Doug Casey says the time is ripe for a boom in gold mining stocks but the good news is, it hasnt even started yet...For the very first time in their history, gold stocks are going to have not only the cognoscenti but the unwashed masses piling in. The bull market will be breathtaking when this gets underway...
"Thanks in no small part to the incessant meddling by U.S. regulators, London's AIM is increasingly becoming the 'go to' market for resource companies..."
While there are a number of ways to play rising gold prices, my personal favourite is the higher-quality junior precious metals exploration companies. Those are companies with a high-risk profile (few will ever actually make an economic discovery), but you can apply analytical screens to them that greatly lower that risk...leaving some truly extraordinary upside.
How extraordinary? While an extreme example, on the back of the Eskay Creek discovery Consolidated Stikine Resources went from 10 cents per share in 1988 up to a high of $73 in 1990, a stunning 70,000% gain!
These stocks do well during periods of crisis for several reasons, but mainly because they are such a small sub-set of the financial landscape that even a fractional increase in interest sends them soaring. And this time around, I think we are going to see the high end of the range that these stocks are capable of, for the following reasons:
Increase in Equity Accounts
Thanks in no small part to the dot-com boom, never before have more North American households been involved in equity markets.
As the gold stock story filters through to them, they'll find it highly appealing and will have the ability to act immediately. Furthermore, such people are trend followers; they know nothing except to buy stocks that have a positive chart. For the first time since the Internet bubble burst, they're going to have a real tiger by the tail. In other words, for the very first time in their history, gold stocks are going to have not only the cognoscenti but the unwashed masses piling in. The bull market will be breathtaking when this gets underway.
Meteoric Rise in Hedge Funds
In a similar vein, we now have the whole new phenomenon of hedge funds, which have grown like kudzu all over the financial tree. They were a non-factor in earlier bull markets, but now number over 12,000 and manage on the order of $1 trillion. Moreover, the majority of these funds are run by twenty- and thirty-somethings with little experience in a real bear market and are herd-like and aggressive to boot. Gold is increasingly finding favour as an asset class with the hedgers.
The Rise of the AIM
Thanks in no small part to the incessant meddling by U.S.
regulators, London's AIM is increasingly becoming the "go to" market for resource companies, offering these companies exposure to a wider audience than the less trafficked Canadian markets which have traditionally been home to the junior exploration companies.
Convergence of Higher Gold Prices and Discoveries
Perhaps most important is that, for the first time ever, we should witness a round of economic mineral discoveries against the backdrop of a major bull market in gold (and
silver) prices.
The trickle of financings for precious metals exploration that began soon after gold's 20-year bear market came to an end in April of 2001 has turned into a small flood. In fact, according to the Metals Economic Group, in 2006 the amount of money raised for exploration topped $7.6 billion, the fourth year in a row that there has been an increase, and the highest total since they began tracking the numbers in 1989.
All that money, much of it in the hands of teams headed by experienced pros let go by the large gold companies during the long bear market, has set off a massive number of new and fast-moving exploration initiatives, using the latest technology and squarely focused on the world's most prospective geological addresses. It is not a matter of "if" there will be significant discoveries, but "when."
If all unfolds as it can, and likely will, for the first time ever, we'll benefit from a concurrence of a discovery market with much higher precious metals prices.
Toss in a lot of investors with a lot of cash, nervous about the outlook for global financial markets and looking for a trend to fall in love with, and you have all the elements necessary for you and me as early investors in the resource sector to pull down truly extraordinary gains.
Don't get overly greedy, and don't mortgage the house to buy gold stocks. But do make sure that you move toward being fully invested... which, depending on your willingness and ability and level of risk tolerance, might take you up to 20% - 25% of your portfolio.
You're going to find good reason to love gold stocks. But I hope you won't fall in love with them. Although I'm a philosophical gold bug, I'm not always a gold bull. I always keep in the back of my mind that gold shares aren't heirlooms, they're burning matches. And while I still think this market will see gold's biggest run in history, when it's over these stocks will lose 90% of their value... as does any class of stocks when a mania ends. But the good news is that the mania hasn't even begun.
Regards
Fanky
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Premium on Gold Coins
Have you ever noticed that two bullion coins which contain the exact same amount of the same precious metal, can sometimes sell for a different price? For example, at the time of this writing, the spot price of gold is $787.50 per ounce. Yet, numerous dealers quote a selling price of $830.80 for the one-ounce American Gold Eagle, $826.90 for the one-ounce Canadian Gold Maple Leaf, and $819.00 for the one-ounce South African Gold Krugerrand.
Have you ever noticed that two bullion coins which contain the exact same amount of the same precious metal, can sometimes sell for a different price?
For example, at the time of this writing, the spot price of gold is $787.50 per ounce. Yet, numerous dealers quote a selling price of $830.80 for the one-ounce American Gold Eagle, $826.90 for the one-ounce Canadian Gold Maple Leaf, and $819.00 for the one-ounce South African Gold Krugerrand.
Why might this be? After all, each contains exactly one ounce of gold. Should not an ounce of the same precious metal, like shares of the same company stock, always have one price at any given time?
Certainly, it seems like it should be that simple, but with precious metal bullion coins, it is not. The fact is that an ounce of a given precious metal - be it gold, silver, or platinum – can, for a variety of reasons, cost either more or less than another ounce of the same metal in the same market.
How can this happen? Where does the additional cost for these gold coins come from in the first place, and why do the amounts paid for the Gold Eagle, Maple Leaf and Krugerrand all differ, even though each contains the same amount of gold?
Well, it's all about a pricing thing called "coin premiums”.
A ‘coin premium’ is the additional cost of a bullion coin above and beyond the market value of the precious metal commodity it contains. For example, with gold at a spot price of $787.50 as mentioned above, an investor can expect to pay a premium of $43.30 over the gold price to buy the one-ounce American Gold Eagle. On the other hand, at the same spot price, an investor will pay only a $39.40 premium (approximately 0.5% less than the Eagle) for a one-ounce Gold Maple Leaf, and only a $31.50 premium (or 1.42% less) for the one-ounce Gold Krugerrand.
In general, this additional cost over the spot price for any bullion coin stems from a number of factors, including the manufacturing, distribution, and administration costs incurred by the mint or refiner in making the coin, plus a "mark-up" representing the cost of sale and the profit for the wholesaler selling the coin to a retail dealer. The retail dealer, in turn, will also "mark-up" its wholesale price of the coin to cover its own sales costs and realise a small profit when selling the coin into the investor market.
This series of incremental price increases applied to the coin as it passes through the distribution chain is a typical market mechanism present in virtually every other industry in existence, from food to auto parts, and houseplants to sporting goods.
And, just as market forces of supply and demand largely determine the value at which all goods and services can be sold in their respective markets, the level of a given coin’s availability (supply) versus its popularity (demand) also directly influences the prices at which different coins will sell for in the market place, even though they may contain the same amount of the same metal!
In fact, in some unusual market conditions, the available supply of a given coin, when balanced against its market demand at any given time, can have a pronounced impact on the coin's premium. Unusual demand for a specific coin type can drive its premium level significantly higher than that of very similar coins in certain circumstances.
Such a disparity occurred between the American Eagle and the Canadian Maple Leaf bullion coins at the end of 1999, when concerns over potential Y2K-related computer debacles created widespread fear about the stability of the US banking system and world economy as the new millennium approached. This fear, in turn, led to an unprecedented demand for U.S. American Eagle Silver coins, in the belief that their owners could spend these U.S. government-guaranteed bullion coins in the surviving economy for the food and other necessities they would require to live should the banking system fail. At the same time, the Silver Maple Leaf legal tender bullion coins, which not only contain the same amount of gold and silver, but were minted in higher purities, were left sitting in dealers' vaults.
Specifically, in late 1999, the premiums for the 99.9% pure (i.e., “3 nines fine”), one-ounce Silver Eagle coins were at one point 300-400% higher than were the premiums on the 99.99% pure (i.e., “4 nines fine”) one-ounce silver Canadian Maple Leaf coins, even though the price of the one-ounce of silver they contained changed very little during the period. While the prevailing spot price of silver averaged about $6.50 per ounce during this time and the price of the silver Maple Leaf remained in the $7.50 vicinity, inordinate demand drove the price of the Eagle to more than $12.50 per coin at one point. Astonishingly, many investors were willing to pay up to four times more in premium costs than they had to for a silver bullion coin in the belief the American Eagle would be readily negotiable in whatever economy might be functioning in post January 1, 2000 period.
[Note: These inflated premiums collapsed to their more rational market levels immediately after January 1, 2000, when it was clear that an economic and banking Armageddon was not going to occur.]
On the other hand, a lack of market demand, or the outright dumping of a particular coin by market participants, can create a negative premium, causing the coin to sell at a price that is actually less than the current "spot price" of its metal content. This is what happened to the gold Krugerrand when its importation into the United States and numerous other countries was banned by many national governments in 1985 to demonstrate their countries’ displeasure with the former apartheid policies of South Africa, the home of the Krugerrand. Few investors wanted to buy the Krugerrands that continued to trade in local markets, and dealers would only buy them at prices discounted below the prevailing "spot" price of gold. It was truly one of the few times that gold – in the form of Krugerrands - has traded in the market below the spot price.
In fact, as noted at the outset of this article, though its premium has long since been positive, the Krugerrand continues selling at a lower premium than do the Eagles and Maple Leafs, reflecting its diminished popularity among investors and dealers still today.
Because coin premiums can vary significantly among coins and in different market conditions, they are an important aspect for buyers of bullion coins to understand today. Investors are well advised to inquire about and compare coin premiums before making their purchase of bullion coins. And as always, it is best to seek the advice of a reputable and trusted bullion dealer concerning any aspect of precious metals investing about which one may be unsure.
Regards
Frank
Have you ever noticed that two bullion coins which contain the exact same amount of the same precious metal, can sometimes sell for a different price?
For example, at the time of this writing, the spot price of gold is $787.50 per ounce. Yet, numerous dealers quote a selling price of $830.80 for the one-ounce American Gold Eagle, $826.90 for the one-ounce Canadian Gold Maple Leaf, and $819.00 for the one-ounce South African Gold Krugerrand.
Why might this be? After all, each contains exactly one ounce of gold. Should not an ounce of the same precious metal, like shares of the same company stock, always have one price at any given time?
Certainly, it seems like it should be that simple, but with precious metal bullion coins, it is not. The fact is that an ounce of a given precious metal - be it gold, silver, or platinum – can, for a variety of reasons, cost either more or less than another ounce of the same metal in the same market.
How can this happen? Where does the additional cost for these gold coins come from in the first place, and why do the amounts paid for the Gold Eagle, Maple Leaf and Krugerrand all differ, even though each contains the same amount of gold?
Well, it's all about a pricing thing called "coin premiums”.
A ‘coin premium’ is the additional cost of a bullion coin above and beyond the market value of the precious metal commodity it contains. For example, with gold at a spot price of $787.50 as mentioned above, an investor can expect to pay a premium of $43.30 over the gold price to buy the one-ounce American Gold Eagle. On the other hand, at the same spot price, an investor will pay only a $39.40 premium (approximately 0.5% less than the Eagle) for a one-ounce Gold Maple Leaf, and only a $31.50 premium (or 1.42% less) for the one-ounce Gold Krugerrand.
In general, this additional cost over the spot price for any bullion coin stems from a number of factors, including the manufacturing, distribution, and administration costs incurred by the mint or refiner in making the coin, plus a "mark-up" representing the cost of sale and the profit for the wholesaler selling the coin to a retail dealer. The retail dealer, in turn, will also "mark-up" its wholesale price of the coin to cover its own sales costs and realise a small profit when selling the coin into the investor market.
