INVESTMENT STRATEGIES FOR TORTOISES PRECIOUS METALS. Robert G. Kahl, CFA, CPA, MBA

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1 INVESTMENT STRATEGIES FOR TORTOISES PRECIOUS METALS Robert G. Kahl, CFA, CPA, MBA

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3 4 REASONS TO INCLUDE PRECIOUS METALS IN YOUR INVESTMENT PORTFOLIO The half-life of fiat currencies (paper money) Precious Metals have characteristics that are useful for wealth preservation Price manipulation of precious metals has artificially suppressed prices Market cap is relatively small

4 THE HALF-LIFE OF FIAT CURRENCIES Per Mike Hewitt in his article The Fate of Paper Money (2008) 177 currencies are currently in circulation Median age for an active currency is 37 years Excluding the early paper currencies of China up until the 15th century and the majority of paper currencies that existed in China until 1935, there are 609 currencies no longer in circulation. Of these, at least 153 were destroyed as a result of hyperinflation caused by over-issuance. The remainder were revalued, destroyed by military occupation/liberation, renamed for political reasons, or were converted to another currency. The median age for these currencies is only seventeen years.

5 PRECIOUS METALS HAVE CHARACTERISTICS THAT ARE USEFUL FOR WEALTH PRESERVATION - GOLD Gold Characteristics Universal acceptance for jewelry, coinage and other purposes for several thousand years; One of the least reactive chemical elements and one of the most malleable of metals; It is scarce Approximately 183,600 metric tonnes held in stocks above ground. This is equivalent to a cube 21 meters on each side. Mine production (3,133 metric tonnes per year) increases above ground stocks by about 1.7% per year.

6 PRECIOUS METALS HAVE CHARACTERISTICS THAT ARE USEFUL FOR WEALTH PRESERVATION - SILVER Silver Characteristics Universal acceptance for jewelry, coinage, and industrial purposes for several thousand years; Silver may tarnish over time (like copper, brass, aluminum) - a thin layer of corrosion that seals and protects underlying layers from reacting; sometimes called patina. It is scarce Approximately 78,067 metric tonnes of identifiable above-ground stocks per Silver Institute. Equals 42% of gold stocks. Global mine production of 27,551 metric tonnes in 2016 per Silver Institute. Ratio of silver mine production to gold mine production is about 9:1.

7 PRICE MANIPULATION OF PRECIOUS METALS HAS ARTIFICIALLY SUPPRESSED PRICES Both gold and silver have seen large sell orders placed on the Comex Globex system within short time spans during hours of thin trading. Has allowed large quantities of gold and silver bullion to be sold to China and India at modest prices. Precious metals have not benefited from the monetary expansion of central banks yet while other asset classes have.

8 RELATIVE MARKET CAP OF PRECIOUS METALS IS SMALL Global market cap of gold + silver bullion is about $7.5 trillion as of July 28, 2017 Market cap of global securities is about $294 trillion at end of 2014 Stock markets $69 trillion Public debt 58 Financial institution bonds 60 Nonfinancial corporate bonds 31 Securitised loans 14 Nonsecuritised loans 62 Global real estate value at end of 2015 $217 trillion A relatively small movement from global securities and real estate to precious metals could have a large price impact on precious metals prices.

9 WAYS TO OWN GOLD AND SILVER BULLION SPDR Gold Trust (GLD) Provisions in the prospectus lack sufficient safety as an investment vehicle Must have minimum of 100,000 shares to exchange for bullion. Sprott Physical Gold Trust (PHYS) and Sprott Physical Silver Trust (PSLV) Shareholders can exchange shares for London Good Delivery bar(s) with minimum of PHYS 1 bar troy ounces PSLV 10 bars troy ounces Storage at the Royal Canadian Mint Trustee, Custodian, and other service providers maintain insurance related to services

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