Two new outlets for gold and silver bullion investment products have come to my attention. Both are UK based, reflecting the burgeoning interest we’re currently seeing here at home for alternatives to fiat paper investments. I can’t vouch for them as yet, but readers may like to check out what they offer. WY Argent are the people behind the Silver British Rose rounds which you may already have seen for sale:
http://www.preciousmoney.co.uk/
You’ve probably noticed the deluge of adverts on TV, in the press and online urging members of the public to exchange their ‘unwanted’ or ’scrap’ gold for cash. If you or anyone you know has been tempted by such offers, tread very carefully indeed. First up, most people have no idea what the current gold price is. This puts them in a very weak position when ‘negotiating’ with one of these companies, especially if they’re in need of cash and have been lured in by the promise of ‘Cash in 24 hours’.
Tellingly, none of the adverts make any mention of the gold price. This is in stark contrast to a conventional gold or silver bullion dealer who will have constantly updated market prices for precious metals displayed on their website. Items of jewelry are much more difficult to value than, say, coins of known weight and fineness (% of pure metal content), but establishing this basic information about any gold, silver or platinum you may wish to sell is well worth the effort and certainly better than simply sticking the family heirlooms in a pre-paid envelope and hoping that the purchasing company gives you a good price. If I had unwanted jewelry to sell, I’d certainly consider taking it to a professional bullion dealer instead. You’ll often find these listed under ‘coin shops’ in local business directories. But unless you’re desperate for the cash, I wouldn’t be selling gold anytime soon.
Live gold price: http://www.taxfreegold.co.uk/goldpriceslive.html
What a strange and fascinating commodity gold is – a store of value that is no one’s liability, which cannot be printed or debauched by governments but which, with no income stream, has no objective value. A simultaneous hedge against both deflationary slump and inflationary spiral, it is little wonder gold should be the investment of choice for the Armageddon crowd.
Gold attracts conspiracy theories like no other asset. Google “Yamashita’s Gold” and enter into a half-plausible thriller of Japanese wartime loot and abandoned bullion in the Philippines. It is the stuff of an airport page-turner but what can it tell us about the real world?
Some serious people think that the recent rally in the gold price really is different this time. It’s not like the safe-haven spikes that have pushed the yellow metal through $1,000 an ounce on a handful of recent occasions but each time failed to hold the gain. Traders are pointing to the shallowness of recent pull-backs and the volume of bets buying speculators the right to purchase gold at between $1,100 and $1,200 an ounce.
One long-term market player said this week that he’d been trading gold for 18 years, the first 13 of which no one wanted to talk to him. Today he’s fighting off questions about what’s going on in the market. (Continues below)
What’s happening is that gold is pushing higher in the face of things that history says should push it lower. Gold rises with inflation but it has strengthened in recent months despite easing price pressures and lower inflation expectations. The other tail risk that investors use gold to hedge against – rising defaults and deflation – has also faded into the background.
If gold is telling us anything today it is that governments – principally America’s and our own – are about to make a mess of the exit from their economic stimulus programmes. Either they are going to tighten too soon, plunging the world into a deflationary ice age, or, more likely, they are going to hang back too long until we are swept away by hyperinflation.
Read article: http://www.telegraph.co.uk/finance/comment/tom-stevenson/6424245/Gold-gives-a-precious-insight-into-economy.html#
I’ve been a gold bug for nearly ten years. It’s been good: the dollar price of gold has nearly quadrupled since 2000. It has also been easy. Not many things in the investment world are obvious (to me at least) but in 2000 the fact that gold’s long bear market was really over seemed pretty clear.
After 20-odd years of falling prices, spending on both exploration and production had collapsed, leaving supply static at best. Yet demand was rising as India (a hefty consumer of gold jewellery) got richer and other emerging markets upped their consumption: for some years more gold had been consumed than had been mined on an annual basis with the shortfall only met by central bank sales and loans.
At the same time, the US trade and government deficits were beginning to look even more unmanageably huge than usual and the supply of money was rising fast, suggesting that the dollar was vulnerable – historically, when the dollar falls, the gold price rises.
Finally, most of the people who had worked during the previous bull market in gold, which took it from $35 to over $800 between 1971 and 1980, were either dead or long retired. So, with all the benefits of 20 years of hindsight, the consensus view from the City was that gold was a rubbish investment. Any suggestion that it might not be was met with almost universal derision.
Oddly, it still is. There was a brief period last year when, with the financial crisis at its peak, the nation’s fund managers all turned temporary gold bulls, tripping over each other to quote the phrases the gold bugs had been mantra-ing for years (“gold is no one’s liability”, “you can’t print more gold”, “gold is the ultimate safe haven”, “gold has held its value for 2,000 years” and so on).
