Mining Journal reported today that Gold Fields (GFI: $11.99) announced a plan to layoff 1,500 workers at mines in South Africa due to downsizing operations.
“Oupa Komane, the deputy general secretary of South Africa’s biggest union, the National Union of Mineworkers (NUM), said the union had resisted the move,” reported the Mining Journal.
Add comment January 21st, 2009
1. Rich Dad’s Advisors: Guide to Investing In Gold and Silver: Protect Your Financial Future
by Michael Maloney
“Throughout the ages, many things have been used as currency: livestock, grains, spices, shells, beads, and now paper. But only two things have ever been money: gold and silver. When paper money becomes too abundant, and thus loses its value, man always turns back to precious metals. During these times there is always an enormous wealth transfer, and it is within your power to transfer that wealth away from you or toward you.” — Michael Maloney.
2. The ABCs of Gold Investing: How to Protect and Build Your Wealth with Gold
3. The Goldwatcher: Demystifying Gold InvestingGoldwatcher explains the pros and cons of gold as a twenty first century investment – when investing makes sense, when prices make sense and when they don’t. The book addresses everything the independent investor needs to know about investing in gold. It addresses gold’s history as a repository of value; what drives supply and demand, why and how the US dollar and global macroeconomic factors affect gold price, how experts in the filed of money management see its prospects and when prices are reasonable. Situations are explained in which gold will be invaluable to investors as stateless money that keeps its value even in the worst of times; a niche investment with value underpinned by scarcity; an investment to include in a portfolio to spread risks; and a suitable investment to include in pension provisions.
4. Buy Gold Now: How a Real Estate Bust, our Bulging National Debt, and the Languishing Dollar Will Push Gold to Record Highs Masterfully researched, and written in a straightforward style, Buy Gold Now makes a case for buying gold as protection against the rising risks of an unprecedented global currency crisis and as a profitable investment vehicle. Divided into five comprehensive parts, this reliable resource examines our country’s current financial situation from a historical perspective and addresses some of the alarming issues that many economists are currently pointing to with concern.
5. The Collapse of the Dollar and How to Profit from It: Make a Fortune by Investing in Gold and Other Hard Assets“Turk and Rubino are right: There is a crisis coming, and it will cause a collapse in the mountain of credit fostered by the monopoly central banks of the world. Read this book and find out how you can protect yourself while there’s still time.” —Robert R. Prechter, author of the bestseller Conquer the Crash
”Should be read by everyone who is interested in both their own investments and this nation’s future. I recommend this book highly.” —Richard L. Russell, Editor, Dow Theory Letters
6. Ruff’s Little Book of Big Fortunes in Gold & Silver: A Middle Class License to Print MoneyIt is a detailed guide to a once-in-a-lifetime chance for middle-class Americans to get rich investing in one of history’s greatest bull markets. Ruff makes a usually arcane subject easy to understand, and even humorous. This bull market will dwarf even the 500% to 1700% profits his readers made in the metals in the 70s, and as usual, Ruff is out in front.
7. Gold: The Once and Future MoneyNathan Lewis explains how the circulation of money is regulated by central banks and, in the process, demystifies the concepts of supply, demand, and the value of currency. And he illustrates how higher taxes diminish productivity, trade, and the stability of money. Lewis also provides an entertaining history of U.S. money and offers a sobering look at recent currency crises around the world, including the Asian monetary crisis of the late 1990s and the devastating currency devaluations in Russia, China, Mexico, and Yugoslavia.
Lewis’s ultimate conclusion is simple but powerful: gold has been adopted as money because it works. The gold standard produced decades and even centuries of stable money and economic abundance. If history is a guide, it will be done again.
8. Junior Mining Investor: 14 Natural Resource Experts Show You How to Invest Profitably in Emerging Gold, Silver, Platinum, Base Metals, and Uranium Mining and Exploration StocksThese analysts are newsletter writers, hedge fund managers, discovery geologists, and industry veterans who have one thing in common: a winning record and proven philosophy in the ever-changing gold and resource stock market. They understand the key fundamentals to investing in the resource sector and have created life-changing wealth for many of their clients.