This series of incremental price increases applied to the coin as it passes through the distribution chain is a typical market mechanism present in virtually every other industry in existence, from food to auto parts, and houseplants to sporting goods.
And, just as market forces of supply and demand largely determine the value at which all goods and services can be sold in their respective markets, the level of a given coin’s availability (supply) versus its popularity (demand) also directly influences the prices at which different coins will sell for in the market place, even though they may contain the same amount of the same metal!
In fact, in some unusual market conditions, the available supply of a given coin, when balanced against its market demand at any given time, can have a pronounced impact on the coin's premium. Unusual demand for a specific coin type can drive its premium level significantly higher than that of very similar coins in certain circumstances.
Such a disparity occurred between the American Eagle and the Canadian Maple Leaf bullion coins at the end of 1999, when concerns over potential Y2K-related computer debacles created widespread fear about the stability of the US banking system and world economy as the new millennium approached. This fear, in turn, led to an unprecedented demand for U.S. American Eagle Silver coins, in the belief that their owners could spend these U.S. government-guaranteed bullion coins in the surviving economy for the food and other necessities they would require to live should the banking system fail. At the same time, the Silver Maple Leaf legal tender bullion coins, which not only contain the same amount of gold and silver, but were minted in higher purities, were left sitting in dealers' vaults.
Specifically, in late 1999, the premiums for the 99.9% pure (i.e., “3 nines fine”), one-ounce Silver Eagle coins were at one point 300-400% higher than were the premiums on the 99.99% pure (i.e., “4 nines fine”) one-ounce silver Canadian Maple Leaf coins, even though the price of the one-ounce of silver they contained changed very little during the period. While the prevailing spot price of silver averaged about $6.50 per ounce during this time and the price of the silver Maple Leaf remained in the $7.50 vicinity, inordinate demand drove the price of the Eagle to more than $12.50 per coin at one point. Astonishingly, many investors were willing to pay up to four times more in premium costs than they had to for a silver bullion coin in the belief the American Eagle would be readily negotiable in whatever economy might be functioning in post January 1, 2000 period.
[Note: These inflated premiums collapsed to their more rational market levels immediately after January 1, 2000, when it was clear that an economic and banking Armageddon was not going to occur.]
On the other hand, a lack of market demand, or the outright dumping of a particular coin by market participants, can create a negative premium, causing the coin to sell at a price that is actually less than the current "spot price" of its metal content. This is what happened to the gold Krugerrand when its importation into the United States and numerous other countries was banned by many national governments in 1985 to demonstrate their countries’ displeasure with the former apartheid policies of South Africa, the home of the Krugerrand. Few investors wanted to buy the Krugerrands that continued to trade in local markets, and dealers would only buy them at prices discounted below the prevailing "spot" price of gold. It was truly one of the few times that gold – in the form of Krugerrands - has traded in the market below the spot price.
In fact, as noted at the outset of this article, though its premium has long since been positive, the Krugerrand continues selling at a lower premium than do the Eagles and Maple Leafs, reflecting its diminished popularity among investors and dealers still today.
Because coin premiums can vary significantly among coins and in different market conditions, they are an important aspect for buyers of bullion coins to understand today. Investors are well advised to inquire about and compare coin premiums before making their purchase of bullion coins. And as always, it is best to seek the advice of a reputable and trusted bullion dealer concerning any aspect of precious metals investing about which one may be unsure.
Regards
Frank
Gold Investment Understanding
In January 2007, the gold price was around $600 an ounce; at the end of January 2008, the gold price touched a new peak of $929 an ounce. That is a rise of 50% in twelve months. The rapidity of the rise invites the question whether it can be sustained...
In January 2007, the gold price was around $600 an ounce; at the end of January 2008, the gold price touched a new peak of $929 an ounce. That is a rise of 50% in twelve months. The rapidity of the rise invites the question whether it can be sustained.
I have expected for some years that the gold price would in fact rise to $1,000 an ounce, and I still regard that as a reasonable forecast. But even $1,000 an ounce no longer looks all that impressive. It is the equivalent of about $400 in real terms, if one takes 1980 as the base year. To reach a new high in real terms, gold would have to rise to about $2,500 an ounce, and that is still a long way off.
The latest price increase has been caused by anxieties about the power supply crisis in South Africa. The normal rule of investment would be that interruptions of the power supply are likely to be temporary. In terms of labour militancy, a power close down is like a strike, and the rule is “buy on a strike, sell on a settlement.” However, the electricity supply situation in South Africa is particularly worrying for the long term, not just the short term.
The South Africans have in the past supplied electricity to Zimbabwe, which has had to be cut off, accentuating the economic crisis of the Mugabe regime. The cause of the shortage is the failure of South Africa to build the new power stations which the South African economy requires. It takes a decade or so to develop a major electrical supply programme. There has also been inadequate maintenance. Local observers think that there will be a considerable delay before an adequate supply is available in the gold mines. There will not be a quick fix.
However, the price of gold is influenced by many factors, of which physical supply is only one. Gold is a unique commodity in that well over 90% of all the gold even mined is thought still to be in existence. Obviously this is true of bullion, but it is also true of jewellery. There are, of course, industrial processes which effectively destroy the gold they use, but even then the metal is so valuable that it pays to recover and reuse it where possible.
Normal price schedules assume a relationship between production and consumption which does not determine the price of gold. The best way to understand the gold market is to regard gold as a kind of shadow currency, competing with national fiat currencies, and influenced by expectations of inflation and global movements of interest rates. However, this is pretty complex. For instance, the fear of recession, such as exists at the present time, normally produces expectations of lower interest rates, which will reduce the carrying cost of gold, and tend to raise the gold price. Yet the fear of a recession is, essentially a fear of deflation, and gold is regarded as a hedge against inflation. Historically the demand for gold is not determined by any single factor, except possibly for fear. Gold can be seen as a defence against a number of different threats.
At present, the weakness of other currencies, particularly of currencies normally used as reserves, is probably the strongest reason for gold’s long term rise in dollar terms in that the world has too many dollars. That situation seems unlikely to change in the near future. If confidence in the dollar is genuinely restored, that will be the day to sell gold. It is a day which still looks a long way off.
In January 2007, the gold price was around $600 an ounce; at the end of January 2008, the gold price touched a new peak of $929 an ounce. That is a rise of 50% in twelve months. The rapidity of the rise invites the question whether it can be sustained.
I have expected for some years that the gold price would in fact rise to $1,000 an ounce, and I still regard that as a reasonable forecast. But even $1,000 an ounce no longer looks all that impressive. It is the equivalent of about $400 in real terms, if one takes 1980 as the base year. To reach a new high in real terms, gold would have to rise to about $2,500 an ounce, and that is still a long way off.
The latest price increase has been caused by anxieties about the power supply crisis in South Africa. The normal rule of investment would be that interruptions of the power supply are likely to be temporary. In terms of labour militancy, a power close down is like a strike, and the rule is “buy on a strike, sell on a settlement.” However, the electricity supply situation in South Africa is particularly worrying for the long term, not just the short term.
The South Africans have in the past supplied electricity to Zimbabwe, which has had to be cut off, accentuating the economic crisis of the Mugabe regime. The cause of the shortage is the failure of South Africa to build the new power stations which the South African economy requires. It takes a decade or so to develop a major electrical supply programme. There has also been inadequate maintenance. Local observers think that there will be a considerable delay before an adequate supply is available in the gold mines. There will not be a quick fix.
However, the price of gold is influenced by many factors, of which physical supply is only one. Gold is a unique commodity in that well over 90% of all the gold even mined is thought still to be in existence. Obviously this is true of bullion, but it is also true of jewellery. There are, of course, industrial processes which effectively destroy the gold they use, but even then the metal is so valuable that it pays to recover and reuse it where possible.
Normal price schedules assume a relationship between production and consumption which does not determine the price of gold. The best way to understand the gold market is to regard gold as a kind of shadow currency, competing with national fiat currencies, and influenced by expectations of inflation and global movements of interest rates. However, this is pretty complex. For instance, the fear of recession, such as exists at the present time, normally produces expectations of lower interest rates, which will reduce the carrying cost of gold, and tend to raise the gold price. Yet the fear of a recession is, essentially a fear of deflation, and gold is regarded as a hedge against inflation. Historically the demand for gold is not determined by any single factor, except possibly for fear. Gold can be seen as a defence against a number of different threats.
At present, the weakness of other currencies, particularly of currencies normally used as reserves, is probably the strongest reason for gold’s long term rise in dollar terms in that the world has too many dollars. That situation seems unlikely to change in the near future. If confidence in the dollar is genuinely restored, that will be the day to sell gold. It is a day which still looks a long way off.
Gold Demand Remains Robust --- hot
Hopes are up and so stock markets...Will they get a second helping from the Fed today? They think so and so does gold... It hit a third consecutive all time high reports the FT when the London spot price rose to $929.40 this morning. Supply disruption in South Africa also helped though jewellery demand at this elevated level is flat. As we noted before...those canny Indian housewives are sellers...
Hopes are up and so stock markets...
Will they get a second helping from the Fed today? They think so and so does gold... It hit a third consecutive all time high reports the FT when the London spot price rose to $929.40 this morning.
Supply disruption in South Africa also helped though jewellery demand at this elevated level is flat. As we noted before...those canny Indian housewives are sellers.
But demand from the Middle East and Asia remains “robust” says Gold Investments in their latest bulletin. The gold trade rose 29% in Dubai over the past year they note and the Qatari central bank has been recycling petrodollars into gold. They are not alone. Central banks remain the largest holders of gold and are likely to become net buyers again in an effort to hedge themselves.
All this is good if you own some, not so good if you don’t and positively bad if you sold a while back. Step forward Gordon Brown...or “Golden” Brown as he subsequently became known for his disastrous decision to sell off 395 tonnes of the 715 tonnes of the UK’s gold reserves at the bottom of the market.
The Treasury averaged $275 auction price between 1999 and 2002. Add to that the fact the proceeds were recycled into dollars, euro and yen currency holdings doesn’t add to its credit... or the accusation that it was done with one eye on joining the euro. Miss Haruko Fukuda, the chief executive of the World Gold Council, criticised the decision at the time saying:
It (gold) has been held as a reserve for thousands of years. Its value does not rely on anybody else's promise to pay, unlike cash, and it builds public confidence."
Relying on a promise to pay and building public confidence are two comments to strike a chord in today’s turbulent markets. By our reckoning the proceeds from those sales would have been $3.8bn at the time against a value at its current level of $12.9bn. A notional loss of $9.1 or about £4.5bn on the trade...
And some leading voices say the gold price will hit $2,000 before it is over...
Silver, too, is shining bright. As we mentioned before, silver is James Turk’s pick for 2008 and it hit a 27-year high of $16.76.
Meantime the strains are starting to show amongst central bankers. Public signs of disagreement are beginning to appear. In the UK, David ‘Danny’ Blanchflower of the Bank of England’s Monetary Policy Committee says the level of UK rates is “restrictive” and accuses co-members of falling behind the curve in cutting interest rates. In effect, “fiddling while Rome burns”.
Blanchflower’s views chime with those expressed recently on TV by ex-MPC member DeAnne Julius, a British-based American economist. She called for an immediate 50 basis point cut. Blanchflower has lived in the US since 1989. Is their American-style dynamism for a more pro-active monetary policy the right one for the UK? The consensus call is still a slowdown rather than a recession and, to date, Goldman Sachs hasn’t told us we’re in one. Stephen Lewis, chief economist at Insinger de Beaufort, says in The Telegraph when it comes to choosing between recession and unhinged inflation expectations...inflation still has the upper hand:
“Surveys are telling us we're on the cusp of a wage-price spiral. The reality is there are few signs of slowdown in the UK, and plenty of signs of inflation.”
