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Gold
Coins > This page
Gold Coins - Questions
and Answers
What
is Xodus Gold Co-operative?
Why is such an instrument necessary?
Which investors will be interested in Xodus Gold?
Why
a co-operative?
Who may become members of the co-operative?
How are members' funds employed?
Is gold being bought specifically for a member?
What are the investment requirements?
Which methods of payment are acceptable?
Is the point in time when the investment is made, important?
Do you, as a member, share in the discounts?
Which costs are to be paid?
In which form is gold being held?
Where are Krugerrands being purchased?
What is the quality of the Krugerrands?
How safe is the gold stock being cleared?
Which options is available to me should I wish to withdraw
my member's interest?
How do I take delivery of my gold?
What bout tax implications?
May I add my own Krugerrands?
How will I be kept informed on my member's interest?
What will my involvement as a member entail?
What
is Xodus Gold Co-operative?
Xodus Gold Co-operative was established to offer an investor the opportunity
to own physical gold without difficulty. Although many countries offer
equivalent instruments to investors, Xodus Gold is the first instrument
of its kind in South Africa.
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Why
is such an instrument necessary?
Although many South Africans acknowledge the need to buy physical gold,
they experience stumbling blocks that prevent them from actually making
a move in that direction, e.g.:
" Lack of knowledge concerning the way in which, and where to buy
gold.
" Effort and costs involved in buying gold.
" The dilemma of safekeeping and insuring gold stock.
" Smaller investors have no negotiating powers needed in the purchasing
process.
Xodus Gold deals with all these facets.
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Which
investors will be interested in Xodus Gold?
Small, as well as prime investors who
" wish to apply diversification of their portfolios - in all circumstances
an investor should invest 10% to 15% of his/her portfolio in physical
gold
" are concerned about a global economic collapse that may affect
all financial institutions, including banks. In such a case tangibles,
especially gold, will provide valuable hedging and could effectively be
used as a medium of exchange
" expect positive growth in the price of gold.
Potential members must keep in mind that speculating in gold is not the
objective of Xodus Gold, but rather to employ members' funds to the maximum
in order to acquire physical gold at the best prices.
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Why
a co-operative?
A co-operative accommodates the following needs or requirements, which
had been identified as being essential from an investor's point of view:
" Liquidity: Calling in of gold should be effected without delay.
A member's gold is available within 24 hours after the required documents
have been submitted.
" Protection: A co-operative protects its members against the majority
interests. Every member has one share at R1 each, irrespective of the
size of his gold investment. Consequently, every member has one vote.
" Right of ownership: Right of ownership of the member's gold in
the gold pool vests in the member's name. Thus, creditors of the co-operative
are currently not entitled to lay claim to any gold that is being held
on behalf of the members. A further advantage is that no capital gains
- or loss - realise when a member calls in his gold, because there had
been no change of ownership.
" Management: The board of directors consists of selected members
of the co-operative, who are investors themselves.
" Membership: This is not restricted to natural persons.
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Who
may become members of the co-operative?
Any natural person, closed corporation, company, trust or accepted legal
entity may become a member.
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How
are members' funds employed?
You must in the first instance become a member of the co-operation by
purchasing one share of R1. The membership fee of R1 is refundable at
the resignation of a member and bears no interest. A 100% of the balance
of your funds, after commission and administrative costs have been deducted,
is being employed to establish your member's share within the total of
the members' interest, in terms of units at the current unit price.
The members' interest comprises of physical gold, which was bought and
held within a gold pool, as well as fractions of cash that were left over
after the purchasing of the gold. The number of units held by you is fixed
and the value of the units will vary as and when the price per unit varies,
which in turn is determined by the price of the gold stock. The funds
of members are being pooled to effect bulk purchases in view of negotiating
an optimal discount.
The units and working of the unit prices result in the changing value
of the coins, not the number you purchased.
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Is
gold being bought specifically for a member?
Yes. The composition of coins bought for any member is not suppose to
change, unless costs are deducted from the gold pool.
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What
are the investment requirements?
Minimum single amount investment (initial or additional amounts) of R10
000 (amount may be amended from time to time).
No maximum, but where amounts exceed R5 000 000, Xodus must be informed
beforehand in order to verify the availability of gold stock.
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Which
methods of payment are acceptable?