Authors include: David Morgan, The Silver-Investor; Brian Fagan, Stocks and Speculations; Adrian Day, Adrian Day Asset Management; Jason Hommel, The Silver Stock Report; Dr. Russell McDougal, Investor’s Daily Edge; Scott Wright, Zeal Intelligence; Ken Gerbino, Kenneth J. Gerbino and Company; Neil Charnock, Gold Oz; Clif Droke, ClifDroke.com; Dr. Richard S. Appel, Financial Insights; James Finch and Julie Ickes, Stock Interview; Roland Watson, The Silver Analyst; and Dudley Baker of Precious Metals Warrants.
Add comment January 5th, 2009
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | |
| Mine production | 2,618 | 2,621 | 2,493 | 2,548 | 2,486 | 2,476 |
| Official sector sales | 547 | 620 | 479 | 663 | 370 | 481 |
| Old gold scrap | 872 | 985 | 878 | 897 | 1,126 | 956 |
| Net producer hedging | -412 | -289 | -438 | -92 | -410 | -446 |
| Total reported supply | 3,625 | 3,937 | 3,412 | 4,016 | 3,572 | 3,467 |
| Gold fabrication in carat jewellery | 2,660 | 2,482 | 2,613 | 2,708 | 2,284 | 2,401 |
| Gold fabrication in electronics | 206 | 233 | 262 | 281 | 308 | 311 |
| Gold fabrication in other industrial | 83 | 81 | 84 | 88 | 91 | 92 |
| Gold fabrication in dentistry | 69 | 67 | 68 | 62 | 61 | 58 |
| Retail investment | 339 | 292 | 339 | 386 | 401 | 402 |
| Investment in Exchange Traded Funds | 3 | 39 | 133 | 208 | 260 | 251 |
| Total identifiable demand | 3,359 | 3,194 | 3,498 | 3,733 | 3,405 | 3,515 |
| Supply less demand | 265 | 743 | -86 | 283 | 167 | -48 |
Total Gold Supply for 2007
Global Gold Demand
Add comment January 5th, 2009
by, Ian Dennis
As other precious metals, gold is measured by troy weight and by grams. And when it is alloyed with supplementary metals the term carat or karat is used to specify the amount of gold present, with 24 carats being pure gold and lower ratings being proportionally less. The purity of a gold bar can also be written as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995.
Carat and gold price
Carat is a measure of the purity of gold and platinum alloys. One carat is one twenty-fourth purity by its weight. Thus 24-carat gold is pure gold (99.99%); 12-carat gold is 50% purity, et cetera. In the United States and Canada, the word karat is typically used for the measure of purity, while carat is referring to the measure of mass.
The carat system is gradually more being complemented or superseded by the millesimal fineness system where the purity of precious metals is denoted by parts per thousand of pure metal in the alloy.
The most frequent carats used for gold in bullion, jewelery making and goldsmith are:
24 carat (millesimal fineness 999), 22 carat (millesimal fineness 916), 20 carat (millesimal fineness 833), 18 carat (millesimal fineness 750), 16 carat (millesimal fineness 625), 14 carat (millesimal fineness 585), 10 carat (millesimal fineness 417) and 9 carat (millesimal fineness 375).
The open market gold price
The gold prices is determined on the open market, but a procedure recognized as the Gold Fixing in London, originating in 1919; provide a twice-daily benchmark figure to the industry.
The historically gold price
Historically gold was used to back currency in an economic system recognized as the gold standard a certain weight of gold was given the name of a unit of currency. For a long period, the United States government set the value of the US dollar so that one troy ounce was equivalent to $20.67 ($664.56/kg), but in 1934 the dollar was revalued to $35.00 per troy ounce ($1125.27/kg). And by 1961 it was becoming harder to uphold this price, and a pool of US and European banks agreed on manipulating the market to stop further currency devaluation against increased gold demand.
On 17 March 1968, economic conditions caused the collapse of the gold pool, and a two-tiered pricing scheme was established and gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to rise and fall; this two-tiered pricing system was discarded in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a store of value even though the level has generally been declining. The biggest gold depository in the world is that of the U.S. Federal Reserve Bank in New York.
