August 15, 2022

Precious Metals Storage – Everything You Need To Know But Probably Don’t

By Nick Barisheff:

Worldwide economic uncertainty has created a growing interest in precious metals as a way to preserve wealth. Today, global risks for investors include currency devaluation, sovereign debt defaults, bond market collapses and stock market losses, all underpinned by ever-increasing government debt.

For protection from impending economic Armageddon, investors are turning in increasing numbers to the traditional safe haven of precious metals. Unfortunately, many today don’t know how to purchase or store bullion, and consequently may find themselves as vulnerable to financial collapse as those who didn’t purchase any bullion at all.

This increased interest in precious metals as portfolio insurance has spawned a new generation of precious metals-based financial products, many of which are paper proxies or derivatives of bullion. There are even unregulated markets for the exchange of “digital gold.”

A clear case for transparency

In 2007, former Bank of Canada Governor David Dodge gave a speech entitled “A Clear Case for Transparency”  to the Canada-UK Chamber of Commerce. “…[I]investors will have to take on more responsibility for diligent research,” he said, “so that they can better understand the nature of their investments and demand greater transparency where it is now lacking … they must do their own homework and make a concerted effort to understand what they are buying.”

Most investors do not read the fine print of the agreements they sign with respect to financial investments; they make assumptions, but do not definitively know if they own actual bullion. Some are attracted to certain bullion investments because of low premiums and low storage fees, but when was the last time Wall Street and the major banks gave the investing public a deal?

Investors who don’t do their homework may be dismayed to find that their safe haven asset has proved to be anything but. These same people perform rigorous due diligence when purchasing a home, car or boat, demanding that they have clear legal title to the asset in question. The same attention to detail must be paid when investing in bullion.

The most important concept to understand is that a financial institution CAN sell an investor’s bullion if the agreement states that it can. Banks are not raiding allocated accounts; rather, they are following the provisions of the contract, in which the bullion is not allocated despite an investor’s assumptions.

There does appear to be cause for concern regarding the transparency of bullion products. As reported by the economic news website ZeroHedge, financial services giant Morgan Stanley paid out $4.4 million in June 2007 to settle a class action lawsuit brought by clients after the firm charged them to “buy and store” precious metals, but did neither .

Similarly, a class action lawsuit filed in New York’s federal court accuses UBS Financial Services of misleading silver investors, and charging them storage fees for metals that were never purchased, let alone allocated or stored for them.

A larger problem has been brewing for several years now, that of exchange-traded funds (ETFs). These are generally viewed as a low-cost panacea that replaces almost any investment strategy, including the purchase of gold bullion, and they are giving investors a false sense of security.

False sense of security for ETF investors

ETFs started as equity index vehicles, in which brokers acting as Authorized Participants borrowed shares from institutions, hedge funds, mutual funds or their clients’ margin accounts to contribute to the Origination Basket of shares. They received ETF shares at Net Asset Value (NAV) in exchange, and sold them to investors at NAV – keeping all of the money. This is standard practice, as brokers have always been able to borrow shares from clients’ margin accounts for the purpose of shorting or for lending to other brokers.

Essentially, many ETFs hold assets that have been borrowed. Because there are no specific prohibitions to prevent the same practice from being used in precious metals ETFs, the same methodology is likely being used. Many investors are attracted by the low management fees offered by precious metals ETFs, but few understand the problems that may arise when more than one person has claim to the same asset.

ETF-based financial crisis could make 2008 look like child’s play

This ETF structure will work during normal market conditions. However, it may result in losses and disputes if the Authorized Participants, acting as market makers, become insolvent or step aside during a precipitous decline. If a bank or brokerage firm becomes an insolvent Authorized Participant, either the lender of the assets or the ETF shareholders will suffer losses. During a market crash, existing holders may be unable to sell their ETF shares.  Although this possibility was considered remote when ETFs were created, the recent and recurring failures of banks and brokerage firms make these concerns far more real .

The bottom line on ETFs is that they are tracking vehicles with multiple claims/counterparty risks on their assets as well as their shares. As debt-based stress on the global financial system continues to build, the flash-crash of 2010 may well have foreshadowed an ETF-based financial crisis that will make the subprime mortgage crisis of 2008 look like child’s play.

Own bullion with clear title

When we at Bullion Management Group sit down with clients seeking to own bullion, we present them with our Precious Metals Pyramid Chart. Moving up the pyramid increases risk; moving down the pyramid increases safety. A portfolio’s foundation should consist of physical bullion owned outright. Farther up the pyramid are proxies of bullion in one form or another that are more risky and often less liquid; in other words, the opposite of a safe haven asset you can count on in times of financial stress. Bullion should always meet two criteria: It should not be someone else’s liability, and it should not be someone else’s promise of performance.

