Editor’s Note: Jim Rickards has published a third book entitled “The Big Drop: How to Grow Your Wealth During the Coming Collapse.” It’s available exclusively for readers of his monthly investment letter called Strategic Intelligence. Before you read today’s essay, please click here to see why it’s the resource every investor should have if they’re concerned about the future of the dollar.]
“I only know of two men who really understand the true value of gold — an obscure clerk in the basement vault of the Banque de Paris and one of the directors of the Bank of England. Unfortunately, they disagree.”
– Lord Nathan Rothschild
“Money is gold, and nothing else.”
– J.P. Morgan
“Nobody really understands gold prices, and I don’t pretend to understand them either.”
– Ben Bernanke
These quotes illustrate the perennial challenge that investors face in deciding what role gold should play in their portfolios. Few understand how to value gold, and even fewer understand that gold is not really an investment — it is money. Of course, if you want a portfolio that preserves wealth, money is a good place to start.
Saying gold is not an investment may seem strange, especially since I recommend some gold in an investor’s portfolio. To illustrate this point, you can reach into your purse or wallet and pull out a dollar bill. You think of the dollar as “money,” but you do not think of it as an investment.
An investment has some element of risk, and typically has some yield in the form of interest, dividends or rent. Money can be turned into an investment by using it to buy stocks, bonds or real estate. But as a dollar bill, it is just money; it has no yield and will still be a dollar tomorrow or next year.
Gold is the same. It has no yield. An ounce of gold today will be an ounce of gold next year and the year after that. It will not mysteriously turn into two ounces. It will not rust or change shape or color. It is just gold. Yet it is money.
It’s true that the value of gold may change when measured in dollars. It is also true that the value of a dollar may change when measured in euros or ounces of gold. But these changes in relative value do not turn these units into investments; they just reflect supply and demand for different forms of money.
If holders of euros have a preference for dollars, the euro may fall relative to the dollar. If holders of dollars or euros have a preference for gold, then the value of gold may rise relative to both. Still, these changes reflect changing preferences for different forms of money, not a return on investment.
While gold is money, this fact is frequently ignored by investors. Gold often trades like an investment and is said to be “up” or “down” in dollar value, the same as a stock is said to be going up or down. Gold also trades like a commodity; in fact, the primary trading venue for paper contracts in gold is the Commodity Exchange, or COMEX.
In that context, gold typically goes up in dollar terms during inflation and down in dollar terms during deflation, just like other commodities, including oil and copper.
That’s why the chart below is so fascinating. It compares the price of gold with the Continuous Commodity Index, an index of major commodities that has been maintained consistently since 1957. The index includes gold, copper, cotton, crude oil, natural gas and 12 other widely traded commodities.
Throughout 2014, the gold price closely tracked the commodity index, as might be expected. The price trend of both was downward, which reflected the strong deflationary trends that began to prevail last year. But in November, this correlation broke down and gold began to diverge sharply from the overall index.
That was not the only significant development in gold late last year. As this chart shows, the pace of gold shipments out of the Federal Reserve Bank of New York increased sharply in October and November. Over 90 tons of gold were shipped out of the Fed to their rightful owners abroad in those two months alone.
That was more than half the total amount of gold shipped out for the entire year. Bear in mind that prior to 2012, almost no gold had been shipped from the Federal Reserve Bank of New York since the 1970s.
It’s a mistake to read too much into short-time series of data such as the gold/CCI correlation or the gold shipments from the Fed. Every analyst knows that correlation of factors does not prove causation. But these two charts do suggest that suddenly late last year, gold stopped trading like an investment or a commodity and started behaving like what it has always been — money.
Late 2014 was a period when commodities generally declined because of deflation and currencies generally fell against the dollar as part of the currency wars. The declining currencies were also a symptom of deflation because currency devaluation is a way to import inflation from trading partners in order to stave off domestic deflation.
Only three major assets went up strongly in the past six months: U.S. dollars, Swiss francs and gold.
