XAG Intrinsic Tender

Mark BainbridgeDirector – Gold Stackers Australia Pty LtdDirector – Gold Stackers Australia Pty Ltd

Overview

• Face Values on legal tender bullion coins

• Problems holding coins in SMSFs• Problems holding coins in SMSFs

• How Intrinsic Tender came about

• Local and Overseas Versions

• Marketplace acceptance

Intrinsic Tender moving forward• Intrinsic Tender moving forward

What is Legal Tender?

Back when the system worked

AGW .2354 Oz.

Face Value £1

£ per Oz. £4.248

Denomination .9677 Oz.

$ Face Value $20

$ per Oz. $20.67

Modern Bullion Coin Face Values

AGW 1 Oz. 1/2 Oz. 1/4 Oz. 1/10 Oz.AGW 1 Oz. 1/2 Oz. 1/4 Oz. 1/10 Oz.

$ Face Value 50 25 10 5

$ per Oz. $50 $50 $40 $50

Modern Bullion Coin Face Values

AGW 1 Oz.

$ Face Value $100

$ per Oz. $100

ASW 1 Oz.

$ Face Value $1

$ per Oz. $1

Modern Bullion Coin Face Values

ASW 5 Oz.

$ Face Value $8

$ per Oz. $1.60

Modern Bullion Coin Face Values

AGW 1 Kg.

$ Face Value $3000

$ per Oz. $93.31

Modern Bullion Coin Face Values

AGW .2948 Oz.

$ Face Value $200

$ per Oz. $678.43

AGW .2354 Oz.

$ Face Value $25

$ per Oz. $106.20

AGW 0.5 gram

$ Face Value $2

$ per Oz. $124.41

Giveaway Time!

Self Managed Super Funds

• SMSF are pretty much the only way to hold

physical precious metals inside super.physical precious metals inside super.

• Recent regulations treat bullion coins and bars

differently.

• Upshot seems to be that you are required to

store your coins separately and have them store your coins separately and have them

insured.

The RegulationSUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994 - REG 13.18AA

(1) For section 62A of the Act, this regulation applies to investments involving

any of the following ( section 62A items ):any of the following ( section 62A items ):

(a) artwork;

(b) jewellery;

(c) antiques;

(d) artefacts;

(e) coins, medallions or bank notes;

(f) postage stamps or first day covers;

(g) rare folios, manuscripts or books;

(h) memorabilia;(h) memorabilia;

(i) wine or spirits;

(j) motor vehicles;

(k) recreational boats;

(l) memberships of sporting or social clubs.

The Regulation

Paraphrasing from REG 13.AA the following must be observed:

• Asset must not be leased to related party

• Item must not be stored in private residence of related party

• Decision on storage of item must be documented

• Item must be insured in fund's name

• Item must not be used by related party

• Transfer of asset to related party requires independent valuation• Transfer of asset to related party requires independent valuation

FULL TEXT : http://www.austlii.edu.au/au/legis/cth/consol_reg/sir1994582/s13.18aa.html

The Confusing Bit

Is my fund's investment in bullion coin

considered to be a collectable and therefore

required to comply with the restrictions required to comply with the restrictions

contained in regulation 13.18AA?

Coins are collectables if their value exceeds

their face value. Therefore, if bullion coins

have a value that exceeds their face value and

they are traded at a price above the spot price

of their metal content, they will be a

collectable and your SMSF must comply with

FROM: Scenario questions for

investments in collectables

and personal use assets made

after 1 July 2011

collectable and your SMSF must comply with

regulation 13.18AA in relation to the

investment.

SOURCE: http://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/Assets-and-investments/Collectables-

and-personal-use-assets---questions-and-answers

The Inspiration

ISO 4217 Currency CodesCode Number Currency

AUD 036 Australian Dollar

CNY 156 Chinese YuanCNY 156 Chinese Yuan

EUR 978 Euro

GBP 826 Pound Sterling

USD 840 United States Dollar

XAG 961 Silver (One Troy Ounce)

XAU 959 Gold (One Troy Ounce)

XDR 960 Special Drawing RightsXDR 960 Special Drawing Rights

XPD 964 Palladium (One Troy Ounce)

XPT 962 Platinum (One Troy Ounce)

The Solution

The Intrinsic Tender bullion rounds have a face value,

and because that face value is denominated in XAG, it and because that face value is denominated in XAG, it

can never be worth more than it’s face value.

Therefore you get to store it at home for your SMSF.

Front Back Mintage

Mirror Frosted 500

Mirror Mirror 500

Mary had a little Lamb

Following on from the success of the Penny design, we

proceeded to produce a cheaper round to suit bullion

investors rather than coin collectors.investors rather than coin collectors.

The XAG Ram was designed to be sold in tubes, and

therefore save on capsules. It was double frosted to reduce

fabrication costs as much as possible.

Still production costs were too high for a competitive

bullion coin, and they couldn’t compete effectively with

cheaper bullion from the United States.

Front Back Mintage

Frosted Frosted 300

The ones that got away

4 variants of the Ram Shilling were originally

commissioned, with encapsulated mirror

varieties that would appeal to collectors. varieties that would appeal to collectors.

They were discontinued due to minting

difficulties, and have since become highly

sought after in the collectible market.

Front Back Mintage Value ObtainedFront Back Mintage Value Obtained

Frosted Mirror 25 $200

Mirror Frosted 25 $230

Mirror Mirror 12 $690 (Sep 2013)

Home.. Home on the Range

Designed by Australian artist Elise Martinson,

previously a coin designer for the Perth Mint, previously a coin designer for the Perth Mint,

the XAG Buffalo was designed to clearly indicate

that this round was US manufactured.

With a price point cheaper than US Silver Eagles,

suddenly we had a product that appealed to

bullion investors. The entire 2013 run was sold

out within 6 months.

Front Back Mintage

Mirror Mirror 16,000

Limited Edition Symposium Round

• First Rounds to be minted with

the 2014 XAG reversethe 2014 XAG reverse

• Strictly Limited to 1000

• Available now from the

registration desk

Front Back MintageFront Back Mintage

Mirror Mirror 1,000

Coming soon in 2014

• 5 and 10 XAG bars produced in Australia

• XAG variants from additional countries• XAG variants from additional countries

• Introduction of XAU denominations

• Gold Symposium “Gold” rounds for

Symposium 2014.

Where To Buy

State Dealer URLState Dealer URL

Victoria

Gold Stackers Australia Pty. Ltd. www.goldstackers.com.au

Peter Strich Stamps and Coins www.peterstrich.com.au

New South Wales Bullion Money Pty. Ltd. www.bullionmoney.com

Western Australia Bullion Bourse Pty. Ltd. www.bullionbourse.com

Queensland Maggies Bullion www.maggiesbullion.com

... and most importantly here at the registration desk here at Symposium.