Ever since 1968 the price of gold on the open market has ranged widely, with a record high $850/oz ($27,300/kg) on 21 January 1980, to a low $252.90/oz ($8,131/kg) on 21 June 1999 (London Fixing). On 26 April 2006 the London gold fixing was $635.50/oz.
Add comment January 5th, 2009
Unlike silver, there are a few Gold ETFs available for investors. There’s streetTRACKS Gold Shares (GLD: $108.5299), or Market Vectors Gold Miners ETF (GDX: $45.15). The main difference for both of these funds is the difference between what the fund focuses on holding. For streetTRACKS Gold Shares (GLD) the focus is physical gold, while the Gold Miners ETF (GDX) fund focuses on gold mining company stock. It’s the difference between holding paper and holding the real thing.
First for those new to ETFs, an Exchange Traded Fund (ETF) is a pretty nifty investment vehicle. Much like a mutual fund, an ETF allows many investors to pool investment funds and buy shares in a professionally managed investment fund. What makes an ETF even more attractive is that shares of an ETF trade exactly like a stock: they can be bought, sold and shorted almost instantaneously. In addition to trading exactly like stock, some ETFs even have options available.
Moreover taxation on ETFs are more favorable than with traditional mutual funds. Most ETFs specialize in particular groupings of companies and industries that have certain common characteristics. Moreover, expenses for ETFs are low and range between .1% to 2%. The low expenses coupled with the specialization makes ETFs an incredible opportunity for investors.
Now for details on the difference between these Gold ETFs. Prudent investors balance the returns and risks by owning both ETFs. Yes, prudent investors would own both gold ETFs to balance the gains from the inflationary hedge, Gold Shares (GLD), and use the leverage available by owning gold miners using the Gold Miners ETF (GDX).
Add comment January 5th, 2009
There’s never been a better time to buy American Eagle Gold Coins. An economic recession is almost assured. Along with the varied fluctuations in the stock market and the downward trend in the real estate sector, more investors are compelled to put their money in items that will hold value, such as gold bullion coins. A recent trend analysis puts the gold market as one of the most flourishing areas of investment, offering the maximum returns.
Most investors select American Eagle Gold Coins as their option for gold coin investments, as these are of assured quality. Likewise, the gold coin collectors, as a hobby or antique collection, prefer American Eagle Gold Coins, which are 91.67% purity or 22 karat. Generally pure gold is actually a mixture of the soft yellow metal and other metals like silver and copper, to make it more wear-resistant.
American Eagle Gold Coins are made out of gold mined in United States. These bullion coins were first released from the US Mint in 1986 and are of assured 22 karats.
There are two varieties of American Eagle Gold Coins - the bullion and the proof.
The American Eagle Gold bullion coins can be considered the best raw gold and is highly suitable for solid investment. These are readily available in the bullion markets. They are a very worthy and safe investment. These coins have been recognized, appreciated and sold the world over. Many American Eagle Gold Coin buyers consider the bullion coins as the best option for a long-term investment.
The American Eagle Gold Proof Coins are actually gold coins that have been specifically struck for collectors and to highlight or mark special occasions. Proof gold coins are not designed for general public circulation. Most of the coin collectors hunt for these types of gold coins. They are very impressive, attractive, glossy and worth the amount that is spent. Different processing techniques are used to make these American Eagle Gold Proof Coins, which gives it an imposing look and beauty.
American Eagle Gold Coins are available in different weights. There are four options of 1 ounce, 1/2 ounce, 1/4 ounce and 1/10 ounce. Generally smaller weights might appear to cost less, but in reality it can be more cost-effective to buy the 1 ounce gold coins.
You should be always be very selective from whom you choose to purchase the gold coins. It is advisable to buy from reputable authorized merchants and clearly check for the purity and weight. There are many establishments approved by the US Mint. The online auction site, eBay, is very convenient and can be very cost effective method of obtaining American Eagle Gold Coins. A proper online search on eBay will turn up many varieties of American Eagle Gold Coins to add to your collection.
At the moment, the gold market is very customer friendly. The handsome collections available gives ample opportunities for the customer to get the best price and selection, making American Eagle Gold Coins a very worthy investment!
