Archive for the ‘Gold Misc.’ Category
Physical Gold or US Dollars?
You have a personal choice to make everyday as to how you keep your savings. Do you keep it in cash? Stocks or bonds? Do you keep it in a CD or in a savings account at the bank? Or do you keep it in physical gold? When you keep it in physical gold, in your possession, you have essentially removed your money from the system; a system in which you have no control, a system that is manipulated by central bankers and the federal government.
There is a fundamental difference between physical gold and paper assets (or digits on a screen). One is a physical piece of gold that has intrinsic value, and has had value for over 5,000 years. On the other end of the spectrum is wealth that is stored as digits in an electronic account in a computer system. If the dollar collapses only one of these is safe.
The way our government is treating the economy today is massively irresponsible. The more money the government prints, the more the value of the dollar is eroded. It has become obvious over the past few years that the irresponsibility has run rampant. From the dealings of Bear Sterns and Lehman Brothers to the failure of BP to buy a part that could have prevented the mess in the gulf. In the world we live in it has clearly become all about the money. Do you trust these types of people to have your best interest in mind? I think not.
If you own physical gold you are saying I don’t trust the government and the Federal Reserve. If you have money in the system you are supporting that system. Now I am not suggesting that you pull everything out and live off the grid, but I am saying that everyone should own some physical gold for financial insurance. Sure you will probably see great gains by many experts’ expectations, but it is more about protecting what you already have, and building wealth as secondary.
He who controls the assets has the power. Gold coins in your hand or numbers in your bank account, which one is safer? Which one will you choose? Weigh your options, do your research and decide for yourself what makes most sense.
New Gold-Backed Currency Could be in Use Next Month
It looks as though a northern state in Malaysia called Kelantan will be using a new gold-backed currency as early as mid-August. They won’t be the first state/country to be using a gold-backed currency; Indonesia has already minted a minimal number of pieces (25,000) to be used in Australia, Malaysia, and Singapore.
According to the Guardian, the states Islamist government is kick starting the currency by paying its government employees 25% of their paychecks with the gold dinar and silver dirham. To further strengthen the cause all state companies will be accepting the currency and over 600 businesses will be doing the same.
Gold-backed currencies are touted as the only way to thwart the central bankers around the world, stop inflation and stabilize the world’s economies. Many well respected financial analysts here in the US are calling for a gold backed dollar in order to do just that. A gold-backed US dollar could work if gold bullion was confiscated and the price was again locked in at a much higher price to be equal with the money supply. Some experts say that price would be anywhere between $3,000 and $11,000 per ounce, though I have heard some pretty extreme predictions as high as $47,000 per ounce.
The US was on the gold standard for many years until the Federal Reserve was allowed into our system in 1913. They have systematically eroded the purchasing power of the dollar through a series of events. First they removed us from the gold standard domestically in 1933 by confiscating all gold bullion and making it illegal to own gold. Then under President Nixon they removed us from the gold standard internationally in 1971 by closing the gold window, making it impossible for foreign countries to convert their excess US dollars to gold.
A new gold standard in the US would thwart the ability of the government to print money at will, thus impeding inflation and the erosion of private wealth. Inflation is merely a tax. The more something costs you the less money you have to spend on other things. Inflation shifts wealth from your pocket to the government’s pocket. Physical gold and silver bullion have proven to keep up with inflation over the years. Therefore everyone should have some in their portfolio.
Why do Investors Prefer Semi-Numismatic Gold and Silver Coins?
To answer this question we must first define numismatic. Numismatic is defined by Wikipedia as the study or collection of currency, including coins, tokens, paper money, and related objects. The government defines numismatics as gold coins having a recognized special value to collectors. This is the definition that is important when acquiring gold coins for your portfolio. This definition tells you what is and what isn’t subject to confiscation, which brings us to the question in the title of this blog.
People in the industry sell certain coins under the name of semi-numismatic. They claim that these coins have some recognized collectable value (even though they are quite common) and therefore would be excluded from confiscation should it occur. It should be noted that no one knows for sure if they would actually be excluded if the American people are subjected to confiscation again. On the other hand, many would agree that graded rare coins again would be excluded. Semi-numismatic coins have high bullion content and are older coins. These types of coins are typically gold Swiss francs, British sovereigns and French francs. The gold content is close to a fifth of an ounce.
