Marc: Hi, I'm Doctor Marc Dussault. I'm here with Peter August at the Australian Bullion Company. And the reason why we've created this YouTube video is I've been talking with Peter for quite a while, that a lot of people think that gold investment is only for rich people. We just wanted to take 2 or 3 minutes very briefly, and you're going to see the big words that Peter's going to be pulling out of the thesaurus today.
Peter: I'll try to keep them small.
Marc: This is just tape two of this YouTube video, by the way, and take one was quite funny. We went through a few points, but let's get started. First of all, there are 105 ounces here on the table, and you can see the size because this is just a regular Blackberry mobile phone. This is 20, 20, 20, 10, 10, 10, 10, and this is 5 1-ounce gold coins.
Peter: Gold bars.
Marc: Sorry, gold bars. This is what it actually looks like, that's what it sounds like. It's actually very heavy. It's an amazing thing to actually touch. How much is this actually worth, by the way? What do we actually have on the table here?
Peter: You've got well over $120,000 worth.
Marc: So this is $120,000.
Peter: I can still run pretty quick, so I will catch up with you.
Marc: I know you can. Why would the person who's watching this want to invest in gold? If you could just give me three quick reasons, that in a portfolio someone would want to have this. First of all, what proportion do you think that they should have in a portfolio?
Peter: I used to advocate 10%. I've actually recently updated my recommendations, and I say that people should own between 15% to 20% in gold. The first reason that I would say, to people to buy gold is to protect your purchasing power.
Marc: Protect purchasing power against inflation.
Peter: Correct. With all the printing of money that's going on around the world, you're getting more dollars, yen, euro, whatever, chasing less goods. So the goods are going up in price. How do you protect yourself against that?
Marc: One of the ways is definitely gold.
Marc: What's the second reason someone should consider gold as an investment?
Peter: I'm going to use a big word here, mate.
Marc: Get your thesaurus out.
Peter: That big word is geopolitical risk.
Marc: When we talk about geopolitical risk with the average person, what does that mean?
Peter: Growing global political tensions.
Marc: Say that again.
Peter: Growing global political tensions. So such as the Middle East, Iran, Afghanistan, North Korea. They're either in war or very tense situations. In times of political tension people flock to gold, so it is a good time to have gold just in case of growing, geopolitical risk.
Marc: What would be the third reason that you give people to consider this amongst other investment decisions they're making for their portfolios?
Peter: Most people don't think that the financial system is a problem, but there is a problem with the financial system. Last year the global financial crisis just illustrated how fragile our financial system is. Yes, it is remote that the financial system can collapse, but if it is under severe pressure or if there is a risk of collapse, you will need something to be able to trade with. You'll need a meaning of exchange, and the best meaning of exchange, having proven itself over thousands of years, is gold.
Marc: Excellent. Thanks for listening. Those are a few reasons why you should invest in gold, and we have another series of YouTube videos that explains in more detail some of the concepts that you'd want to consider, as a sophisticated investor, or as a beginner. As you consider, maybe starting off with something as small as a 1-ounce, and you call this a gold bar? I call this a coin, but that's just my lack of experience.
Peter: Generally speaking, coins are usually round.
Marc: Yes, exactly, but on the camera, as you can see, it looks like a coin, but it's actually a very small bar.
Peter: I'm just educating Marc, here.
Marc: Yes. Absolutely. The reason we're doing this is to make sure that we give you the information that you need to make your investment decisions. Thanks for listening. Thank you very much, Peter.