Why Gold, Why Now?

Read the article in the Cayman Financial Review Magazine 

Hunter Wise International Commodities, Ltd (HWIC) is a specialist in business-to-business precious metals trading and financing. Offering their wide array of physical bullion products to a sophisticated, global network of independent dealers and institutional investors, Hunter Wise International Commodities and it’s U.S. affiliate company, Hunter Wise Commodities, have quickly become key players in the industry.  

The Hunter Wise business model has proven to be very successful with total sales exceeding $1,000,000,000 since 2009. HWIC aims to more than double that number over the next two years as they aggressively penetrate new markets worldwide.

HWIC is domicilled in the Cayman Islands with two branch offices in London. The Cayman operation is headed by Vice President and Managing Director, Mr. Kyle Martin. His focus has been on developing a vast dealer network for international institutional sales and other financial product service segments. Mr. Martin began his career with HWIC in 2008 when he accepted a management position within the firm’s Operations Department. Two years later he spearheaded the launch and development of the corporate headquarters in Las Vegas, Nevada. 

He was instrumental in developing policies and procedures within the firm’s technical support division, while applying his formidable skill-set to further expand the firm’s Independent Dealer network.  Mr. Martin was also actively involved in dealer training within the firm’s service support division. Along with his Director of Trading, Mr. Toufic Mansour, HWIC operates a sixteen hour trade desk offering a convienient buy-sell market to accommodate clientelle within multiple time zones. The trade desk will soon be a twenty four hour operation to accommodate clients trading in the Asian markets.

Martin
Kyle Martin
Vice President
E: kyle.martin@hwic.com

The Investment – Precious Metals

Precious metals have traditionally been regarded as an excellent means of preserving wealth during periods of political turmoil, price inflation, and economic uncertainty.  Precious Metals are also considered to be a non-correlated asset class relative to stocks, bonds, and mutual funds. 

As such, they are often added to portfolios to diversify risk and enhance returns. Precious Metals have outperformed almost every other traditional investment instrument over the last six years. The average price of gold in 2006 was approximately $605. If an investor purchased 33 ounces of gold at a cost of $20,000 in 2006, those 33 ounces would be worth approximately $57,000 at today’s prices.
 

Fred-Jager-
Fred Jager
Chairman and CEO
E: fjager@hwic.com

“Gold is arguably the oldest financial asset in the world, but there is little consensus on how much of it you should hold in your portfolio. Central banks and individuals in certain countries are significant holders, but most investors have no gold in their portfolio. This was not an issue over the two and a half decade bear market in gold following the inflation induced price peak in 1979. But the 155% rise since 2006, straddling the financial crisis, is now challenging the perception that gold is only for central banks and individuals.”
– Matthew Lehmann, J.P. Morgan Securities

While these numbers are appealing to an investor, who you invest with is a key factor in maximizing your returns. HWIC offers their products on both a fully-paid or financed basis. In a fully-paid transaction a client would have the ability to have their product shipped directly to them or to have their metals stored at a regulated third-party depository.

When investors purchase physical precious metals on a financed basis they provide an initial equity deposit (usually 25% of the total purchase price) and then HWIC provides a loan for the residual amount.  Collateral for the loan is the precious metal which is stored in a regulated third-party depository. Through a non-recourse loan, if the market value of the precious metals falls below the loan amount, HWIC will absorb the resulting “negative equity” and will not require the investor to deposit additional funds.  This arrangement effectively gives the investor unlimited upside of profit potential with simultaneous limited risk.  

Why Now?

Since February of 2008, when gold rose above its nominal high of $850 per ounce, there has been much speculation about gold being a bubble. A professor of economics at New York University’s Stern School of Business, Nouriel Roubini, is considered to be one of the more prominent financial and economic experts. Roubini said then that gold was infact a bubble. Several of his peers and other experts internationally echoed his sentiments. In December 2009, with gold over $1,100 per ounce, Roubini, was quoted saying, “All the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense”. Roubini went on to say, “I don’t believe in gold.” Gold has risen over 50% since that comment and needless to say Roubini has been silent about his opinion on the gold price.  
 

Mansour
Toufic Mansour
Director of Trading
E:Toufic.mansour@hwic.com

“The longer-term price trend in gold remains up, and there are no significant technical clues to suggest the uptrend will end any time soon. Thus, the path of least resistance for gold prices in the coming months will likely remain sideways to higher. I would not be surprised to see nearby gold futures prices push above $2,000.00 an ounce in 2013”
–  Jim Wyckoff, Kitco News

The ever increasing demand for gold and silver is being seen in countries like China and India who are constantly demanding these precious metals to produce jewelry and other goods. China’s growing middle class and easing government rules on owning precious metals have fostered substantial growth and appeal as store of wealth and purchasing power. We are currently in the midst of the largest bull market in precious metals in over 30 years.

This has been brought about by the fact that for the first time in over twenty years, central banks around the world are net buyers of gold. In addition to currency devaluation and price inflation, Middle Eastern tensions are threatening to dramatically increase oil prices. A failing United States Dollar coupled with a deteriorating European Union and the political and economic instability throughout the world supports the case for precious metal ownership, now. 

Hunter Wise International Commodities, Ltd (HWIC) 

Hunter-Wiselogo

802 West By Road,
Grand Cayman,
Cayman Islands

T: +1 (345) 769 4000
W: www.hwic.com