GOLD METAL INVESTMENT

China Mainland Gold Import Accelerating

2013-12-16T22:45:00.000-08:00

http://www.ingoldwetrust.ch/china-mainland-gold-import-accelerating

China Mainland Gold Import Accelerating

This week the the Hong Kong Census and Statistics Department officially released their trade numbers from October. Whilst they offer specific numbers in advance to anybody willing to pay, I rather wait for the total booklet to be published free of charge.

Most significant is the amount of gold net exported to the mainland, up 21 tons from 109 tons in September to 130.2 tons in October, + 19 % m/m, +446 % y/y, just shy of the all time record of 130.3 tons in March. Reinforcing an upward trend that started in 2011. Year to date Hong Kong net gold export to the mainland stands at 957 tons, + 200 % relative to the same period in 2012.

Russia, Kazakhstan Extend Gold Purchases as Prices Tumble

2013-06-24T13:42:00.001-07:00

Russia, Kazakhstan Extend Gold Purchases as Prices Tumble

Russia and Kazakhstan expanded their gold reserves for a seventh straight month in April, buying the metal to diversify assets even as prices slumped the most in three decades.

Russian holdings, the seventh-largest by country, climbed 8.4 metric tons to 990 tons, taking gains this year to 3.4 percent after expanding by 8.5 percent in 2012, International Monetary Fund data show. Kazakhstan’s hoard grew 2.6 tons to 125.5 tons, taking the increase to 8.9 percent this year after a 41 percent expansion in 2012, data on the website showed.

Gold plunged into a bear market April 12 and by the end of the following session had lost 14 percent, the biggest two-day drop since 1983. The drop was driven by some investors losing faith in the metal as a store of value, spurring record reductions from holdings in exchange-traded productsamid speculation that the global economy is recovering.

“Some central banks would have taken advantage of the lower prices to build their gold assets,” said Alexandra Knight, an economist at National Australia Bank Ltd. inMelbourne. “With the general mood in the market quite bearish, perhaps some others are factoring in the potential for lower prices and holding off purchases for now. But the longer-term trend for central banks to increase gold reserves remains intact.”

Gold for immediate delivery, which dropped to a two-year low of $1,321.95 an ounce on April 16, traded 0.4 percent higher at $1,391.43 at 10:53 a.m. in Singapore. Bullion has declined 17 percent in 2013 after advancing for the past 12 years.

Portfolio Diversification

Central banks bought 534.6 tons of gold last year, the most since 1964, and may add as much as 550 tons in 2013, the World Gold Council estimates. While central-bank purchases fell 5.2 percent in the three months through March, they totaled more than 100 tons for the seventh straight quarter, according to council data.

The banks are less attracted to bullion as an overall strategy of portfolio diversification and the price drop should not lure them away from a long-term policy of gold accumulation, according to HSBC Securities (USA) Inc.’s James Steel. Still, reserve managers tend to be conservative and expecting central banks to step in and support a falling market is unrealistic, Credit Suisse analysts including Ric Deverell wrote in a May 22 report.

Turkey’s holdings rose 18.2 tons to 427.1 tons in April, increasing for a 10th month as it accepted gold in its reserve requirements from commercial banks. Belarus’s holdings expanded for a seventh month, while Azerbaijan’s and Greece’s holdings climbed for a fourth month, according to the IMF data.

Mexico cut its gold reserves for a 12th month and Canada reduced holdings for a fourth month, the data showed.

http://mobile.bloomberg.com/news/2013-05-27/russia-kazakhstan-extend-gold-asset-purchases-as-prices-tumble.html

Australian amateur prospector finds massive gold nugget

2013-01-23T17:00:00.001-08:00

Australian amateur prospector finds massive gold nugget

An amateur prospector in the Australian state of Victoria has astonished experts by unearthing a gold nugget weighing 5.5kg (177 ounces).

The unidentified man, using a handheld metal detector, found the nugget on Wednesday, lying 60cm underground near the town of Ballarat.
Its value has been estimated at more than A$300,000 ($315,000: £197,000).
Local gold experts say gold has been prospected in the area for decades, but no such discovery had been made before.
"I have been a prospector and dealer for two decades, and cannot remember the last time a nugget over 100 ounces (2.8kg) has been found locally," said Cordell Kent, owner of the Ballarat Mining Exchange Gold Shop.
"It's extremely significant as a mineral specimen. We are 162 years into a gold rush and Ballarat is still producing nuggets - it's unheard of."

“Start Quote

There's nothing like digging up money, it's good fun”

Cordell Kent Ballarat Mining Exchange Gold Shop

A video of the Y-shaped nugget was posted on YouTube on Wednesday by user TroyAurum.

He wrote that the man who found it had said it "sounded like the bonnet of a car through the headphones.
"It was lying flat (broad side up) and he carefully dug it up."
Gold currently trades in Australia at about A$1,600 per ounce, meaning the discovery would be worth about A$283,200, but its rarity and the fact it weighs more than a kilogram would add a premium, said Mr Kent.
He told Australian media the prospector had been using a state-of-the-art metal detector, which meant he was able to find the gold relatively deep underground in an area which had been searched many times in the past.
The man had only made small finds before, he said, but was a "person that really deserved it".
"A finding like this gives people hope. It's my dream to find something like that, and I've been prospecting for more than two decades," the Ballarat Courier quoted him as saying.
"I've got no doubt there will be a lot of people who will be very enthusiastic about the goldfields again, it gives people hope," said Mr Kent.

"There's nothing like digging up money, it's good fun."

http://www.bbc.co.uk/news/world-asia-21055206

Gold Lures Japan’s Pension Funds as Abe Targets Inflation

2013-01-14T14:04:00.003-08:00

Gold Lures Japan’s Pension Funds as Abe Targets Inflation

Japanese pension funds, the world’s second-largest pool of retirement assets after the U.S., will more than double their gold holdings in the next two years as the new government pushes for a higher inflation target, according to an adviser to the funds.
Assets held by Japanese pension funds in gold-backed exchange-traded products may expand to 100 billion yen ($1.1 billion) by 2015 from less than 45 billion yen at present, said Itsuo Toshima, who represented the Tokyo office of World Gold Council for 23 years through 2011.

Gold bars are displayed for a photograph at Tanaka Kikinzoku Jewelry K. K.'s store in Tokyo, Japan. Photographer: Junko Kimura/Bloomberg

New Prime Minister Shinzo Abe’s pledge to spur inflation to 2 percent and end the yen’s appreciation means Japanese pension funds now have to hedge against rising prices and a currency decline after two decades of stagnation. They’re set to jump into gold after 12 straight years of gains with the precious metal now 14 percent below its all-time high reached 2011. Gold priced in yen reached a record a week ago.
“Bullion’s role as an inflation hedge, long ignored by Japanese fund operators, has come under the spotlight thanks to Abe’s economic policy,” Toshima, who now works as an adviser to pension-fund operators, said in an interview today in Tokyo. “Gold may be a standard asset-class in the portfolio of Japanese pension funds as Abe’s target is realized.”

Pension Funds

Japanese pensions oversee $3.36 trillion, according to human-resource and consulting services company Towers Watson & Co. Corporate pension funds in Japan will diversify 72 trillion yen in assets after domestic stocks produced little return in the past two decades, according to Daiwa Institute of Research.
Japan’s Nikkei-225 (NKY) Stock Average lost 73 percent at the end of 2012 from a record high reached in December 1989, compared with the MSCI All-Country World Index (MXWD), which more than doubled.
The nation’s economy has been mired in deflation, with consumer prices kept below 3 percent since 1991, as the bursting of an asset bubble in the late 1980s led to stagnant economic growth as land values dropped to about half of what they were. Abe wants the Bank of Japan to raise its inflation target of 1 percent.
Bullion posted its longest run of annual gains in at least nine decades last year. Credit Suisse Group AG said Jan. 3 gold will average the most ever this year and joined Goldman Sachs Group Inc. in predicting the 12-year bull market will probably peak in 2013.

Gold in Yen

Mitsubishi UFJ Trust and Banking Corp., which introduced Japan’s first gold ETF in 2010, expects assets held in the product to double over the next several years from 26.2 billion yen as of Nov. 30. Global investors are holding a near-record amount in gold-backed ETPs that are valued at $139.6 billion, data compiled by Bloomberg show.
Local pension funds last year for the first time allocated 2.1 billion yen, or 2 to 3 percent of their assets, in the gold- backed ETF of Mitsubishi UFJ Trust, a member of Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender, according to general manager Osamu Hoshi. The bank is in talks with several pension funds on gold, he said Dec. 20.
Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of monetary easing from December 2008 through June 2011. The European Central Bank, Bank of Japan and China have all pledged to do more to bolster their economies.
Gold in Japan’s currency reached a record 147,780 yen an ounce on Jan. 2, after climbing 21 percent last year. Gold in dollars reached a record $1,921.15 an ounce on Sept. 6, 2011 and gained 7 percent in 2012.

Federal Reserve

The metal fell last week for a sixth week, the worst run since May 2004, after U.S. Federal Reserve policy makers said they’ll probably end their $85 billion of monthly bond purchases this year, according to the record of the Federal Open Market Committee’s Dec. 11-12 gathering. Bullion traded at $1,651.05 at 5:56 p.m. in Tokyo.
Turnover at Mitsubishi UFJ Trust’s gold ETF on the Tokyo Stock Exchange amounted to 8.67 billion yen in November, exceeding turnover in the SPDR, the biggest exchange-traded fund backed by bullion, and becoming the ninth most-traded fund out of the 140 products listed on the Japanese securities exchanges, data compiled by the bank show.
Mitsubishi UFJ’s ETF is linked to yen-based gold prices on the Tokyo Commodity Exchange, Japan’s largest raw-material bourse. Gold futures on the exchange known as Tocom rallied 19 percent last year, outperforming the 7.1 percent increase in the spot market in London, as the yen declined 13 percent against the dollar.
Assets held by corporate pension funds in Japan amounted to 72.24 trillion yen as of March 2012, declining 0.9 percent from a year earlier, according to Yasuo Sugeno, director at Daiwa Institute of Research in Tokyo. Of the total, about 72 billion yen were allocated to commodities including gold through hedge funds, he said Dec. 10.
Government Pension Investment Fund of Japan, the operator of the world’s largest pension fund with 113.6 trillion yen, stays away from commodity investment as 67 percent of their assets were allocated to Japanese bonds, Sugeno said.
“Pension money invested in bullion is ‘peanuts’ at the moment,” Toshima said. “If 1 percent of their total assets shift to the metal, the gold market would explode.”

http://www.bloomberg.com/news/2013-01-08/gold-lures-japan-s-pension-funds-as-government-pledges-inflation.html

Some personal thoughts on surviving the monetary meltdown

2012-11-21T17:31:00.002-08:00

Some personal thoughts on surviving the monetary meltdown

Let us start by looking at the economy from 10,000 feet above: After 40 years of boozing on easy money and feasting on fantastical asset price inflations, the global monetary system is approaching catharsis, its arteries clogged and instant cardiac arrest a persistent threat. Most financial assets are expensive, and many appear to be little more than securitized promises with low probability of ever delivering payment in full. Around the globe, from Japan to the US, a policy of never-ending monetary stimulus consisting of zero interest rates and recurring rounds of ‘quantitative easing’ has been established aimed at numbing the market’s growing urge to liquidate. Via the printing press, the central banks, the lenders-of last resort, prop up banks and financial assets and simultaneously fatten the state, the borrower of last resort, which, despite excited editorials against the savage policy of ‘austerity,’ keeps going further into debt almost everywhere.

‘Muddling through’ is the name of the game today but in the end authorities will have two choices: stop printing money and allow the market to cleanse the system of its dislocations. This would involve defaults (including those of sovereigns) and some pretty nasty asset price corrections. Or, keep printing money and risk complete currency collapse. I think they should go for option one but I fear they will go for option two.

In this environment, how can people protect themselves and their property?

Disclaimer

Before I start sharing some of my own personal thoughts on this topic with you I should repeat my usual disclaimer: I provide economic analysis and opinion, food for thought. But I do not intend to give investment advice and certainly not any specific trade ideas. I provide a worldview, and an unconventional one at that. You alone remain responsible for your actions, and whatever you do, you do it at your own risk.