" Electronic transfer (preferred).
" Bank cheque or bank guaranteed cheques.
" Cash deposit, but the cost of all levy fees on cash will be recovered
from the member's investment and could even be as high as 1%.
Please note that a payment could only be accepted, provided that a waiting
period, if applicable, has expired. For this reason electronic transfers
are the preferred method of payment.
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Is
the point in time when the investment is made, important?
This may well be. It is your decision when to purchase gold. Xodus will
not necessarily conduct its gold purchases daily, but will attempt to
accumulate all new incoming funds for a maximum period of 5 working days
in order to accomplish bulk purchases, thus ensuring optimal discount.
Members shall earn no interest on any cash.
If the member's investment is a substantial amount and the potential member
is concerned about losing a few days' interest, Xodus should be contacted
beforehand and in good time to ascertain when the following date of purchase
will be. The potential member must also take into consideration any possible
waiting period, if applicable, to ensure that deposits are available in
the bank account of Xodus.
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Do
you, as a member, share in the discounts?
The co-operative was established exclusively with the aim to buy gold
on behalf of members, to secure and safeguard it, to administer and manage
it. It is not geared towards gain. Discounts on bulk purchases may run
to 2% and is not used no purchase gold, but is diverted to an account
dealing with subsidising costs. The member therefore does not benefit
directly through the direct purchasing of gold, but indirectly in that
costs are financed in this manner.
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Which
costs are to be paid?
Initially:
Administration costs: 1.25% of the amount being invested.
Commission: Negotiable for large amounts. (Smaller amounts have a maximum
of 2%)
Annually: Currently no costs. Please continue reading in order to understand
costs. The co-operation is responsible for the following costs:
Expenses:
" Starting costs, yearly auditing costs, remuneration of board of
directors, ad hoc running expenses. These costs are managed strictly and
are kept as low as possible. For example, currently the directors are
receiving remuneration only for petrol expenditure as they are managing
the co-operation as members on behalf of other members.
" A fixed contracted fee of 0.054% (exc. VAT) per month to RBK Asset
Management for the management and administration of members' interests.
" Safekeeping, controls and transport of gold stock.
Income:
" The initial administration fee of 1.25% (exc. VAT) on all new investments
" The discounts on bulk purchases which are being kept for running
expenses
" Fraction cash (±0.5%) of new investments that are being
kept separate
" Any interest earned on cash
If the income mentioned above are depleted at any time, the co-operation
will supplement it from the gold pool or directly from members who prefer
paying additionally.
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In
which form is gold being held?
Only Krugerrands are purchased in order to comply with South African legislation
which makes possession of physical gold in any other form except jewellery
and collection coins illegal.
Krugerrands are known internationally and are an accepted international
currency.
The gold stock will mainly consist of 1 oz and 1/10 oz coins to ensure
that members - who wish to withdraw their member's interest - receive
the maximum in the form of gold coins which are equal in value to their
member's interest, thus making sure that as little fractions of cash as
possible are left.
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Where
are Krugerrands being purchased?
Although Xodus will not be limited to one specific source, purchases of
Krugerrands will be effected at Rand Refinery. Rand Refinery is one of
the most renowned refineries in South Africa and acts as an exclusive
agent for the SARB to prepare, amongst other activities, gold for Krugerrands,
which are then minted at the SA Mint and distributed. For more information
concerning the Rand Refinery, feel free to visit them at their website
at www.randrefinery.co.za.
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What
is the quality of the Krugerrands?
Unless gold becomes scarce, purchases will mainly be restricted to new
Krugerrands. However, if quality is guaranteed in terms of an agreement
between Rand Refineries and Xodus, secondary coins, if available, will
also be purchased. Rand Refinery does not trade in coins, but produces
new ones for distribution. Occasionally secondary coins are available
when supplied directly by the SARB. Most of these coins have probably
never been handled before. The value of a Krugerrand does not depend upon
its exterior appearance, but on its weight. The coins are also being protected
by a 2-carat copper content, which improves the durability of the coins.
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How
safe is the gold stock being stored?
The directors and members have built in every security measure and control
in order to safeguard the stock. Some of these include:
" Monthly auditing by external auditors
" Six-monthly auditing by another external auditor
" Stock keeping on three separate systems
" Secure measures with regards to safe visits when making deposits
and withdrawals
If you decide to become a member, more information will be provided.
