All about Global Gold...

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Category: IM Interviews

Published on Wednesday, 26 October 2011 10:00

Written by International Man

We have quite a treat for you today. We're talking to Frank Suess, CEO of BFI Capital Group, a Swiss-based wealth planning and management service, as well as the leader of the increasingly popular gold storage program Global Gold.

In this interview, exclusive to International Man, Frank will share details of the company's services including Global Gold, as well as a wealth of knowledge over decades of experience in the industry.

For our American readers, this will be of particular interest because, as Frank will cover in detail, BFI has committed to continuing to work with American clients, going so far as to register with the SEC and free up the resources to comply with current and future regulation.

Might be a valuable resource for you.

Interview with Frank Suess, CEO, BFI Capital Group
25th of October, in Singapore... Part I

International Man: Tell us a little bit about you and your company, BFI Capital Group, and its subsidiaries.

Frank Suess: In brief, BFI Capital Group is a Swiss wealth management group that provides a unique array of international wealth planning and investment management services. We've been in business for more than twenty years and support our clients at diversifying their assets jurisdictionally, safely and in compliance with the rules. We also manage assets with a focus on solid wealth preservation and proper risk management.

We are concerned that decades of "easy money" are leading us steadily toward increased monetary and fiscal imbalances that require prudent wealth management and planning. Investors, particularly in highly indebted nations, need to protect their assets in terms of both structure and adequate asset allocation. Everything our group does, the services we offer, the solutions we develop, is strongly influenced by that fundamental "big picture".

A key aspect of our business is independence. We see our role as one of a trusted partner, who helps clients plan and implement their respective strategies as needed. Rather than doing everything in house, we work with a variety of custodian banks, brokers, trust companies, life insurance carriers, attorneys, accountants and/or any other entity that our clients would need.

BFI is not a big firm. We employ 25-30 people in total. However, this makes us large enough to provide an interesting array of good services. And, we are still small enough to provide personal attention and a family office type experience.

IM: If I can jump in for a moment... Before we get too far into the interview, can you tell us a little more about Swiss annuities? Most of our readers will be familiar with the concept but may not know the details.

FS: Certainly. We have quite a few clients that have Swiss annuities. Generally, Swiss annuities are used as a safe and cost efficient means of asset protection and currency diversification.

Today, unfortunately, the term "Swiss Annuity" is sometimes used a little too broadly. I recently even saw a brochure of a recently founded Swiss advisor who is aggressively pushing a number of products they term "Swiss Annuity". They offer, for example, something they call a "Swiss Strategic Annuity" and they even add a trademark symbol to it. That is ridiculous. In fact, that product is a deferred variable annuity issued by a non-Swiss life insurance carrier.

When I say Swiss annuity I'm talking about fixed Swiss annuities which have guaranteed yields. They're issued by Swiss insurance companies that are considered very safe - in Switzerland, we have never had a life insurance company go bankrupt.

Obviously, people invest in Swiss annuities for the purpose of safe retirement income. Many also did it in order to have their life-time annuity payments denominated in the Swiss franc, or other currencies of their choice.

One popular reason to invest in Swiss annuities is the solid asset protection you can obtain. For example, a lot of doctors have Swiss annuities in order to protect themselves from litigation, and possibly spend less on malpractice insurance. It is practically impossible for creditors or plaintiffs to pierce the shield of a Swiss annuity, unless the policyholder has done something criminal according to Swiss law.

IM: Great thanks. Now, let's continue with your company's history...

FS: While BFI's clients continue to regularly invest in the traditional kind of Swiss annuity, around 1998, we increasingly started using what is widely known as "Private Placement Life Insurance", or PPLI. The respective policies, issued by international life insurance carriers, rather than offering fixed yields, provide variable returns that are dependent on the performance of the investments in the policy. The PPLI solutions we like to work with allow our clients to have a personally tailored investment portfolio within the policy.

Around 2002, we started offering asset management for high net-worth clients and families. We differentiated our investment strategies from others in that we allocated a pretty big share towards gold. Partly as a result, the performance has been very respectable over the past 10 years.

Initially, our allocations toward precious metals consisted of a variety of typical bank products, claim accounts, metals accounts or ETFs. But, as the years went by and we started seeing where the world was headed with its fiat currency system and fiscal issues, we moved away from these "paper metal solutions" towards physical allocation.