My three favourite assets

My three favourite assets are, in no particular order, gold, gold and gold. After that, there may be silver, and after a long gap of nothing there could be – if one really stretches the imagination – certain equities or commercial real estate.

Why gold?

We are, in my assessment, in the endgame of this, mankind’s latest and so far most ambitious, experiment with unconstrained fiat money. The present crisis is a paper money crisis. The gigantic imbalances that threaten to unravel the system momentarily are the direct consequences of years and decades of artificially cheap credit and easy money, and are simply unfathomable in a hard money system. Take away fiat money and central banks and our current problems would be inexplicable. (If you are still under the widespread but erroneous impression that the gold standard caused the Great Depression you may want to consider that the strictures of hard money were systematically disabled and the disciplinary power of a true gold standard increasingly weakened with the establishment of the Federal Reserve in 1913, and the introduction and spreading of lender-of-last resort central banking in the US financial system. In any case, we are now in the Greater Depression, and this one is entirely the responsibility of central banking and unlimited fiat money.)

Whenever paper money dies, eternal money – gold and silver – stage a comeback. We have already seen a major re-monetisation of gold over the past decade, as the metal again becomes the store of value of choice for many investors. This will continue in my view, and even accelerate.

Gold is money

A frequent allegation against gold is that its non-monetary applications are minor and do not justify the present price, and that gold doesn’t pay interest or dividends, quite the opposite, storing and insuring it incurs running expenses. Gold is an instrument with a negative cash yield.

None of these objections stand up to scrutiny. They are either wrong or irrelevant.

It is investment goods that are supposed to offer cash yields – interest income or dividends. But gold is not an investment good, it is a form of money. Gold is the oldest form of money still considered a monetary asset today, and the only truly global form of money (besides silver but silver is today still more of an industrial commodity than a financial one). Gold is – importantly – inelastic money. It cannot be created nor be destroyed by politicians and central bankers. It can, of course, be taxed and confiscated, and I come to that later.

The main alternative to gold is therefore not bonds, equities and commercial real estate but cash, i.e. state paper money. The person who ‘invests’ in gold is holding money. The cash in your wallet or under your mattress does not give you a cash return either. Neither does gold.

Sometimes I get asked, what if people suddenly stopped considering gold to be a monetary asset and a store of value? Would its price not drop steeply? – That is a fair point. But this applies to your paper money, too. In fact, it applies to paper money more so.

Every monetary asset – whether gold, paper tickets from the state, or electronic book-entries at your bank – receives its value (exchange value or purchasing power) from the trading public, and from nobody and nothing else, not from the state, nor from any non-monetary uses of the monetary asset, if it has any at all. If the public stops treating the item in question as money, or uses it less as money or only at a discount, it looses its monetary value. That is also always the case with state paper money. It is a sign of our hopelessly statist zeitgeist that many people believe that the state ‘assigns’ value to its paper money and somehow supports this value. This is not the case. The truth is that the paper tickets in your wallet have purchasing power (and thus have value beyond their paper content) for one reason and one reason only: the public accepts them as a medium of exchange, the public accepts them in exchange for goods and services. The public also determines what the exact purchasing power of those banknotes is at any moment in time and at any given place. The state does not even back its paper money with anything. If you take your paper tickets to the central bank, what do you get in return? – Change.

Paper monies come and go. In fact, throughout history every experiment with paper money has ended in failure, with over-issuance the predominant cause of death. Pound and dollar are the two oldest currencies around today but through most of their history they were linked to gold or silver, which restricted their issuance. Our system of hundreds of entirely unrestricted local fiat money monopolies dates back only to 1971, at least in its present form. In the 20^th century alone, almost 30 hyperinflations of paper monies were recorded.

By contrast, gold has been money for 2,500 years at least. Should you be more concerned about the public not taking your gold any longer, or your paper money?

Gold is hard, apolitical, and global money, supported by an unparalleled history and tradition. That is the asset I want to own when our assorted finance PhDs in the central banks, the bureaucrats in the Treasuries and Ministries of Finance, and our sociopathic welfare politicians have manoeuvred the system to the edge of the abyss. Which is now.

Remember, paper money is always a political tool, gold is market money and apolitical. Paper monies come and go, gold is ‘eternal’ (as far as we can tell presently).

You have to be clear in your mind why you buy gold.

At every moment in time, all your possessions – all your wealth – can be split into three categories: consumption goods, investment goods, and money. For most of your possessions the category is pretty clear: The clothes you wear and the car you drive are consumption goods; your investment funds or your equity portfolios are investments; the banknotes in your drawer are money. For some things it is not so clear: An expensive painting might be an investment but if you hang it in your living room and enjoy looking at it, it is also a long-lasting consumption good. The house you live in could be both but in most cases it is more of a long-lasting consumption good than an investment: you use it up over time, albeit slowly, and you cannot easily liquidate it. You have to live somewhere.

The wealth you are not consuming in the here and now but want to maintain for the future can thus be held in the form of money or investment goods. Money gives you (usually) no return but has other advantages, namely that it allows you to maintain your purchasing power, at least if it is proper, hard money, and simultaneously retain complete flexibility. You are not committing yourself today to any investment good (or consumption good); you remain on the sidelines to wait how things turn out. But as you hold a monetary asset – a store of value and medium of exchange of (almost) universal acceptance – you can re-enter the markets quickly and easily. Somebody will always buy the gold from you in the future (which is far from certain in the case of most of your consumption and investment goods, and also in the case of that other form of money, state paper money).

Why gold now?

It seems that this is an opportune time to be on the sidelines, to be not engaged in the markets for equities, bonds and real estate, or to at least keep one’s exposure to these markets very low, since years and decades of unprecedented money growth have inflated and gravely corrupted the prices of standard investment goods. Sadly, these prices now rely increasingly on the kindness and efforts of manipulating bureaucrats to simply sit still and avoid a painful descent.

Central bankers state – openly and unashamedly – that they now consider it part of their mandate, if not the chief part of it, to keep asset prices at elevated levels and, if possible, even boost them further. Naturally, this will require ever more aggressive money printing and eternally super-low interest rates, and certainly argues against holding much paper money. Those who like to bet on the bureaucrats may claim that it makes sense to hold the very financial assets the prices of which central bankers are manipulating. As long as the central bankers are not ashamed of running the printing presses ever faster, they will simply get their way. Well, even under the rosiest of assumptions, this argument does not support investment in bonds. It could, in principle, be an argument for equities and real estate as ‘real assets’ of a sort but even in respect to these assets I consider it unsound, as I will explain later. Be that as it may, the beauty of gold is precisely that it allows you to remain on the sidelines and keep your powder dry. By holding gold you remove your wealth to a considerable degree from the rigged game of artificially inflated and openly manipulated financial markets. You commit internal capital flight from the fiat money system, and you simultaneously bet on the further debasement of paper money. The bet is this: The central bankers are trapped. The state, the banks, the pension funds, the insurance companies, the investment funds – they all would be in a right mess – or an even deeper mess than they already are – without cheap money from the central bank. Ergo, the policy of super-cheap money will have to continue until the bitter end.

There are a few more things to say about gold but before I do this let us talk about the worst asset.

Bonds – the worst asset class in my view

Bonds are ideal assets for you if you suffer from a financial death wish. Let me put it like this: After 40 years of almost relentless and of late accelerating money production we have too much debt. When you buy bonds you buy debt, and there is a lot of it to go around. And it is not even cheap. In most cases, it is ridiculously expensive, in particular when considering that most of it will never get repaid.

This is especially true of the sovereign bonds of major governments, which are probably among the worst ‘assets’ on the planet, yet are bizarrely still considered ‘safe haven’ assets, a ridiculous concept to begin with. What are the prospects in the long run for government bonds? Remember that most sovereign states are now credit-addicts, desperately relying on low rates and cheap credit to fund their incurable spending habits, and increasingly leaning on their central banks to provide the daily fixes. If the central banks stop printing money and thus stop funding the governments, they go broke. If the central banks keep funding the governments they will have to keep printing money, and this will certainly lead to higher inflation at some point, and that point may even be soon.

As an investor you will ultimately lose money through default or through inflation, and if it is a hyperinflation there will be default at the end of the hyperinflation. For the bond investor the choice is between death by hanging and death by drowning.

If that sounds overly dramatic then ask yourself in what scenario you win or even get your money back. Only if the present policies lead to a slow and steady return to self-sustaining growth that is inflation-free and allows the central banks to slowly and painlessly remove accommodation and deflate their overgrown balance sheets, and if the political class then grows up and gets sensible, departs from its free-spending ways, gets the fiscal house in order, and starts paring back the debt.

Yeah, and pigs might fly!

That this scenario is evidently the basis of much strategizing by professional money managers does not say much about its soundness or even remote probability. It is simply the scenario in which the financial industry comes out unscathed, with its size, reputation and income-stream intact. It is also the one scenario in which you need little money – neither paper money nor gold – but can stay fully invested in equities, bonds and real estate, as the rosy outlook of seamless crisis resolution and onwards growth forever will ultimately justify today’s lofty valuations. This is the scenario the financial industry favours and has an overwhelming desire to believe in – as do all politicians, central bankers and assorted Keynesians and other interventionists. Good luck to all of them! I fear this is wishful thinking rationalized with poor economics.

Every day that the markets are open the US government borrows an additional $4billion, roughly. For 5 years running the country’s budget deficits were considerably in excess of $1 trillion. Britain is among the world’s most highly indebted societies if you combine private and public debt, and despite all the blather in the press about ‘austerity’, the public sector keeps going more into debt. Japan has long been a bug in search of a windshield.

Bond investors may counter that it is all about the timing. Until death arrives, you collect coupons. – Well, hardly. With yields for the bonds of major bankrupt nations now in the 1 to 2 percent range, if that much, there is, in my view, little point in sitting on a gigantic powder keg and hoping the fuse is long enough. When this one blows, the fallout will be substantial.

Why are bonds not selling off?

As David Stockman has pointed out, much of the US Treasury market is not owned but rented. The big primary dealers and many hedge funds hold government bonds as trading positions funded with cheap money from the Fed. That is the true reason for the Fed’s new communications policy. Ben Bernanke now goes so far as to promise to keep rates and therefore the trading community’s funding costs near zero, not only for the near-term, but even beyond the tenure of his own chairmanship at the Fed. The goal is to make sure that these leveraged renters of Treasury debt stay engaged and help funding the state.

Then there are the big bureaucratic asset management entities that have historically always provided a reliable home for government bonds: insurance companies, pension funds, sovereign wealth funds, foreign central banks. Built-in risk-aversion and intellectual inertia are here working in support of over-valued bond markets. Here, the big investment decisions are made by committees of professional fund managers who are often in charge of obscenely large amounts of money. To beat the market and achieve superior returns is an objective located somewhere between the hugely improbable and the completely impossible. They are destined to fail, and in this position of nerve-shredding uncertainty they all cling to the same straws: 1) do what everybody else does; 2) stick to what has worked in the past; 3) stick to the industry’s assumed wisdom, such as ‘never fight the Fed’; ‘government bonds are safe assets because the government can always pay’, and so forth. The last point has no basis in theory and history, and looks increasingly like a heroic assumption today, but that is the fund manager’s line and he is sticking with it.

That government bonds are a safe investment can, of course, not be left a matter of simple opinion but has to be enshrined in the laws of the land, and the state’s rapidly expanding finance constabulary is already working on it. Via legislation and regulation, the state is busily building itself a captive investor base for its own debt.

The state regulates the banks and has long been telling them that if they want to lend their money securely they should give it to the state. Everywhere, state-imposed capital requirements for banks can best be met by buying government bonds. The advantages are obvious: Spanish banks heavily increased their exposure to ‘safe’ Spanish government bonds over the past year, from about 13 percent of their balance sheets to 31 percent. And what is safe for the banks is certainly safe for insurance companies, pension funds and other ‘socially important’ pools of saving. ‘Capital controls’ is such a nasty term. Much nicer to call it ‘regulation’, and the masses have now been sufficiently indoctrinated with the idea that the financial crisis was caused by lack of ‘regulation’ so that the state can now safely and calmly tighten the screws.