The reason that people prefer them is that they are more affordable than graded rare coins and they are smaller in size. You can pick up a gold Swiss franc for around $275-$300 today depending on the dealer. I personally don’t think that investors prefer them; they are just more affordable than an ounce of gold or a rare coin. They have not performed as well as graded $20 Liberties and $20 Saint Gaudens over the long-term, so to say that investors prefer them would be a false statement (if you agree that investors always want the best rate of return). These coins are more approachable to new investors in the gold market and therefore are sold as such.
I personally feel that it is important to establish your goals and objectives and acquire the right coins for your portfolio. If that means gold Swiss francs are a right fit then so be it. But don’t just buy them because they are more affordable or the sales person tells you to. These coins are very easy to check prices on so do your research. Some companies sell these coins for far more than what they are worth in order to make huge profits. As with everything do your research and make sure you acquire gold for your portfolio that supports your goals.
What is the Value of a 1904 Liberty $20 Gold Coin?
The $20 Liberty Head was the largest denomination ever minted when it was released to the public in 1850. It was designed by James B. Longacre and it contains 90% gold and 10% copper and contains .9675 ounces of gold. These coins were minted from 1850 to 1907 when the design changed to the $20 Saint Gaudens (there was one coin minted in 1849 for design proofing). The $20 Liberty is one of the most popular rare gold coins to investors and collectors alike.
The 1904 $20 Liberty coin was minted in Philadelphia and it is the most common Liberty coin minted. The original mintage was 6,256,699 and there are many in existence in mint state grade available for purchase. Compare that to the 1882 $20 Liberty of which only 571 were minted and there are very few in existence. The 1904P in the rare coin industry is considered a “common date” coin. If you call a broker/dealer and ask to buy a common date Liberty this is what they will sell you.
Its value tends to fluctuate more so with the spot price of gold than other coins because rarity plays a minute role in its value, although the higher the grade the higher the value. For example (approximate pricing):
MS61= $1,530
MS62= $1,600
MS63= $2,100
MS64= $2,600
MS65= $4,400
The lower you go on the grading scale the closer to the spot price the coin will be and vice versa. This coin will be the lowest valued coin of all liberty head $20 coins. Thus all other coins will go up in value from these prices. For example, a 1903 $20 Liberty in MS65 condition sells for around $5,100. The original mintage on this coin was 287,270. The rarity factor for this coin is higher than the common date coin and therefore it is worth more money. If a coin is in mint state 65 grade and only one is known to exist it will be far more valuable than $4,400 and will probably only be found at auction.
Liberty head $20 gold coins are great for investing and collecting. Whether you are looking for asset protection, growth or historical significance and beauty there is a coin out there for everyone.
Everything You Need to Know about Gold in Three Sentences
Richard Russell, a prominent financial writer, on July 8th wrote this:
“Fed Chief Bernanke will absolutely not accept deflation… Shrewd gold-accumulators are well aware of this. As the deflationary and deleveraging forces press on the US economy, the Bernanke Fed is ready to devalue the US dollar in its (whatever it takes) battle to hold back deflation.”
Russell sums it up in three sentences:
1. The Fed will not tolerate the growing forces of deflation
2. To combat the deflationary forces, the Fed will devalue the dollar by printing trillions more of Federal fiat money.
3. Once it is realized that the Fed is on the path to devalue the dollar, there will be panic to buy and own gold.
The key to what he has said is “once it is realized that the Fed is on the path to devalue the dollar.” Most of the general public does not realize that this is going on with intention. They don’t realize that every time the Fed prints dollars it devalues all dollars in the system through monetary inflation. It only takes 4% inflation for 17 years to cut the value of the dollar in half! When the general public realizes that the Fed won’t stop printing there will be a mass exodus into gold and the prices will go through the roof; simple supply and demand.
It should be obvious that the Fed hates deflation; they have been inflating the dollar since their inception in 1913. They do this by printing money. This process has been accelerated by the removal of the gold standard in 1971. The Fed can now print money without limitation, thus the reason the monetary supply has increased 2.5 times in 18 months. The deficits are increasing by an average of $4.7 billion per day. But people have become accustom to the inflation tax, so it is just normal.
The new pace with which the Fed is printing money will have massive inflation implications in the long-run and it will be impossible for people to ignore. Own gold now before everyone does. By the time everyone wants in there won’t be enough physical gold for everyone to own in order to protect what they have.
“Sabotaging the System”
Think of all of your monetary wealth:
Checking Accounts
Savings Accounts
CD’s
IRA’S
401K’S
Stocks
Bonds
Mutual Funds
Annuities
Insurance
Social Security
All of these monetary instruments are controlled by computers. Less than 3% of all money in the system is actually printed. That means 97% of US dollars are electronic.