Add comment December 15th, 2008
by: Paul Abbey
A person may start purchasing gold coins for any number of reasons. One reason is they see them as a good investment, while some other person may choose to acquire them because they see the way gold actually increases in value. Even these days, you will find that coin collectors are highly motivated to pay whatever the marketplace demands to acquire hard to come by coins.
Irrespective of the reason a person has for purchasing gold coins, they know that it is one of the most secure ways to invest their extra money. Simply due to the fact that they comprehend that over time these coins are unlikely to depreciate in worth but instead are more likely to appreciate.
If you are in the market to purchase coins, you should ensure you are dealing with a coin dealer who is known for his honesty and good reputation. If you can to, select somebody who belongs to the association called the Professional Coin Grading Service, or the Numismatic Guaranty Corporation. By using a coin dealer who is not a member of these associations, you are taking a huge risk with your money and the possibility of buying fake coins.
Once you have found a trusted coin dealer, you can make a decision regarding the amount of gold that you want to acquire. This is essential as the price of gold is constantly fluctuating and by knowing how much it is you have available to spend will help you to acquire at the cost at which it is currently set more easily.
As well as knowing how much money you have available to invest in your gold coins you need to determine what gold coins are available and which are the best ones to invest in. These days gold coins are usually separated up into three different classes. Regular gold bullion coins are collectible and are classed as hard to find.
Gold bullion “coins” are in reality valued based on the volume of precious metal in them. While scarce and collectible coins their prices actually fluctuate enormously and particular factors will need to be taken into consideration in order to place a worth on them. The amount of gold in the coin, the age of the coin and its rareness are the major determining issues.
When buying coins, it is vital to know about the process of grading and evaluation. This will help you when attempting to understand the coin market and to know when bargains arise.
P Abbey owns and operates http://www.goldcoinfacts.com
Add comment December 14th, 2008
The precious metal of gold has fascinated humans for thousands of years. But how do we actually get it out of the ground? Let’s take a look at the most common ways to mine gold.
There are two main gold mining methods, one is called “placer” and the other is “vein” mining. And another type of mining is when gold is collected as a by-product in the mining of other metals.
Placer mining is practiced when the metal is found in unconsolidated deposits of sand and gravel from which the gold can be easily separated because of its high density. The sand and gravel suspended in moving water. Much heavier metal sinks to bottom and is separated by hand.
The simplest method of placer mining is panning. Here the miner swirls the mixture in a pan rapidly enough to carry the water and most of the gravel and sand over the edge while the gold remains on bottom. This was the classic method used by the Forty-Niners during the California gold rush of 1849 and has been immortalized in story, art, and song.
A more efficient form of placer mining uses a sluice box, a U-shaped trough with a gentle slope and transverse bars firmly attached to the trough bottom.
The bars — extending from side to side — catch the heaviest particles and prevent them from washing down the slope.
Sand and gravel are placed in the high end, the gate to a water supply is opened, and the lighter material is washed through the sluice box and out the lower end. The materials are caught behind the bars and are gleaned to recover gold.
Another variation of placer mining is called hydraulic mining. A very strong stream of water is directed at natural sand and gravel banks washing away the lighter materials. The suspended materials treated as if they were in giant sluice box.
Currently the most important placer technique is dredging. A huge shovel of several cubic meters capacity lifts the unconsolidated sand and gravel from soil and mud and the placer process starts.
Vein, or lode mining is the most important of gold recovery methods. Each ounce of gold recovered requires the processing of about 100,000 ounces of ore. Much gold is deposited in rock veins and this method accounts for more than half world’s total gold production. Gold in veins may be of microscopic particle size, in nuggets or sheets, or in gold compounds. The ore requires extensive extraction and refining.
One-third of all gold is produced as a by-product of copper, lead, and zinc production. Copper must be electrolytically refined to raise its purity from 99% to the more than 99.99% that is required for many industrial purposes.
In the refining process an anode of impure copper is electrolyzed in a bath in which the cathode is a very thin sheet of highly refined copper. This process
creates anode sludge which contains gold in quantities sufficient to make its recovery profitable. One-third of all gold is obtained from such by-products.
Silver and platinum are also recovered from the copper anode sludge in quantities large enough to more than pay for the total refining process.