I fear that to a large degree this is even welcome by the asset management industry. In an unstable and increasingly uncertain world, being told what to buy lifts a great responsibility of one’s shoulders. Although individually many money managers complain about stifling restrictions and regulations, it is usually the case that any outsized boom industry, when faced with the end of its boom, happily embraces state involvement to avoid getting trimmed back by market forces too harshly. Rather than seeing the return of the ‘bond vigilantes’ who instilled fear and loathing in debtors in the 1970s and 1980s but who roamed the financial landscape of a different age, one in which grown-ups were still allowed to smoke in public, we will most likely be treated to the sad spectacle of timid money mangers being herded into officially sanctioned asset classes by the cocksure financial market police.

All of the above may help explain why expensive assets may keep getting more expensive but these are, in the end, mitigating factors only that will, at the most, postpone the endgame but not change it.

One popular way to rationalize investments in bonds is that they are deflation hedges. Whenever the forces of liquidation and cleansing get the upper hand, bonds do well. This may be the case in the short term but any extended period of deflationary correction must be poison for sovereign bonds in particular: tax receipts will drop, non-discretionary state spending will balloon, and credit risk will rise. The bond market’s pendulum of doom will simply swing from the risk of higher inflation to the risk of default.

Gold versus other ‘real assets’ (equities and real estate)

It is often argued that equities and real estate are also good inflation hedges, and I know many people who prefer them to gold. I see the rationale but disagree with the conclusion. Gold may no longer be cheap because what I explain here has been a powerful force behind gold for a decade. But I would argue that equities and real estate are in general much more overvalued as the current financial infrastructure is designed to channel new money into financial assets and real estate but not into gold, and our financial infrastructure has been operating on these principles for decades. How many people do you know who not only own gold but bought it on loan from their bank? Now ask yourself the same question with respect to real estate. – Gold is the great ‘under-owned’ asset. Its share in global portfolios is miniscule. It plays hardly any role in institutional asset management.

It is true that during deflationary phases when the inflationary impetus from central banks slackens a bit and the urge of the markets to liquidate comes to the fore again, gold often sells off in sympathy with equities. But I believe that any risk of a more extended period of deflationary correction poses a much bigger problem for equities, and by extension real estate, than for gold.

Additionally, ask yourself how equities and real estate will fare in an inflationary crisis or a currency catastrophe. Which companies will make money, pay dividends or even survive? Which tenants, whether residential or commercial, will keep paying the rent? I am not saying that all these equities and all the real estate will become worthless – far from me to forecast a ‘Mad Max’-style end of civilisation. It is indeed to be expected that certain equities and select pieces of real estate will turn out to be decent instruments for carrying wealth through the valley of tears, and for coming out at the other end with one’s prosperity intact. But which ones? It strikes me that the variance of outcomes is much greater in these hugely heterogeneous, highly inflated and widely held sectors than anything that can come from holding the eternal money and homogenous commodity gold. If you consider any major economic crisis, whether inflationary or deflationary, gold beats equities and real estate in my book. (Equities and real estate are superior to bonds and paper money, however, and this is why I listed them above as potential holdings.)

Additionally, there is one aspect of real estate investing that is, in my opinion, frequently overlooked or underappreciated, and that is this one: Your property is like a marriage agreement with the local taxman, as my friend Tristan Geschex keeps reminding me. The War On Wealth is intensifying, as are the fiscal problems of most states. Both go hand in hand. Real estate is low-hanging fruit for the state, and taxation on it will most certainly increase. What market value and rent-income your property will manage to sustain through the vagaries of the crisis will most probably be subjected to confiscatory taxation from a bankrupt state. The ownership of gold could potentially also be restricted or heavily taxed. This is certainly a risk. But as I said, gold is still the under-owned asset, and there is still a chance that you can find arrangements for your gold holdings that lessen the tax implications. When the winds of change alter the political landscape in your country of residence and bring the War On Wealth to a cinema near you, you may still – if you are quick and lucky – pack your things, take your gold and move somewhere else (as long as they let you), maybe even obtain a different citizenship (as long as they let you), but owning property means having nailed your wealth to the ground and having signed up for whatever the local purveyors of snake-oil (politicians) manage to sell your fellow voters.

Paper money versus gold

Under what scenario would paper money beat gold, i.e. would the paper-money-price of gold drop sharply? – The answer is clear, in my view: If the central banks stopped the printing press and stopped depressing interest rates artificially and fully accepted the consequences for other asset classes and the economy. If the central banks decided to defend the value of their paper money and credibly assigned a greater importance to this objective than to the now dominant ones, which are sustaining a mirage of solvency of banks and states, funding the governments, propping up asset prices, and creating short-term growth spurts.

The big gold bull market of the 1970s ended harshly in 1980, when then Fed-chairman Paul Volcker stopped the printing press, let interest rates shoot up, and looked on as the economy slipped into recession. The paper dollar enjoyed a revival and the gold price tanked.

My view is that this is exceedingly unlikely to happen today. The global financial system is considerably more leveraged than it was 32 years ago, and presently much more dependent on never-ending cheap money from the central bank. In 1980, the total debt of the US government was less than $1 trillion, today the annual budget deficits are bigger than that. The fallout from an end to free money would be huge, and most politicians would deem the consequences inacceptable. Today, there are also no other strategies available that could cushion the impact. In the early 1980s, then-president Reagan countered hard money with an easy fiscal policy, and simply let the budget deficit balloon throughout his tenure. Today, the bond market would be quickly in trouble without support from the central bank, and the government would soon face its very own Greece-moment.

But even if this were indeed to happen, I think that gold would still do better than equities and real estate, and certainly bonds, which would suffer hugely from rapidly rising default risk. The deflationary correction is also a huge threat to the over-stretched banking system, which means you may not want to hold your paper money in form of bank deposits. Again, gold seems to be a decent self-defence asset, even in this scenario.

How to own gold

Personally, I believe one should hold gold in physical form (bars and coins), not through ETFs, derivatives or gold accounts. If one wants to have it held within the banking system (not ideal but there could be reasons for it), one should insist on having it in allocated form, that is, clearly allocated to one’s name and identified by serial numbers. Or, have the gold delivered and keep it in a safety deposit at a bank. Alternatively, there are now a number of specialised asset managers or gold dealers around that offer storage facilities as well.

I think the risk of gold confiscation is small in most countries at present but things may change. The risk of taxation on gold or restrictions on gold ownership is somewhat higher. The safest places to hold gold are probably Switzerland (still) and Singapore at present but if you live in the wrong place or have the wrong passport, having your gold there may not protect you from the long arm of your government when it begins to show interest in your gold. It is no surprise that people who really care about their wealth, which are often people who are very wealthy, now consider changing residency and even changing citizenship as an important component of their estate planning. The last time the US government confiscated private gold, in April 1933, it only grabbed what was held within the territory of the United States, and many people probably kept their gold by simply burying it in the backyard. Believe me, the next time private property will be confiscated, the process will not be handled so amateurishly.

In any case, these are just my opinions. As I said, food for thought….

In the meantime, the debasement of paper money continues.

http://detlevschlichter.com/2012/11/some-personal-thoughts-on-surviving-the-monetary-meltdown/

Billionaire investor George Soros, who as recently as late 2011 said gold was an asset bubble, now appears quite bullish on the yellow metal and the companies that extract it from the earth. During the third quarter, Soros Fund Management LLC added to its investment in the SPDR Gold Shares (GLD), the second-largest ETF in the world by assets.
The firm raised its interest in GLD to 1.3 million shares from 884,400 shares, according to an SEC filing. Even at 1.3 million shares. Soros Fund Management owns a small percentage of GLD's shares outstanding, which stood at 443.2 million as of November 14.
The filing also indicates Soros Fund Management has boosted its holdings of ETFs that own shares of gold miners. An August SEC filing showed the firm held 1 million shares of the Market Vectors Gold Miners ETF (GDX) and nearly 2.4 million shares of the Market Vectors Junior Gold Miners ETF (GDXJ).
The November filing indicates Soros has more than doubled his GDX stake to 2.32 million shares and now holds a sizable chunk of call options on the ETF as well. The firm's position in GDXJ has not changed, according to the filing.
Since mid-August, GLD has jumped 6.6 percent while GDXJ has soared 5.7 percent. GDX has risen 3.3 percent over the same time. Barrick Gold (ABX), Goldcorp (GG) and Newmont Mining (NEM) combine for a third of GDX's weight.
Soros also slightly added to his position in the SPDR S&P Metals and Mining ETF (XME). The firm owned 350,000 shares of XME as of the August filing, but the more recent November filing indicates that stake has risen to 353,400 shares and the firm also owns call options on that ETF.
XME does hold some gold miners, but the fund is heavily allocated to coal and steel names such as Peabody Energy (BTU) and Nucor (NUE). Soros also holds a stake in the Materials Select Sector SPDR (XLB) as well as call options on that position.

Read more: http://www.foxbusiness.com/news/2012/11/15/soros-adds-to-gold-miner-etf-positions-raises-gld-stake/#ixzz2CuWWNN4D

2012-11-07T13:38:00.002-08:00

http://www.silverdoctors.com/u-s-mint-racks-up-another-400000-silver-eagle-sales-over-the-weekend/

Submitted by SD Contributor SRSrocco:
The US Mint’s frantic silver sales pace continued over the weekend, as the Mint reported 430,000 ounces of silver sales over the weekend on Monday. Perhaps more importantly, the US Mint Silver eagle to US Gold eagle sales ratio continues to exceed 50 to 1, a pace that is simply unsustainable with a current mine ratio of 9 to 1.

Friday was the last day the U.S. Mint updated its figures. At last count there were 2,014,000 Silver Eagle sales for October. They just released the new total:
OCT = 2,449,000 Silver Eagles

**2012 Silver Sales Totals**
(in ounces / number of coins)
Month	One ( oz. / #coins )
January	6,107,000 6,107,000
February	1,490,000 1,490,000
March	2,542,000 2,542,000
April	1,520,000 1,520,000
May	2,875,000 2,875,000
June	2,858,000 2,858,000
July	2,278,000 2,278,000
August	2,870,000 2,870,000
September	3,255,000 3,255,000
October	2,449,000 2,449,000
Total	28,244,000 28,244,000

I would imagine if we keep up this pace we will see a total of 33-35 million Silver Eagle Sales for 2012. Even though this may be lower than 2011… if the price of silver runs over $50 an ounce within the next 6 months, the U.S. Mint may not be able to keep up with demand.
3 THINGS I LOOK FORWARD TO:
1) price of silver north of $50…. (for starters)
2) The U.S. Mint unable to keep up with future massive silver investment demand
3) the article I plan on writing about LOUSY PRECIOUS METAL ANALYSTS (Nadler, Schmidt & Christian) when the top 2 things occur.
*Update by The Doc:
US Mint silver eagle sales continues to run at nearly a 55 to 1 clip to US Gold eagle sales at 2.5 million ounces of silver vs. 43,500 oz of gold:

**2012 Gold Sales Totals**
(in ounces / number of coins)
Month	One ( oz. / #coins )	Half ( oz. / #coins )	Quarter ( oz. / #coins )	Tenth ( oz. / #coins )	Total ( oz. / #coins )
January	84,500 84,500	24,500 49,000	9,500 38,000	8,500 85,000	127,000 256,500
February	20,000 20,000	0 0	500 2,000	500 5,000	21,000 27,000
March	57,500 57,500	1,000 2,000	0 0	4,000 40,000	62,500 99,500
April	19,000 19,000	0 0	500 2,000	500 5,000	20,000 26,000
May	49,000 49,000	1,500 3,000	1,000 4,000	1,500 15,000	53,000 71,000
June	55,000 55,000	1,000 2,000	1,500 6,000	2,500 25,000	60,000 88,000
July	28,500 28,500	0 0	500 2,000	1,500 15,000	30,500 45,500
August	34,000 34,000	1,500 3,000	1,000 4,000	2,500 25,000	39,000 66,000
September	63,000 63,000	1,000 2,000	1,000 4,000	3,500 35,000	68,500 104,000
October	41,500 41,500	0 0	500 2,000	1,500 15,000	43,500 58,500
Total	452,000 452,000	30,500 61,000	16,000 64,000	26,500 265,000	525,000 842,000

SD Bullion customers are not surprisingly even more silver focused, with SD Bullion silver to gold sales ratios currently near 200 to 1!

Home / Blogs Romania Wants Return of 93.4 tons as Gold Repatriation Ratchets

2012-11-01T14:31:00.002-07:00

Romania Wants Return of 93.4 tons as Gold Repatriation Ratchets

Romania wants its gold treasure back from Russia, a recent Bullion Street article says. It’s another signal of the accelerating trend of countries to repatriate their gold—and another indication that the tide is turning toward gold and silver.

