chat, WhatsApp or here at [email protected] and we will gladly tell you more about this and other options.

Remember: There are good rational grounds for purchasing some gold today. But there is an emotional reason for that as well: when you hold a five or a ten ounce bar of gold in your hand, WOW!!! You get a feeling that can hardly be expressed in words. It feels unexplainably good to hold gold in your hand!  Enjoy.