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Money machine Part I - Physical precious metal allocation in Switzerland and Panama
Gold, silver, platinum, and precious metals are etched into the human psyche as stores of value in a volatile world. Precious metals are the oldest and most reliable form of money and have been around since the dawn of all civilizations.
In volatile times, such as Covid recessions and global depressions, precious metals are one of the few forms of portfolio protection. The reasons to buy precious metals as part of your portfolio include the following:
A. Central banks have no accepted gold as currency. Since there is a limited supply of gold and limitless supply of Fiat, it is inevitable that gold (and other precious metals following it) will continue rising in value so gold and precious metals act as a hedge fund against inflation and currency devaluation in times of volatility.
B. The world’s wealthiest families and family offices always store at least 20% of their wealth in precious metals. In times of volatility, this can increase to 50%. Further, they borrow against the precious metals to maintain liquidity.
C. Precious metals are not only forms of money but also act as commodities that are increasingly demandeded in various processes. Thus, unlike money, precious metals are also useful in the industry.
How to buy /where to buy:
In this article, we are talking about physical precious metals because while IPO and other paper investments can, of course, bring huge returns, physical precious metals are not so much an investment strategy as a classical hedging strategy to protect your portfolio against risks and black swan events like the coronavirus meltdown.
We will talk about gold investing in stocks in the next section. Here, we briefly discuss how family offices go about buying gold.
The most common way to buy gold is through gold traders who work with mints that are part of the LBMA certification process. These are sold on the market at a price known as spot and most traders charge a spread or premium above spot to deliver the metals. In gold, the above spot price is usually around 4%. The bars and coins certified under LBMA are highly liquid and easily tradeable but come at a high price.
You can find traders and mints worldwide but famous ones are The Canadian Royal Mint, Perth Mint, US Mints, etc. Almost every country has its own mint.
Sophisticated family offices buy on the non-LBMA markets. For example, they work with small miners to buy what is known as “Dore” or non-certified pure gold and precious metals. This is usually bought at the below spot and then takes time to refine into certified bars. What is the difference between a Dore bar and an LBMA bar? Good question. In the end, it is nothing more than a label, but LBMA has reputational value.
Other sources of Dore are entering into a futures-buying contract with a mine whereby the mine supplies gold to you at a fixed price. You can gain significant earning and savings this way.
A third way is buying gold from pawn shops and scrap metal dealers.
Many people ask when it is the best time to get into precious metals. The answer is always. Whether they are going up or down and regardless of what the financial experts say, continuously buying and holding precious metals is a strategy that has worked for mankind over 5000 years and is unlikely to go out of fashion. So, while many investments can become obsolete over time, precious metals keep going up.
Yet, it is important to work with experts. Whether you want to buy traditional bars or coins, or get into complex dore purchases you need a team of experts to guide you through the process and at Mundo we have assembled a team of gold buying and dealing experts who can assist in developing your portfolio. Contact our experts for more information.
Where to store
Storage is one of the most significant aspects of physical precious metals, while there are many factors, our team of experts defines the following to be the most important:
- Don’t store in a bank because under the rules of most banking institutions, if a bank goes bankrupt its precious metals holdings will go into the general liquidation pool and disappear into the hands of the liquidator. With a physical storage vault, even if the vault becomes insolvent, the gold remains yours. So, the key is to choose the correct vault with proper insurance.
- You need to store in a vault located in a country that does not levy any capital gains taxes on your precious metals, has little political risk of confiscation or seizure, and is generally safe and politically neutral. Most importantly the laws of that country need to be sufficiently robust to allow you to visit the vault and physically remove your gold any time you want. This may sound like common sense, but you may be surprised to know that countries like India and China allow you to buy gold but do not allow you to export it.
- Preferably, the storage company should be able to arrange lending over your precious metals and/or a buyback program through its clients.
- Finally, the KYC rules should not be so ridiculously difficult as to make it impossible for you to hold your gold. As an example, some countries simply do not allow various nationalities to hold their gold there at all. Russians, Latin Americans, Ukrainians, and increasingly Americans, often find it difficult to have gold storage contracts due to their nationalities.
Holding your gold in Panama
At first, you might think this an odd choice but when you dig deeper you will find some interesting facts that make Panama unlike any other country on earth. Let us look at some of the reasons from our experts:
Reason 1: Panama has a free zone legislation that permits the import and export of precious metals, including their storage, without any kind of taxes or duties. That means no VAT, no import duties, no capital gains tax, in fact, no taxes of any kind. Further, the free zone is a protected zone so the Panamanian government has little influence there and does not interfere. Panama has a large number of free zones designed to service the Panama Canal.