Two railway carloads, or 93.4 tons of gold, were transferred to Russia as German troops began to threaten the region during World War I. According to the article, “All the governments of Romania since World War I, regardless of their political colour, have tried unsuccessfully to negotiate a return of the gold.”
Of course, this is not the first time the Romanian people, or people of any region for that matter, have found their monetary metals tempting to foreign powers. Invaders sent by Roman Emperor Trajan found gold and silver in great quantities in the Western Carpathians, which run through what is now modern-day Romania. Resulting from this conquest, Trajan brought back to Rome over 165 tons of gold and 330 tons of silver.
It is interesting that considering this history independent auditors say Germany has stored its gold abroad since the Cold War in case of Soviet invasion. Additionally, the auditor’s report says the German gold stored in London has fallen "below 500 tons" due to recent sales and repatriation. Considering German gold stocks have remained the same, the sale of physical gold must have been offset by an acquisition of paper promising to pay gold from the Federal Reserve Bank or other entities needing a physical supply of gold.
One event that may have triggered a large-scale demand for physical delivery of gold was the repatriation of the 211 tons, or 17,000 standard 400-ounce bars, of Venezuelan gold.

“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” President Hugo Chavez said, “It’s a healthy decision.”

The obvious danger to having others hold your valuables is that they can simply deny your right to audit or access what they store for you. German lawmakers were turned away from viewing the 1,500 tons of German gold reportedly held at the New York branch of the privately held Federal Reserve Bank (Fed). This fact may have played a part in the recent German federal court ruling that mandates repatriation of 50 tons of the gold per annum. For more, see Germany Brings it Home – Gold Repatriation as Stocks Scare.
One reason Russia has refused to cooperate with Romania’s demand for its gold is assumed to be Romania’s cooperation with the U.S. missile “shield.” According to the Huffington Post, in 2011, U.S. Secretary of State Hillary Clinton signed the agreement with Romanian Foreign Minister Teodor Baconschi and said the United States expected to deploy interceptor missiles at a Romanian air force base in approximately four years.
Mr. Eugen Anca at the time of the following quote ran the European arm of the Institute for Foreign Economic Relations (VNIIVS), a governmental agency of the Russian Federation’s Ministry of Economic Development and Commerce. He comments on the Romanian “gold treasure”

The Treasure is privately owned. Specifically, it is the private property of the National Bank of Romania (BNR)! At least this is how it was defined and certified by Victor Antonescu himself, the minister for finances in 1916, who signed the Protocol with Kremlin. This document is public and it can be found by any interested reader in the Foreign Ministry Archive, fund 71/1914, E2, Part I, vol. 183, pages 50 – 53. And there are certified copies of this document held by the Ministry for Finances, BNR, the French and British embassies, and Kremlin.

For this reason the Russians wanted a private corporation to exchange the BNR’s gold with a private Romanian entity that could secure assistance in developing Siberian natural resources as a win-win situation that could offer an new option to offset the 300 million (274 tons of gold) owed Russia per the 1947 Paris peace treaty previously satisfied via confiscation of the BNR gold stored in Russia. This is crucial, the “Romanian gold” is not even owned by Romania, it is owned by a private bank acting as the central bank of Romania. Sounds familiar as Americans handed their gold over to the Federal Reserve in 1934, not their state or federal Treasuries.
One lesson here for international players is that “if you can’t hold it, you don’t own it!” According to Edel Tully, precious metals strategist at UBS, “There is a growing preference among many different communities in the gold market to have their physical gold at home.”
Over the years the Russians have returned to Romania 17 railroad car loads of archives and documents, including as many as 39,320 Romanian art works were returned in 1956, including paintings, drawings, engravings, icons, tapestry works, religious objects, gold coins, medals and the Pietroasele treasure (below).

https://wealthcycles.com/blog/2012/10/23/romania-wants-return-of-934-tons-as-gold-repatriation-ratchets-up

The Germans Are Coming for Their Gold

2012-11-01T14:27:00.000-07:00

A German federal court has said that country’s central bank should conduct annual audits and physically inspect its gold reserves worldwide, including gold in the custody of the Federal Reserve Bank of New York. In addition to the FRBNY, Bundesbank gold is stored in London, Paris and Frankfurt.

(Read more: Republicans Eye Return to Gold Standard)

For decades, the Bundesbank has relied on written confirmation of its gold holdings in London, Paris and New York. According to the report from the German audit court, the last time Bundesbank officials physically inspected the central banks gold holdings was, well, never.

(It should be stated that the folks at FT Alphaville quote a report saying an inspection took place in 1979/1980.)

Interestingly enough, the Bundesbank is apparently quite happy with taking the word of other central bankers about the existence, location and size of its gold reserves. It put out the word that it disagrees with the Audit Court, which only has advisory power and cannot force the Bundesbank to follow its recommendations, about the need for inspections. Nonetheless, the Bundesbank is actually going to follow the recommendation that it verify the gold stocks. It also has plans to ship some 150 tons of gold back to Germany for a more “thorough examination.”

The Bundesbank is, of course, quite right in its opinion of the value of the examinations. In reality, it does not matter one bit whether the Federal Reserve Bank of New York actually has the German central bank’s gold or whether the gold is pure. As long as the Fed says it is there, it is as good as there for all practical purposes to which it might be put. It can be sold, leased out, used as collateral, employed to extinguish liabilities and counted as bank capital just the same whether it exists or not.

The actual presence of the gold wouldn’t make a lick of difference unless, say, Germany’s central bank decided it wanted to start using the gold for some practical, non-monetary purpose like making watches.

But there’s long been a paranoia about central bank and government gold reserves. (Read more: GOP Appeased Me on Gold Standard: Rep. Ron Paul)

The gold of the United States government, which officials say is held in the United States Bullion Depository in Fort Knox, has been rumored—probably since the Depository’s founding in 1937—to have been looted and replaced with gold-painted tungsten, for instance. The government treats this as nonsense—which it most likely is—but nonetheless it does conduct regularly scheduled audits of the gold in Fort Knox, including doing purity tests on a small sample of the gold.

This paranoia is not entirely irrational, for one reason. As I mentioned above, for almost all imaginable operational purposes, the actual existence of the gold in Fort Knox or in the vault beneath the FRBNY’s Liberty Street headquarters is irrelevant. The bookkeeping is what really matters here. So long as the Fed says Bundesbank owns X tons of gold, the Bundesbank can act as if it did own the gold—even if the gold had somehow been swallowed into a gold-eating galactic worm hole. But the irrelevance of the facticity of the gold does quite easily lend itself to thinking: if the gold being there doesn’t matter, why would it be there?

I’m sure the Bundesbank officials understand this quite well, even though the German Audit Court does not. There is nothing to be gained by inspecting the gold. If it is all there and pure, there is no difference from an undiscovered absence. But if the gold isn’t there, well, calamity could follow as trust in the central bank gold depositories evaporated instantly.

In any event, it looks like Bundesbank officials will soon be visiting the Fed’s vault, which is located 80 feet below street level and 50 feet below sea level. The vault is accessible only by elevators controlled by an operator in a remote location. I’ve been told by a source that the elevator operator is actually not in New York City at all, although I can’t confirm this and the Fed won’t discuss this sort of thing.

Down in the vault there are 122 compartments assigned to depositing countries and international organizations. Smaller gold depositing countries get shelves in shared library compartments.

The compartments do not have labels reading “Germany’s gold” and so on. They are instead numbered, and only a few people at the Fed know what numbers correspond to which country. The Fed says it does this to protect the privacy of the depositors. But this also makes actual inspection less reliable. There’s no way for Germany to know that the gold it is being shown is Germany’s, as opposed to some other depositor’s. In an extreme case—which I have no reason to believe is true—miscreants at the Fed could just show everyone who came to visit the same pile of gold.

This is related to another mystery about gold reserves: why do they persist?

The central banks of the world's established economic powers do not actually do anything with their gold, apart from rare and occasional sales of gold limited by the Washington Agreement to no more than 400 tons per year.

Some central banks lend out their gold to speculators and gold miners (who borrow the gold to finance mines—basically, a risk-free hedged loan since the borrowed gold can be repaid with newly mined gold, regardless of what happens to the price of gold on the market), which can be a somewhat profitable activity—especially when the alternative is just letting it sit around doing nothing but fluctuating in value with the market price. But, as far as we know, this isn’t something the Bundesbank or the Fed does.

When Congressman Ron Paul recently asked Fed chair Ben Bernanke about the rationale for central banks holding gold, Bernanke said it was the result of “long term tradition.” But that’s not really a satisfactory answer. The lack of a satisfactory answer actually contributes to the suspicion that the gold isn’t really there at all. If there’s no purpose for it, why would it be there?

So is the German Audit Court nuts? Not necessarily. For one thing, there probably is some value to putting to rest suspicions that the public is being deceived about central bank gold reserves—although I doubt an audit will really do very much in this regard. For another, there’s always the off-chance that someone has embezzled the gold, enriching himself unjustly. Might as well check if the gold is really there.

The Fed wouldn’t comment on the record about how it will handle a German request to inspect the gold. A source says they would likely work out a deal with the Germans permitting some sort of inspection.

But I like to imagine that the Fed officials would bring the Germans to the door of the a compartment labeled, say, No. 322, and then pose the question: “Are you absolutely sure you want to see what’s in here?”

- by CNBC Senior Editor John Carney

http://www.cnbc.com/id/49540593

Bundesbank Refuses Gold Control

2012-11-01T14:23:00.002-07:00

22.10.2012

The Bundesbank, has refused to allow the German members of parliament Philipp Mißfelder and Marco Wanderwitz to view the German gold reserves stored in Paris and London. Reason: The central banks in Paris and London do not have suitable rooms for visits.

The German federal bank, the Bundesbank, has refused to allow the German members of parliament Philipp Mißfelder and Marco Wanderwitz to view the German gold reserves stored in Paris and London. As reported by the newspaper Bild-Zeitung (Monday edition, Germany's largest newspaper), Carl-Ludwig, a member of the Bundesbank’s Executive Board, wrote a letter to the two deputies saying that the central banks in Paris and London do not have suitable rooms for visits. Large portions of the German gold reserves (a total of 3,400 tons worth more than € 150 billion) are kept abroad, and only a fraction is held by the Bundesbank in Frankfurt.

Philipp Mißfelder, foreign affairs spokesman of the CDU/CSU coalition, wanted also to inspect the German gold reserves at the Federal Reserve Bank in New York in February - but didn't succeed. Now he wanted to do the same in London and Paris. This is related to intense criticism by accounting experts and the German Federal Audit Office concerning the storage of Germany’s gold reserves abroad.

http://www.mmnews.de/index.php/english-news/11126-bundesbank-refuses-gold-control

Perth Mint Gold and Silver Bullion Sales Surge

2012-10-17T16:37:00.003-07:00

The Perth Mint of Australia has announced their latest sales figures for gold and silver sold as coins and minted products. During September 2012, sales for both metals surged to their highest levels since the start of monthly reporting. The higher sales were undoubtedly driven by the release of the new designs for popular series of gold and silver bullion coins.
Sales of silver coins and minted products rose to 1,251,580.06 troy ounces, up 269% from the prior month and more than doubling the previous highest reported monthly amount from March.
The sales for gold coins and minted products rose to 81,095.13 troy ounces, representing an increase of 118% from the prior month. This eclipsed the previous highest monthly reported amount from June.
Year ago comparisons are not available, since the Perth Mint only began reporting monthly sales levels in March of 2012.
2012 Perth Mint Bullion Sales in Troy Ounces

	Gold	Silver
March	35,957.28	590,636.15
April	17,575.64	207,109.91
May	30,387.88	437,759.34
June	44,619.05	523,663.46
July	34,026.23	452,692.79
August	37,196.86	338,945.22
Sept	81,095.13	1,251,580.06

The burst of sales can be attributed to the release of new 2013-dated gold and silver bullion coins on September 3, 2012. On that date, the 2013 Year of the Snake coins went on sale with gold bullion coins available in sizes ranging from 1/20 ounce to 1 kilo and silver bullion coins available in sizes ranging from 1/2 ounce to 1 kilo. For both metals, a 10 kilo sized coin will be available at a later date. Sales also began for the 2013 Australian Kookaburra silver bullion coins available in 1 kilo, 10 ounce, and 1 ounce sizes.

http://news.coinupdate.com/perth-mint-gold-and-silver-bullion-sales-surge-1646/

http://precious-metal-investment.blogspot.co.uk/

Three Scenarios For Gold

2012-10-17T15:00:00.001-07:00

Three Scenarios For Gold

Even though we have presented comparable scenarios looking at the coverage of the US money base in gold terms previously, aka "gold coverage" ratio, including once from Dylan Grice, and once from David Rosenberg, now that we have drifted into a new, previously unchartered and very much open-ended liquidity tsunami, it is time to revisit the topic. Luckily, Guggenheim's Scott Minerd has done just that. Not only that, but he presents three distinct gold pricing scenario, attempting to forecast a low, medium and high price range for the yellow metal.
To wit: "The U.S. gold coverage ratio, which measures the amount of gold on deposit at the Federal Reserve against the total money supply, is currently at an all-time low of 17%. This ratio tends to move dramatically and falls during periods of disinflation or relative price stability. The historical average for the gold coverage ratio is roughly 40%, meaning that the current price of gold would have to more than double to reach the average. The gold coverage ratio has risen above 100% twice during the twentieth century. Were this to happen today, the value of an ounce of gold would exceed $12,000.”