The dollar/gold correlation was most striking because they had been inversely correlated since 2011 with the dollar getting stronger and gold getting weaker. Suddenly, gold and dollars were gaining strength together against commodities, euros, yen, yuan and most other measures of wealth.
Using our causal inference models, our tentative conclusion is that gold is behaving like money again. This could be an early warning of a breakdown in the international monetary system as a result of persistent deflation and currency wars. Investors are moving to safe havens, and dollars, gold and Swiss francs are at the top of the list.
However, our intelligence collections and inferential models suggest that something even more profound may be going on. Russian and Chinese gold acquisition programs have been going on for years; that story is well known to our readers. But those acquisitions have now passed the point that Russia and China need to have a seat at the table in any new international monetary conference.
Both countries have caught up to the U.S. in terms of the all-important gold-to-GDP ratio. Yet massive gold acquisitions by Russia and China continue. Can something else be going on?
At a minimum, Russia and China are using gold to hedge the dollar value of their primary assets. In the case of China, those assets consist of $3 trillion of U.S. Treasury and other dollar-denominated debt. In the case of Russia, those assets consist of oil and natural gas, both of which are priced in dollars on world markets.
For China, the hedge is simple. If the U.S. inflates the value of the dollar, China will lose on its debt holdings but will make large gains on its gold. Converting some portion of its dollar reserves to gold is a good way for China to hedge its exposure to dollars.
For Russia, the case is more convoluted. In the short run, Saudi Arabia is suppressing the dollar value of oil, which hurts Russian receipts, since Russian oil is also priced in U.S. dollars. But this deflation has also tended to keep gold prices low in recent years.
When Russia sells oil at a low dollar price, it immediately converts the dollars to gold, also at a relatively low dollar price. When inflation returns, the dollar price of Russia’s gold will soar, thereby compensating it for the “lost dollars” or the earlier sales of oil.
What China and Russia have in common is they are both protecting themselves against dollar and oil price manipulation by converting their export sales into gold. While investors may have missed this development, other central banks have not.
The withdrawals from the Federal Reserve represent efforts by central banks in Germany, Netherlands and elsewhere to take physical possession of their gold in advance of a systemic monetary breakdown.
The correlation of dollars and gold, the divergence of gold from commodities, the repatriation of gold from the Fed and continued large acquisitions of gold by China and Russia are all visible from the data.
The conclusions that gold is beginning to behave like money rather than a commodity and that Russia and China are using gold to hedge dollar exposures in oil and Treasury securities respectively are reasonable inferences using our models.
But is something else going on? Something that is not apparent in the data and for which the inference would be less certain? Could Russia and China be trying to corner the market in gold?
Leaving aside blatant government intervention such as FDR’s 1933 gold confiscation, there has not been a successful effort to corner the gold market since Jay Gould and “Big Jim” Fisk tried it in 1869. Even that corner was broken when the U.S. Treasury unexpectedly sold large quantities of gold after Fisk and Gould had been assured by insiders that the Treasury would not do so.
The Hunt brothers infamously tried to corner the silver market in 1979 and 1980. That corner was broken by a combination of scrap silver flooding the market in the form of tea sets and silverware and changes in exchange regulations that increased margin requirements and hurt the Hunts’ ability to maintain their leveraged futures positions.
A Russian corner of the gold market would not be leveraged on futures exchanges, because Russia is a cash buyer of physical gold. Russia is also immune from U.S. regulation; the U.S. has no enforcement powers in Russia.
As in the cases of Gould, Fisk and the Hunt brothers, patience and stealth are needed at the beginning of a successful corner. Russia has both.
We will watch this story closely in the future and use our causal inference and inverse probability models to test the thesis. As signs emerge of a possible corner of the gold market by Russia, our readers will be among the first to know.
In the meantime, investors who have not already allocated some portion of their portfolio to gold still have time to make the allocation at an attractive entry point.
P.S. If you haven’t heard, I’ve just released a new book called The Big Drop. It wasn’t a book I was intending to write. But it warns of a few critical dangers that every American should begin preparing for right now.