Reason 2: Panama does not have a central bank. Thus, it is the least likely place to put any restrictions on ownership, import, or export of gold. Furthermore, very few people know that Panamanian law still has the local currency, Balboa linked to the Gold standard and that has never been changed.
Reason 3: Panama allows you to gain fast residency via various residency programs, which means you can easily enter the country and carry your gold in and out. This is important as you can gain physical access to your storage.
Reason 4: Panama is politically neutral and located in the center of the Latin American gold industry. Thus, Panama does not discriminate against Latin Americans, South Africans, Chinese, Russians, or other nationalities in terms of storage and purchase of gold. This is not the case for most European countries. Thus, Panama is ideal for holding family office wealth via precious metals.
Reason 5: Panamanian Foundations offer rock-solid asset protection. You can hold your physical precious metals in a foundation or a trust without issue.
At Mundo, we work with the owners of Panama's best-kept secret: a free zone gold storage facility insured by Lloyd’s and which has special deals for our clients.
Holding your gold in Switzerland
For those who want to hold their metals in Europe, Switzerland is really one of the best choices. It is essentially the oldest precious metals safe haven and has managed to maintain political neutrality and stability for hundreds of years.
If you want to describe in simple words what the economic and political landscape has looked like these last two decades, we can make it simple for you: Turmoil. Since the beginning of the 2000s when gold was traded at roughly CHF 300 an ounce, investors started realizing the prospect of a major "dog eats dog" kind of situation. Let us give you a clue: They were not wrong. Major conflicts in the Middle East, a global economic meltdown, unparalleled diplomatic tensions, and a global pandemic clearly give us a hint of what investors were afraid of some 15 years ago.
Moreover, investors realized that the market forces may cause terrible ill when they are misled by those in charge (Remember 2008?). In the end, they can act irresponsibly because a Nanny State will always give them a pat on the back and continue things as usual. In the face of tragedy, governments are quite likely to lean towards policies that will not favor institutions that protect private property or markets at all… They look out for their interests and of those near them.
Thus, we find ourselves in a scenario where precious metals' tangible and objective value is not subject to questioning anymore. This process led back to what historically have served human as a source of richness and economic stability: Precious Metals.
We are working with one of the best worldwide physically allocated precious metals provider. Why work with us?
- Precious metals are the perfect way to diversify your risk and preserve your wealth against inflation and excessive taxation.
- Our partner works with rare precious metals such as platinum, taking your asset diversification to the next level.
- Our partner physically allocates your gold in Switzerland, which means you are safe. Your metals are not registered in their ledgers or balance sheet.
- The acquisition of precious metals is VAT free while stored.
- Low minimum purchase, which is good for small family offices.
- Hassle-free storage, purchasing, and selling processes.
Our main concern: The preservation of your assets
Ask any investor what their main concern is, and many will respond to you: Wealth preservation. Most precious metal investors won't be as worried about inflation or excessive taxation as their peers who invest in different holdings. However, the grass is not always greener on the other side. If you are investing in physical metals, different issues will arise that could potentially elevate your costs—namely, storage and transport costs, liquidation issues, government taxation, and the risk of theft.
Facing such possibilities will raise some eyebrows, especially among the savviest investors. Furthermore, if your entity manages large-scale assets for third parties, you sure want to be on the top of the chain to provide solutions for your clients.
Diversifying: What’s the deal?
One of the first ideas any trustworthy advisor will give you if you are in this position is: diversify your risk, and just as you would not put all your eggs in one basket, why would you leave all your assets in one jurisdiction? These are turbulent times, and governments are well-known for disrespecting private property once the odds are against them.
Wealth preservation, especially amidst the economic and political environment created this decade, is essential. Diversification across different jurisdictions, therefore, is of the utmost importance for any asset manager.
Purchasing bullion metals as a way of diversification and the subsequent investment in high-security storage in a safe political and economic environment is the most secure path to ensure security from theft, inflation, confiscation, and taxation of your client's funds nowadays.
Bearing this in mind, our partner created unique solutions for each of these problems. Located in Switzerland, we have developed the simplest process to help you achieve your investment goals. Our partner expands your choices. They go beyond gold and silver, adding platinum and palladium to the mix to further enhance your risk diversification strategy.
At this point, you may be wondering, Why Switzerland?
The country has maintained a policy of neutrality, respect to private property, and rule of law, even after two major European conflicts in the past century, developing a highly respectable reputation as a major allocation and banking hub. Moreover, holding assets is a major part of the Swiss economy; their reputation is a matter of state.