Keep in mind, the $12,000 price is based on the current monetary base. When this number rises by $2 trillion (at least) through the end of 2014, the upside case of gold will be orders of magnitude higher.
And now you know why bickering over a few hundred dollars here and there is largely irrelevant, and in fact one should be delighted if gold can be purchased at as low a price as possible. Why? Because one thing is absolutely certain: in order to keep the ponzi going, with every other sector at peak leverage, including household, corporate and financial, and real assets already massively encumbered by debt, the only real indirect buyer of gold will be the world's central banks, by means of diluting the existing paper supply. And whether or not the New York Fed, or some gold cartel, are actively pushing the price of gold lower, this is very much irrelevant, and in fact continues to be a welcome diversion, one which allows for the artificially low entry prices into gold. Because one day, gold will revert to its fair value, and so often happen, that is when its will go back to 100% "coverage" as faith in fiat evaporates. At that point whether one bought gold at $1000, $1500 or even $2200 will be absolutely irrelevant.

http://www.zerohedge.com/news/2012-10-17/three-scenarios-gold

GOLD BULLION COINS SPECIFICATIONS - TEST YOUR COINS

2012-09-26T22:04:00.001-07:00

http://www.onlygold.com/TutorialPages/Coin_specsFulScreenVersion.htm

Country	Coin	Face value	Gold oz	Wt oz	Wt grams	Dia mm	Thickness mm	Gold fineness
Australia	Lunar Series 1 oz	A$ 100	1.0000	1	31.1030	32. 10.	2.65.	999.9
Australia	Lunar Series 1/2 oz	A$ 50	0.5000	0.5	15.5515	25.10	2.20	999.9
Australia	Lunar Series 1/4 oz	A$ 25	0.2500	0.25	7.7758	20.10.	1.80	999.9
Australia	Lunar Series 1/10 oz	A$ 15	0.1000	0.1	3.1103	16. 10.	1.30.	999.9
Australia	Lunar Series 1/20 oz	A$ 5	0.0500	0.05	1.5552	14.10.	1.40	999.9

Australia	1 oz. Kangaroo	A$ 100	1.0000	1	31.1030	32. 10	2.65	999.9
Australia	1/2 oz. Kangaroo	A$ 50	05000	05	15.5515	25.10	2.20	999.9
Australia	1/4 oz. Kangaroo	A$ 25	02500	025	7.7758	2010	1.80	999.9
Australia	1/10 oz. Kangaroo	A$ 15	01000	01	3.1103	16. 10	1.30	999.9
Australia	1/20 oz. Kangaroo	A$ 5	00500	005	1.5552	14.10	1.40	999.9

Austria	1 oz Philharmonic	OS 2000	1.0000	1	31.1030	37.0	2.0	999.9
Austria	1/2 oz Philharmonic	OS 1000	05000	05	15.5515	28.0	1.6	999.9
Austria	1/4 oz Philharmonic	OS 500	02500	025	7.7758	22.0	1.2	999.9
Austria	1/10 oz Philharmonic	OS 200	01000	01	3.1103	16.0	1.2	999.9

Belgium	20 Francs		01867	02074	6.4508	21.00	1.30	900

Canada	1 oz. Maple Leaf	C$ 50	1 .0000	1	31.1030	3000	2.80	999.9
Canada	1/2 oz. Maple Leaf	C$ 20	05000	05	15.5515	25.00	2.23	999.9
Canada	1/4 oz. Maple Leaf	C$ 10	02500	025	7.7758	2000	1.70	999.9
Canada	1/10 oz. Maple Leaf	C$ 5	01000	01	3.1103	16.00	1.22	999.9
Canada	1/15 oz Maple Leaf	C$ 2	00666	00666	2.099	15.0	098	999.9
Canada	1/20 oz Maple Leaf	C$ 1	00500	00500	1.581	14.1	092	999.9

Country	Coin	Face value	Gold oz	Wt oz	Wt grams	Dia mm	Thickness mm	Gold fineness
Chile	100 Pesos		05885	06539	203383	31.2.	2.50	900

China	1 oz. Panda	100 Yuan	1.0000	1	31.1030	32.05	2.70	999
China	1/2 oz. Panda	50 Yuan	05000	05	15.5515	27.00	1.85	999
China	1/4 oz. Panda	25 Yuan	02500	025	7.7758	21.95.	1.53	999
China	1 / 10 oz. Panda	10 Yuan	01000	01	3.1103	17.95.	1.05	999
China	1/20 oz. Panda	5 Yuan	00500	005	1.5552	13.92.	083	999

Colombia	5 Pesos		02354	02568	7.9873	22.00	1.50	916.7

France	20 Francs (3 Types)		01867	02074	6.4508	21.00	1.40	900

Germany	20 Mark		02305	02561	7.9655	22.50	1.40	900

Great Britain	I oz. Britannia	Lb 100	1 .0000	1.0909.	33.9303	32.60	2.79.	916
Great Britain	1/2 oz. Britannia	Lb 50	05000	05454	16.9636	27.00	2.08	916
Great Britain	1/4 oz. Britannia	Lb 25	02500	02727.	8.4818	22.00	1.63	916
Great Britain	I Sovereign		02354	02568	7.9873	22.05.	1.52	916
Great Britain	1/2 Sovereign		01177	01284	3.9936	19.22	099	916
Great Britain	I /10 oz Britannia	Lb 10	01000	01091	3.3933	16.50	1. 17	916

Country	Coin	Face value	Gold oz	Wt oz	Wt grams	Dia mm	Thickness mm	Gold fineness
Hungary	100 Korona		09802	1.0891	33.8743	37.08.	2.29	900
Hungary	20 Korona		01960	02178	6.7742	21.00	1.00	900

Isle of Man	1 oz. Angel	1 Angel	1.0000	1.0000	33.9303	32.70	2.83	999.9
Isle of Man	I oz. Cat	1 Crown	1.0000	1	31.1030	32.70	2.60	999.9
Isle of Man	1/2 oz. Angel	1/2Angel	05000	05000	16.9636	27.00	2.16	999.9
Isle of Man	1/2 oz. Cat	1/2 Crown	05000	05	15.5515	3000	1.90	916
Isle of Man	1/4 oz. Angel	1/4 Angel	02500	02500	8.4818	22.00	1.79	999.9
Isle of Man	1/5 oz. Cat	1/5 Crown	02000	02	6.2206	22.00	1.40	916
Isle of Man	1/ 10 oz. Angel	1/10 Angel	01000	01000	3.3933	16.50	1.20	916
Isle of Man	1/ 10 oz. Cat	1/10 Crown	01000	01	3.1103	17.95	1.00	999.9
Isle of Man	1/25 oz. Cat	1/25 Crown	00400	004	1.2441	13.92	070	91

Italy	20 Lire		02074	01867	5.8069	21.00	1.20	900

Country	Coin	Face value	Gold oz	Wt oz	Wt grams	Dia mm	Thickness mm	Gold fineness
Mexico	50 Pesos		1.2057	1.3396	37.5009	37.08.	2.69	900
Mexico	I Onza		1.0000	1.1111	34.5585	34.54	2.55	90
Mexico	1/2 Onza		05000	05555	17.2777	29.00	2.03	900
Mexico	20 Pesos		04823	05358	16.6650	27.50	2.03	900
Mexico	1/4 Onza		02500	02777	8.6373	23.00	1.68	900
Mexico	10 Pesos		02411	02679	8.3325	22.50	1.40	900
Mexico	5 Pesos		01205	01339	4.1647	19.00	1.14	900
Mexico	2 1/2 Pesos		00602	00669	2.0808	15.50	086	900
Mexico	2 Pesos		00482.	00535	1.6640	13.00	1.02	900

Netherlands	10 Guilders		01947	02163	6.7276	22.50	1.31	900

Peru	I Libra		02354	02568	7.9873	22.00	1.52	916.7

Country	Coin	Face value	Gold oz	Wt oz	Wt grams	Dia mm	Thickness mm	Gold fineness
South Africa	I oz, Krugerrand	None	1.0000	1.0909	33.9303	32.60	2.75	916
South Africa	1/2 oz. Krugerrand	None	05000	05454	16.9636	27.00	2.24	916
South Africa	1/4 oz. Krugerrand	None	02500	02727	8.4818	22.02.	1.52	916
South Africa	1 Rand	None	01177	01284	3.9936	19.43	1.09	916.7
South Africa	1 / 10 oz, Krugerrand	None	01000	01091	3.3933	16.46.	1.19	916
South Africa	2 Rand	None	02354	0,2568	7.9873	22.00	1.83	916.7

Switzerland	20 Francs		01867	02074	6.4508	21.00	1.20	900

U.S.A.	1 oz. American Eagle	US$ 50	1.0000	1.0909.	33.930	32.70	2.87	916.7
U.S.A.	1/2 oz. American Eagle	US$ 25	05000	05454	16.9636	27.69.	2.15	916.7
U.S.A.	1/4 oz. American Eagle	US$ 10	02500	02727	8.4818	22.00	1.78	916.7
U.S.A.	1/ 10 oz. American Eagle	US$ 5	01000	01091	3.3933	16.50	1.26	916.7

Country	Coin	Face value	Gold oz	Wt oz	Wt grams	Dia mm	Thickness mm	Gold fineness
U.S.A.	1 oz. A.Arts Medallion		1.0000	1.1111	34.5585	34.30	2.41	900
U.S.A.	$20.00 Liberty Type		09675	1.075	33.4357	32.70	2.83	900
U.S.A.	$20.00 Saint-Gaudens		09675	1.075	33.4357	32.25.	2.79	900
U.S.A.	1/2 oz. A.Arts Medallion		05000	05555	17.2777	27.00	2.16	900
U.S.A.	$10.00 Indian Head Type		04838	05375	16.7179	27.00	2.03	900
U.S.A.	$10.00 Liberty Type		04838	05375	16.7179	27.00	2.03	900
U.S.A.	$5.00 Liberty Type		02419	02688	8.3605	21.60	1.59	900
U.S.A.	$5.00 Indian Head Type		02419	02688	8.3605	21.60	1.40	900
U.S.A.	$2.50 Liberty Type		01209	01343	4.1771	18.00	1.27	900
U.S.A.	$2.50 Indian Head Type		01209	01343	4.1771	18.00	1.14	900
U.S.A.	$1.00 Indian Head Type		00484	00538	1.6733	13.00	1.02	900
U.S.A.	$1.00 Liberty Type		00484	00538	1.6733	15.00	076	90

USSR	10 Roubles		02490	02767	8.6062	22.60	1.70	900

Gold analysts' forecasts and commentary for 2012. All prices are in US dollars.

2012-09-22T12:11:00.000-07:00

Gold analysts' forecasts and commentary for 2012. All prices are in US dollars.