Here’s the catch — this book is not available for sale. Not anywhere in the world. Not online through Amazon. And not in any brick-and-mortar bookstore.
Instead, I’m on a nationwide campaign to spread the book far and wide… for FREE. Because every American deserves to know the truth about the imminent dangers facing their wealth.
That’s why I’ve gone ahead and reserved a free copy of my new book in your name. It’s on hold, waiting for your response. I just need your permission (and a valid U.S. postal address) to drop it in the mail.
source : http://dailyreckoning.com/gold-is-once-again-money/
The old versions of German Marks (Reichsmarks,Rentenmarks,Papiermarks),Yugoslavia Dinars,Vietnam Dongs,Peru Intis and soles,Brazil cruzeiros and cruzados,Argentina Peso leys (ARL),Bolivia Bolivianos,Angola Kwanza reajastodos,Greece Drachma,Italian lira,Turkey lira (TRL),Croatia dinars,China gold Yuan,Zaire zaires,Poland zloty,Romania lei ,Mexico Pesos,New Iraq dinar,Iran Rials mainly of the inflation economic period in these countries of upto 500 billions in denominated notes ,coins are remonetized and of gold standard money as per IMF,Bureau de change and world central banks prescribed guidelines.
They minimumly hold equal value to the new circulating acceptable money in that country as also they are high denominated money notes so an higher value.As per the worldwide central banks law gold standard currencies are acceptable , exchanged redeemed and cashed at face value of the bill or banknote ,without redenomination, anywhere in the world at any central bank and its branches for an unlimited period at all times.Gold standard currency is defined as money backed by real,pure 24 Kt solid gold by governments of past,present and future through their bank administrators as a country’s central bank law.Non-acceptance or exchange of gold standard currencies would mean losing real money or gold.
When the country undergoes a economic period mainly of inflation or hyperinflation,it has to guarantee its currency money by wt. of gold due to the public worldwide which stays for life and remain unchanged.These currencies and banknotes status cannot be changed or demonetized other than be out of circulation and become a valuable collectible due to change,Only renewals, remonetizing ,pay debts ,at par to new is permissible and allowed.
source : articlesbase.com
Investing in gold today is a lucrative way of building your wealth, thereby securing your retirement life. Investing for the future always has a certain amount of uncertainty associated with it, but then wise decision-making is equally important. Looking at the past performance, gold does seem to be a commodity that has risen in value more often than not. In this context, the attractiveness of gold as an investment option has grown with time. People are now investing in gold Investment Retirement Accounts (IRA) to secure their future. You could possibly do that as well.
Making Gold Investments
Investing in gold is a trade that has been there for many years, but it has become famous in the recent years. The interest to buy the precious metals started to grow very fast after the 2008 economic down fall. As the paper money continues to depreciate, gold on the other hand is still on its upward path.
Investing in gold IRA is now an opportunity that can safeguard the future earnings of all the individuals who are wise enough to look to gold.
The investment market is not certain; it is changing all the time. What looks a great deal may crash horribly at the next moment due to a sudden shift of the economic equilibrium. The only hope that the investors have is to invest in commodities like gold.
The positive historical performance of gold and its consistent appreciation in value has been used as a remedy to calm the currency turbulence by many brokers who offer the various classes of IRAs to their clients. This has made gold investment a popular trend among the general public.
The history of gold is illustrious. Starting from the gold coins used as currency by the ancient kings to its use in making jewellery that catches attention, gold has always been in the limelight. During the First World War gold was used to control the financial crisis that had hit Europe. Also in US after the Second World War the dollar was exchanged for gold at the rate of $35 per troy ounce. From this example it is clear that gold is possibly the only stable commodity which can help you stay in command.
source : articlesbase.com/investing-articles/gold-investment-does-historical-performance-predict-future-performance-7118993.html
Your social gatherings and parties can now be a source of money and also a profitable event to attend for all your guests. The holiday spirit is already in air and everyone is looking forward to a cheerful Christmas. This can be the best time to organize a gold party and sell your gold for instant cash.
