PFGBEST Perspectives
Tuesday, 12.13.11Back to newsletter
About This Newsletter
By Peter Thomas

Precious metals have won the headlines for more than a year on choppy, high-volume trading in both cash and futures markets.  Analysts, including our own PFGBEST Research analyst Mike Daly, track price movements to alert clients of beak-outs from the trend lines. Meanwhile, investors and traders worldwide are weighing whether the benefits of dollar-cost-averaging outweigh the risks of holding precious metals.

How much to hold? How long to hold? Trade futures or hold hard assets? These are exciting times, with exciting implications for those who are staying informed!

Whether you already have a brokerage account, or a precious metals accumulation account, or are an educated collector of coins, we want to be your BEST source for information about strategies concerning precious metals. Diversification. Account management and risk management.  Evolving supply and demand fundamentals and technical intelligence. Storing, collecting, accumulating, charting, transporting…you name it.

As the leader of PFG Precious Metals, Inc. I am proud to present this inaugural issue of PFGBEST Perspectives On Precious Metals; this is one publication in a series of Perspectives electronic newsletters on subjects customers want to learn more about – managed futures; technology; institutional forex; options, and now, something for the gold bugs. We bring you a feature article from PFGBEST Sr. Strategist George Cocalis on a “trade gone bad” that he hopes you can learn from so you don’t have to experience a similar painful event.

I’ll first provide an overview about PFG Precious Metals, and in “What’s New” a list of current promotions, products and service updates. And then, George’s personal and honest feature story.

Please feel free to contact me at any time with suggestions, ideas, concerns or requests for any precious metals subjects. Reach me directly:

Peter Thomas
Director of Business Development
PFG Precious Metals, Inc.

Peter Thomas On PFG Precious Metals, Inc.:
I’ve been in the business since college, having followed my father who was a long-time gold trader in Chicago’s futures markets.  Dad helped get me a membership with the Mid America Commodity Exchange in 1979 before he retired. There, I traded for my own account and also filled some orders for brokers.  I started my own IB in about 1983, but after a few years, took a break to enjoy some world travel and then started trading electronically, off the floor.

I joined PFGBEST in 2007 as head of business development for PFG Precious Metals, Inc., which the company was launching then. Today, we operate as a division of PFGBEST.  My colleagues are Tom Garland (chief operating officer) and Ben Kutz (metals traffic manager).

Just the basics? We offer physical gold, silver, platinum and palladium in the form of bullion bars and bullion coins. (We carry current quotes for a variety of coins on our website: Ours is a full-service, wholesale precious metals trading company. In addition to specialized pricing and acquisition capabilities, we can ship as well as insure precious metals purchases through Lloyds of London. PFG Precious Metals is a member of the Certified Coin Exchange, a dealer-to-dealer exchange that connects more than 450 coin dealers in the United States.

We have several areas of keen focus. I’ll detail each a bit after more or less listing them now.

One is to serve people in retirement plans who want to diversify their portfolios with hard assets (precious metals). Other services we offer are metals pricing through Typhoon, and we buy and sell gold, silver, platinum and palladium in various forms (coins, bullion, etc.) We do a huge volume and believe we are among the top 10 (if not the top five!) in the United States.  And, PFG Precious Metals, Inc. offers storage and delivery services.

Finally, one of our major home runs has been to create a VERY unique, limited edition collectible set of four silver coins – the SpongeBob SquarePants Treasure Chest. This is entirely exclusive to PFG Precious Metals – we worked directly with Nickelodeon for licensing and for the one-of-a-kind dye stamp for the 4 characters (on square, silver coins), and with the New Zealand Mint, which minted the coins. What a great country – a South Pacific island that gels nicely with the location of SpongeBob and his friends in Bikini Bottom. Incidentally, the coins are real legal tender! The SpongeBob collectible coin set is just being marketed for the first time, with initial deliveries scheduled for mid-December! Soon, it will be featured in the Intelligent Collector magazine!

Diversification and pension fund clients:
In a nutshell, the IRS has given PFG Precious Metals a “purchasing mandate” because it recognizes the products that we have in our vaults (some eight or more located in ports of call worldwide) and we understand fully and comply with all of the guidelines established for precious metals.  These are published by the IRS annually and have to do with various facets of these investments such as purity, carat amount of each coin by type, transfer processes, and time constraints to adhere to (once the customer order is initiated, the money is moved quickly to purchase specific precious metals, ship them, and get them transferred into the client’s 401 (k), IRA, Roth or other pension fund without delay to avoid the dreaded 33% tax penalty.)  The IRS has just three certified vaults in the U.S. for pension clients to store precious metals – all are in Maryland. We ship to one of those and the physical metals account (on average about $50,000 and up) is transferred to the client’s trustee.  This represents about 15% of our business.