Moreover, data security and privacy regulation provide additional protection layers to legal entities and individuals interested in holding precious metals in the country. There are several reasons why you may or may not want your assets information shared with your home country institutions but whatever your situation is, our partner is not under any obligation to provide the metal holdings’ to any government. So, if your situation requires discretion, you may rest assured.
Made in Switzerland
Our partner is a 100% Swiss company. Thus, they must comply with Swiss law and regulations. This ensures they will offer the highest standards in treating of your holdings. On top of that, their focus on clients who are independent thinkers have helped them develop strategies for your satisfaction and security, for example:
No vague terms or unclear wording. They won't trade, hedge, or lease your holdings. You own your metals, and they will be available for transfer, sell, pick up, or delivery at any moment. The vaults' content is not "linked" to the banking system or the stock market, therefore guaranteeing the availability of your funds immediately.
Even in the worst of cases, if our partner were to go bankrupt, your metals are not registered in their ledgers or balance sheet. Thus, possible creditors won't be able to raise claims or have access to your funds. As you can see, our partners’ business model is entirely based on your assets' security.
Where to begin?
For starters, you will need to become a registered and approved client. Submit a notarized copy of your ID or passport along with a copy of the application forms and a utility bill. Our partner will evaluate your request, and once the application is approved, you can start purchasing metals and make use of their storage products.
One advantage is that our partners have a very low minimum purchase limit. Generally, it is 50.000 CHF, but thanks to our special relationship, we can lower it to 20.000 CHF, which is perfect for small family offices that are just starting out. This will allow us to purchase your precious metals at the best rates in the market and store them in our partners’ VAT-Free Switzerland located secure vault.
Precious metals are purchased directly from wholesalers and internationally approved refineries. As of this moment, roughly 70% of the world's precious metals are refined in Switzerland; thus, the quality of the product's is guaranteed.
The standard offering includes gold, silver, palladium, and platinum 1ozt coins to 100 gr, 500 gr, to 1 kg bars. The products are purchased from reputable sources, from London Bullion Market Association Approved (LBMA) refineries and Mints, focusing on Switzerland's locations, for example, Argor-Heraeus or Valcambi.
Once you have purchased your metals, they will be stored in either Collective or Segregated Storage vaults located in Switzerland. Other storage options are New Zealand, Hong Kong, and Singapore.
Collective storage option
The most cost-efficient and frequent client choice is the Collective Storage option. There, your coins and bars will be physically stored in a vault area together with the holdings of other Global Gold Clients, but worry not, you will have full control since your assets will be clearly identified for immediate availability. Their commitment is to protect your investment and physically back the totality of your deposited metals in the same format as you have deposited them.
Segregated storage option
In case you want to make use of the Segregated Storage option, this will offer you a separate storage in our vault area. You will be given your very own, numbered storage space, and your purchased metals serial numbers will be specified for more security.
A minimum purchase of CHF 250.000 in metals is required for this option.
The most exclusive clients can opt for our Key-Box Storage option. This will grant you high-security for your most valuable assets since it can only be opened by you personally or an appointed representative using the key for the Key Box. For this option, a purchase of at least CHF 250.000 is necessary as well as the purchase of a Key Box bundle for the small cost of CHF 450.
As we said before, you will have full and immediate access to your holdings at any given time through your online Storage Report with the possibility of requesting delivery, liquidation, or pick-up approval of your bullion metals.
In order to complete a delivery, you will have to fill in a request. Once they receive this request, the delivery, details and costs will be confirmed with you, and, upon payment, the delivery will be scheduled.
As for liquidation, you will need to complete a liquidation order. If you send us the order during working hours (8 am to 6 pm, Monday-Friday, Swiss time) we can execute the trade. If you make the order after 6 pm or on Friday, you will have to wait until the next working day.
Is this for you?
Our partner offers a wide array of services for the diversification of your risk. The most thorough metal purchasing and storage service is at the tip of your fingers.
Whether you are a family office manager, wealth manager, or individual investor, you need to ensure your client's wealth preservation and enhancement (or yours). Any successful asset diversification strategy counts on precious metal investment. We offer an outstanding and complete bundle of services and the chance to diversify your assets into one of the safest jurisdictions worldwide, with an ample history of respect for private property even amid global crisis and full-scale wars, solid democratic and legal institutions.
Our partner excels the competition based on their location and the unique nature of their non-bank services. They offer great simplicity in the purchase and liquidation process and total ownership and availability of your funds no matter what the scale of the operation entails. Their promise to you is a 100% physical backing of the products deposited in their vaults.
Choose legal security, choose the best rates, choose the safest vaults, and the most experienced experts.
For more information regarding their program, contact us right now!
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