↑	high	low	average	range
Anne-Laure Tremblay - BNP Paribas	$2,100	$1,500	$1,775	$600
Average forecasts -	$2,055	$1,443	$1,766	$612
Bayram Dincer - LGT Capital Management	$1,950	$1,450	$1,770	$500
Bhargava Vaidya - B.N. Vaidya & Associates	$1,900	$1,440	$1,600	$460
Carl Firman - VM Group	$2,012	$1,410	$1,689	$602
Daniel Brebner - Deutsche Bank	$2,100	$1,545	$1,825	$555
Daniel Smith - Standard Chartered Bank	$2,075	$1,525	$1,875	$550
David Jollie - Mitsui & Co Precious Metals Inc	$2,075	$1,480	$1,770	$595
Eddie Nagao - Sumitomo Corporation	$1,800	$1,300	$1,525	$500
Edel Tully - UBS	$2,500	$1,400	$2,050	$1,100
Frederic Panizzutti - MKS Finance S.A.	$2,120	$1,550	$1,808	$570
James Steel - HSBC	$2,050	$1,450	$1,850	$600
Jeffrey Rhodes - INTL Commodities	$1,975	$1,465	$1,727	$510
Martin Murenbeeld - DundeeWealth	$2,125	$1,450	$1,835	$675
Matthew Turner - Mitsubishi Corporation International (Europe) Plc	$2,100	$1,425	$1,782	$675
Michael Jansen - JPMorgan Securities	$2,150	$1,450	$1,869	$700
Michael Widmer - BAML	$2,000	$1,500	$1,850	$500
Peter Fertig - QCR Quantitative Commodity Research Ltd	$2,150	$1,390	$1,730	$760
Philip Klapwijk - Thomson Reuters GFMS	$2,005	$1,530	$1,760	$475
René Hochreiter - Allan Hochreiter (Pty) Ltd	$2,000	$1,450	$1,650	$550
Rohit Savant - CPM Group	$1,800	$1,200	$1,612	$600
Ross Norman - Sharps Pixley Ltd	$2,100	$1,590	$1,765	$510
Suki Cooper - Barclays Capital	$2,200	$1,400	$1,875	$800
Thorsten Proettel - LBBW	$1,950	$1,220	$1,640	$730
Tom Kendall - Credit Suisse Securities (Europe) Ltd	$1,960	$1,475	$1,755	$485
William Adams - Fastmarkets	$2,230	$1,500	$1,785	$730
Wolfgang Wrzesniok-Rossbach - Degussa Goldhandel GmbH	$2,010	$1,425	$1,750	$585
YTD actual at 21-Sep-12	$1788	$1538	$1648	$250

http://www.lbma.org.uk/pages/index.cfm?page_id=142

Deutsche Bank: GOLD IS MONEY

2012-09-22T03:15:00.003-07:00

Is gold money?

It's become a tireless debate: goldbugs seem to cling to the shiny yellow metal with a religious fervor not usually displayed by anyone toward other asset classes, and it's been known to frustrate some who don't share their views.
Gold often gets lumped in to investment forecasts with other "commodities" – real, consumable things like oil or food.
But Deutsche Bank analysts Daniel Brebner and Xiao Fu say gold is seriously misunderstood, and in a new report – wherein they update their gold target to $2000/oz sometime in the first half of 2013 – they explain that "gold is not really a commodity at all."
The undisputable evidence for the case that gold is money, according to the Deutsche Bank analysts:

While it is included in the commodities basket it is in fact a medium of exchange and one that is officially recognised (if not publically used as such). We see gold as an officially recognised form of money for one primary reason: it is widely held by most of the world’s larger central banks as a component of reserves.

That's their take. But there's more – the analysts differentiate between "good money" (gold) and "bad money" (fiat paper currency):

We would go further however, and argue that gold could be characterised as ‘good’ money as opposed to ‘bad’ money which would be represented by many of today’s fiat currencies. In describing gold as such we refer to Gresham’s Law – when a government overvalues one type of money and undervalues another, the undervalued money (good) will leave the country or disappear from circulation into hoards, while the overvalued money (bad) will flood into circulation.

What's interesting is that all of the arguments against gold propogated by the anti-goldbugs – that it's not really a consumption good, that it serves no industrial purpose, etc. – are all the exact reasons why Brebner and Xiao call gold "good money."
The analysts elaborate on this point in the report:

In our view the ideal medium of exchange must balance the paradox of representing value while having little intrinsic value itself. There are very few media which can do this. Fiat currencies physically have no use other than that which is prescribed to them by government and accepted by the public. That fiat currencies cost little to produce is of a secondary concern and we believe, quite irrelevant to the primary purpose.

Gold is neither production good nor consumption good. Jewellery we see as a form of storage or hoarding (the people of Portugal have all but exhausted their personal gold stores – hoarded in the form of jewellery – having converted them to survive the crisis). If gold did have a meaningful commercial use we believe that it would make the metal less attractive as a medium of exchange as the value of the metal in whatever market it was used in could periodically interfere with its medium-of-exchange role...

Other characteristics are important of course in fulfilling the requirements for ‘good’ money: indestructibility, divisibility, transportability and universal acceptability.

http://precious-metal-investment.blogspot.co.uk/

Gold Hits New All-Time Highs Around the Globe, Every Portfolio Should Have Gold

2012-09-22T03:10:00.001-07:00

Gold Hits New All-Time Highs Around the Globe, Every Portfolio Should Have Gold

On Friday, gold (NYSEARCA:GLD) futures for December delivery jumped $7.80 to settle at $1,778 per ounce, while silver (NYSEARCA:SLV) edged 4 cents lower to close at $34.64. Gold hit new all-time highs in terms of the Euro, Swiss Franc and Brazilian Real.

Gold received heavy attention today after Ray Dalio, founder and co-chief investment of the world’s largest hedge fund, Bridgewater Associates, expressed his views to CNBC on the global economy and alternative currencies. On the current slowdown and deleveraging process, he said, “I think there will be a combination of monetary policy and printing a certain amount of money to relieve it. And at the same time, there’ll be a deleveraging and restructuring of debt…I think we’re going to see both because you have to lower the debt-to-income ratio so you have a higher level of growth than you do of interest rates. And at the same time, there’ll be a deleveraging and restructuring of debt…I think we’re going to see both because you have to lower the debt-to-income ratio so you have a higher level of growth than you do of interest rates.”

Dalio also said he thought Warren Buffett was “making a big mistake” by publicly bashing gold. He explains, “We have a situation now where when you have too much debt. Too much debt leads to printing of money to make it easier to service. So all of those things mean that some portion of an investment portfolio should be in gold.”

By the end of the trading day, the SPDR Gold Trust (NYSEARCA:GLD) closed 0.29 percent higher, while the iShares Silver Trust (NYSEARCA:SLV) edged slightly lower. Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Goldcorp (NYSE:GG) both jumped about 1 percent. Meanwhile, Silver Wheaton (NYSE:SLW) and Endeavour Silver (NYSE:EXK) gained 0.66 percent and 0.86 percent, respectively.

http://wallstcheatsheet.com/stocks/gold-hits-new-all-time-highs-around-the-globe-every-portfolio-should-have-gold.html/

http://precious-metal-investment.blogspot.co.uk/

South Africa mines hit by wildcat strikes after Marikana police shootings

2012-09-12T23:58:00.002-07:00

South Africa mines hit by wildcat strikes after Marikana police shootings

ANC's former youth leader Julius Malema alerts soldiers and urges strikers to shut mines as unrest spreads after deaths

Three of South Africa's biggest mines came to a standstill on Wednesday as wildcat strikes spurred by a police massacre and firebrand politician threatened to paralyse the industry.
A walkout at the Lonmin platinum mine in Marikana, where 34 workers were gunned down by police last month, showed no sign of relenting, with the company reporting attendance down to 1.8% at all its shafts.
The unrest continued to spread elsewhere as security guards fired teargas at strikers at Gold Fields' KDC west gold mine, near Carletonville, where 85% of the workforce downed tools. The company said the workers had been intimidating and threatening contractors.
The world's top platinum producer was also hit. A column of 1,500 marchers, chanting and waving sticks, confronted riot police backed by armoured vehicles in a tense stand-off at Anglo American Platinum's Bathopele shaft. The company said it had to redirect its staff from the premises for their own safety.
The mining sector, which accounts for a fifth of South African gross domestic product, has been in turmoil since the strike at Marikana last month which led to the deaths of 44 people, including police and security guards.
On Tuesday, near the area where miners were striking, another, unidentified, body was found with deep cuts in the back of the neck.
The flames have been fanned by Julius Malema, a former youth leader who was expelled from the governing African National Congress for ill discipline this year.
ANC officials and unions have accused him of exploiting the situation at the mines so as to revive his career, but Malema's ferocious anti-elite rhetoric has struck a chord with angry miners who feel betrayed by the government. Malema has toured mines making soapbox speeches and urging a national strike.
In an interview on South Africa's Talk Radio 702 on Wednesday, Malema said: "We are calling for mine change in South Africa. We want the mines nationalised. We want the workers paid a living wage … and somebody has to listen.
"Maybe this call has been ridiculed … by the authorities and mining bosses. Now we want to show them that we mean business. We are going to be engaging in very peaceful yet radical and militant action that will hit straight into the pockets of white monopoly capital."

Malema, who is facing an official investigation into corruption, widened his campaign on Wednesday by addressing disgruntled members of the South African army, prompting the country's military bases to be placed on high alert for the first time since the advent of democracy in 1994.
Nosiviwe Mapisa-Nqakula, the defence minister, accused him of trying to "mobilise against the state".
Speaking to about 60 soldiers in civilian clothes at a recreation centre south of Johannesburg, Malema said he would never conspire to overthrow the government through undemocratic means, but told his audience to mobilise in a disciplined way to save their jobs.
He condemned the president, Jacob Zuma, for treating them as a low priority and he drew attention to the president's polygamous lifestyle.
He said: "I don't know what is a priority to him, maybe getting married every year. He specialises on that one. Maybe that is what is going right for him.
"Here, children don't have books, people in hospitals don't have the necessary machines, they don't have roads or clean water.

Continued

http://www.guardian.co.uk/world/2012/sep/12/south-africa-mines-wildcat-strikes?newsfeed=true

Analysis - South Africa's mining crisis may lead to more unrest

2012-09-05T23:08:00.001-07:00

(Reuters) - South Africa's mining industry is being sucked into a vicious circle as labour unrest spreads from platinum to gold with steep wage demands neither sector can afford.
Fuelled by outrage over the police killing of 34 striking miners last month, the militancy in the world's top platinum producer is leading to closed shafts and job losses, triggering in turn more union and social tension.

"This may be the beginning of a ‘Miner Spring'. Perhaps we have reached a point now where the inequity in the pay scale would lead to broader civil disobedience and protest action," said Tony Healy, an expert on South African labour law.

The worker stridency has found fertile soil in the squalor of the poor communities that ring the mines in South Africa, the continent's wealthiest economy but one scarred by the inequalities of its racist past.
It is also the most serious challenge since the end of white rule in 1994 to the unwritten pact at the heart of post-apartheid political and economic power: unions aligned to the ruling ANC deliver modestly higher wages for workers, while also ensuring labour stability for big business.
Operations have been frozen for almost a month at world No. 3 platinum producer Lonmin (LMI.L) (LONJ.J) after violence erupted with the killing of mine security guards and two police officers. The mass shooting by police followed days later.
Although the most violent, it was just one in a string of incidents caused by a turf war in the platinum belt between the dominant National Union of Mineworkers (NUM) and the militant Association of Mineworkers and Construction Union (AMCU).

Aquarius Platinum (AQPJ.J) (AQP.L) shut its Everest mine in June, citing labour infighting, with the loss of 2,000 jobs. Lonmin has warned if its strike is prolonged, 40,000 jobs will be lost.
But worker anger at NUM is rife, with its leaders seen as too close to management and the ANC, its senior partner in an official governing alliance.
At Marikana on Wednesday, demonstrating miners chanted "We hate Zokwana" - a reference to NUM President Senzeni Zokwana.

The discontent has enabled AMCU to recruit thousands of disenchanted NUM members at Lonmin, Impala Platinum (IMPJ.J) and Aquarius Platinum. They are also active at Anglo American Platinum (AMSJ.J), the world's biggest producer, although have not had as big an impact.
In response, NUM has signalled it is prepared to push its own wage demands harder, by insisting that negotiations on two-year collective agreements in the gold and coal sectors start several months early.
"We are strongly of the view that we need to arrest the dissatisfaction that members have over their wages and start talking sooner rather than later. Maybe as early as February next year," spokesman Lesiba Seshoka told Reuters.
NUM members have been getting pay rises above inflation but at the bottom of the pay scale that does not go far as most mineworkers have on average eight dependents.