Ore from the gold mine is first crushed in rod or ball mills. This process reduces the ore to a powdery substance. The gold is then extracted by amalgamation with mercury or by placer procedures. Approx. 70% is recovered at this point.
The remainder is then dissolved in dilute solutions of sodium cyanide or calcium cyanide. The addition of metallic zinc to these solutions causes metallic gold to precipitate. This precipitate is refined by smelting and the purification is completed by electrolysis. The sludge produced in this process will also contain commercial quantities of silver, platinum, osmium, and other rare-earth metals.
Gold is one of the first two or three metals, along with copper and silver that was used by humans in these metals’ elemental states. Because of its poor chemical reactivity it was found uncombined and required no knowledge of refining. Gold was used in decorative arts before 9000 BC. And civilizations prized gold for its beauty.
A principal use of gold today is as a currency reserve. For centuries gold was used directly as currency along with silver. During the 19th century, gold assumed the role as the sole basis of the currencies of most nations. Paper money was directly convertible into gold.
World War I, however, disrupted the “gold-standard” system. The original gold standard was gradually abandoned. The United States stopped minting gold coinage in 1934 and the dollar eventually emerged as the principal unit of international monetary transactions.
Since the 1970s, gold has been bought and sold on the world market, with widely fluctuating prices. Today gold reserves maintain only a very indirect relationship with currency values. However, as gold has declined as a currency reserve, its use in industrial processes has risen. On top of this, its beauty and workability continue to give gold an important role in the world’s jewelry industry.
Add comment December 13th, 2008
by: Peter Macfarlane
Gold: the ultimate store of wealth that has been used since time immemorial. A hedge or in troubled times, a ’safe haven’ in the current crisis. If your wealth is stored in gold, then who really cares if the financial system implodes? Empires, currencies and rulers have come and gone… but gold has always retained value and purchasing power. Of the various precious metals, gold is probably the easiest, most liquid (easily traded) asset you can invest in.
Gold is a traditional hedge against inflation or deflation. Against currency devaluations. Against avaricious or incompetent governments or Central Bankers. Or shall I just say, in a less politically correct manner, that America is bankrupt and Gold is the only real money? If you invest in Gold, you no longer have to rely on the “full faith and credit” of the US government - which is declining sharply.
If you’re reading this article, you probably don’t need me to tell you why you should buy gold. It’s actually an obvious decision in the current economic climate. The question is not so much should you buy gold, as can you afford to hang on to assets denominated in a declining currency like the dollar or the pound sterling or the euro…?
The US dollar typically rises or falls inversely with the value of gold. Recently, although there’s been a slight increase recently, the trend of the US dollaris downwards. My view is that the dollar will continue to decline until the US economic fundamentals look better - till America comes out of bankruptcy, that is - and that could take some years.
In terms of your savings or retirement portfolio, this means that if you invest in things like bank deposits (CDs) the net return is most likely negative. Since the beginning of 2003, US dollars held in 3-month US Treasury Bills have yielded less than 3% per year (Source: Global Financial Data). Considering that the inflation rate over this same period of time has averaged more than 3% annually (Source: US CPI), the cash accumulated had less buying power in October 2008 than it did half a decade before.
The carnage on Wall Street, and the fallout around the world, looks far from over - despite what the Feds or the mainstream media might have you believe. Every time there is a new panic like another bank or insurer collapsing, a flurry of investors with dollars, euro and pounds start a new mini gold rush.
At the same time, demand for the yellow metal continues to significantly outweigh supply. The Chinese, for example, love gold and have plenty of dollars. China is keen to diversify its huge foreign currency reserves (by far the largest in the world) away from the dollar. A small increase in China’s percentage of gold reserves would cause a huge increase in demand and consequently in the gold price. Asia, particularly the Indian subcontinent, and the Middle East (think Dubai) are also seeing large increases in domestic gold demand as disposable income increases. When people think that paper currencies will be worth less in the future, they have historically looked to place their net worth into a more stable vehicle. And gold is typically viewed as a safe form of currency, as its value isn’t as affected by inflation.
Why Buy Gold Offshore?
So far, so good. There’s nothing particularly new or controversial about the information above. But I have always believed in a more offshore, skeptical, pragmatic approach. Like it or not, we tell things as they are.