A gold party is like any other lively social event except that it helps you to make instant cash by selling your unwanted gold and silver jewelry or other such items. A licensed cash for gold company in Canada helps you to organize the entire set up and you become the proud host of a party catching up with friends and family while also helping them to sell their precious metals for loads of cash.
Once you book a date for the event, the concerned gold buying company may also send you a free tool kit to help in the flawless organization of the party. You can have the event at your own home or any other venue that suits you and your guests. The buyers put up a booth at the place to evaluate the items that you wish to sell. Precious metals such as gold, silver, platinum and palladium are bought in forms of jewelry, coins, metal bars, watches, cutlery, nuggets, wires and even dental gold. The value of each article is assessed as per the standards of its purity and weight. The actual payout is based on the prevailing market price of the concerned metal. For fair business practices, these prices are also published on the official website of the gold buying company.
What’s the use of an investment tool if it does not bring you good returns? The gold and other precious metals lying unused at your home can bring big amounts of dollars if you liquidate them now. Just like shopping, selling too becomes a fun activity when you have friends around. Everyone can enjoy a fun filled gathering with some finger foods and drinks, and walk back with wallets full of money. Interestingly, some cash for gold buyers in Canada also offer you, the host of party, a commission from the total worth of metals sold to them at the event. If it sounds like a fun way to enjoy the Christmas season and fill your coffers with crisp dollars this winter, go ahead and invite all your loved ones for a pleasurable and profitable cash for gold party.
source : articlesbase.com/international-business-articles/sell-your-gold-in-a-fun-gold-party-7131441.html
There are numerous options available to couples searching for wedding rings, from settings to diamonds and the design on the band. One part of the wedding ring that affects how the ring will look on the bride is the metal. The most common metals are silver, gold and platinum. Here is a short comparison of two different shades of gold, yellow gold and rose gold.
Yellow Gold Pros:
– Yellow gold is the most classic metal used in wedding rings and other types of jewelry. Because of this, they are almost always in style.
– In addition, because the current fashion is to use vintage rings, yellow gold is highly recommended as it was used during the Art Deco and Edwardian era in most pieces of jewelry.
– Yellow gold is hypoallergenic and doesn’t cause allergic reactions like other precious metals that contain reaction-inducing Nickel.
– This type of gold is also easy to match with stud earrings, especially those that make use of fancier settings such as Pave settings that can show it off more than a simple stud.
Yellow Gold Cons:
– Because appearances are quite important to any bride, those brides who are pale or rosy skinned will find that yellow gold will make them look ill. For this reason, yellow gold is not always the ideal choice of metal for a wedding ring.
– Yellow gold is weaker in comparison to other colors and as a result needs to be polished and cleaned regularly in order to retain its shine and value. In addition, yellow gold can be dented and scratched more easily than other types of gold because it typically is not coated with rhodium in the way that white gold is.
Rose Gold Pros:
– Rose gold is widely considered to be the most romantic of all shades of gold due to its pinkish-red color. Rose gold gets its color from copper which makes it a unique metal.
– Brides looking for a vintage wedding ring will be able to find numerous rose gold rings that are just as beautiful as rings made of other metals.
– Because copper costs less than the other metals used in gold rings, rose gold wedding rings are more affordable than the more popular white and yellow gold rings.
– Copper is naturally a strong metal and makes a rose gold ring far more durable than yellow or white gold, which need extra coatings to protect it from damage.
Rose Gold Cons:
– Copper sometimes causes allergic reactions and therefore is not as hypoallergenic as other precious metals.
– Because rose gold wedding rings are less common, their prices is often much higher than that of regular rings.
source : articlesbase.com/jewelry-articles/rose-gold-vs-yellow-gold-a-short-comparison-4531950.html
Melbourne-Australia (Apr 20) The metal held above the $US1,200 an ounce level, however, which it broke above earlier this week after a run of downbeat US data led analysts to reassess expectations the Fed would raise rates in June.
The US dollar turned positive after US inflation data.