These are the paper assets that you count on to be there when you need them, now and in the future.
Now imagine they are all wiped out in a nanosecond by a cyber attack that erases all financial data and fries the interlinked banking and financial systems.
The public thinks that these systems are impenetrable. Think again. This isn’t science fiction, this is science fact. It has already happened. The US Government’s military defense system was hacked into and controlled for a few days! One banking system was hacked to the tune of $10 million. These attacks are common and worldwide. In this report from 60 minutes in November of 2009, an ex-government official acknowledges the vulnerability of our internet based security.
Scenario, you go to your bank, they have no records. All the bank loans and records are erased the bank has no information of what they owe you or who owes them. Your brokerage account and the stock exchanges have no record of who owns what, and so on down each layer of the financial system. FDIC is broke and they don’t have a clue as to how to restore the system. You’re left with the money in your pocket and any physical gold you own.
Even though this 60 minute segment is old I thought that it is good for us to be aware of. There are a million scenarios that can happen, but if we have a plan we can succeed. Those without plans and protections in place will be in trouble. I urge you to acquire physical gold. Then at least you are prepared for anything.
PART 1 http://www.youtube.com/watch?v=vbOLlNtRcQA
PART 2 http://www.youtube.com/watch?v=lbxRSAFB0TI&feature=related–
After Hyperinflation comes Gold
Zimbabwe is the latest example in history of what happens when a government and its leaders print money unchecked. For years President Robert Mugabe printed money to pay off debts and government employees, to the extent that the inflation rate at one point was over one million percent annually. But recently it looks as though Zimbabwe is in recovery even as their currency was declared dead as recently as April of 2009.
Zimbabwe was deep in debt and was unable to afford its interest payments. When any country reaches this point it can either go bankrupt or devalue the currency through inflation. Zimbabwe chose the later. As a result the currency collapsed and the country is now debt free. That is right, debt free. However not without consequence, hyperinflation wiped out the savings of all of its citizens, putting 80% of the people of Zimbabwe in abject poverty.
Forced to start over the people needed something to trade with. They chose gold and US dollars. Gold is trusted because it can not be manipulated by government and for now the US dollar is still the world’s reserve currency. So with this quasi gold standard the shelves are stocked again and government controls have gone by the way side and the country is rebuilding. Check out some of the BBC videos on youtube.com covering the panning and digging for grains gold by the Zimbabwe people to buy food.
Unfortunately the United States is on a similar path. We are also printing money to cover deficits at a faster pace than this country has ever seen. There are common denominators in all hyperinflations. There will come a point when these deficits cannot be paid through any combination of taxes, growth or government borrowing. Ultimately the government will need to make a choice, 1) cut government expenditures to the point that the budget is balanced, or the easier choice that is currently being used 2) fund the deficit by printing US dollars. Most politicians will ultimately choose this route as it is the path of least resistance. Unfortunately this leads to inflation and the erosion of savings.
If left unchecked inflation can lead to hyperinflation and in that case you will want to own gold. Owning tangible assets are the only items that can put you in the 20% of the people that are thriving.
Numismatic Guarantee Corporation Reaches Important Milestone
Numismatic Guarantee Corporation known in the industry as NGC, announced in May that it reached an important industry milestone-20 million coins graded. NGC is the first grading company to reach this mark, which underscores its position as an industry leader.
Chairman of NGC Mark Salzberg is more excited about what this number means which he states in this way, “We would not be here without the support and trust of the numismatic community. We are so grateful to the collectors and dealers who have entrusted their passions and livelihoods with us.”
NGC is one of the top two grading companies in the world, the other being PCGS. They are both independent third party grading companies. Their contributions to the numismatic world have been instrumental in establishing standards for grading, valuation and authenticity. This has created a level of confidence amongst collectors and investors alike which has added a level of liquidity and a higher level of demand for rare gold coins.
With the advent of these two companies the sale of rare gold coins has been allowed to expand. No one needs to be an expert in the field of valuing rare coins in order to safely acquire them. Because these two companies guarantee a coins quality and authenticity investors and collectors can rest assured knowing they have the real deal. This has created another layer of demand that would not have otherwise been achievable. It allows the novice to enter the market safely. Because the numismatic market is so small in comparison to the bullion market, higher levels of demand has a bigger impact on prices of rare coins.