Can we trust government to manage our finances? I think the overwhelming evidence suggests no. History shows that gold is politically sensitive, and governments (read Central Banks, particularly the Federal Reserve) don’t like to see individuals buying gold. Why? Because they can’t control it. They can certainly try. For example, in an earlier article you will find here, we asked seriously Will the US Government Confiscate Gold?
Then suddenly, as of late September 2008, we saw the US Federal Government beginning to limit the access of ordinary citizens to gold bullion - by withdrawing new bullion coins from circulation. (Suddenly and unexpectedly in mid-crisis the IRS also introduced a new form FBAR for reporting of foreign bank accounts)
What we can see from all this is that the smartest strategy is to keep your gold holdings outside your home jurisdiction — where they will be well protected against all sorts of threats from governments to predatory ex-spouses. So you need to know:
How to Buy Gold Bullion Offshore
Gold bullion is the most liquid form of gold. If you want to buy gold with the idea that you’ll ultimately sell it, then you will want to buy gold bullion. Bullion means either bars or coins. Fortunately, you can easily buy gold this way and just as easily sell it again anywhere in the world. If you need to break it into smaller denominations, you can for example exchange gold easily for silver coins like Panama’s old Silver Balboa or Mexico’s silver coins.
You can buy gold bullion by looking for offshore dealers. If you have a particular kind of coin in mind - like the Canadian Maple Leaf or South African Krugerrand, to name a few of the most popular gold coins - then do a search for that particular coin, or find the official mint websites. For example, check out the South African Mint or the Royal Canadian Mint. An interesting and more private option for Americans is restricted circulation coins. When you want to buy gold, these sites all contain helpful tools for finding local and international dealers of gold coins.
Provided you don’t ‘look suspicious’ and you can prove the origin of your funds with some documents, it is quite easy to buy gold bullion coins anonymously with cash. Some countries, like France, charge sales tax on gold and so should be avoided. Others place burdensome restrictions on export, like major gold producers Brazil and South Africa. Others, like San Marino, are simply too far from major gold markets for purchase there to be economical - you would be saddled with high transport and insurance costs.
So where should or can you go to buy gold offshore? The undisputed capital of the business is Zurich, Switzerland. There you can buy and store your gold in the free trade zone at the airport. Major Swiss banks like Credit Suisse will sell you gold directly from their branches in Zurich Airport.
Most countries in mainland Europe are good for buying gold. Luxembourg, for example, is a friendly little place where privacy is still respected in precious metals transactions.
In the Americas, Mexico is another country where you can simply walk in to a casa de cambio and buy gold ‘centenarios’ over the counter for cash. Mexico has suffered from so many devaluations and is also a major producer of gold and silver, so investing in bullion coins has become popular there. There has been a serious effort in Mexico to introduce silver coins as legal tender. (For info on Mexican gold coins, known as Centenarios, visit here…
Urgent Warning: Here’s why you should absolutely NOT Invest in Gold ETFs
In September 2008, shareholders in ETF securities were left high and dry - unable to trade popular commodity securities, due to concerns over the future of their backer, insurance giant AIG. Overnight, banks and brokerages stopped making markets in the Exchange Traded Commodities (ETCs) backed by the troubled insurer. The price of the stoc
Gold ETFs are vastly different to holding real gold. Turbulence, such as the above in the market, can affect the value of those gold ETFs markedly. When you buy an ETF you are buying electrons on a screen. It is not the same as buying real solid gold. What if the bank or fund manager goes out of business? What if trading in the shares is suspended, as for example short selling was just suddenly banned? What if the whole exchange is suspended as has happened in the past? Shares can be subject to massive manipulation and liquidity problems. I believe we will see dual gold prices from now on - one ‘official’ spot price, and another price dictated by pure supply and demand which will dictate what you can actually buy and sell real gold for in the real world.
If you own stock in an ETF, that means you own a stock that depends on the price of gold, rather than gold itself. No matter that corporations such as ETF Securities own gold. How much gold they own is not clearly discernable by the average “Joe Sixpack” who may own ETF stocks.
