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PRIVATE ASSET MANAGEMENT – Feldman talks physical gold ownership

By Amber Morgan
August 22, 2012

Private Asset Management

Former Goldman Sachs partner and current CEO and co-founder of Gold Bullion International (GBI), Steven Feldman, shares how incorporating physical gold in a portfolio creates a hedge against risks, and highlights that while it’s a popular desire to own the commodity, it ironically remains a severely under-owned asset.

According to a recent national survey conducted by GBI, results illustrate that while 63% of individual investors polled are interested in owning a physical asset such as gold coins or bullion, only 2% actually own investment-grade, institutional-quality gold. This correlates with the demand for gold down 5% from the previous year during the first half of 2012, according to World Gold Council’s Q2 2012 Gold Demand Trends report. Additionally, investors don’t own physical gold because they don’t know how to do it, it seems too difficult and they need more education.

Hard Assets Alliance and GBI took notice of the lack of awareness in the market and recently formed a partnership to launch the SmartMetals platform so investors, financial advisors and wealth-management professionals can buy, store and sell gold and other physical precious metals through the technology like a stock or bond.

“Gold is a safe-haven asset and we want people to buy it in its safest form,” Feldman told PAM. “The safest form in our mind is the actual physical bar.” He highlighted the benefits gained when making a trade through a broker dealer or the SmartMetals website: sole ownership, physical audits, insured purchases, geographic diversification, physical delivery, competitive execution, transparent pricing, choice of vault and it has no default or credit risk.

Feldman further explained that gold has historically performed extremely well against market shocks and inflationary environments, making it a good long-term protector against inflation and an effective portfolio insurance policy. “Avoiding the shocks is the most important thing you can do as an investor over long periods of time.” He suggests it is a wise move to take a little out of bonds and cash and move 5-10% to gold, depending on age, wealth and income needs.

“It’s the preservation of your wealth and preservation against shocks and the loss of purchasing power,” Feldman said. As people are nearing or saving for retirement, loss of purchase power is devastating for those who are aging past their prime earning years, he added.

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