To establish a physical bullion portfolio foundation with metals that are stored on an allocated and insured basis, one that will protect against what could be called ethical mayhem in today’s financial sector, investors must, as Governor Dodge advised, make a concerted effort to understand what they are buying. While reading legal documents and prospectuses is tedious, the truth is in the fine print and investors must do their own due diligence, and beware of complex investment structures.

Demand documentation that transfers title directly to the purchaser

For a bullion product, be it a fund or actual bullion bars, to earn its place as the foundation of a portfolio, the bullion purchaser must demand documentation that legally transfers title of specific, physical bars directly to them. Do not accept IOUs, paper proxies or derivatives. It is important to read the purchase documents carefully to ensure they convey legal title. Only after the purchaser has legal title can they enter into a binding custody agreement for bullion storage on an allocated, insured basis. In that agreement, the purchaser must be able to identify all terms and rights concerning insurance and secure, allocated storage.

Proper insurance and allocated storage in a credible, guarded vault costs money, so steer clear of bullion products promising low fees. If the deal appears too good to be true, the physical bullion may not exist. What the investor may have is paper bullion that will not offer protection when it is most needed; they may simply be an unsecured creditor of the dealer. It is hardly prudent to be tempted by low storage fees that will save a fraction of a percentage point while risking an entire bullion holding. Short cuts and penny pinching are inadvisable strategies for any asset intended as an ultimate safe haven of wealth protection.

Home storage not worth the risk of invasion or physical assault

Many people think that storing their bullion at home is a good way to economize on physical bullion storage fees, but be aware that any sizeable amount of home-stored bullion will not be covered by a household insurance policy.

Keeping a modest—and secret—stash of small-denomination gold or silver for barter purposes is recommended in the event that ATM machines aren’t working, or a ‘bank holiday’ is announced. This may seem like an excess of caution until you consider that, earlier this year, the Bank of Italy authorized the suspension of payments by Bank Network Investments Spa (BNI) without first advising depositors .

Unless absolute secrecy is maintained, home storage means putting yourself and your family at risk of a home invasion. There has been an increase of home invasions in England during Asian wedding season, when gold gifts are stored in homes, and street gangs and professional thieves are only too happy to relieve people of their precious metals .

Even in peace-loving Canada, a British Columbia man lost his life savings of $750,000 in silver bars to knife-and-gun wielding thugs who arrived at his door disguised as police officers. When he let them in, the ‘officers’ forced him to open his vault and stole the silver . For any sizeable amount of bullion, home storage is clearly not worth the risk.

Many precious metals dealers do not trust banks for storage, and prefer private vault facilities. They may rethink this approach on reviewing a British case where authorities raided three private safe deposit box centres, and opened 6,717 private boxes . The owners of the boxes were required to provide proof of the contents of their box before their possessions were returned. Most could not do so, and much of the cash involved went missing while other items are in dispute. The ensuing litigation will likely last for decades; in the meantime, those who stored bullion in their boxes have been relieved of their metal, and may only receive compensation in the amount of the value of the bullion at the time of the raid.

Another consideration is that safe deposit box contents cannot be insured, and there is no proof that anything is actually in the box. Investors who are still interested in private vaults or safe deposit box centres should perform due diligence on the financial condition of the operator and the owner of the vault, since stored assets may be at risk in the case of a private vault’s insolvency.

Storing bullion at home, in a safe deposit box or in a private vault is another form of false economy, wherein investors put their safe haven asset at risk to save a small amount in storage fees.

LBMA bullion in LBMA member vaults

Another important aspect of due diligence for a proper foundation of wealth preservation is the assurance that your bullion is in the form of Good Delivery bars, and stored in the vault of a London Bullion Market Association (LBMA) member.

The LBMA is a wholesale, over-the-counter market for trading gold and silver. Its members include the majority of the bullion banks that hold gold, plus producers, refiners, fabricators and other traders throughout the world.

The reason for insisting on LBMA bullion is that it assures the purchaser of the quality and fineness of the bars. Once gold is outside a chain of integrity such as that of the LBMA, it may need to be re-assayed before it can be sold. This prevents gold-plated Tungsten bars from entering the chain of integrity. Re-assaying is time consuming, engenders extra cost and once again defeats the purpose of a safe haven store of wealth that offers efficient liquidity.

We constantly hear stories of discount bullion, or bullion sold at no premium to the spot price. The likelihood that this is pure bullion from an ethical source is slight to none.

In case of fire, you need an extinguisher, not a picture of one

Bullion demand is clearly growing as both sovereign nations and the world’s largest financial institutions buckle under the burden of unserviceable debt, leaving helicopter-loads of new money printing and associated currency devaluation as the only way out.

Investors can protect their portfolios by purchasing physical bullion. Just as with any large asset purchase, demand documentation that confers legal title to the bullion you are purchasing, review a written custodial agreement that specifies insured, allocated storage without giving the custodian the right to deal with the bullion in any way, and insist on Good Delivery bars.

