He is going a giant step further than investors who are buying the precious metal for inflation protection, as insurance against currency collapses and in hopes the price will continue to escalate.
He is staking his livelihood on it. Last month, Kacarevic left a job as a consultant with Investors Group in Windsor to set up his business as an independent gold broker/dealer.
Using the training and experience he gained working for three years as a commodities broker in Florida, he has established Gold Coins Canada to sell investment grade gold, silver, platinum and palladium.
"It just kind of opened my eyes to a whole new way of thinking about investing," he says of his experience buying and selling commodities for clients. "You don't have to have all your money in mutual funds or in the stock market. You can put your money in tangible assets."
Kacarevic is not alone in espousing the value of gold as one of those assets. U.S. financial pundit Jim Rogers has predicted gold, which is currently selling for over US$1,200 an ounce, is on its way to $2,000. Also still touting gold's glitter is Canada's Sprott Asset Management LP, which started investing in it 10 years ago when the price was around $300 an ounce.
"I expect gold to trade at several multiples of the current price before this bull market breathes its last breath," Sprott's chief investment strategist, John Embry, says in a report updated last month.
But like any other investment, gold comes with no guarantees, cautions Windsor's Dan Hallett, director of asset management for HighView Financial Group.
Over the past 40 years its value has increased three to four per cent above the rate of inflation, but very inconsistently, he says. "It's very volatile.... My overall conclusion is it's a worthwhile thing to hold as a part of a diversified portfolio. It's not part of every portfolio I'd put together."
A rough guideline for those who want to invest in gold to offset their exposure to the stock market is to invest 10 to 15 per cent of what they have in equities in gold, says Hallett.
He also points out that it is demand for gold as an investment that is driving the price up.
"Investment demand is not very steady. Does (gold) have any intrinsic value? I don't think so. I think it has value as long as people are fearful."
There are several ways to invest in gold. One is to hold stock in a gold mining company, which also means putting a vote of confidence in the company's management and economic conditions generally. Another is to buy certificates backed by gold. A third is putting money into mutual funds or exchange traded funds that invest in gold.
But for Kacarevic and other purists, the only way to own gold is to buy it in a form they can hold in their hands.
He doesn't deal in collectible coins and isn't interested in buying jewelry. He sells only government-issued coins and bars. Most of the gold he sells comes from PFG Precious Metals in Chicago, but he also has connections with Canadian dealers, he says.
Like many gold dealers, Kacarevic makes his money by collecting a commission on each sale. He charges seven to eight per cent above the spot price for gold. That puts his prices below those of bigger dealers, such as Scotiabank, and is the reason he can compete, he says.
Clients can pick up their gold at his office, temporarily located at 1316 Ouellette Ave., or have it delivered to their home if they want, he says. Clients can also have their gold insured and stored in vaults owned and operated by Brinks Canada Ltd. for a fee of two per cent of the value of the gold per year.
While Kacarevic feels his experience as a licensed commodities broker in the U.S. and as a financial consultant in Canada are valuable credentials, he notes that there are no qualifications required to sell gold in Canada and that investors should be careful when shopping around.
He only accepts cash, which can be in the form of a certified cheque or bank draft, for purchases of gold and the other precious metals he sells.
"So there is a big trust factor there. That's why my business is mostly through referrals," he says, though he has a website and plans to start advertising in Southwestern Ontario.
"There's no insurance on my business, so it's cutthroat and simple. Either you trust me or you don't. If I do bad business, I suffer immediately."
Kacarevic says he has no intention of burning bridges. He and his wife plan to raise their two young daughters in Windsor, his hometown. He wants to be part of rebuilding the local economy, which he believes means investing in local businesses and gradually restoring wealth to the community.
For Kacarevic that includes building up Windsor's stash of gold.
evanwageningen@thestar.canwest.com and Ellen on Windsor Business at windsorstar.com