About four years ago, we had more and more of our clients asking, "Could you offer us a non-bank Swiss solution? We'd really like to store physical allocated metals in Switzerland, but we'd like it to be outside of the banks."

That fit with our big picture, too; whatever crisis scenario we're headed towards, it's definitely going to heavily involve the banks. It makes sense to look for a solution of owning precious metals outside the paper banking system.

That's how Global Gold was born. We founded that company in 2008.

IM: Speaking of Global Gold - many members have asked us about an overseas precious metal storage facility, and a few have even mentioned your company, Global Gold, by name. What makes your company different from some of the other options out there?

FS: Global Gold's service is summed up in one sentence: "We offer private and institutional investors a safe, convenient, and competitive Swiss solution for buying, selling, storing, and delivering a variety of physically-allocated bullion coins and bars made of gold, silver, platinum, and palladium."

We have all four metals. It's a Swiss program. It's all bullion coins and it's physically allocated. Those are some of the key aspects. Most importantly, we're a Swiss non-bank solution. Traditionally, the precious metals business in Switzerland has been occupied by banks, and is still largely occupied by banks.

As I mentioned before, if you own gold or silver as a hedge against the financial crisis ahead, you need to consider what kind of crisis it will be. We definitely expect banks to be highly affected by that crisis, and therefore it makes a lot of sense to own gold in something which is non-bank.

Ultimately, it's really the sum of features that makes Global Gold unique and that add up to make it a solid crisis hedge.

First, direct and unencumbered ownership. You want to make sure that you own the metals directly and it's not a claims situation. Most bank products and paper solutions are claim structures, meaning that the institution that issues you the precious metals actually owns it - has it on its balance sheet. So, if they go bankrupt, then your assets are exposed to creditor obligations. With Global Gold, you own the metals directly. They are not on Global Gold's balance sheet.

Second, physically allocated ownership is important. By that I mean that you specifically own a certain number of coins or a certain number of bars of a certain format. Those coins and bars exist and are in storage for you to sell or deliver as you wish.

A lot of the other programs out there offer fractional ownership. Very often you will own a fraction of a bar. For example, when it concerns gold, it's very often going to be a 12.5-kilo bar or what they call a "standard gold bar". [Currently valued at just under USD $720,000 as of this writing]

With Global Gold you own a specific and physically separate product. Global Gold offers common and liquid formats - Maple Leafs, American Eagles, Britannia, Philharmonic, those kinds of coins - and different bar formats.

Third, the solution has to be independent of financial markets or the Internet. You do not, for example, want to be dependent on the stock exchange in New York being up and running. There are a lot of programs that only function when the NYSE is open, or if the Internet is functional.

Fourth, you want delivery and/or sale to be done quickly and conveniently. Some people may want a safe deposit box overseas. The problem is that if you ever come into a crisis situation, you would have to travel in order to sell or obtain your metals. Then when you're there you have to take it out of the box and you have to find a buyer. That can be a slow and inconvenient process.

With Global Gold, you don't have to be present in Switzerland if you want to sell your metals or if you want them delivered. All it takes is a sell or delivery order that you fax, e-mail, or mail to us.

Fifth, you must ensure that the contract does not contain any cash settlement clauses. These clauses are standard in the banking industry. You find them in ETFs, metal accounts and most other paper solutions. A cash settlement clause means that if you want physical delivery the issuer of the product has the right to simply pay out in cash. This would generally apply, for example, if the market is tight or if there are a lot of redemptions.

Lastly, you'll need to consider overall safety - like insurance, audits, high-security storage, etc.

So, to sum up your question, it's the combination of these factors that makes Global Gold unique.

IM: That'll wrap it up for now but in next week's regular interview series, we'll pick up our conversation with Frank right where we left it. Some of the highlights:

• One of the big dangers to gold-based ETFs
• Why someone would want to consider diversifying assets to Switzerland instead of other financial centres like Singapore
• Evolution of Swiss banking and finance over the past 20 years - the good and the bad

You can read Part II of the interview here.

Tags: banks , bullion , Capital Group , ETFs , fiat currency , Frank Suess , Global Gold , gold , high net worth individual , investors , precious metals , silver , Swiss annuity , Switzerland