Buying and selling coins:
This was one of the first services that PFG Precious Metals specialized in.  As I said before, we do huge volume and it remains nearly 60% of our overall business.

If you go to a coin store to purchase coins or bullion, what they have is probably from us. The reason coin stores come to us for their inventory is because we offer a pricing system that no one else has.  It’s called Typhoon.

Price protection using Typhoon:
Typhoon was built by and is exclusive to PFGBEST. This technology was originally for institutional foreign exchange trading clients for hedging price risk and being able to access pricing from all over the globe instantly for spot forex transactions. It’s been adapted for metals and it aggregates liquidity – that is, it brings together and sorts the best bids and offers on gold, silver, platinum and palladium from the largest precious metals dealers in the world. Using Typhoon ensures straight-through processing of all trades (whether for buyers or sellers) and automatically matches to the best available bid or offer without going through a dealer.

Anyone in the business seeking to mitigate price risk comes to us and uses Typhoon. The system ensures efficiency, transparency of prices, and execution of customer orders. The depth of liquidity the system provides is unavailable elsewhere. Volumes can be nearly infinite, or they can be all the way down to a one-ounce coin.

Precious metals delivery services:
Because PFGBEST is a futures commission merchant (FCM) that transacts business on various exchanges, we can take delivery from both the Comex and from the London Metals Exchange. If an ordinary futures trader wanted to make or take delivery on a trade, the process could be very expensive and time consuming. We, however, have streamlined it for clients, whether the contracts they are buying and selling and delivering or taking delivery of are mini-sized, full-sized, or kilibar-sized contracts. As I said before, we insure the product through Lloyds. We have relationships with shippers for the use of armored vehicles, and we have access to any number of vaults in various locations that can be rented for storing a client’s inventory. We have relationships with foundries for buying bulk metals. We work with mints in many countries to secure purchases and deliveries on behalf of our customers. 

SpongeBob SquarePants:
This may seem like a non-sequiter. I annoy my colleagues by saying it is one of our “show business” relationships, but it’s no joke. Through relationships we have essentially created a new, limited edition, collectible edition silver coin set. There are many ways to look at this product as a business-expanding and innovative addition to our mix (or to the sales mix for our brokers and IBs.)

PFGBEST has a commitment to sustainable investing. Giving a child a collectible coin set helps teach them the value of owning something that is likely to gain value rather than depreciating over time. This also fits right in with the PFGBEST commitment to educated investors having a longer, and more satisfying, experience in the markets.

Accumulation accounts:
We call it GSAP: the gold and silver accumulation program at PFGBEST. This program is also inherently representative of commitment to educated investing and sustainability. Here, we offer physical precious metals to our individual investors at affordable price. Investing in gold and silver could not be more simple. Complete the account opening documents and arrange funding via automatic bank payment, direct bank account withdrawal, or credit card. Minimums apply: $50 / month minimum investment for silver, $100 monthly minimum for gold purchases, or a combined gold/silver accumulation program minimum investment is $200 / month.

GSAP brings the power of dollar-cost-averaging to investors of precious metals, and systematic investing in gold and silver brings diversification to any portfolio in a simple, cost-effective way.

Purchasing gold and silver directly from PFG Precious Metals in a GSAP program is extremely flexible as far as investing/diversifying. Convert yours (or your grandchild’s?) accumulated gold and silver account into fabricated products, such as American Gold Eagles or silver Canadian Maple Leafs – or any other sovereign coin available. Or, liquidate your account at prevailing market prices and cash out at the accumulated value.

Investing by the dollar amount, and not by the ounce, is a completely unique advantage – you are not forced to round up to a specific weight increment (and dollar value) of a coin. Your purchases are made in whole or partial ounces, with no costly assaying fees for weight and purity testing. Plus, PFG Precious Metals does not charge storage or handling fees. With minimal acquisition fees of 5½% on gold and 9½% on silver, this is an economical way to acquire these precious metals.

Keep track of all your metals purchases easily and conveniently with daily and monthly electronic statements. Your metals investment (and any accounts you wish to open for your heirs or family members) is marked to the New York close at the end of every day for tracking purposes.

Choose the amount you wish to invest to create your own personalized investment plan for building a precious metals portfolio. Use your personal precious metal portfolio to hedge against other investments that can be ravaged by inflation. It can be your safe haven.

Now, on to other precious metals products and services from parent company PFGBEST.