Spot gold was up 0.6 per cent at $US1,204.10 an ounce at 2.36pm EDT (0436 Saturday AEST), off an earlier high of $US1,207.60 and down 0.3 per cent on the week. US gold futures for June delivery settled up $US5.10 an ounce at $US1,203.10.
“Still seems very much (like) range bound trading in the days ahead,” said Steve Scacalossi, Director and Head of Sales for Global Metals at TD Securities in New York, in a note.
“Some attention is now focused on the end of April for some guidance from the next FOMC meeting on 29th April.
Gold is sensitive to US monetary policy, as rising rates would boost the US dollar, in which the metal is priced, while lifting the opportunity cost of holding non-yielding bullion.
“Even if the rate rise gets pushed back, people still see rates rising, and we believe that’s still a negative for gold,” Julius Baer commodity analyst Warren Kreyzig said.
“The delay may give gold a reprieve, but in the long term we think it will still go down.”
Adding to the rates uncertainty were comments from Fed officials on Thursday that showed officials at odds over the timing of a move.
“Expectation once again is for rate rises to be pushed out even later. September or October has been our base assumption for some time, but I’ve heard talk in the last couple of days of rate rises being pushed out to 2016,” Mitsubishi analyst Jonathan Butler said.
“That’s all positive for gold.”
Physical buying in the world’s top two gold-consuming countries remained slow this week. Premiums in China improved only slightly and those in India slipped as prices stabilised at $US1,200 an ounce.
Silver was up 0.2 per cent at $US16.22 an ounce, while platinum was up 0.8 per cent at $US1,165.49 an ounce and palladium was up 0.7 per cent at $US781 an ounce.
Deciding to research and perhaps move forward on buying gold coins is a big deal!
Before you start buying gold coins, you will need to know a few important things like:
1) The different types of gold coins there are.
2) Which is the best type of gold coin to buy to suit your objectives.
3) How to safely buy the correct gold coin(s).
Gold investors typically acquire gold bullion coins as their prices are very transparent. Gold bullion coin prices are based on the market price of physical investment grade gold. Today’s gold bullion coins are typically 22k to 24k, having a 90% or higher level of gold content.
II. Best Gold Coin for Your Objectives
Choosing the best gold coin for your investing objective will depend upon multiple factors including your geographic location, the Importance Of Privacy when selling gold coins back to gold dealers, and premiums both on the buy and sell side.
If you are consideringConverting An IRAinto gold coins, gold bullion coins are a great choice for gold investors. The most popular gold bullion coins areAmerican Gold Eagles followed by Canadian Gold Maple Leafs.
III. How to Safely Buy Gold Coins
Gold coins can be bought in numerous ways, including but not limited to buying on online websites like eBay or our website, GoldSilver.com. Some investors buy gold coins locally at coin shops, while in some countries investors can buy gold coins directly from banks.
Almost every gold retail outlet has more than one payment option: bank wire transfer, credit card, cash, postal money orders, checks, and PayPal are all but a few payment methods being used within the gold industry.
Always consider any differentiators that some gold coin dealers may have over others. The gold dealer with the lowest price doesn’t necessarily mean it is the best choice.
Mike Maloney, author of the # 1 best selling precious metals book Guide To Investing In Gold And Silver, says that investors must take into account the value, not merely the price, of any investment decision. For example, GoldSilver.com’s value differentiators are the Education, Vault Storage Options, and Exit Strategy that we provide our clients.
Don’t Get Ripped Off
Investors should perform proper due diligence to understand all the costs involved when buying gold coins. Extraneous expenses can quickly add up. You will want to know if there are any hidden commissions, shipping costs, insurance fees, or extra charges for using credit cards, bank wire transfers, etc.
Regardless of the gold dealer you decide to use, make sure you verify a company’s volume or complaints and reputation through third party resources like the Better Business Bureau and RipOffReport.Com. You only want to do business with trusted, reputable gold dealers with positive peer reviews.