Even a downgrading by credit agencies like S&P or Moodies can drastically affect the share price in ETF Securities - as it has done! In September 2008 shares in ETF Securities products, which were backed by AIG, were down as much as 50% in one morning after the US insurer was downgraded by the rating agencies. The cold hard reality is that if the issuer of an exchange traded note goes bankrupt, investors holding exchange traded products backed by these notes will join the ranks of other creditors hoping to get their money back. With any gold ETF one does not own actual gold and cannot automatically or instantly redeem gold from the fund.
Indeed, to buy gold ETFs is adventurous and courageous - one might almost say dangerous - activity, in today’s economic climate, with so many Wall Street firms going under.
The same is true, in my personal opinion, to the Perth Mint Certificate Program (PMCP). This program is run by the government of Western Australia, and is offered by many gold dealers and investment advisors around the world. The problem is, when you do due diligence on the Perth Mint program, you will see that you are not really buying physical gold. You are just buying papers or ‘notes’, and redeeming those notes later could involve substantial bureaucratic hassle. You are also reliant on the Australian government. If, for example, the US tried to confiscate all gold held by its citizens, do you think the Australian government would co-operate? Most likely yes!
Also be aware that if you hold shares in an ETF they are reportable for tax purposes. Physical gold however is not reportable. That’s just another reason to consider real gold bullion bought offshore, rather than exchange traded funds.
Peter Macfarlane is an author and lecturer on offshore finance, investment, due diligence and wealth creation matters. He is joint editor of The Q Wealth Report http://www.qwealthreport.com
Add comment December 13th, 2008
In 1967, the government of South Africa minted the gold krugerrand to increase the marketing of South African gold. Although the krugerrand is considered as legal currency in South Africa, it is rarely used for that purpose. Instead, it has become a favorite of coin collectors all over the world, known as “medal coins.” This was the first coin to be valued at the monetary value of gold, or the current rate of gold prices.
For example, a U.S. silver dollar is worth exactly one dollar unless it is unusual in some way that makes it more valuable to collectors. The krugerrand was originally a one-ounce piece of 22 carat gold with no monetary value imprinted on it; its value is based upon the market gold price that frequently fluctuates. Today krugerrands are made in a variety of weights, including half-ounce, quarter-ounce and one-tenth ounce.
Coin dealers and collectors often obtain krugerrands through estate sales. The price that the dealer or collector will pay depends upon the current gold market price on that particular day. For example, imagine that a family man invests in buying 100 krugerrands when the gold prices are $300 per ounce. When the man dies ten years later, the value of the krugerrands will be based upon gold prices at that time. Like any investment, buying gold krugerrands is never a “sure thing.” When the man dies, gold may be priced at $150 per ounce, meaning that the family will have lost money on the investment. However, gold prices may well be $700 per ounce, giving the family a sizeable return on the investment if they decide to sell the krugerrands. In cases like this, probate attorneys recommend that surviving heirs consult a coin dealer about the fluctuation of gold prices; knowing when to sell and when to hang on is a matter that requires professional consultation.
If you buy gold krugerrands as an investment, keep in mind that these coins are 22 carat gold; an extremely high grade in quality. Pure gold, at 24 carats, is too soft to be minted so it is “cut” with various amounts of metal to make it hard enough to mint. Novice investors often make the mistake of comparing the gold prices for jewelry items made from 18, 14, or 12 carat gold with the gold price or market value of the 22 carat krugerrand. All gold is not created equal!
The South African krugerrand was the prototype model for other one-ounce coins like the Canadian Gold Maple Leaf, the Australian Nugget, the Mexican Gold Peso, and the United States Golden Eagle. Since these coins are not as widely available as investments as the krugerrand is, they are sometimes subjects of counterfeiting. Have a coin consultant investigate the current gold price, the authenticity of the coin, and the coin’s carat weight.
Ben Harmon has been collecting Krugerrands since his grandfather first gave him one when he was eight years old. You can read more about this fascinating coin at Gold Krugerrand Ferret.
Add comment December 12th, 2008
| DJIA | 10565.21 | |||||||
| NASDAQ | 2357.28 | |||||||
| S&P 500 | 1144.66 | |||||||
| GG | 39.72 | |||||||
| ABX | 39.00 | |||||||
| GLD | 108.53 | |||||||
| GDX | 45.15 | |||||||
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