A few years ago I did an appraisal for a client who was pledging his gold as collateral in a commercial real estate transaction. In the course of doing the appraisal, I was struck with the large gain in value. His original purchase in 2002 was in the seven figures when gold was still trading in the $300 range. His holdings had appreciated 50% after a roughly three-year holding period. (Since that appraisal, the value has risen another three times.) I asked his permission tell his story at our website as an example how gold can further one’s business plans.
"No problem at all,” he wrote by return e-mail, “I have viewed it as a hedge, but also as an alternative to money market funds. Now I can leverage it for investment purposes -- private equity and real estate mostly. The holding has averaged 7%-10% of my total assets. And I do hope to buy substantially more, when appropriate. Thanks again."
It needs to be emphasized that he was not selling his gold, but pledging it as collateral to finance other aspects of his business. Selling it would have meant giving up his hedge -- something he didn’t want to do. Instead, he was using gold to further his business interests in a transaction in which he would become a principal owner.
Upon publishing his story at the USAGOLD website, we received a letter from another client with a similar story to tell: (more)
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