Finally, when it comes to buying gold coins, you need to think ahead in the future of how you may ultimately sell your gold at a profit and What Your Exit Strategy Might Look Like. Understand if the gold dealer you are buying from guarantees buying back the gold coins they sell to you, and if they will be offering you a fair price years from now if you return to sell to them.
source : http://goldsilver.com/article/how-to-buy-gold-coins/
This guide is for any potential silver investor looking to buy silver online to protect wealth or maximize gains.
Although there are literally dozens of silver products and silver dealers, following a few simple guidelines will ensure you secure a safe investment and capitalize on this precious metals bull market to the fullest.
Stick to Stacking Silver Bullion Products
Silver bullion coins, bullion bars, and bullion rounds attain their value through their .999+ fine silver composition. By buying highly regarded silver bullion hallmarks, silver investors gain access to a much more transparent market and cost effective silver investment.
Government minted silver bullion coins, particularly American Silver Eagles, are the most acclaimed and liquid products amongst silver investors.
Silver bullion bars and bullion rounds struck from widely recognized private mints like Johnson Matthey, also represent a sizable portion of the silver bullion market, offer low premiums relative to the Silver Spot Price.
Inferior Alternatives: Silver Numismatics, Silver Semi-Numismatics, Silver Collector Coins
Numismatics collector coin markets lack sufficient transparency, liquidity, and have often left silver investors with large losses in spite of a rising silver price. Silver investors will want to avoid “rare” or “collector” silver products.
Many Numismatic And Semi-Numismatic Coins are heavily marketed through old media outlets (TV, radio, magazine, and newspaper ads, etc. ). Often times, collector coin sellers are Large Silver Dealers with call centers of salesmen utilizing fear tactics and hypothetical confiscation scenarios to make large profit margins off unsuspecting silver investors. Terms such as confiscation, rarity, and collector value should wave red flags to potential customers.
If you have a specific silver bullion product in mind, do not let a salesman change your intent and potentially up-sell you into an item unbefitting of your silver investment objectives.
Avoid all Paper Markets
Few funds actually hold sufficient silver to physically deliver and many are directly tied to the collapsing financial system. Most paper silver instruments today are merely tradable time bombs, redeemable in only paper, providing little to no insulation against a monetary crisis or a major economic event.
Physical Delivery + Silver Vault Storage Options
Any reputable dealer should offer both domestic and international shipping options. When you buy silver online, be sure you are given an estimated date of shipment within a reasonable time frame. You will want to ensure the products are fully insured and that you are not held liable until your silver products have been safely delivered either to your door ( adult signature required ) or to the vault storage facility of your choosing.
If you choose Silver Vault Storage option, make certain the silver bullion is held by a third party in a segregated account with a proof of insurance. You should also receive a Storage Certificate Title accounting for your silver holdings.
Most silver dealers will provide you with multiple methods of payment. Ensure you are able to lock in pricing the moment you place your order.
Full credit card payment will be subject to a processing fee, however it will typically secure your pricing. Most silver dealers also provide a bank wire option, giving you the ability to lock pricing with a minimal credit card deposit (5-15%).
Checks and money orders are often accepted but typically delay the purchase process or escalate the cost of the transaction.
Cash is out of question for most dealers as privacy is compromised. Any purchase exceeding a cash purchase over 10K would trigger a reporting requirement on the side of the dealer.
Finding a Credible Silver Dealer
Ensure the dealer is credible, has been in business for an extended amount of time, and follows good business practices.
Scams and frauds are not uncommon in the gold and silver industry, thus be sure to always perform proper due diligence to find a reputable dealer, and DO NOT simply seek a dealer based on a cheap advertised silver price.
Differentiators Between Online Silver Dealers
When it comes to buying silver online, you need to think ahead in the future of how you may ultimately sell your silver at a profit and and What Your Exit Strategy Might Look Like.
Understand if the online silver dealer you are buying from guarantees buying back the products they sell you. Investigate their bid prices ( what they are buyinh the products they sell at ) to find out if they are offering you a fair price today. If not, years from now, if you return to sell back to them, you most likely will not get a fair offer on your silver investment.
source : http://goldsilver.com/article/how-to-buy-silver-online/