GOLD HIT TOO
The anti-NUM contagion has now infected the gold sector, with 12,000 workers at Gold Fields (GFIJ.J), a quarter of its workforce, downing tools last week because of anger with their local NUM leaders, whom they want replaced.
Gold was supposed to be immune, in part because much of its workforce lives on hostels on private mine property. In the platinum sector most workers live off-site in communities around the mines where union recruiters can work freely.
But the Gold Fields' wildcat strike, which ended on Wednesday, did not need outside agitators. The workers in the hostels became fed up with their NUM branch and insisted they step down.
Gold was also seen as shielded from militancy by the industry-wide, collective bargaining process that defines wage talks among the big producers. Platinum has a company-by-company process that has provided a gap for upstart unions to muscle in pit by pit and claim they can strike better deals.
But if NUM wants to bring wage talks forward, this framework may start to fall apart.
WORKERS WANT MORE, COMPANIES HAVE LESS
The battle cry at Lonmin, which began with 3,000 rock drill operators who launched the illegal strike, has been for a basic wage of 12,500 rand (942 pounds) a month, well over double the 5,400 rand they currently receive.

If Lonmin concedes, it will add about $30 million a year to its wage bill against a first-half profit of $18 million.
But the demand has spread from rock drill operators to thousands of less-skilled workers who also want 12,500 rand as a minimum monthly wage.
Lonmin already has a shaky balance sheet and is widely expected to offer a rights issue to shore it up. Much of the platinum sector is already underwater with shafts seen closing because of depressed costs and soaring prices.
Gold companies look on firmer ground, in large part because of high bullion prices, but they too are getting squeezed and the sun may be setting on South Africa's 120-year-old gold industry.
Take Gold Fields, the world's fourth largest bullion producer that gets about half of its production from South Africa. Its total cash costs per ounce in South Africa have risen from $618 in 2007 to $1,360 last year.
The average gold price over the same period has risen to $1,569 an ounce from $659 but there is no guarantee the bull run will be maintained.
Global mine inflation, the cost of running a mine, is about 15 percent per year but has been higher in South Africa. Power costs have soared and NUM has consistently delivered above-inflation wage hikes for its members, usually 10 percent or more.
Adding just 15 percent a year to Gold Fields' costs would mean it would need a gold price of over $2,000 an ounce by 2014 just to break even in South Africa.
In a research note, SBG Securities forecast downsizing at almost all South Africa's mature gold operations over the next 3 years in the face of "declining reserves and unrelenting inflationary pressures."
The gold sector underwent a painful restructuring over a decade ago when the price of bullion slumped, leading to tens of thousands of job losses and South Africa's fall from world No. 1 gold producer to 4th place.

Job losses in the mining sector have already added to South Africa's social ills, inequalities and poverty levels, but the next round looks set to come at a time of hardened union militancy which will stoke tensions higher.
(Additional reporting by Sherilee Lakmidas, Peroshni Govender and Jon Herskovitz; editing by Anna Willard)

US 'will return to gold standard', says Euro Pacific Capital chief Peter Schiff

2012-08-31T17:26:00.003-07:00

US 'will return to gold standard', says Euro Pacific Capital chief Peter Schiff

A major US investor has predicted the world's leading economy will return to the gold standard, giving further weight to Republican moves to set up a commission to look at the issue.

Peter Schiff, chief executive of Euro Pacific Capital, has argued that the US is heading for a currency crisis, and an immediate move to peg the dollar to gold is needed as the economy is caught in a "phony recovery".

"Eventually we will be back on a gold standard, not because politicians want it, but because the public demands it and the situation requires it," he told King World News.

"We are headed for a currency crisis, and the only way we’re going to stop it is by putting real value back into the paper dollar. So we have to tie it to gold.

"The sooner we do it the better because the sooner we start to repair the problems the easier it is. The longer we wait, the bigger the problems get. But I think it’s happening soon [a return to the gold standard]."

The economy is so bad, Mr Schiff argues, that despite Ben Bernanke's speech today in which he is expected to dampen hopes of further monetary policy stimulus, the Federal Reserve chairman will soon be forced into another round of quantitative easing.

“QE3 is coming. You know we’ve got a phony recovery, so it’s going to fail. So we are going to get more QE. It’s not that we need it, but if we don’t have QE3, then we are back in recession," said Mr Schiff, who ran as a candidate in the Republican primary for the US Senate seat in Connecticut in 2010.
"We have a lot of problems, and if we cure them it’s going to mean a short-term recession as we repair the damage. Until the Fed lets us have a real recession, as painful as that may be, we are never going to have a recovery."
Added to North America's economic woes, a "fiscal cliff" is looming. A number of tax increases and spending cuts are due at the end of the year that are expected to weigh heavily on growth and possibly drive the economy back into a recession.
Mr Schiff believes this will push the US into currency and debt crises, paving the way for a return to the gold standard.
"They want to keep growing the government, growing the deficits. That eventually means we will have a currency crisis, and a sovereign debt crisis, which will lay the foundation for a return to the gold standard."
The gold standard has returned to mainstream US politics for the first time in 30 years with a “gold commission” becoming part of official Republican party policy. This commission will look at whether a return to the gold standard is feasible.
Marsha Blackburn, a Republican congresswoman from Tennessee and co-chair of the committee, recently told the Financial Times: “These were adopted because they are things that Republicans agree on. The House recently passed a bill on this, and this is something that we think needs to be done.”
The proposal evokes memories of the Gold Commission created by Ronald Reagan in 1981, 10 years after Richard Nixon broke the link between gold and the dollar during the 1971 oil crisis. That commission supported the status quo.
Some argue a return to the gold standard would foster economic stability and prosperity, primarily by creating price stability, fixed exchange rates and placing limits government deficit spending as well as trade imbalances.
However, opponents believe it would limit the flexibility of governments and central banks in managing economies, restricting the ability to adjust money supply, government budgets and exchange rates.
Gold rose 0.3pc to $1,660.95 an ounce on Friday.

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/9511886/US-will-return-to-gold-standard-says-Euro-Pacific-Capital-chief-Peter-Schiff.html

Gold margins getting tight, says Gold Fields chief

2012-08-14T00:12:00.004-07:00

The wave of rationalisation that is starting to emerge among the major diversified miners will soon spread to the gold sector, as soaring costs and labour shortages begin to squeeze margins.

That warning from Nick Holland, the head of South African miner Gold Fields Limited, came this afternoon as the world's fourth biggest gold company addressed the Melbourne Mining Club.

Mr Holland criticised fellow gold producers for failing to include corporate and capital costs when publicising their profit margins, saying they were only fooling themselves and governments, who would duly seek to tap the industry for more taxes.

Mr Holland said rising energy, labour and production costs would virtually double costs in the next five years, and a gold price of close to $US2000 per ounce would be needed to keep pace.

If costs remain close to $US1600 where they have been in recent weeks, much of the industry would be "killed", he said, and many companies would have to pull back on projects.
"It may be that we have are going to have to see the sector rationalise before people believe us," he said.
Mr Holland said gold companies would have to start favouring dividends and returns to shareholders over marginal production if it is to win back investors, who have fled to gold-focused exchange traded funds in recent years.
Gold Fields is based in Johannesburg but operates the St Ives mine in Western Australia, and Mr Holland said he was looking for another mine in Australia.
Mr Holland said margins at St Ives were "tight" and the company would have to work hard to sustain that mine.

The triumph of politics

2012-08-14T00:06:00.000-07:00

On August 15, 1971, President Richard Nixon declared that the United States would no longer honour its promise to exchange US dollars held by foreign central banks for gold at a fixed price of $35 an ounce. The innocuous term ‘Nixon closed the gold window’ that is now widely used to describe this act does not quite convey its significance. (Was something to be stopped from going out or from coming in through the window? Can the window be reopened again?)

What Nixon did was cut the last remaining official link between the world’s leading reserve currency and gold and thus remove the last constraint on fiat money creation.

Was this a big deal? – It was very big deal. In fact, we are only now beginning to realize the full consequences of it. In fact, the present crisis is nothing but the endgame of this system, or non-system, of this, mankind’s latest and so far most ambitious, experiment with unrestricted fiat money. The first truly global paper standard.

Nixon knew that it was big. On TV that day he felt compelled to reassure the American public that this was only temporary and that the purchasing power of the dollar was secure. Forty-one years later we are still on the same system (or non-system), and the dollar has lost eighty percent of its purchasing power.

But, the mainstream economists, who weren’t even involved in designing this system (or non-system), as nobody designed it, it was simply the result of political opportunism — these economists today tell us that this system is great, it is to our advantage. We should be grateful for it.

Because the eighty percent drop in purchasing power quoted above, isn’t the whole story, that is only CPI, the consumer price index. For the past thirty years, a lot of the newly created money was channeled predominantly not into the markets for consumer goods but into the stock market, the bond market, the real estate market, and again the bond market. This created illusions of wealth. It also created a lot of debt, overstretched banks, a gigantic financial industry, various bubbles, and yet more debt. It did so around the world. And whenever this house of cards looks like it could come crashing down on us – we print more money!

Simple. What can go wrong?

Of course, there was also real economic progress over those forty-one years. Entrepreneurship, trade, innovation, saving, and all that old fashioned stuff that modern, enlightened economists don’t talk about any more. But on top of that real prosperity an ever thicker layer of make-believe prosperity accumulated. And our economists have adapted to this new reality – a reality created not by them, or their theories, but simply borne out of cynical political expediency – and become experts in the various techniques of governments to create illusionary prosperity and short-term growth spurts. Stimulus. Growth through low interest rates. Growth through more debt. Growth through currency debasement. Growth through fiscal policy. Growth through monetary policy.

Modern economists don’t know capitalism. They certainly don’t care about it. If the economy grows it is because of good policy, which means low interest rates and stimulus. If the economy doesn’t grow, it is because of bad policy, which means interest rates are too high (even if they are zero) or the central bank does not print enough money. Since Nixon ‘closed the gold window’, we have progressively replaced savings with cheap credit, the market with policy, and entrepreneurs and innovation with the FOMC and the G20.

Since 1971, the number and intensity of banking crises around the world has gone up markedly, according to Carmen Reinhart and Kenneth Rogoff, hardly anti-establishment economists. Debt levels exploded. The ten years up to the start of this crisis in July 2007 have seen house prices in the US rise ten times faster than over the previous one hundred years.

Look around the world today. Is it a coincidence that all major central banks are at zero interest rates to support bankrupt banks and bankrupt governments the world over?

Bizarrely, it is today the advocates of sound and hard money who are made to explain their atavistic ideas. — Gold standard? To establishment figures like Lord Skidelsky, the advocates of a gold anchor are like druids who dress in strange clothes and worship ancient gods – rather than, as befits the enlightened modern economist, worship at the altar of Keynes, the IMF, and big government. And ex-central banker DeAnne Julius simply knows that it would be foolish to return to a gold standard. All power to the bureaucracy!

What I find fascinating is how many intelligent people are willing, even feel urged, to provide intellectual support for a system that is not the result of intellectual discourse but came about – rather non-intellectually – through sheer power politics, opportunism and hubris, and that is evidently failing. Our financial system (or non-system) offers a great example of Nietzsche’s dictum that investigating the true origin and the true motivation behind things most often leads to surprising results. The purpose and the clever design that most people later believe to be behind various institutions are often only projected onto them with hindsight.

Even more bizarre is the willingness to absolve the political class of their responsibility for the disaster they have inflicted on us, and to even look to the political class to now save us from this ever-growing mess. There is something disturbing and sickening about the pathetic reverence of commentators, analysts and economists for the policy bureaucracy, the central bankers, the G20, the finance ministers; how every word they say is scrutinized for any hint of another clever scheme, another policy initiative that could make all our past mistakes go away and that could make the status quo operable again. “The weak labour market could force the Fed into action,” as if the Fed had the key to the solution in some drawer, as if all that was needed now was another round of QE, another rate cut, another twisty price manipulation.

I wonder if forty years of paper money have made the politicians bolder and the economists dumber. But maybe at this stage they are both simply getting more desperate.

