SA BULLION Investor Presentation: Ju ly 2016 T +27 21 447 3240 F +27 86 504 7857 business@sabullion.co.za Unit 3, The Old Castle Brewery, 6 Beach Road, Woodstock, Cape Town 7925, RSA
Introduction 1. Only licensed bullion investment manager in South Africa 2. FSB and SARB regulated 3. Founded 2005 4. Owner managed, 2 families 5. Head o ffi ce in Woodstock Introduction
SA BULLION CASE FOR GOLD T +27 21 447 3240 F +27 86 504 7857 business@sabullion.co.za Unit 3, The Old Castle Brewery, 6 Beach Road, Woodstock, Cape Town 7925, RSA
4 Key Points - Why to invest in Gold 1. A Where you own your home. “WE BELIEVE IN A FOUNDATION OF B BEDROCK-INVESTING.” And store a portion of your wealth in physical gold. Introduction
4 Key Points - Why to invest in Gold 2. “WE SEE GOLD AS A COMPETITOR TO CASH IN THE BANK.” Introduction
4 Key Points - Why to invest in Gold 3. "POOR FINANCIAL MANAGEMENT OF THE ADVANCED ECONOMIES IS LEADING TO INCREASING CURRENCY AND BANK RISK, WORLDWIDE.” Introduction
4 Key Points - Why to invest in Gold 4. “WE SEE GOLD AS THE ONLY CURRENCY WHERE YOU DO NOT HAVE TO RELY ON GOVERNMENTS AND BANKS TO DO THE RIGHT THING.” Introduction
Historical Timeline of Gold 550 1971 B.C 1933 Bretton Woods System US Dollar King Croesus Roosevelt Nixon ends ends domestic foreign convertibility convertibility 1913 1944
An Era of Unbacked Currencies 1971
Closing of the Gold Window The quantity of money had The quantity of money had become unrestricted been restricted by the quantity of gold reserves 1971
Fiat Currencies 1. No Physical Backing 2 . Notionally backed by faith and con fi dence 3. Ultimately priced by economic fundamentals 4. All referenced to the US Dollar ($) Two layers of trust required: In the US government to do the right thing In own government to do the right thing Introduction
The Implications for an Unbacked Dollar • ‘full faith and credit of the US government’ • Financial discipline • Budget de fi cits • Public debt : GDP • Poor economic fundamentals • Deterioration in ‘faith and credit’
KEY FINANCIAL MANAGEMENT ISSUES OF THE U.S 1. Accumulated Surplus or Debt 2. Debt:GDP Ratio 3. Monetary Policy Introduction
US Public Debt Accumulated Value in Dollar (2000 – 2015) 20000000000000,00 $18.6 Trillion 18000000000000,00 16000000000000,00 14000000000000,00 12000000000000,00 10000000000000,00 8000000000000,00 6000000000000,00 4000000000000,00 2000000000000,00 0,00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Introduction
US Gross Domestic Product Value in Dollar (2000 – 2015) 20000000000,00 $18 Trillion 18000000000,00 16000000000,00 14000000000,00 12000000000,00 10000000000,00 8000000000,00 6000000000,00 4000000000,00 2000000000,00 0,00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Introduction
US Public Debt vs. Gross Domestic Product Value in Dollar (2000 – 2015) 2016 2017 US GDP US PUBLIC DEBT Introduction
US Public Debt to GDP Ratio (2000 – 2015) 120,00 104% 100,00 80,00 64% 60,00 40,00 20,00 0,00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 IMF research indicates: Increasing public debt leads to increasing long term interest rates. (0.05% per 1% for AEs; 0.04% per 1% for EMEs beyond 50% threshold) US PDR transmits e ff ects to AEs and EMEs beyond 75% threshold at (0.1% per 1%) Introduction
US Monetary Policy Fed Funds Rate (2000 – 2015) 7,00 7,00 6,00 6,00 5,00 5,00 4,00 4,00 3,00 3,00 2,00 2,00 1,00 1,00 0,12 0,00 0,00 2000-01-01 2000-01-01 2001-01-01 2001-01-01 2002-01-01 2002-01-01 2003-01-01 2003-01-01 2004-01-01 2004-01-01 2005-01-01 2005-01-01 2006-01-01 2006-01-01 2007-01-01 2007-01-01 2008-01-01 2008-01-01 2009-01-01 2009-01-01 2010-01-01 2010-01-01 2011-01-01 2011-01-01 2012-01-01 2012-01-01 2014-01-01 2014-01-01 2013-01-01 2013-01-01 2015-01-01 2015-01-01 Introduction
June 2016 US Headline News Annualised GDP growth rates in recent quarter Q2 2015 Q3 2015 Q4 3.92% Q1 2015 2016 1.98% 1.39% 1.07% Notwithstanding the massive stimulus e ff orts since 2008, the economy is on track for recession and QE4
US Headline News June 2016 Unemployment U3 Unemployment 4,9% 287,000 jobs U6 Unemployment 9,6% created Shadowstats Alt Rate 22,9% in June The problem with overstated BLS numbers… …is their ever declining Labour Force Participation Rate viz:
Ultimate Driver of Economic Prosperity Aggregate Demand But, The US consumer has not recovered Growth in real income is poor The consumer is heavily stressed
US Short-Term Future Economic conditions look set to deteriorate towards recession Fed unable to raise rates meaningfully Movement towards QE4 Dollar to su ff er setbacks
US Public Debt Gold in an Era per Taxpayer of Unbacked Currency Value of one 1967 US Dollar $5 , 195 $�158 , 196 Value of one 1967 SA Rand + 2950 % US Public Debt to GDP ratio $�1 $�0 . 14 - 86 % R �1 R �0 . 01 R �19 , 000 - 99 % + 75 , 900 � % 38�% 105�% $�1 , 200 Value of one + 3330 � % ounce of gold $�35 R �25 2016 1971 1971 2016
South Africa Key Drivers of the Rand in 2016 GDP Credit Ratings Government and Political Leadership
SA GDP Growth Percentage annualised at end of Q2 5.8% 4% 3.6% Q1 2.8% 2.3% 2.0% 0.8% -1.2% -1.4% -2% 2006 2001 2012 2013 2014 2010 2011 2016 2009 2015
S&P Credit Rating
SA Short-Term Future Economy under pressure Looming ratings downgrade Deteriorating Political Leadership
Gold Price Performance Gold in US Dollar to 30 June 2016 Gold in South African Rand to 30 June 2016 36.3% pa 18.4% 16.2% pa 12.9% pa 8.0% pa 7.4% 6.8% pa 3.6% 10 years Quarter 1 year 3 years Versus performance on cash… ?
SA BULLION � � � � � � � � � � � � � � � � T +27 21 447 3240 F +27 86 504 7857 business@sabullion.co.za Unit 3, The Old Castle Brewery, 6 Beach Road, Woodstock, Cape Town 7925, RSA
Asset Allocation Compulsory Assets • Reg 28 • Rand Hedge South Africa
Sweet Spot - Rand Hedge Asset Allocation Discretionary Asset : • • Rand Hedge South Africa
THE KRUGERRAND T +27 21 447 3240 F +27 86 504 7857 business@sabullion.co.za Unit 3, The Old Castle Brewery, 6 Beach Road, Woodstock, Cape Town 7925, RSA
Why the Krugerrand is the ideal form of gold ownership 1) Physical 2) Valued only for it’s content 3) owned outright 4) legal tender (no VAT) 5) underwritten by the central bank 6) right to physical delivery Partnership Opperturnity
THE FACILITIES SA BULLION T +27 21 447 3240 F +27 86 504 7857 business@sabullion.co.za Unit 3, The Old Castle Brewery, 6 Beach Road, Woodstock, Cape Town 7925, RSA
“ bringing together a traditional asset with a modern approach ”
The Qualities of our Facilities Store of Currency Value Hedge Outside of The Perfect the banking Facility system
The Qualities of our Facilities Store of Value Financial Crisis Bailout Too big to fail Great Recession Fiscal Stimulus Liquidity Crisis Sovereign Debt Crisis Credit Rating Agencies Systemic Crisis Bank Crisis Bail in Inappropriate Monetary Policies Failed Regulations and Supervision
The Qualities of our Facilities Store of Value The intergenerational story 30 APR, 2016 1 SEP, 1970 R 18 , 310 R 25 $1 , 286 $35
The Qualities of our Facilities Currency Hedge International Currency Crises Currency devaluation relative to US Dollar International Currency Crises (November, 2008 – May, 2009) Currency devaluation relative to US Dollar November, 2008 - May, 2009 United Kingdom South Africa New Zealan Czech Rep. Swaziland Indonesia Australia Romania Hungary Sweden Norway Zambia Mexico Turkey Iceland Russia Korea Brazil 0,00 v -10,00 -20,00 -30,00 -40,00 -37% -46% -46% -50,00 -52% -60,00 -70,00
The Qualities of our Facilities Outside of the banking US Bank Failures system (per decade) US Bank Failures per decade 348 182 2000 2010 2015 2020 Largest US Bank Failures Largest US Bank Failures Washington Mutual - $307 billion (2008) Continental Illinois - $40 billion (1984) Continental Illinois City Federal Washington Mutual City Federal - $39 billion (1989) $40 Billion (1984) $39 Billion (1989) $307 Billion (2008) Introduction
The Qualities of our Facilities Outside of the banking system 9 9 SA Bank Failures SA Banks since democracy Standing today
The Qualities of our Facilities The Perfect Facility PURE SECURE DELIVERY PRICING LIQUIDITY SUPPLY
The Qualities of our Facilities The Perfect Facility The Perfect Facility
How it works BULLIONGOLD FACILITY
How it works BULLIONGOLD FACILITY
BULLIONGOLD FACILITY FOR SMART SAVERS
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