And the impression remains the MPC are still taking the inflation fight as its top priority whereas in the US it has been relegated to the greater need of salvaging the economy.
Over at the European Central Bank, the Latin nations ‘have begun to mutiny’...led by the Spanish where the property market is already falling and unemployment has risen to 8.6%.
*** So, Mr Job Applicant, you have “A” levels from the McDonald’s school in co-ordinated burger flipping, gherkin slicing technologies and “Happy Meal” assembly, a degree in money market borrowing from Northern Rock and a Masters in casino management from Societe Generale...
Excellent. When can you start in our derivatives department?
Hopes are up and so stock markets...
Will they get a second helping from the Fed today? They think so and so does gold... It hit a third consecutive all time high reports the FT when the London spot price rose to $929.40 this morning.
Supply disruption in South Africa also helped though jewellery demand at this elevated level is flat. As we noted before...those canny Indian housewives are sellers.
But demand from the Middle East and Asia remains “robust” says Gold Investments in their latest bulletin. The gold trade rose 29% in Dubai over the past year they note and the Qatari central bank has been recycling petrodollars into gold. They are not alone. Central banks remain the largest holders of gold and are likely to become net buyers again in an effort to hedge themselves.
All this is good if you own some, not so good if you don’t and positively bad if you sold a while back. Step forward Gordon Brown...or “Golden” Brown as he subsequently became known for his disastrous decision to sell off 395 tonnes of the 715 tonnes of the UK’s gold reserves at the bottom of the market.
The Treasury averaged $275 auction price between 1999 and 2002. Add to that the fact the proceeds were recycled into dollars, euro and yen currency holdings doesn’t add to its credit... or the accusation that it was done with one eye on joining the euro. Miss Haruko Fukuda, the chief executive of the World Gold Council, criticised the decision at the time saying:
It (gold) has been held as a reserve for thousands of years. Its value does not rely on anybody else's promise to pay, unlike cash, and it builds public confidence."
Relying on a promise to pay and building public confidence are two comments to strike a chord in today’s turbulent markets. By our reckoning the proceeds from those sales would have been $3.8bn at the time against a value at its current level of $12.9bn. A notional loss of $9.1 or about £4.5bn on the trade...
And some leading voices say the gold price will hit $2,000 before it is over...
Silver, too, is shining bright. As we mentioned before, silver is James Turk’s pick for 2008 and it hit a 27-year high of $16.76.
Meantime the strains are starting to show amongst central bankers. Public signs of disagreement are beginning to appear. In the UK, David ‘Danny’ Blanchflower of the Bank of England’s Monetary Policy Committee says the level of UK rates is “restrictive” and accuses co-members of falling behind the curve in cutting interest rates. In effect, “fiddling while Rome burns”.
Blanchflower’s views chime with those expressed recently on TV by ex-MPC member DeAnne Julius, a British-based American economist. She called for an immediate 50 basis point cut. Blanchflower has lived in the US since 1989. Is their American-style dynamism for a more pro-active monetary policy the right one for the UK? The consensus call is still a slowdown rather than a recession and, to date, Goldman Sachs hasn’t told us we’re in one. Stephen Lewis, chief economist at Insinger de Beaufort, says in The Telegraph when it comes to choosing between recession and unhinged inflation expectations...inflation still has the upper hand:
“Surveys are telling us we're on the cusp of a wage-price spiral. The reality is there are few signs of slowdown in the UK, and plenty of signs of inflation.”
And the impression remains the MPC are still taking the inflation fight as its top priority whereas in the US it has been relegated to the greater need of salvaging the economy.
Over at the European Central Bank, the Latin nations ‘have begun to mutiny’...led by the Spanish where the property market is already falling and unemployment has risen to 8.6%.
*** So, Mr Job Applicant, you have “A” levels from the McDonald’s school in co-ordinated burger flipping, gherkin slicing technologies and “Happy Meal” assembly, a degree in money market borrowing from Northern Rock and a Masters in casino management from Societe Generale...
Excellent. When can you start in our derivatives department?
Gold Bull Over?
While there is no one to defend the dollar, gold will continue to shine.
From Rome:
Yesterday was a big day in Italy – 63 years ago. That was the day that Mussolini was shot, along with his mistress. They were hung upside down in Milan. What went wrong with Benito?
“What always seemed to go wrong,” said our guide on Sunday “was that they ran out of money.”
She was speaking about emperors. She might have been speaking about elected presidents or dictators. When they run out of money, trouble follows.
This week, the US opened its largest and most expensive embassy ever – in Iraq. It is like the Vatican City, say reports, a country within a country…both heavily fortified and luxurious …ready for a siege or a party.
The Vatican was attacked by its own Holy Roman Emperor, Charles Quint, in the 15 th century. He had put together an army of Protestants, at whose head a general carried a noose – ready to hang the Pope.
But the Pope wasn’t giving up without a fight. With the help of his Swiss Guards, he slid down a back wall of the Vatican and raced over to the Castello San Angelo, where he was able to hold out until the siege was lifted. His Swiss guards, however, were not so lucky. They fought almost to the last man to protect him.
But let us return to our beat – money. Alas, nothing much happened in the world of money yesterday. Instead, markets stood still – as if waiting for something to happen. The Dow eased off only 20 points. The price of oil stayed at $118. The dollar held at $1.56 per euro. And gold rose $5 – remaining where it has been, below $900.
Gold is correcting. Is the bull market over? Readers will remember what we can’t forget – what happened to gold in 1980. The price of gold shot up over $800…but then began a bear market that lasted 20 years. Many people think it is happening again. But we also remember that the US had a positive current account in 1980…and that Americans owned more of foreign assets than foreigners owned of theirs…and that Paul Volcker pushed lending rates above 15% in order to protect the dollar!
Look to the left, dear reader. Look to the right. Do you see Paul Volcker at the Fed? Nope. Volcker is still alive – warning that there is a painful adjustment coming. But at the Fed itself, there is only Ben Bernanke, promising to drop dollars from helicopters, if necessary, in order to keep the economy bubbling along. And since the US lives so far beyond its means…and owes so much money to so many people…the likelihood that a Paul Volcker will come along to protect the dollar is probably about as likely as Alan Greenspan being elected as the new Pope.
No, fear not. The Fed is unlikely to fall victim of a sudden attack of monetary integrity. The dollar is unlikely to rise very far against gold.
Still, the current correction could take the price down another $100 and still be above the 50-week moving average. So hold onto your gold…and hold on to your hats.
Elsewhere in the news, we find that OPEC has said $200 oil is a possibility. It hit $120 over the weekend. And truckers are protesting high gasoline prices. In other places, mobs are protesting the high price of food. You might think that these people don’t realise how markets work…that they don’t know that prices aren’t set by popular demand. In fact, what they know is how government works. If you can make a big enough stink about something, the government will intervene in the markets on your behalf. In fact, governments are already controlling prices for fuel and for food all over the planet. But there is no problem so bad that government can’t make worse.
*** We are here in Rome trying to learn something – on your behalf, of course, dear reader. So far, what we’ve learned is that the Abruzzo and Barolo wines are rich, complex and smooth. The wines we’ve tried from Compania, on the other hand, seemed a little green…and a little sharp. But the Barolos tend to be expensive. Last night, our restaurant didn’t have a single one less than $150.
As for the world of money…we have found out what brought the empire down. Money, of course. They ran out of money. But that was only a part of the story…and not even the most interesting part.
“The empire held together pretty well,” explained our guide, “at long as it was controlled by Rome’s leading families, who shared the same culture and the same values. But as it expanded, it came into contact with more and more groups. And in order to protect the borders – which had become vast even before the empire itself was officially recognised under Augustus – more and more soldiers were required, and more and more money.
“I saw in the paper that you Americans opened a huge embassy in Iraq and that it was very expensive. Well, that’s what the Romans did too. They had garrisons all over the empire. And each one was expensive to maintain. The ‘cursus honorarium’ – it was the route to power and prestige, like today, we go to a good college and then get a job with a good corporation and then we might go into politics…well, then, young men who were ambitious had to go into the army and take their post at these distant garrisons. And then they began to bring people into the system from the outside…and spend their lives outside Rome. Many leaders were no longer from Rome and some rarely even came to Rome. And many of the soldiers weren’t Roman either.
“When the empire was still expanding, there was a lot of money coming into Rome. Whenever they conquered another city or another tribe, they brought in more gold, silver and slaves. But when the empire stopped expanding…they had the cost of maintaining the borders, but no source of revenue.”
Now, let us check in on today’s empire. Where does it get its money? How could it afford such an extravagant embassy – in an area where it has no real interests? How can it afford the trillion-dollar tag for the Iraq War? We will state the obvious: it too is running out of money. But unlike the era of Augustus Caesar or Romulus Augustus our modern government can conjure money out of thin air. It doesn’t even have to print it up on a piece of paper. It’s enough just to send an electronic transfer.
Now we will ask you a question, dear reader: What is an electronic transfer? Or, in an electronic transfer, what is transferred?
“Electrons,” you will answer. Or perhaps “information”. Or a “symbol of wealth”…something that represents money.
And here…back to penises for a moment. We once overhead a woman in a tour group in Paris, gazing at the Place de la Concorde. The leader had just informed her that the long, talk obelisk in the middle of the square might be considered a “phallic symbol.” She turned to her neighbour and asked:
“A phallic symbol of what?”
The electrons…or even the paper dollar…may be a symbol too. But a symbol of what?
From Rome:
Yesterday was a big day in Italy – 63 years ago. That was the day that Mussolini was shot, along with his mistress. They were hung upside down in Milan. What went wrong with Benito?
“What always seemed to go wrong,” said our guide on Sunday “was that they ran out of money.”
She was speaking about emperors. She might have been speaking about elected presidents or dictators. When they run out of money, trouble follows.
This week, the US opened its largest and most expensive embassy ever – in Iraq. It is like the Vatican City, say reports, a country within a country…both heavily fortified and luxurious …ready for a siege or a party.
The Vatican was attacked by its own Holy Roman Emperor, Charles Quint, in the 15 th century. He had put together an army of Protestants, at whose head a general carried a noose – ready to hang the Pope.
But the Pope wasn’t giving up without a fight. With the help of his Swiss Guards, he slid down a back wall of the Vatican and raced over to the Castello San Angelo, where he was able to hold out until the siege was lifted. His Swiss guards, however, were not so lucky. They fought almost to the last man to protect him.
But let us return to our beat – money. Alas, nothing much happened in the world of money yesterday. Instead, markets stood still – as if waiting for something to happen. The Dow eased off only 20 points. The price of oil stayed at $118. The dollar held at $1.56 per euro. And gold rose $5 – remaining where it has been, below $900.
Gold is correcting. Is the bull market over? Readers will remember what we can’t forget – what happened to gold in 1980. The price of gold shot up over $800…but then began a bear market that lasted 20 years. Many people think it is happening again. But we also remember that the US had a positive current account in 1980…and that Americans owned more of foreign assets than foreigners owned of theirs…and that Paul Volcker pushed lending rates above 15% in order to protect the dollar!