And nothing is more dangerous to your personal and material wellbeing, and your liberty, than desperate politicians. Desperate politicians think that the end justifies the means. No constraints on their ad hoc decision-making can be tolerated. Laws must be changed if they stand in the way.

On October 27, 2010, Chancellor Angela Merkel promised the German parliament that the bailout fund EFSF (European Financial Stability Facility – you couldn’t make this stuff up!) was a temporary thing. As temporary as Nixon’s closed window, one assumes. In February of 2010, Greece had already been bailed out the first time – in contravention of the no-bailout clause in European treaties. Now a bailout fund was needed. But not to worry. This is only temporary. And we know what we are doing.

Of course, as more bailouts were needed, the EFSF grew bigger. It will now be replaced with the ESM – the European Stability Mechanism, no sniggering please. And this thing is, of course, permanent. (The German Constitutional Court will rubber-stamp it soon. Not to worry.)

What do our commentators and mainstream economists have to say about it? – Great! We need a big bazooka! Merkel should do more!

EVERY law, regulation and restriction that was part of the original set-up of EMU has now been broken.

The limits on budget deficits and overall public debt limits (Maastricht Criteria)? –Ignored.

The no-bail out provision? – Ignored.

The ban on ECB buying sovereign bonds to support fiscal policy? – Circumvented with the flimsiest of excuses.

Let’s face it. There is no master plan here. The political class is losing control. There is not even a conspiracy. There is a lack of control, of direction and of design. One quick-fix after another, and every one brings us a step closer to a very nasty endgame.

For the final option is always the same, not only in the Euro Zone, where new ‘hope’ just arrived in the form of Mario Draghi’s apparent willingness to buy more government debt, but also in the US, the UK, Japan, and China: print more money.

If you have no (or little) debt, if you are a productive citizen and if you have saved a bit, you are already in the crosshairs of the policy bureaucracy. Either your property will get taxed away or inflated away. Probably both.

The biggest threat to your property and to your individual liberty does not come from markets and not even from the bankers. It comes from politics.

http://papermoneycollapse.com/2012/07/the-triumph-of-politics/

Hong Kong’s Largest Bullion Vault Signals Rising Asia Wealth

2012-08-13T23:59:00.001-07:00

Hong Kong’s Largest Bullion Vault Signals Rising Asia Wealth

Hong Kong’s largest gold-storage facility, which can hold about 22 percent of the bullion now in Fort Knox, will open in September to meet rising demand from banks and the wealthy, according to owner Malca-Amit Global Ltd. (3271)

The facility, located on the ground floor of a building within the international airport compound, has capacity for 1,000 metric tons, said Joshua Rotbart, general manager for the Hong Kong-based company’s Malca-Amit Precious Metals unit. Two of the vaults may hold assets, including gold, for banks and financial institutions, and others will be used for diamonds, jewelry, fine art and precious metals, said Rotbart.

The move in Hong Kong reflects increased demand for gold in Asia even as the commodity struggles to sustain its rally into a 12th year. Gold-demand growth in China, the world’s second- largest user after India last year, is slowing, according to the World Gold Council. Vault charges will depend on each customer’s operations, according to Rotbart, who declined to give a figure for the venture’s cost beyond millions of dollars.

“Hong Kong is a very important center for gold, especially because it acts as a doorway to China,” said Sunil Kashyap, head of Asia-Pacific foreign exchange and precious metals at Scotiabank. “Current international hubs are in New York, Zurich and London. There’s still a need to set up an Asian hub for physical gold. The trend is for more people to look at storage and trading in Asia, when it comes to physical metal.”

11-Year Rally

Immediate-delivery gold rallied from 2001 to 2011 as investors sought protection from weaker currencies and the risk of inflation, and central banks boosted holdings. The metal traded at $1,618.75 an ounce at 7:42 p.m. in Hong Kong today, 3.5 percent higher this year. It rose 10 percent in 2011. Gold held in exchange-traded funds reached a record 2,413.61 tons on July 5, according to data tracked by Bloomberg.

The U.S. Bullion Depository Fort Knox in Kentucky, held as an asset of the nation at book value of $42.22 an ounce, holds 147.3 million ounces (4,582 tons) at present, according to data on the U.S. Mint website. In total, U.S. holdings of gold amount to 8,133.5 tons, according to World Gold Council data.

“The general trend is for moving the assets from the West to the East,” said Rotbart, who also oversees business development and marketing of the company’s vault in the Singapore FreePort. “Proximity to China is very important.”

China’s gross domestic product expanded 7.6 percent in the second quarter, the least in three years, a report showed on July 13. Gold demand in the country may increase 13 percent to 870 tons this year, according to a revised forecast this month from the WGC, which abandoned a target for usage to gain as much as 30 percent to 1,000 tons. Last year, demand in the world’s second-largest economy grew 20 percent to 769.8 tons.

Increasing Wealth

Asia-Pacific millionaires outnumbered those in North America for the first time last year, according to Capgemini SA and Royal Bank of Canada’s wealth-management unit. The number of individuals in the region with at least $1 million in investable assets rose 1.6 percent to 3.37 million, helped by increases in China and Indonesia, according to the firms’ World Wealth Report, released last month. So-called high-net-worth individuals in North America dropped 1.1 percent to 3.35 million.

The new storage facility will compete with services offered by the Airport Authority Hong Kong, which began storage operations at a 340 square meter site in 2009 for government institutions, commodity exchanges, bullion banks, refiners, wealthy individuals and exchange-traded funds. Capacity is reviewed on a regular basis to ensure there is adequate storage over the medium term, the authority said in a statement.

Singapore’s Push

Singapore is also among economies in Asia vying for a greater share of the bullion trade. In February, the government announced a plan to exempt investment-grade gold, silver and platinum from a goods and services tax, starting from October. The aim is to raise the city-state’s share of the global gold trade to as much as 15 percent in five to 10 years from about 2 percent, according to IE Singapore, the external trade agency.

Malca-Amit plans another storage facility in Shanghai as the firm targets 10 or more sites around the world over the next two to three years, from six at present, said Rotbart. The logistics company, founded in Tel Aviv in 1963 and handling more than 50 percent of the world’s diamond transportation, started its precious-metals storage business after the 2008 global financial crisis reduced demand for gemstones, he said.

http://www.bloomberg.com/news/2012-07-25/hong-kong-s-largest-bullion-vault-signals-region-s-rising-wealth.html

The world gold production 2012

2012-08-07T13:24:00.000-07:00

The world gold production 2012

http://www.dani2989.com/gold/goldprod2012gb.html

2012-08-03T08:53:00.002-07:00

"Oil And Gold Seasonals Suggest BTFD"

Brent Crude's two major bullish seasonals...

and Gold's three periods of bullish seasonality...

Quote & images : Zerohedge

2012-08-03T08:51:00.000-07:00

Gold margins getting tight, says Gold Fields chief

The wave of rationalisation that is starting to emerge among the major diversified miners will soon spread to the gold sector, as soaring costs and labour shortages begin to squeeze margins.
That warning from Nick Holland, the head of South African miner Gold Fields Limited, came this afternoon as the world's fourth biggest gold company addressed the Melbourne Mining Club.
Mr Holland criticised fellow gold producers for failing to include corporate and capital costs when publicising their profit margins, saying they were only fooling themselves and governments, who would duly seek to tap the industry for more taxes.
Mr Holland said rising energy, labour and production costs would virtually double costs in the next five years, and a gold price of close to $US2000 per ounce would be needed to keep pace

If costs remain close to $US1600 where they have been in recent weeks, much of the industry would be "killed", he said, and many companies would have to pull back on projects.
"It may be that we have are going to have to see the sector rationalise before people believe us," he said.
Mr Holland said gold companies would have to start favouring dividends and returns to shareholders over marginal production if it is to win back investors, who have fled to gold-focused exchange traded funds in recent years.
Gold Fields is based in Johannesburg but operates the St Ives mine in Western Australia, and Mr Holland said he was looking for another mine in Australia.
Mr Holland said margins at St Ives were "tight" and the company would have to work hard to sustain that mine.

http://www.smh.com.au/business/mining-and-resources/gold-margins-getting-tight-says-gold-fields-chief-20120731-23cal.html

For similar articles :

WWW.PRECIOUS-METAL-INVESTMENT.BLOGSPOT.CO.UK

Revealed: why Gordon Brown sold Britain's gold at a knock-down price

2012-07-07T07:52:00.001-07:00

A great deal of Gordon Brown’s economic strategy would strike a sane man as troubling. Not a great deal was mysterious. The orgy of consumption spending, frequent extensions of the cycle over which he would “borrow to invest”, proclamations of the “end of boom and bust”: these are part of the armoury of modern politicians, of all political hues.
One decision stands out as downright bizarre, however: the sale of the majority of Britain’s gold reserves for prices between $256 and $296 an ounce, only to watch it soar so far as $1,615 per ounce today.
When Brown decided to dispose of almost 400 tonnes of gold between 1999 and 2002, he did two distinctly odd things.
First, he broke with convention and announced the sale well in advance, giving the market notice that it was shortly to be flooded and forcing down the spot price. This was apparently done in the interests of “open government”, but had the effect of sending the spot price of gold to a 20-year low, as implied by basic supply and demand theory.
Second, the Treasury elected to sell its gold via auction. Again, this broke with the standard model. The price of gold was usually determined at a morning and afternoon "fix" between representatives of big banks whose network of smaller bank clients and private orders allowed them to determine the exact price at which demand met with supply.
The auction system again frequently achieved a lower price than the equivalent fix price. The first auction saw an auction price of $10c less per ounce than was achieved at the morning fix. It also acted to depress the price of the afternoon fix which fell by nearly $4.
It seemed almost as if the Treasury was trying to achieve the lowest price possible for the public’s gold. It was.
One of the most popular trading plays of the late 1990s was the carry trade, particularly the gold carry trade.
In this a bank would borrow gold from another financial institution for a set period, and pay a token sum relative to the overall value of that gold for the privilege.
Once control of the gold had been passed over, the bank would then immediately sell it for its full market value. The proceeds would be invested in an alternative product which was predicted to generate a better return over the period than gold which was enduring a spell of relative price stability, even decline.
At the end of the allotted period, the bank would sell its investment and use the proceeds to buy back the amount of gold it had originally borrowed. This gold would be returned to the lender. The borrowing bank would trouser the difference between the two prices.
This plan worked brilliantly when gold fell and the other asset – for the bank at the heart of this case, yen-backed securities – rose. When the prices moved the other way, the banks were in trouble.
This is what had happened on an enormous scale by early 1999. One globally significant US bank in particular is understood to have been heavily short on two tonnes of gold, enough to call into question its solvency if redemption occurred at the prevailing price.
Goldman Sachs, which is not understood to have been significantly short on gold itself, is rumoured to have approached the Treasury to explain the situation through its then head of commodities Gavyn Davies, later chairman of the BBC and married to Sue Nye who ran Brown’s private office.
Faced with the prospect of a global collapse in the banking system, the Chancellor took the decision to bail out the banks by dumping Britain’s gold, forcing the price down and allowing the banks to buy back gold at a profit, thus meeting their borrowing obligations.
I spoke with Peter Hambro, chairman of Petroplavosk and a leading figure in the London gold market, late last year and asked him about the rumours above.
“I think that Mr Brown found himself in a terrible position,” he said.
“He was facing a problem that was a world scale problem where a number of financial institutions had become voluntarily short of gold to the extent that it was threatening the stability of the financial system and it was obvious that something had to be done.”
While the market manipulation which occurred when the gold reserves were sold was not illegal as the abuse at Barclays may have been, the moral atmosphere in which it took place was identical.
The crash which began in 2007 and endures still was the result of an abdication of responsibility across the financial sector. This abdication ranged from the consumer whose thirst for goods pushed him beyond into grave debt to a government whose lust for popularity encouraged it to do the same.
Responsibility is evaded by all bar those on whose shoulders it ought to rest. The gold panic of 1999 was expensively paid for by the British public. The one thing politicians ought to have bought with that money was a lesson in the structural restraints which needed to be placed on banks now that the principle that they were ultimately public liabilities had been established.
It was a lesson which could have acted to restrain all players in the credit market boom of the 2000s. It was a lesson which nobody learnt.

http://blogs.telegraph.co.uk/finance/thomaspascoe/100018367/revealed-why-gordon-brown-sold-britains-gold-at-a-knock-down-price/#disqus_thread