Home' Trinidad and Tobago Guardian : August 1st 2013 Contents BG10 | NEWS
BUSINESS GUARDIAN www.guardian.co.tt AUGUST 2013 • WEEK ONE
Describing the market for investing in gold as
being "a long way from being sophisticated"
the president of Bullion Management Group,
Nick Barisheff, said the understanding of how
the gold market works tends to be limited.
"Investors hold something around a half per cent, in total,
in terms of portfolios. In 1980 it used to be about 20 per cent.
There is a long way to go before this becomes mainstream
and everyone understands it," he said.
Bullion Management Group Inc is a Canadian-based bullion
management company which provides investors with a cost-
effective, convenient way to purchase and hold physical bul-
While there is the myth that gold carries a lot of risk,
Barisheff said this is not so.
"How do you measure risk there are about a dozen different
elements that entail risk and gold only has about three or four
(elements of risk) out of the entire 12; all the other investments
have all 12."
Secondly, he said: "When people talk about gold and risk
they think volatility and volatility is not a sophisticated measure
of risk. When you look at volatility or fluctuation you have
to first of all differentiate between upside volatility and downside
volatility. Nobody cares about upside volatility, you only get
worried about downside volatility. You would want to measure
the volatility against return."
In other words, it is not enough to look at volatility when
choosing an investment instrument.
What he does tell investors is to be aware of which entity
you approach to invest in gold.
"They (the investors) need to make sure they actually own
gold and they don t have somebody s promise to give them
gold in the future. In many cases, the gold ownership can be
a paper promise of giving gold which isn t the same thing.
"When you are buying gold you need physical gold---whether
it is in your own possession if you are a small investor, or you
need to own gold that sells under a proper agreement (stored)
in a major vault like Scotia---to actually own it. Futures contracts,
options, certificates; those are all like paper proxies and deriv-
atives of gold."
He said if the institution which issued the certificate indicating
the investor-bought gold goes bankrupt, it means that the
investor stands to lose. Barisheff said an investor trading in
gold needs to use the physical bullion, whether "it is a few
(gold) coins buried in the back yard or millions of dollars of
gold in a vault, it needs to be physical gold not a pieces of
To trade in gold the investor is not limited to one time of
day since gold never sleeps.
"Currencies have come and gone, there have been times
when people wouldn t take currencies but would take gold.
In Egypt, the country has no foreign currency reserves for all
the obvious reasons. As a result, if you re an Egyptian citizen
you can only deal in Egyptian pounds and no one will take
those Egyptian pounds, outside of Egypt, but if you wanted
to trade in gold they will always take gold.
Barisheff is the author of a book entitled: $10,000 gold:
Why Gold s Inevitable Rise is the Investor s Safe Haven. Asked
what inspired him to write the book, he said there is so much
misunderstanding and misconception about gold.
Why invest in gold?
"I don t consider gold as an investment. I consider gold as
holding money in a vault; the same if you had a stack of $100
bills in a vault, that would not be an investment but you would
be holding money. Gold preserves purchasing power over long
periods of time. Gold has been money for 3,000 years and
it still is today."
Why purchase gold
Whether you are in the Caribbean, North America or any
part of the world you can be an investor in gold since the
same principles apply.
"If you take your savings and buy gold you can buy the
same amount of stuff today, tomorrow or ten years from now
and possibly be able to buy more stuff in the future."
The gold market is "not particularly competitive" but the
bigger problem would be "in getting supply. Paper gold is
traded in unlimited supply while real gold is very fixed. It ulti-
mately going to be competitive from the point of view, if you
can deliver the real gold."
Investors can be located in Canada and outside.
"Our fund is different than most mutual funds. In Canada
most mutual funds are restricted to 49 per cent non-residents
but because we hold bullion that restriction does not apply.
About 20 per cent of our annual sales are international. We
have advisors and dealers all over the world."
If an investor from outside the United Kingdom were to
invest in gold with his company there would be no taxes for
"In Canada there is no upfront tax or VAT or sales tax or
anything like that. We have an upfront tax but it does not
apply to gold, silver or platinum and if an ivestor has bullion
or funds stored with us in Canada there are no withholding
taxes. The tax consequence are whatever the person s tax con-
sequences are in his country of his residence."
Asked if the regulations under the Foreign Account Tax
Compliance Act (FATCA) would affect his business, he said:
"It will have some effect on the Mutual funds but FATCA is
limited to US investors who have accounts in foreign juris-
FATCA and its implications are still being looked at.
According to the Barisheff in Chapter eight, page 182, of
his book: "Gold provides wealth protection. it is the ultimate
form of insurance against financial calamity or the unexpect-
Three questions integral to BMG s investment principles,
according to page 184: "What is the true state of the investment s
liquidity in the event of a crisis? What is the potential for
third party liability and what is the potential for human mis-
Nick Barisheff, president of Bullion
PHOTO COURTESY BULLION MANAGEMENT
The myth that gold carries risk
The president of Bullion Management Group:
• Established in 2002
• Has over CDN$416 million in assets
• Has 50 dealers across 15 nations with over 20,000
• Offer bullion ownership in regulated Canadian
mutual funds: BMG BullionFund; BMG Gold BullionFund;
BMG Gold Advantage Return BullionFund (BMG Funds);
and individual bars with the BMG Bullion Bars
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