Look to the left, dear reader. Look to the right. Do you see Paul Volcker at the Fed? Nope. Volcker is still alive – warning that there is a painful adjustment coming. But at the Fed itself, there is only Ben Bernanke, promising to drop dollars from helicopters, if necessary, in order to keep the economy bubbling along. And since the US lives so far beyond its means…and owes so much money to so many people…the likelihood that a Paul Volcker will come along to protect the dollar is probably about as likely as Alan Greenspan being elected as the new Pope.
No, fear not. The Fed is unlikely to fall victim of a sudden attack of monetary integrity. The dollar is unlikely to rise very far against gold.
Still, the current correction could take the price down another $100 and still be above the 50-week moving average. So hold onto your gold…and hold on to your hats.
Elsewhere in the news, we find that OPEC has said $200 oil is a possibility. It hit $120 over the weekend. And truckers are protesting high gasoline prices. In other places, mobs are protesting the high price of food. You might think that these people don’t realise how markets work…that they don’t know that prices aren’t set by popular demand. In fact, what they know is how government works. If you can make a big enough stink about something, the government will intervene in the markets on your behalf. In fact, governments are already controlling prices for fuel and for food all over the planet. But there is no problem so bad that government can’t make worse.
*** We are here in Rome trying to learn something – on your behalf, of course, dear reader. So far, what we’ve learned is that the Abruzzo and Barolo wines are rich, complex and smooth. The wines we’ve tried from Compania, on the other hand, seemed a little green…and a little sharp. But the Barolos tend to be expensive. Last night, our restaurant didn’t have a single one less than $150.
As for the world of money…we have found out what brought the empire down. Money, of course. They ran out of money. But that was only a part of the story…and not even the most interesting part.
“The empire held together pretty well,” explained our guide, “at long as it was controlled by Rome’s leading families, who shared the same culture and the same values. But as it expanded, it came into contact with more and more groups. And in order to protect the borders – which had become vast even before the empire itself was officially recognised under Augustus – more and more soldiers were required, and more and more money.
“I saw in the paper that you Americans opened a huge embassy in Iraq and that it was very expensive. Well, that’s what the Romans did too. They had garrisons all over the empire. And each one was expensive to maintain. The ‘cursus honorarium’ – it was the route to power and prestige, like today, we go to a good college and then get a job with a good corporation and then we might go into politics…well, then, young men who were ambitious had to go into the army and take their post at these distant garrisons. And then they began to bring people into the system from the outside…and spend their lives outside Rome. Many leaders were no longer from Rome and some rarely even came to Rome. And many of the soldiers weren’t Roman either.
“When the empire was still expanding, there was a lot of money coming into Rome. Whenever they conquered another city or another tribe, they brought in more gold, silver and slaves. But when the empire stopped expanding…they had the cost of maintaining the borders, but no source of revenue.”
Now, let us check in on today’s empire. Where does it get its money? How could it afford such an extravagant embassy – in an area where it has no real interests? How can it afford the trillion-dollar tag for the Iraq War? We will state the obvious: it too is running out of money. But unlike the era of Augustus Caesar or Romulus Augustus our modern government can conjure money out of thin air. It doesn’t even have to print it up on a piece of paper. It’s enough just to send an electronic transfer.
Now we will ask you a question, dear reader: What is an electronic transfer? Or, in an electronic transfer, what is transferred?
“Electrons,” you will answer. Or perhaps “information”. Or a “symbol of wealth”…something that represents money.
And here…back to penises for a moment. We once overhead a woman in a tour group in Paris, gazing at the Place de la Concorde. The leader had just informed her that the long, talk obelisk in the middle of the square might be considered a “phallic symbol.” She turned to her neighbour and asked:
“A phallic symbol of what?”
The electrons…or even the paper dollar…may be a symbol too. But a symbol of what?
The why and how of investing in gold
Gold and silver have been sought and prized since prehistoric times. They have also been both a cause of war and a medium of exchange.
Gold has traditionally been the standard by which the value of anything is assessed; it has also been a universally accepted medium of exchange. Silver does not lag far behind in the history of global trade. In fact, till the nineteenth century silver was actually more widely employed than gold as the standard of value.
The Indians' faith in God and gold dates back to the Vedic times; they worshipped both. Historian Pliny complained that her Indian trade drained ancient Rome's bullion resources. Indian merchants always demanded payment in silver during the times of the East India Company; so much silver was exported from London that East India Company teetered on the brink of financial disaster.
According to the World Gold Council Report, India stands today as the world's largest single market for gold consumption. In developing countries, people have often trusted gold as a better investment than bonds and stocks, particularly because historically these acted as a good hedge against inflation. In that sense these metals have been more attractive than bank deposits or gilt-edged securities.
Why people buy gold
Despite recent hiccups, gold remains an important and popular investment for many reasons:
* In many countries gold continues to be an integral part of social and religious customs, besides being the basic form of saving. This continues to be exceptionally true in India, which is the world's largest consumer of gold. Shakespeare called it 'the saint-seducing gold'.
* Superstition about the healing powers of gold persists. Ayurvedic medicine in India recommends gold powder and pills for many ailments.
* Gold is indestructible. It does not tarnish and is also not corroded by acid - except by a mixture of nitric and hydrochloric acids.
* Gold has aesthetic appeal. Its beauty recommends above all other metals for ornament making.
* Finally, gold is scam-free. So far, there have been no Mundra-type or Mehta-type scams in gold.
Thus, the lure of this yellow metal continues.
On the other hand, it is interesting to note that apart from its aesthetic appeal gold has no intrinsic value. You cannot eat it, drink it, or even smell it. This aspect of gold compelled Henry Ford, the founder of Ford Motors, to conclude that 'gold is the most useless thing in the world'.
The returns from gold
During the 1950s, gold appreciated only marginally; from Rs 99 per 10 gms in 1950 to Rs 111 per gms in 1960. During the next decade, from 1960-70, it moved up to Rs 184.
Between 1970 and 1980 came the massive rise from Rs 184 to Rs 1,330.
During the 1980s, it moved up another 240 per cent. The trend of gold prices in India in the last few years is given in Table 1 which reveals that between 1950 and 2007 gold appreciated 95-fold, an annual compound rate of return of 8.32 per cent.
Gold prices in India
March end
Gold price
per 100 gm
(Rs)
1925
18
1930
18
1935
30
1940
36
1945
62
1950
99
1955
79
1960
111
1965
71
March end
Gold price
per 100 gm
(Rs)
1970 184
1975 540
1980 1,330
1985 2,130
1990 3,200
1995 4,658
1996 5,713
1997 4,750
1998 4,050
March end
Gold price
per 100 gm
(Rs)
1999 4,220
2000 4,395
2001 4,410
2002 5,030
2003 5,260
2004 6,005
2005 6,165
2006 8,210
2007 9,500
How to buy gold
Gold Deposit Scheme
Introduced in 1999, this scheme is managed by SBI [Get Quote]. Individuals, HUFs, trusts and companies can deposit a minimum of 200 gm of gold with no upper limit, in exchange for gold bonds carrying a tax-free interest of 3 to 4 per cent depending upon the tenure of the bond ranging from 3 to 7 years.
Furthermore, these bonds are free from wealth tax and capital gains tax. The principal can be collected back in gold or cash at the investor's option.
Buying gold bars and coins
You can now also buy gold coins or bars/biscuits from various authorised banks and dealers. So, if you too are touched by the yellow fever, well, you could satisfy fascination by keeping some gold coins and bars with you.
Incidentally, don't be mistaken into thinking that buying ornaments is the same as investing in gold. In practice, gold converted into ornaments is rarely sold. Thus, though gold ornaments are a liquid asset their sale usually entails a heavy loss. The making charges are a total write-off. Then, too, your jeweller may take undue advantage of your predicament and buy back the ornaments at a discount.
Gold exchange-traded funds
The modern international method of investing in gold is via gold mutual funds. India should soon be catching p in this area.
In his Union Budget for 2005-06, Finance Minister P Chidambaram had proposed that Securities and Exchange Board of India should permit mutual funds to introduce Gold Exchange Traded Funds (Gold ETFs) with gold as the underlying asset.
According to the Budget proposals, the scheme would enable households to buy and sell gold in units for as little as Rs 100 and such units could be traded in the same manner as units of mutual funds.
Gold Exchange Traded Funds are a relatively recent phenomenon even in the American market where the first Gold ETF--StreetTracks Gold--made its debut in the New York Stock Exchange in November 2004. Each unit of the StreetTracks Gold ETF represents one-tenth an ounce of gold.
In Gold Exchange Traded Fund, the underlying asset is exclusively gold bullion, and not a basket of stocks as is the case of equity ETFs. Gold ETFs are shares or units of gold that are owned by investors and are fully backed by gold bullion bars held by a custodian.
Like other ETFs, they are traded on a stock exchange.
Gold ETFs will allow investors to buy gold in small increments. In the global market, one unit represents one-tenth of an ounce fine gold (1 oz-28.35 grams). If an investor in the fund holds 100 units, the fund must have physical gold worth 10 ozs.
The value of the unit will move in accordance with the price of gold. Just like mutual funds, the value per unit will be the total value of the gold held, divided by the number of units, minus the expenses of the fund. Gold ETFs, like any share, can be traded and bought by the investors through their stockbrokers.
They can be used for speculating in the short-term for betting on the price of gold, or it can be used for long-term investing. Just like the ETFs, Gold ETFs can be open-ended funds or closed ended funds.
In India, the ETF structure may be particularly suitable for a gold fund because of the unavailability of a highly liquid, organized market for gold or gold-backed securities.
Tax implications
Since there is no income as such from holding gold, there is no liability of income tax. But bullion and jewellery are subject to capital gains tax and wealth tax, without any exemptions whatsoever.
While determining the value of gold ornaments for the purpose of wealth tax, making charges should be ignored, unless the ornaments are studded with precious stones. The value of gold contained in the ornaments can be reduced by 15 to 20 per cent because the dealer invariably deducts 15 per cent of the ruling rate of standard gold when ornaments are sold in the open market.
The prospects for gold
Many contemporary investors forget that when gold price went up during the late 1970s, the metal was just trying to catch up with prices of other things, which had already gone up.
In 1970, when the price of gold was $35 an ounce (due to the gold standard then followed in usa), it was unquestionably undervalued. When gold hit $850 an ounce in January 1980 it was again, unquestionably, overvalued.
If the increase in gold price had kept the same pace in 1980s and 1990s as it did in 1970s, it would have become $20,000 an ounce by 2000. With a number of Central Banks selling off huge chunks of their gold reserves, the international price of gold has come down in the last few years.
Timothy Green, a well-known gold expert, reminds us of a historical truth: 'The great strength of gold throughout history has not been that you make money by holding it, but rather you do not lose. That ought to remain its best credential'.
A research study on gold established a remarkable consistency in the purchasing power of gold over four centuries. Its purchasing power in the mid-twentieth century was found to be nearly the same as in the middle of the seventeenth century.
You can safely invest in gold. But take care to keep your jewellery in bank lockers. You can also raise loans on gold for your other portfolio investments. If the Indian economy continues to be liberalised and unshackled fast, several new options may emerge for investors to invest in gold bars, gold coins, gold funds, gold mining companies and gold options.
It will also lead to the eventual equalisation of domestic and international prices.
Gold has traditionally been the standard by which the value of anything is assessed; it has also been a universally accepted medium of exchange. Silver does not lag far behind in the history of global trade. In fact, till the nineteenth century silver was actually more widely employed than gold as the standard of value.
The Indians' faith in God and gold dates back to the Vedic times; they worshipped both. Historian Pliny complained that her Indian trade drained ancient Rome's bullion resources. Indian merchants always demanded payment in silver during the times of the East India Company; so much silver was exported from London that East India Company teetered on the brink of financial disaster.
