Investment Approach - Philosophy

Income Producing Assets

An investment in a bond or equity buys the right to its future income stream. The potential income return determines the future opportunity of an investment. Income streams can be measured, projected objectively and valued. Valu-Trac's Intrinsic Value Yield is a measure of the potential income return, expressed as an annualised yield.

High Intrinsic Value Yield is attractive. The combination of high and falling Intrinsic Value Yield (as Price rises) is most attractive. Allocations based on competitive Intrinsic Value Yield provide competitive performance.

Non-Income Producing Assets

The Intrinsic Value of non-income producing assets is calculated by reference to the World Monetary Base, as represented by Central Bank Total International Monetary Reserve ('IMR') Assets, which determines the quality of money. Central Bank money growing faster than the economy points to monetary and price inflation, and changes in the World Monetary Base is the chief cause of change in the Gold price.

The World Monetary Base can be used to value Gold, which in turn is used to value other Commodities.

The Intrinsic Value for Currencies is determined by reference to each Central Bank's monetary policy as shown by changes in Total IMR Assets. Monetary Reserve Parity is equivalent to Purchasing Power Parity ('PPP').