NGC has graded some of the most valuable coins in the world, including the highest known quality US 1804 $10 gold coin valued somewhere around $5 million.
Congratulations to NGC for not only being an industry leader but also for achieving this historic mark. Thanks for creating a safer environment for us to put our money.
Richard Russell Says Get Out of Stocks and Buy Gold
Richard Russell has been writing the Dow Theory Letters and daily market commentary for 52 years. He is well respected around the world for his knowledge of the markets. He uses technical analysis to forecast action in the stock market. He recently wrote this to his subscribers:
“Yes, everybody is searching for the ultimate safe haven. I pick gold. The ironic problem with gold is that it is quoted every minute against currencies. If you have a safe haven item like a Picasso, do you quote its “Possible” price every hour? No, you relax knowing that it will always represent wealth. The same can be said of a great diamond. But because it is quoted hourly, investors worry about gold. I’ve said, and I’ll repeat it, figure your gold in number of ounces, not dollar value. When the dollar is history, gold will still be here, and it will still be an eternal item representing WEALTH.”
This is such a great statement. Gold has always held its value. People get nervous with the day-to-day price action in the market, but gold needs to be thought of in terms of the big picture. If you are a day trader then you need to be concerned with the day-to-day, but a typical investor needs to use gold as a safe haven first and foremost, and a safe haven is a long-term investment.
Rare gold coins are even more so a long-term acquisition. Rare gold coins/numismatics do not typically fluctuate every day, therefore they are less volatile in their price action. They tend to lag behind bullion in terms of timing. If the price of gold rises dramatically, rare gold coins typically take a few days to respond. It should be noted that the more common a coin, the more it will fluctuate with the spot price of gold. The rarer issues will not be affected as much by the spot price of gold’s rising and falling.
Rare gold coins, are like a Picasso, “you can relax knowing that it will always represent wealth.” So stop watching the day-to-day action and relax with the peace of mind that you own something that will always represent wealth.
Almost 1,000 point drop in Dow on Thursday called a mistake
Lincoln once said, “You can fool all of the people some of the time, and some of the people all of the time, but you can’t fool all of the people all of the time.”
Shame on the press for knowing better and still printing stories about the supposed trading error that set off the largest inter-day drop in the history of the NYSE.
Someone I work with was an institutional trader years ago before the highly evolved computer systems that Wall Street has now and he said, this size “mistake” would have been nipped in the bud back then. Let me explain:
1. At the point of order entry the brokerage firm has software that checks an order for completeness and that the trade matches the positions in the account. If it doesn’t, then the order is held till the order is corrected. (i.e. wrong stock, wrong number of shares, wrong price etc.) Believe me selling a BILLION of anything would raise a red flag before the order went out to the exchange.
2. Stock transactions are entered in shares not dollar amounts. Bonds are done by dollar amount NOT STOCKS! You don’t order to sell $10,000 worth of Proctor and Gamble. You check the current stock price and figure how many shares you need to sell and round up or down. Provided the computer checks your account and you have enough shares to sell, see 1. above.
($32 stock price … sell 310 shares = $9020 sell 320 shares = $10,240, this isn’t rocket science)
3. Even if the order did somehow get the exchange, a $1 BILLION dollar order would be questioned. The entire New York Stock Exchange only trades 2-3 billions shares in a day. Nobody at the NYSE is that asleep at the wheel to not notice that order. A billion is a thousand million.
McDonald’s, 6 burgers please, … 6 burgers please, …6000 burgers please… I rest my case!
4. The “market maker” is an individual on the floor of the exchange that is responsible to maintain a fair, organized, equitable and balanced market in the stock, “PG”, that they manage. He is there to help match trades and maintain the “book” of orders on a particular stock. Balancing buyers and sellers and preventing runs up or down. Giving the market stability. He knows the stock and how it trades and who trades it. He would catch the order when it was presented.
5. For decades the SEC and the NASD have used a software program that monitors all transactions on all listed exchanges. “Stock Watch” is designed to look for unusual trading activity in individual stocks, sectors, options you name it. If all of a sudden orders go off the charts one way or the other on a stock, their computers give them an alert. They will investigate the alert and contact the orders source and grill someone as to who, what, where, when and WHY!!!!! An order of that magnitude would have someone on the phone in a heartbeat.
The only reason that the press hinted at a mechanical Wall Street breakdown is to placate the already cynical disenchanted public, trying to pacify the masses that the market is safe and stable. Nothing could be farther from the truth. Own gold!