According to the World Gold Council Report, India stands today as the world's largest single market for gold consumption. In developing countries, people have often trusted gold as a better investment than bonds and stocks, particularly because historically these acted as a good hedge against inflation. In that sense these metals have been more attractive than bank deposits or gilt-edged securities.
Why people buy gold
Despite recent hiccups, gold remains an important and popular investment for many reasons:
* In many countries gold continues to be an integral part of social and religious customs, besides being the basic form of saving. This continues to be exceptionally true in India, which is the world's largest consumer of gold. Shakespeare called it 'the saint-seducing gold'.
* Superstition about the healing powers of gold persists. Ayurvedic medicine in India recommends gold powder and pills for many ailments.
* Gold is indestructible. It does not tarnish and is also not corroded by acid - except by a mixture of nitric and hydrochloric acids.
* Gold has aesthetic appeal. Its beauty recommends above all other metals for ornament making.
* Finally, gold is scam-free. So far, there have been no Mundra-type or Mehta-type scams in gold.
Thus, the lure of this yellow metal continues.
On the other hand, it is interesting to note that apart from its aesthetic appeal gold has no intrinsic value. You cannot eat it, drink it, or even smell it. This aspect of gold compelled Henry Ford, the founder of Ford Motors, to conclude that 'gold is the most useless thing in the world'.
The returns from gold
During the 1950s, gold appreciated only marginally; from Rs 99 per 10 gms in 1950 to Rs 111 per gms in 1960. During the next decade, from 1960-70, it moved up to Rs 184.
Between 1970 and 1980 came the massive rise from Rs 184 to Rs 1,330.
During the 1980s, it moved up another 240 per cent. The trend of gold prices in India in the last few years is given in Table 1 which reveals that between 1950 and 2007 gold appreciated 95-fold, an annual compound rate of return of 8.32 per cent.
Gold prices in India
March end
Gold price
per 100 gm
(Rs)
1925
18
1930
18
1935
30
1940
36
1945
62
1950
99
1955
79
1960
111
1965
71
March end
Gold price
per 100 gm
(Rs)
1970 184
1975 540
1980 1,330
1985 2,130
1990 3,200
1995 4,658
1996 5,713
1997 4,750
1998 4,050
March end
Gold price
per 100 gm
(Rs)
1999 4,220
2000 4,395
2001 4,410
2002 5,030
2003 5,260
2004 6,005
2005 6,165
2006 8,210
2007 9,500
How to buy gold
Gold Deposit Scheme
Introduced in 1999, this scheme is managed by SBI [Get Quote]. Individuals, HUFs, trusts and companies can deposit a minimum of 200 gm of gold with no upper limit, in exchange for gold bonds carrying a tax-free interest of 3 to 4 per cent depending upon the tenure of the bond ranging from 3 to 7 years.
Furthermore, these bonds are free from wealth tax and capital gains tax. The principal can be collected back in gold or cash at the investor's option.
Buying gold bars and coins
You can now also buy gold coins or bars/biscuits from various authorised banks and dealers. So, if you too are touched by the yellow fever, well, you could satisfy fascination by keeping some gold coins and bars with you.
Incidentally, don't be mistaken into thinking that buying ornaments is the same as investing in gold. In practice, gold converted into ornaments is rarely sold. Thus, though gold ornaments are a liquid asset their sale usually entails a heavy loss. The making charges are a total write-off. Then, too, your jeweller may take undue advantage of your predicament and buy back the ornaments at a discount.
Gold exchange-traded funds
The modern international method of investing in gold is via gold mutual funds. India should soon be catching p in this area.
In his Union Budget for 2005-06, Finance Minister P Chidambaram had proposed that Securities and Exchange Board of India should permit mutual funds to introduce Gold Exchange Traded Funds (Gold ETFs) with gold as the underlying asset.
According to the Budget proposals, the scheme would enable households to buy and sell gold in units for as little as Rs 100 and such units could be traded in the same manner as units of mutual funds.
Gold Exchange Traded Funds are a relatively recent phenomenon even in the American market where the first Gold ETF--StreetTracks Gold--made its debut in the New York Stock Exchange in November 2004. Each unit of the StreetTracks Gold ETF represents one-tenth an ounce of gold.
In Gold Exchange Traded Fund, the underlying asset is exclusively gold bullion, and not a basket of stocks as is the case of equity ETFs. Gold ETFs are shares or units of gold that are owned by investors and are fully backed by gold bullion bars held by a custodian.
Like other ETFs, they are traded on a stock exchange.
Gold ETFs will allow investors to buy gold in small increments. In the global market, one unit represents one-tenth of an ounce fine gold (1 oz-28.35 grams). If an investor in the fund holds 100 units, the fund must have physical gold worth 10 ozs.
The value of the unit will move in accordance with the price of gold. Just like mutual funds, the value per unit will be the total value of the gold held, divided by the number of units, minus the expenses of the fund. Gold ETFs, like any share, can be traded and bought by the investors through their stockbrokers.
They can be used for speculating in the short-term for betting on the price of gold, or it can be used for long-term investing. Just like the ETFs, Gold ETFs can be open-ended funds or closed ended funds.
In India, the ETF structure may be particularly suitable for a gold fund because of the unavailability of a highly liquid, organized market for gold or gold-backed securities.
Tax implications
Since there is no income as such from holding gold, there is no liability of income tax. But bullion and jewellery are subject to capital gains tax and wealth tax, without any exemptions whatsoever.
While determining the value of gold ornaments for the purpose of wealth tax, making charges should be ignored, unless the ornaments are studded with precious stones. The value of gold contained in the ornaments can be reduced by 15 to 20 per cent because the dealer invariably deducts 15 per cent of the ruling rate of standard gold when ornaments are sold in the open market.
The prospects for gold
Many contemporary investors forget that when gold price went up during the late 1970s, the metal was just trying to catch up with prices of other things, which had already gone up.
In 1970, when the price of gold was $35 an ounce (due to the gold standard then followed in usa), it was unquestionably undervalued. When gold hit $850 an ounce in January 1980 it was again, unquestionably, overvalued.
If the increase in gold price had kept the same pace in 1980s and 1990s as it did in 1970s, it would have become $20,000 an ounce by 2000. With a number of Central Banks selling off huge chunks of their gold reserves, the international price of gold has come down in the last few years.
Timothy Green, a well-known gold expert, reminds us of a historical truth: 'The great strength of gold throughout history has not been that you make money by holding it, but rather you do not lose. That ought to remain its best credential'.
A research study on gold established a remarkable consistency in the purchasing power of gold over four centuries. Its purchasing power in the mid-twentieth century was found to be nearly the same as in the middle of the seventeenth century.
You can safely invest in gold. But take care to keep your jewellery in bank lockers. You can also raise loans on gold for your other portfolio investments. If the Indian economy continues to be liberalised and unshackled fast, several new options may emerge for investors to invest in gold bars, gold coins, gold funds, gold mining companies and gold options.
It will also lead to the eventual equalisation of domestic and international prices.
Get Started With your Gold Investments
Gold investments are the best way to consolidate your investments as they are well known for fixed market value that does not depreciates in a volatile way in comparison to stocks. Incase you are looking for investment opportunities; make sure you go for gold investment that helps you in getting the best value for money. Given the market value of gold and its stability over money investments, gold can offer huge financial returns and true vale for money. It is seen that gold has survived monetary collapses while sailing through swiftly in the bullion market. This makes gold stable in comparison to stocks and shares where the risk of losses is much high in comparison of profits.
However, if you want to go forth with gold investments, make sure you invest in gold coins as they offer instant liquidity solutions. Apart from liquidity solution, gold coin investment rules both the national and international markets. It is seen that gold bullion investment is the most lucrative and sound investment in bullion market as many investors try to incorporate gold stocks in their portfolios. However, if you are planning to dabble in stock of gold as investment, make sure you have a thorough knowledge about bullion trade and its market practice.
While making gold investment, try to gather as much information about bullion trade. This will definitely help you in making a sound investment. It is seen that investment in gold jewelry such as necklace, rings and other things is not as sound investment in comparison to gold coins and bricks. Gold bricks and coins are secure investments and help you in increasing your profitable bullion trade career. However, in order to get started with gold trade portfolio, you have to start collecting gold bars and coins. This will definitely give you an edge in trading policies. The benefit of trading in gold bullion trade is the fact that gold investment does not get effected by the falling paper currency. Therefore, if the trade market faces crunch and money value topples, your gold will remain virtually unaffected to the falling price by providing you an option of stable liquidity. Therefore, given the benefits of gold investment, gold coin sale can offer you a plum and lucrative trading practice that helps you in getting good money in exchange of gold. During increasing sensex, gold prices automatically increase and offer huge dividend on its sale.
So, given the amazing benefits of gold trade, if you are into bullion trade or deal in gold investment, you will definitely have an edge over other portfolio owners as bullion trade is more lucrative in comparison to other portfolios. In comparison to $ US, gold has show a strong position that makes it an important investment. Well, keeping all the above things in mind will definitely help you in making the best investment solution. Buy Gold as investments which are more profitable than real estate ventures as economical recession can take the toll of market price however, in gold investment; it remains untouched by any market condition.
However, if you want to go forth with gold investments, make sure you invest in gold coins as they offer instant liquidity solutions. Apart from liquidity solution, gold coin investment rules both the national and international markets. It is seen that gold bullion investment is the most lucrative and sound investment in bullion market as many investors try to incorporate gold stocks in their portfolios. However, if you are planning to dabble in stock of gold as investment, make sure you have a thorough knowledge about bullion trade and its market practice.
While making gold investment, try to gather as much information about bullion trade. This will definitely help you in making a sound investment. It is seen that investment in gold jewelry such as necklace, rings and other things is not as sound investment in comparison to gold coins and bricks. Gold bricks and coins are secure investments and help you in increasing your profitable bullion trade career. However, in order to get started with gold trade portfolio, you have to start collecting gold bars and coins. This will definitely give you an edge in trading policies. The benefit of trading in gold bullion trade is the fact that gold investment does not get effected by the falling paper currency. Therefore, if the trade market faces crunch and money value topples, your gold will remain virtually unaffected to the falling price by providing you an option of stable liquidity. Therefore, given the benefits of gold investment, gold coin sale can offer you a plum and lucrative trading practice that helps you in getting good money in exchange of gold. During increasing sensex, gold prices automatically increase and offer huge dividend on its sale.
So, given the amazing benefits of gold trade, if you are into bullion trade or deal in gold investment, you will definitely have an edge over other portfolio owners as bullion trade is more lucrative in comparison to other portfolios. In comparison to $ US, gold has show a strong position that makes it an important investment. Well, keeping all the above things in mind will definitely help you in making the best investment solution. Buy Gold as investments which are more profitable than real estate ventures as economical recession can take the toll of market price however, in gold investment; it remains untouched by any market condition.
Buy Gold - Wise Investment Options
As one of the world's leading precious metals refineries and fabricators, PAMP is particularly well regarded for its pioneering spirit, as evidenced in 1977 by the introduction of a wide variety of decorative designs on the reverse side of its ingots, also known as 'small bars.'*
An industry first, the aim has been not only to extend the frontiers of bullion bar concepts, but also to place new emphasis on the intrinsic beauty - and therefore value - of precious metals overall. As a result, the extensive collection of decorative motifs has opened up new doors for ingots as a memorable gift, suitable for all occasions, in every market.
Today, PAMP controls more than half of the world market for gold bullion bars weighing less than 50-grams. The introduction of Fortuna-embellished silver, platinum and palladium bars has also met with resounding international success. Signed, Certified packaging guarantees the qualities, weight and assayed precious metal content of every bar leaving the refinery.