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Which
options is available to me should I wish to withdraw my member's interest?
A member is free to decide at any stage to partly or completely withdraw
or sell his member's interest and to end his membership. However, costs
may be recovered if expenses incurred have not yet been settled by using
funds from the pool. The reason for this decision is to rule out any cross
subsidising among members.
The following options
are available:
1. Withdrawing physical gold
Withdrawing stock implies that the member exercises the choice to withdraw
some, or all of his gold, and decides to keep it in his own custody. In
such instances the member's interest is determined by basing it on the
number of units allocated to the member multiplied by the unit price on
the day of withdrawal. A member may also stipulate a specific amount or
the number of units he wishes to be withdrawn.
The member's interest is presented to the member in Krugerrands, based
on the value of the coins in Rands on that specific day. Should a member
decide to withdraw his full member's interest and prefer to end his membership
as well, the R1 membership fee is also refunded to him. Left over fractions
cash, of which the total is less than the value of a 1/10-oz, are deposited
electronically into the member's account. The member does not have the
option to withdraw his member's interest in cash. However, should the
member prefer cash, the following options should be considered.
2. Selling of physical
gold after withdrawal
A member may, after having instructed Xodus to withdraw his member's interest,
partially or totally, appoint an authorised broker to sell his gold. Such
appointment must be submitted to Xodus in writing, and must contain the
required ID particulars. Xodus or RBK Asset Management may be contacted
for further information concerning a suitable broker. The member must
personally negotiate the price and costs with the broker involved. Xodus
will inform the member of the market prices.
3. Selling the member's
interest
A member may sell his member's interest, valued at the number of units
and the price per unit, to a third party. The third party must be a member
of the co-operative. However, if the third party is not a member, the
membership of R1 may be transferred to him. Xodus will inform the member
of the value of the member's interest. The member (seller) will personally
be responsible for recovering the amount owed to him by the buyer. After
having received the instruction issued by the member, Xodus will transfer
the member's interest to the new member on instruction.
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How
do I take delivery of my gold?
For the sake of the members' own protection and safety, strict control
measures will be enforced when members give notice of their intention
to take delivery of their gold. When you become a member more information
will be available on taking delivery of gold.
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What
about the tax implications?
(Please confirm your tax situation with your tax consultant
as tax legislation differs from country to country.)
Income Tax
None is payable as no interest is earned - both with regards to members'
interests and membership fees.
Capital Gains Tax
No capital gains or loss realises when a member withdraws his member's
interest and takes delivery of his physical gold. However, if a member
should sell his gold afterwards, capital gains or loss may result, in
which case the member is liable to declare such gains or losses to the
Receiver. If a member should sell his member's interest to a third party,
capital gains or loss must be declared to the Receiver.
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May
I add my own Krugerrands?
In answer to enquiries received from potential members on whether they
would be allowed to place already owned Krugerrands in the care and safekeeping
of Xodus, provision has been made that this may indeed be done. Xodus
must be informed of the exact number of coins and the necessary arrangements
must be made to hand them in. A member's interest will be enlarged by
the added value of the Krugerrands, based on the current procurement price
at the Rand Refinery on the day on which the coins are handed in. Only
1 oz and 1/10 oz coins will be accepted.
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How
will I be kept informed of my member's interest?
Xodus will supply quarterly statements to members, which, apart from personal
details, will also supply the following information:
" Member's investments received.
" Units allocated.
" Value of member's interest reflected in Rands.
" Number of Krugerrands representing the member's interest at market
prices on the date on which the statement has been issued.
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What
will my involvement as a member entail?
An annual meeting will be held for members within 120 days after the closing
of the financial year (28 February), during which members will be afforded
the opportunity to participate in important decisions regarding Xodus'
state of affairs. Members will decide, amongst other issues, who are to
be appointed as auditors, who are to serve on the board of directors and
the remuneration they are to receive, as well as the implementation of
important strategic decisions concerning Xodus.
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The articles of association of Xodus are be available for perusal on request.
Email
us at gold@eagletraders.com
Recommende further
reading:
Why
invest in gold?
Why
invest in Krugerrands?
Comparison between of South African Krugerrands,
Gold Eagles and Maple Leafs
How do I start - what do I need to do?
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