It didn’t last very long. Today, even with the gold price once again knocking around the $1,000 mark, the majority of mainstream fund managers aren’t much interested. They say that weak jewellery demand (a symptom of the recession) makes the “fundamentals” of supply and demand look bad; they say that gold isn’t rare or particularly useful; and, most frequently, they say it makes no sense for gold to have a role as a currency in the modern financial world. (Continues below)
So how does the gold bug answer these claims? First, I think we can agree that gold is not rare (look around you – along with some equally ubiquitous diamonds, you’ll see some gold on pretty much every finger in sight). But rare isn’t the point. The balance between demand and supply is the point. And right now supply is limited and demand is high.
Sure, thanks to high prices and what the World Gold Council describes as “a time of severe global economic difficulty”, jewellery demand fell in the second quarter of this year (except for in China, where it rose 6%). But investment demand was up 46% and supply was well below that of the previous quarter as the flood of recycled gold (think panic selling of jewellery) on to the market slowed and as central banks entered the market as buyers rather than (as they usually are) sellers. Between them, they made net purchases of 14 tonnes.
The fact is that right now the gold price has little to do with the demand for bangles and brooches across the world’s shopping malls. Instead, it reflects gold’s monetary role: whether you think it makes sense or not, gold is seen by a large number of people (mostly outside the City) as having a monetary function.
With massive increases in global money supply, quantitative easing suddenly seeming normal, and fiscal stimulus all over the place, there is a huge amount of new money sloshing around the world – by the end of the year the Bank of England will have printed at least £175bn, for example. The inevitable result? Most currencies are being debased in one way or another. So it makes sense to hold one that can’t be. Indeed, as one of the leaders of the long-term gold bugs, Bill Bonner, likes to say, gold is most useful in extreme monetary conditions – when “other money goes bad”.
There is a large and growing school of thought that would have you believe the global economy is recovering, that neither inflation nor deflation is a particular threat and that you no longer need safe haven investments of any kind.
This view might be the right one, but just in case it isn’t – there may be more bank failures and another leg of recession, perhaps even inflationary recession ahead – I’m going to stick with my gold for a while yet.
I might even buy some more. According to Frank Holmes, the US fund manager, the beginning of September has historically been a pretty good time to start building or to top up a gold holding – the price has risen in 16 of the 21 Septembers since 1989.
Late on a Friday in August, when most people around the world were not looking, the international monetary system, in an unprecedented move, evolved. We were notified by the IMF of the following:
Aug. 28 (Bloomberg) — The International Monetary Fund said it today pumped about $250 billion into foreign-exchange reserves worldwide, acting on an April call from leaders of the Group of 20 nations to boost global liquidity.
Countries will be able to convert the money, to come from so-called Special Drawing Rights, into hard currencies through “voluntary trading arrangements” with other members, the IMF said on its Web site today. The SDRs are the institution’s unit of account based on a basket of currencies.
What this means is that for the first time in history we have a world central bank capable of creating money out of thin air. No longer does the IMF need to borrow money with a vote of all members plus the consent of the US congress. It can simply create whatever amount of money it needs through the creation of SDRs. Not for itself, mind you, but for the world. The SDR has been around since 1967, but never as a convertible asset. That changed Friday, August 28th, 2009. The SDR has quietly mutated.
Read article: http://www.kitco.com/ind/Nathan/aug312009.html
Much commentary can currently be found on the advantages of moving a substantial portion of your worthless paper money into gold, a genuine hard asset and an age-old store of value. Silver, however, looks like an even better long term investment with the added advantage that even those with relatively small amounts of cash can easily enter the market. A single visit to eBay can get you started, where one ounce silver coins such as the Britannia, Eagle and Maple Leaf can be purchased in the £12-£20 range.
Let us imagine that in August of 1971 the governments of the world decreed that as of that date all vehicles of the world should run on water rather than on gasoline. Within 48 hours, at the most, all vehicular traffic in the world would have ceased. The cause – an absurd decree – would have produced disastrous effects immediately. In human affairs, which are much more complex, it generally happens that bad decisions do not produce all their bad effects immediately, but only in the course of time.
Today the world is struggling with an unprecedented economic collapse, caused by a mistaken decision taken almost 38 years ago. The distance of 38 years in time, in a world which is undergoing change at such a rapid pace as ours, is a great distance. Those who can remember the bad decision of August 15, 1971, and who can recall how the world worked before that date, are today at least 63 years of age. They are already either retired or about to retire from active life.
For men who are active today, 1971 is a date that is beyond the horizon of their interest. For those men, what they have seen in their lives seems to them completely normal; they think that life has always been as they have known it. Why should it not continue to be so?
Read article: http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=96