Motifs range from mythological and astrological themes to religious icons, and from historic monuments to botanical renderings.
The most famous of these designs is of course the exquisite Lady Fortuna™, which quickly became the calling card of PAMP. Hangers are available for pendant wear, along with proprietary, multi-colored holograms, as both a decorative and security feature.
Fortuna is the first decorative motif to ever decorate precious metals bullion, an emblem that has heralded PAMP's superior quality products and services worldwide for nearly a quarter century. Indeed, only the Roman goddess of fortune can so admirably convey the ideals and prestige of the world's leading independent precious metals refinery.
For centuries, buying gold has been recognized as one of the best ways to preserve one's wealth and purchasing power. Gold is a unique investment, one that has served mankind well for thousands of years. From the times of ancient Egyptians, Greeks and Romans to more modern times, man has been fascinated with the beauty and magic of gold, and with its power to change men's lives. Gold bullion is real, honest money...and, many say, the best form of money the world has ever known. It is a store of value and a safe haven in times of crisis. Gold is rare, durable and does not wear out in the manner of lesser metals (or paper!) when passed from hand to hand. A small amount, easily carried, can purchase a significant amount of goods and services. It is universally accepted, and can be easily bought and sold around the world. Today, the beauty of a gold bar lies in its ability to diversify investments, protect wealth and preserve one's purchasing power. Gold bullion bars are real, tangible assets, and throughout history, have been an ideal store of value and an excellent hedge against inflation, deflation and political uncertainty. They are extremely liquid investments, easily stored and transported, and can be a uniquely private way to preserve one's wealth.
The first gold coins produced in America, the original $10 gold "Eagle" coins, were originally minted by the United States Mint starting in 1795. More than two hundred years later, U.S. gold coins-perhaps some of the greatest symbols of American liberty and freedom -- are still produced with levels of quality and beauty that one would expect of the United States Mint.
First released by the United States mint in 1986, the gold American Eagle is the first modern bullion coin to be authorized by the United States congress...and is backed by the US Mint for its weight, content and purity.
Each gold American eagle coin features striking imagery, symbolizing the American spirit and character. The obverse of the coin, originally designed by Augustus Saint-Gaudens for the country's $20 gold piece minted from 1907 to 1933, carries the image of a full length figure of Lady Liberty holding a torch in her right hand and an olive branch in her left. In the background can be seen the images of the sun rising and the United States Capitol dome. The obverse side of the coin also bears the inscription "Liberty" and contains both the date of issue and the individual mint mark of origin. The reverse side of the coin bears the image of a male bald eagle carrying an olive branch, flying towards his mate in a nest with their hatchlings.
American eagle gold coins are available coinsbullions.com website in four different sizes and denominations. The one-ounce gold American Eagle has a diameter of 32.7mm, a thickness of 2.87mm, a total weight of 1.0909 troy ounces (or 33.931 grams), contains one troy ounce of pure gold, and has a face value of $50. One-ounce gold American Eagles are sold in units of 10 one-ounce coins.
The half-ounce gold coin has a diameter of 27mm, a thickness of 2.24mm, a total weight of .5454 troy ounces (or 16.966 grams), contains a half- ounce of pure gold, and has a face value of $25. The quarter-ounce gold coin has a diameter of 22mm, a thickness of 1.83mm, a total weight of .2727 troy ounces (or 8.483 grams), contains a quarter-ounce of pure gold, and has a face value of $10. The tenth-ounce gold coin has a diameter of 16.5mm, a thickness of 1.19mm, a total weight of 0.1091 troy ounces (3.393 grams), contains a tenth-ounce of pure gold and has a face value of $5. American eagle gold coins provide investors with the means to diversify, balance and stabilize a well-rounded investment portfolio, all with the safety and backing of the United States government and the U.S. Dollar.
Canadian Maple Leaf gold coins are known and respected throughout the world because of the impeccable standards of quality mandated by the Royal Canadian Mint. The Royal Canadian Mint's insistence upon flawless coins, the pure gold blanks from which gold coins are struck, has led to an enviable reputation among demanding investors and collectors. Its impeccable quality, pleasing design, and fine gold purity (at ninety-nine point nine-nine percent pure gold, or "four-nines" fine) has made the Canadian Maple leaf one of the preferred gold coins of investors around the world. In fact, the one troy ounce gold Canadian Maple Leaf has been in continuous production longer than any other pure gold bullion coin.
Each gold Maple Leaf coin features the image of Great Britain's Queen Elizabeth the second, along with the denomination and date of issue, on the obverse side...and an image of Canada's national symbol, the maple leaf (from which the coin derives its name), on the reverse side, along with the name of the country and the level of purity of the gold, listed in both English and French.
The classic one troy ounce coin, which measures 30mm in diameter with a thickness of 2.87mm, makes the coin approximately the same size as an extra thick United States half-dollar. The coin carries a face value of 50 Canadian Dollars. One ounce Canadian Maple Leaf gold coins are offered by coinsbullions.com in units of 10 one-ounce coins, and are available and the coins make a wonderful addition to any investment portfolio.
The half-ounce coin has a diameter of 25mm, and is 2.23mm thick, which gives this coin similar dimension to a double-stacked United States quarter, and carries a face value of 20 Canadian Dollars. The quarter-troy-ounce Canadian Maple Leaf coin has a diameter of 20mm, with a thickness of 1.78mm, and a face value of 10 Canadian Dollars. The tenth-ounce gold Maple Leaf has a diameter of 16mm and a thickness of 1.13mm, making it comparable in size to a United States dime, and carries a face value of 5 Canadian Dollars.
An industry first, the aim has been not only to extend the frontiers of bullion bar concepts, but also to place new emphasis on the intrinsic beauty - and therefore value - of precious metals overall. As a result, the extensive collection of decorative motifs has opened up new doors for ingots as a memorable gift, suitable for all occasions, in every market.
Today, PAMP controls more than half of the world market for gold bullion bars weighing less than 50-grams. The introduction of Fortuna-embellished silver, platinum and palladium bars has also met with resounding international success. Signed, Certified packaging guarantees the qualities, weight and assayed precious metal content of every bar leaving the refinery.
Motifs range from mythological and astrological themes to religious icons, and from historic monuments to botanical renderings.
The most famous of these designs is of course the exquisite Lady Fortuna™, which quickly became the calling card of PAMP. Hangers are available for pendant wear, along with proprietary, multi-colored holograms, as both a decorative and security feature.
Fortuna is the first decorative motif to ever decorate precious metals bullion, an emblem that has heralded PAMP's superior quality products and services worldwide for nearly a quarter century. Indeed, only the Roman goddess of fortune can so admirably convey the ideals and prestige of the world's leading independent precious metals refinery.
For centuries, buying gold has been recognized as one of the best ways to preserve one's wealth and purchasing power. Gold is a unique investment, one that has served mankind well for thousands of years. From the times of ancient Egyptians, Greeks and Romans to more modern times, man has been fascinated with the beauty and magic of gold, and with its power to change men's lives. Gold bullion is real, honest money...and, many say, the best form of money the world has ever known. It is a store of value and a safe haven in times of crisis. Gold is rare, durable and does not wear out in the manner of lesser metals (or paper!) when passed from hand to hand. A small amount, easily carried, can purchase a significant amount of goods and services. It is universally accepted, and can be easily bought and sold around the world. Today, the beauty of a gold bar lies in its ability to diversify investments, protect wealth and preserve one's purchasing power. Gold bullion bars are real, tangible assets, and throughout history, have been an ideal store of value and an excellent hedge against inflation, deflation and political uncertainty. They are extremely liquid investments, easily stored and transported, and can be a uniquely private way to preserve one's wealth.
The first gold coins produced in America, the original $10 gold "Eagle" coins, were originally minted by the United States Mint starting in 1795. More than two hundred years later, U.S. gold coins-perhaps some of the greatest symbols of American liberty and freedom -- are still produced with levels of quality and beauty that one would expect of the United States Mint.
First released by the United States mint in 1986, the gold American Eagle is the first modern bullion coin to be authorized by the United States congress...and is backed by the US Mint for its weight, content and purity.
Each gold American eagle coin features striking imagery, symbolizing the American spirit and character. The obverse of the coin, originally designed by Augustus Saint-Gaudens for the country's $20 gold piece minted from 1907 to 1933, carries the image of a full length figure of Lady Liberty holding a torch in her right hand and an olive branch in her left. In the background can be seen the images of the sun rising and the United States Capitol dome. The obverse side of the coin also bears the inscription "Liberty" and contains both the date of issue and the individual mint mark of origin. The reverse side of the coin bears the image of a male bald eagle carrying an olive branch, flying towards his mate in a nest with their hatchlings.
American eagle gold coins are available coinsbullions.com website in four different sizes and denominations. The one-ounce gold American Eagle has a diameter of 32.7mm, a thickness of 2.87mm, a total weight of 1.0909 troy ounces (or 33.931 grams), contains one troy ounce of pure gold, and has a face value of $50. One-ounce gold American Eagles are sold in units of 10 one-ounce coins.
The half-ounce gold coin has a diameter of 27mm, a thickness of 2.24mm, a total weight of .5454 troy ounces (or 16.966 grams), contains a half- ounce of pure gold, and has a face value of $25. The quarter-ounce gold coin has a diameter of 22mm, a thickness of 1.83mm, a total weight of .2727 troy ounces (or 8.483 grams), contains a quarter-ounce of pure gold, and has a face value of $10. The tenth-ounce gold coin has a diameter of 16.5mm, a thickness of 1.19mm, a total weight of 0.1091 troy ounces (3.393 grams), contains a tenth-ounce of pure gold and has a face value of $5. American eagle gold coins provide investors with the means to diversify, balance and stabilize a well-rounded investment portfolio, all with the safety and backing of the United States government and the U.S. Dollar.
Canadian Maple Leaf gold coins are known and respected throughout the world because of the impeccable standards of quality mandated by the Royal Canadian Mint. The Royal Canadian Mint's insistence upon flawless coins, the pure gold blanks from which gold coins are struck, has led to an enviable reputation among demanding investors and collectors. Its impeccable quality, pleasing design, and fine gold purity (at ninety-nine point nine-nine percent pure gold, or "four-nines" fine) has made the Canadian Maple leaf one of the preferred gold coins of investors around the world. In fact, the one troy ounce gold Canadian Maple Leaf has been in continuous production longer than any other pure gold bullion coin.
Each gold Maple Leaf coin features the image of Great Britain's Queen Elizabeth the second, along with the denomination and date of issue, on the obverse side...and an image of Canada's national symbol, the maple leaf (from which the coin derives its name), on the reverse side, along with the name of the country and the level of purity of the gold, listed in both English and French.
The classic one troy ounce coin, which measures 30mm in diameter with a thickness of 2.87mm, makes the coin approximately the same size as an extra thick United States half-dollar. The coin carries a face value of 50 Canadian Dollars. One ounce Canadian Maple Leaf gold coins are offered by coinsbullions.com in units of 10 one-ounce coins, and are available and the coins make a wonderful addition to any investment portfolio.
The half-ounce coin has a diameter of 25mm, and is 2.23mm thick, which gives this coin similar dimension to a double-stacked United States quarter, and carries a face value of 20 Canadian Dollars. The quarter-troy-ounce Canadian Maple Leaf coin has a diameter of 20mm, with a thickness of 1.78mm, and a face value of 10 Canadian Dollars. The tenth-ounce gold Maple Leaf has a diameter of 16mm and a thickness of 1.13mm, making it comparable in size to a United States dime, and carries a face value of 5 Canadian Dollars.
Feel the Gold Rush with Gold Coins
A lot of people find collecting gold coins as not only an incredibly interesting hobby but a fairly lucrative one as well! Over time, your collection will accure value and parts of it can be sold if you desire. This way, you will have additional income for yourself later in life in addition to a fantastic collection of valuable coins.
1. Face To Face: Coin Collectors Know Best
The internet is home to a lot of gold coin dealers wherein you can meet all sorts of people from all over the world who are into both buying and selling gold coins. Of course, it is a rather convenient venue for you to be able to do your transactions. You must be extremely conscious, however, when it comes to dealing with other gold coin collectors that you will meet through the internet. While there are some real gold coin enthusiasts in the internet, there are also those people who are posing as gold coin collectors and are just looking to rip you off.
2. Why Gold Coins?
The history of gold coins dates as far back as 2,700 years ago. The first gold coins in the world were issued in Lydia around 640 B.C. certain internet websites will provide you with a lot of information about the history of gold coins.
As money, gold coins have been a convenient way for people to do their transactions. Gold was only used for coins that were considered of a higher value. As gold is not the most common ore, it became impractical for gold to be used in the common coin systems of all major countries. This means a collection of gold coins is extremely rare due to the fact that gold coins are no longer being produced.
3. Gold Coins For Investment
- Gold is sensible investment: all major countries use reserves of gold (such as Fort Knox) to maintain their national worth
- A highly convenient investment
- Physical gold is extremely stable in value
4. Commemorative Coins
When it comes to the commemorative gold coins, since gold is deemed as a highly valuable kind of metal, it is an obvious choice when it comes to making or producing special commemorative coins. In the past, there are sets of gold coins that were just issued to mark coronations as well as other important state events. A lot of financial reserves that are being held by banks are in the form of gold coins. Gold coins are a desired form of a reserved asset since gold coins are not really used for circulation anymore.
5. About Collectors
There are a lot of various gold coin sellers, buyers as well as collectors who are waiting to bid on the best kind of gold coins in the market most especially in the internet. For most gold coins that can be bought as well as sold at prices that are closely related to their intrinsic gold content. The most popular bullion gold coins are the krugerrands as well as the sovereigns.
For most gold coin collectors, there are the highly coveted rare gold coins and a lot of gold coin collectors are interested in these rare gold coins that they will offer high bids just to be able to get their hands on these.
A lot of people who are looking for things to collect are in real treat if ever they try out collecting gold coins most especially because gold coins can be bought in highly excellent and may be in even mint condition for only a relatively low premium over the gold coin's gold content. Also, since the coin is made from gold, it is highly unlikely that it will tarnish or even discolor.
If you are looking into collecting gold coins, first research the various gold coins that are available in the market today. Find out how much they are really worth due to their gold content, and then factor in any additional value to the coin for being rare. Always be on the lookout for fake coins, and have coins appraised by a gold coin expert to avoid large differences in price.
1. Face To Face: Coin Collectors Know Best
The internet is home to a lot of gold coin dealers wherein you can meet all sorts of people from all over the world who are into both buying and selling gold coins. Of course, it is a rather convenient venue for you to be able to do your transactions. You must be extremely conscious, however, when it comes to dealing with other gold coin collectors that you will meet through the internet. While there are some real gold coin enthusiasts in the internet, there are also those people who are posing as gold coin collectors and are just looking to rip you off.
2. Why Gold Coins?
The history of gold coins dates as far back as 2,700 years ago. The first gold coins in the world were issued in Lydia around 640 B.C. certain internet websites will provide you with a lot of information about the history of gold coins.
As money, gold coins have been a convenient way for people to do their transactions. Gold was only used for coins that were considered of a higher value. As gold is not the most common ore, it became impractical for gold to be used in the common coin systems of all major countries. This means a collection of gold coins is extremely rare due to the fact that gold coins are no longer being produced.
3. Gold Coins For Investment
- Gold is sensible investment: all major countries use reserves of gold (such as Fort Knox) to maintain their national worth
- A highly convenient investment
- Physical gold is extremely stable in value
4. Commemorative Coins
When it comes to the commemorative gold coins, since gold is deemed as a highly valuable kind of metal, it is an obvious choice when it comes to making or producing special commemorative coins. In the past, there are sets of gold coins that were just issued to mark coronations as well as other important state events. A lot of financial reserves that are being held by banks are in the form of gold coins. Gold coins are a desired form of a reserved asset since gold coins are not really used for circulation anymore.
5. About Collectors
There are a lot of various gold coin sellers, buyers as well as collectors who are waiting to bid on the best kind of gold coins in the market most especially in the internet. For most gold coins that can be bought as well as sold at prices that are closely related to their intrinsic gold content. The most popular bullion gold coins are the krugerrands as well as the sovereigns.
For most gold coin collectors, there are the highly coveted rare gold coins and a lot of gold coin collectors are interested in these rare gold coins that they will offer high bids just to be able to get their hands on these.
A lot of people who are looking for things to collect are in real treat if ever they try out collecting gold coins most especially because gold coins can be bought in highly excellent and may be in even mint condition for only a relatively low premium over the gold coin's gold content. Also, since the coin is made from gold, it is highly unlikely that it will tarnish or even discolor.
If you are looking into collecting gold coins, first research the various gold coins that are available in the market today. Find out how much they are really worth due to their gold content, and then factor in any additional value to the coin for being rare. Always be on the lookout for fake coins, and have coins appraised by a gold coin expert to avoid large differences in price.
Buy Gold the Right Way by Knowing these Secrets
As an investor, the glitter of gold can catch anyone’s eye. It has for centuries and lately, it seems, it has once more. The price of the precious metal is now at levels we haven’t seen in almost 25 years and leading investment advisers are hyping gold as a the latest way to diversify your portfolio and protect yourself against inflation during the recent decline in the value of the dollar.
What makes gold so difficult for investors is that gold can potentially be owned in a few different forms with some riskier than others. Costs associated with all of the different forms as does its liquidity. If investing in gold for the first time is something that interests you but are not sure just how to get started with such an investment, perhaps you can find some useful ideas in this guide. Here's a look at just a few of the more popular ways to participate in today's gold rush.
* Know there are five principal ways people invest in gold. They are in tangible coins and bars, certificates, precious metals mutual funds, stock in mining companies, and gold and metals futures. If safety and diversity is something that you would primarily be interested in, then coins and bars would be best choice.
* All of your tangible gold should be broken down in two subcategories. They are either bullion or numismatics. Pure or almost pure gold falls under the gold bullion category, notable for its bar form. Minted coins such as commemorative ones are considered to be numismatics.
* Go online and do a search for brick-and-mortar precious metals dealers or any websites that do dealings in it. There are certain questions you should pay attention to and definitely get answers to each. Some of these questions would be to ask how long the dealer has been in business, whether or not they specialize in one specific segment of the market, and who their typical client would be.
* Don’t make any rash judgments and never impulse buy but instead, shop around to a few different places. Coins and bars all have different markups but a one troy ounce size is the most popular since it is easy to buy, sell and store.
* When it comes to the market for numismatics, it couldn’t hurt to educate yourself a little about it. For example, did you know that the design and condition of a gold coin will affect the price nearly as much as the gold content of the coin?
* If you’re not interested in storing anything, go with the option of buying certificates instead. These certificates act as a representation of your ownership for a certain quantity of gold.
* What about investing in gold stocks and funds as a different choice? Since they are diversified and managed, gold funds are definitely the most stable of all your choices but be careful when it comes to stocks in gold because you are buying into only one company which makes that investment less stable.
* If you’re one of those people who like to live on the edge then gold futures is the high risk/high potential return choice for you. That is if you have confidence in your ability to predict the increase or decrease of the value of gold. Basically, they are a contract to buy or sell at a specific point in time for a particular set price. How well you do with them is dependant solely on the value of gold during the contract term.
What makes gold so difficult for investors is that gold can potentially be owned in a few different forms with some riskier than others. Costs associated with all of the different forms as does its liquidity. If investing in gold for the first time is something that interests you but are not sure just how to get started with such an investment, perhaps you can find some useful ideas in this guide. Here's a look at just a few of the more popular ways to participate in today's gold rush.
* Know there are five principal ways people invest in gold. They are in tangible coins and bars, certificates, precious metals mutual funds, stock in mining companies, and gold and metals futures. If safety and diversity is something that you would primarily be interested in, then coins and bars would be best choice.
* All of your tangible gold should be broken down in two subcategories. They are either bullion or numismatics. Pure or almost pure gold falls under the gold bullion category, notable for its bar form. Minted coins such as commemorative ones are considered to be numismatics.
* Go online and do a search for brick-and-mortar precious metals dealers or any websites that do dealings in it. There are certain questions you should pay attention to and definitely get answers to each. Some of these questions would be to ask how long the dealer has been in business, whether or not they specialize in one specific segment of the market, and who their typical client would be.
* Don’t make any rash judgments and never impulse buy but instead, shop around to a few different places. Coins and bars all have different markups but a one troy ounce size is the most popular since it is easy to buy, sell and store.
* When it comes to the market for numismatics, it couldn’t hurt to educate yourself a little about it. For example, did you know that the design and condition of a gold coin will affect the price nearly as much as the gold content of the coin?
* If you’re not interested in storing anything, go with the option of buying certificates instead. These certificates act as a representation of your ownership for a certain quantity of gold.
* What about investing in gold stocks and funds as a different choice? Since they are diversified and managed, gold funds are definitely the most stable of all your choices but be careful when it comes to stocks in gold because you are buying into only one company which makes that investment less stable.
* If you’re one of those people who like to live on the edge then gold futures is the high risk/high potential return choice for you. That is if you have confidence in your ability to predict the increase or decrease of the value of gold. Basically, they are a contract to buy or sell at a specific point in time for a particular set price. How well you do with them is dependant solely on the value of gold during the contract term.
How to Buy Vietnamese Gold SJC Bars
The Saigon Jewelry Company (SJC) is a government owned company based in Ho Chi Minh City. The company enjoys a monopoly on gold bars manufactured within Vietnam. The gold used in these bars is pure Swiss gold, measuring 999.9 parts gold per thousand. This is the purest gold available on the market, and is used for bank to bank transfers, real estate transactions and by private collectors. Although SJC gold bars are in high demand, they are available to anyone with the money to pay for them. Follow this simple guide to learn how to buy SJC gold bars in Vietnam.
Instructions
Step1Obtain a passport and a visa to enter Vietnam. Additional information on passports and visas can be obtained on the US State Department website.
Step2Make travel plans to go to Vietnam. Whether you use the services of a travel agent, or make the reservations yourself, you will need a round trip flight and hotel accommodations for the duration of your stay. There is a SJC location in every major city, such as Hanoi, Da Nang and Nha Trang, but your best option is to travel to Ho Chi Minh City.
Step3Visit the SJC retail outlet. If you intend to buy smaller gold bars, known as ingots, these can be purchased directly at the SJC retail store. This is primarily a jewelry store, but small gold bars can be purchased here directly. These gold bars weigh 1 gram, 5 grams, 10 grams and 25 grams.
Step4Go to one of the gold trading floors in Vietnam. In Ho Chi Minh City, SJC has partnered with four different banks to operate as many gold trading floors in the city. Asia Commercial Bank, Viet A Bank, Phuong Nam Bank and Eximbank all operate gold trading floors in partnership with SJC. These gold markets are open Monday through Friday from 8:00am to 5:00pm, with a two hour break from lunch. Gold bars as large as 1kg (2.2 lbs.) are traded in these markets.
How to Sell Gold to a Refiner
Selling gold to a refiner is usually the fastest, simplest and easiest way to exchange your gold for cash. Some refiners will even allow you to exchange your gold for better gold, such as trading broken jewelry for gold bullion. If you have jewelry that is in excellent condition, then you may get a better price by selling elsewhere, but if you have damaged jewelry or raw gold to sell, then a refiner is your best option by far.
Instructions
Step1Use a digital scale to weigh your gold. This allows you to judge the buyer’s honesty when an offer is made for your gold.
Step2Monitor the price of gold. Gold prices are updated twice each day. You can always get the current rate of gold by visiting kitco.com (see Resources below). Following the day-to-day fluctuations in the price of gold will allow you to better gauge what your gold is worth.
Step3Locate local refiners. Most metropolitan areas have at least one gold refiner within driving distance. Using the local telephone directory is one way to look up refiners, but online search engines are probably more efficient. Start by doing a search for refiners in your city, and if no results are found you can expand your search to the state level and then see what refiners are close. For example, if you live in Atlanta, you can first search for “Atlanta gold refiner,” and if no results are found you can expand your search to “Georgia gold refiner.”
Step4Choose a refiner. Once you have identified the refiners that are in your local area, call them to determine what rate they are paying for gold. Tell them what how many carats (k) your gold is and how much it weighs, then ask what rate they pay. This will allow you to compare rates without driving all over town. Once you know who is paying the highest rate, it is a simple matter of taking your gold in and trading it for cash.
Instructions
Step1Use a digital scale to weigh your gold. This allows you to judge the buyer’s honesty when an offer is made for your gold.
Step2Monitor the price of gold. Gold prices are updated twice each day. You can always get the current rate of gold by visiting kitco.com (see Resources below). Following the day-to-day fluctuations in the price of gold will allow you to better gauge what your gold is worth.
Step3Locate local refiners. Most metropolitan areas have at least one gold refiner within driving distance. Using the local telephone directory is one way to look up refiners, but online search engines are probably more efficient. Start by doing a search for refiners in your city, and if no results are found you can expand your search to the state level and then see what refiners are close. For example, if you live in Atlanta, you can first search for “Atlanta gold refiner,” and if no results are found you can expand your search to “Georgia gold refiner.”
Step4Choose a refiner. Once you have identified the refiners that are in your local area, call them to determine what rate they are paying for gold. Tell them what how many carats (k) your gold is and how much it weighs, then ask what rate they pay. This will allow you to compare rates without driving all over town. Once you know who is paying the highest rate, it is a simple matter of taking your gold in and trading it for cash.
How to Invest in Gold Futures
Gold is a favorite of investors, whether they have a few hundred dollars or millions. An investment in gold coins and bars (known as bullion) is a good hedge in uncertain economic times. If you take the time to learn the factors that affect the price of gold, it’s relatively safe and can be quite profitable. If you are wiling to take risks, you may want to invest in gold futures. Strictly speaking, trading in gold futures isn’t investing; it is speculating (a polite word for gambling). The lure is understandable--people can and have become millionaires. But be warned. Most first-time traders in gold futures lose their money.
Instructions
Step1
Understand how investing in gold futures differs from buying gold. When you buy gold coins or bars you are purchasing the metal. A futures contract of any kind is an agreement that you will pay the current price at some point in the future, regardless of the price at the time. If the price goes down you will lose money and if the price rises you make money (this is a “call” contract; you can do the same thing in reverse with a “put” contract). What makes investing in gold futures so potentially profitable and so risky is the margin. Futures contracts are bought and sold with the trader putting up a small amount of the actual price (perhaps 10 percent). When you invest in gold futures costing $100,000 you put up $10,000 (or even less). If the price goes up 10 percent you can double your money. But if the price goes down 10 percent you lose your entire investment.
Step2
Educate yourself about the factors that affect the price of gold. Three types of economic forces are important to the price of gold. Demand can increase because new buyers are entering the market. We have seen this in recent years as newly emerging industrial nations like China are creating growing demand for gold. Another important factor is the value of the dollar. When the value of currency falls, either due to inflation or a weak dollar on the currency exchanges, it takes more to buy gold and so the price rises. Economic uncertainty is also a major factor. Gold is a good hedge and a relatively safe investment. When economic news is bad, investors pull out of stock markets and put their money in safer investments—and gold is a perennial favorite.
Step3
Open a brokerage account to invest in gold futures. Most traders use a discount brokerage. Buying and selling gold futures contracts depends on small changes in price most of the time, so experienced traders keep overhead to a minimum by using discount brokerage firms.
Step4
Keep track of the price of gold and gold futures. Up to date information is essential when profit or loss depends on small changes in price. You can get daily quotes on the price of gold using the link at the end of this article. Futures contracts are always somewhat different in price and you will watch those prices separately. Most brokers have online sites where you can monitor prices in real time. However, you can see examples of gold futures by using the second link below to the Chicago Board of Trade.
Step5
Study the markets and trading patterns for a while and practice by making mock trades. When you are ready, try your hand at trading gold futures. You can limit your risk by including a stop sell order with each trade. This is an order to sell automatically if the price drops a certain amount and is a good way to limit your losses—and you will lose money on some trades. Successful traders in gold futures are the ones who can limit their losses while taking advantage of profit opportunities.
Instructions
Step1
Understand how investing in gold futures differs from buying gold. When you buy gold coins or bars you are purchasing the metal. A futures contract of any kind is an agreement that you will pay the current price at some point in the future, regardless of the price at the time. If the price goes down you will lose money and if the price rises you make money (this is a “call” contract; you can do the same thing in reverse with a “put” contract). What makes investing in gold futures so potentially profitable and so risky is the margin. Futures contracts are bought and sold with the trader putting up a small amount of the actual price (perhaps 10 percent). When you invest in gold futures costing $100,000 you put up $10,000 (or even less). If the price goes up 10 percent you can double your money. But if the price goes down 10 percent you lose your entire investment.
Step2
Educate yourself about the factors that affect the price of gold. Three types of economic forces are important to the price of gold. Demand can increase because new buyers are entering the market. We have seen this in recent years as newly emerging industrial nations like China are creating growing demand for gold. Another important factor is the value of the dollar. When the value of currency falls, either due to inflation or a weak dollar on the currency exchanges, it takes more to buy gold and so the price rises. Economic uncertainty is also a major factor. Gold is a good hedge and a relatively safe investment. When economic news is bad, investors pull out of stock markets and put their money in safer investments—and gold is a perennial favorite.
Step3
Open a brokerage account to invest in gold futures. Most traders use a discount brokerage. Buying and selling gold futures contracts depends on small changes in price most of the time, so experienced traders keep overhead to a minimum by using discount brokerage firms.
Step4
Keep track of the price of gold and gold futures. Up to date information is essential when profit or loss depends on small changes in price. You can get daily quotes on the price of gold using the link at the end of this article. Futures contracts are always somewhat different in price and you will watch those prices separately. Most brokers have online sites where you can monitor prices in real time. However, you can see examples of gold futures by using the second link below to the Chicago Board of Trade.
Step5
Study the markets and trading patterns for a while and practice by making mock trades. When you are ready, try your hand at trading gold futures. You can limit your risk by including a stop sell order with each trade. This is an order to sell automatically if the price drops a certain amount and is a good way to limit your losses—and you will lose money on some trades. Successful traders in gold futures are the ones who can limit their losses while taking advantage of profit opportunities.
How to Survive a Bear Attack
How to Survive a Bear Attack
Hopefully, you will never need this advice. But, if you are unable to prevent a bear attack, these tips may help you survive it. Depending on the type of bear--grizzly or black--there are specific actions you can take (or avoid) to help you survive! Follow these steps to learn more.
Instructions Difficulty: Challenging
Things You’ll Need:
bear pepper spray
In Grizzly Country--When a Brown Bear Attacks
Step1
Hike with bear pepper spray at the ready--easily accessible in a holster on your belt or in a front pocket. If a bear does attack, you will only have seconds to respond.
Step2
Aim the bear spray toward the attacking bear. When he is in close range--about 40 feet away--begin to fire a cloud in his direction. Hopefully, the super-strength pepper spray will be enough to ward off the attack.
Step3
Drop to the ground and lie face down if you have no spray, or the bear continues its charge anyway. Cover the back of your neck with your hands and DO NOT move.
Step4
Play dead. When the bear starts its attack as you lie on the ground, play dead. If he leaves you alone--even for 20 minutes, play dead. The bottom line: yes, play dead. Grizzlies are well-known for attacking until the perceived threat is neutralized; if you're no longer moving, you're no longer a threat.
When a Black Bear Attacks
Step1Stand your ground; look big; scream and shout--flail your arms about! Do whatever you can to look aggressive and big. If you have a pack or bike or branch--anything--hold it over your head to look bigger. Black bears will usually bluff one or even several charges.
Step2Keep your feet on the ground; do not climb a tree! Black bears are excellent climbers.
Step3Fight back once the bear is upon you. Do not go quietly into the night. Think last stand, no holds barred. It is very unlikely things will get to this point, but if they do, use your fists, your feet, sticks and stones; bite his nose off if you have to! He's not going to leave you alone otherwise.
Tips & Warnings
If a grizzly seems to be following or circling you, it may actually be hunting you as prey. Although this is not normal behavior, it may happen with a sick or starving bear. In this case, fight back! Aim for the bear's eyes and face.
Do not run. Running critter equals easy prey! The bear will be on top of you like lightning. There is no chance of outrunning her.
Hopefully, you will never need this advice. But, if you are unable to prevent a bear attack, these tips may help you survive it. Depending on the type of bear--grizzly or black--there are specific actions you can take (or avoid) to help you survive! Follow these steps to learn more.
Instructions Difficulty: Challenging
Things You’ll Need:
bear pepper spray
In Grizzly Country--When a Brown Bear Attacks
Step1
Hike with bear pepper spray at the ready--easily accessible in a holster on your belt or in a front pocket. If a bear does attack, you will only have seconds to respond.
Step2
Aim the bear spray toward the attacking bear. When he is in close range--about 40 feet away--begin to fire a cloud in his direction. Hopefully, the super-strength pepper spray will be enough to ward off the attack.
Step3
Drop to the ground and lie face down if you have no spray, or the bear continues its charge anyway. Cover the back of your neck with your hands and DO NOT move.
Step4
Play dead. When the bear starts its attack as you lie on the ground, play dead. If he leaves you alone--even for 20 minutes, play dead. The bottom line: yes, play dead. Grizzlies are well-known for attacking until the perceived threat is neutralized; if you're no longer moving, you're no longer a threat.
When a Black Bear Attacks
Step1Stand your ground; look big; scream and shout--flail your arms about! Do whatever you can to look aggressive and big. If you have a pack or bike or branch--anything--hold it over your head to look bigger. Black bears will usually bluff one or even several charges.
Step2Keep your feet on the ground; do not climb a tree! Black bears are excellent climbers.
Step3Fight back once the bear is upon you. Do not go quietly into the night. Think last stand, no holds barred. It is very unlikely things will get to this point, but if they do, use your fists, your feet, sticks and stones; bite his nose off if you have to! He's not going to leave you alone otherwise.
Tips & Warnings
If a grizzly seems to be following or circling you, it may actually be hunting you as prey. Although this is not normal behavior, it may happen with a sick or starving bear. In this case, fight back! Aim for the bear's eyes and face.
Do not run. Running critter equals easy prey! The bear will be on top of you like lightning. There is no chance of outrunning her.
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