When the next financial firestorm erupts, you need real, physical bullion and not a paper proxy; just as in a fire you need a real fire extinguisher, not a picture of one.

Nick Barisheff is President and CEO of Bullion Management Group Inc., a bullion investment company that provides investors with a cost-effective, convenient way to purchase and store physical bullion. Widely recognized in North America as a bullion expert, Barisheff is an author, speaker and financial commentator on bullion and current market trends.  His first book, $10,000 Gold: Why Gold’s Inevitable Rise is the Investors Safe Haven, will be published in the fall of 2012. For more information on Bullion Management Group Inc. visit: www.bmgbullion.com.

Gold Bullion Coin Sales Up 13% In June, Silver Bullion Coin Sales Remain Steady

According to the latest report from the U.S. Mint, sales of gold bullion coins increased by over 13% during June, while total sales of the silver bullion coins were essentially unchanged from May.

Monthly sales of the American Eagle gold bullion coin have fluctuated considerably during 2012 with sales reaching a monthly high of 127,000 ounces in January and a monthly low of 20,000 ounces in April.  Sales rebounded strongly in May to 53,000 ounces and continued higher in June with the sale of 60,000 ounces.

Sales of the American Eagle gold bullion coin can vary dramatically from month to month based on many factors.  The all time yearly sales record for the gold bullion coins of 1,435,000 ounces was reached in 2009  when many people feared that the financial system would collapse.  Sales volume of the gold bullion coins have not, however, had a direct correlation to the price of gold.  Gold closed 2009 at $1,087.50 per ounce and subsequently went on to hit a 2011 high of $1,895 on September 5th.  Despite the fact that gold increased by over 74% since year end 2009, total gold bullion coin sales declined in both 2010 and 2011.

If the European financial storm continues to unwind into a collapse similar to what we experienced in 2008, sales of the gold bullion coins could easily expand dramatically over the record levels seen in 2009.  With each passing day, there seem to be fewer reasons to maintain confidence in the paper money system as central bankers and governments attempt to prop up a debt burdened world economy with additional debt and money printing.

Listed below are the yearly sales of the American Eagle gold bullion coins since 2000.  The total for 2012 is through June 30th.

Gold Bullion U.S. Mint Sales By Year
Year Total Sales Oz.
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 343,500
Total 7,593,000

If the sales trend of American gold bullion coins continues on the pace it has been on thus far, 2012 may turn out to be the fourth year in a row of lower sales.  The graph below shows gold bullion coin sales since 2000 with figures for 2012 annualized based on sales through June 30th.

U.S. Mint sales of the American Eagle silver bullion coin continued strong in June at 2,858,000 ounces, down slightly from the May total of 2,875,000 ounces.  After a strong start in January with sales of over 6 million ounces, sales dipped below 2 million ounces in February and April.  Year to date sales through June 2012 of the silver bullion coins total 17,392,000 ounces, down by 22% from the comparable sales period in 2011 when 22,303,500 ounces were sold.

If sales of the silver bullion coins continue at the same pace for the remainder of 2012, total sales could exceed 34 million ounces, not far below the record set during 2011 of 39.9 million ounces.   Considering that silver has corrected in price from $48.70 reached during April of 2011, the volume of silver bullion coin sales is very robust, with buyers taking advantage of lower prices.

In addition to gold and silver bullion coins, the U.S. Mint sells numismatic series of both gold and silver American Eagle coins which the public can purchase directly from the U.S. Mint.  Bullion versions of the gold and silver American Eagles are only sold to Authorized Purchasers who in turn resell the product to the general public and other dealers.

Total annual U.S. Mint sales of the American Silver Eagle bullion coins since 2000 are shown below.  Sales totals for 2012 are through June 30th.

American Silver Eagle Bullion Coins
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 17,392,000
TOTAL 215,792,500

Gold and Silver Bullion Coin Sales Rebound Strongly In May

According to the latest report from the U.S. Mint, sales of both gold and silver bullion coins rebounded strongly during May.

Sales of the American Gold Eagle bullion coins during April had declined to only 20,000 ounces, the lowest monthly sales since June 2008 when 15,500 ounces were sold.  During May, the U.S. Mint sold 50,000 ounces of gold bullion coins, up 150% from April sales of 20,000 ounces.

The monthly sales figures for bullion coins can vary dramatically for a number of reasons, but support for the increase in demand during May may be due to the recent pullback in gold prices.  During May, the closing London PM Fix Price for gold declined by 6.3% from $1,664 to $1,558 per ounce.  Through the end of May, gold has declined by $40 from $1,598 at the beginning of 2012.  Gold reached a 2012 high of $1,781 on February 28th.

Sales of the American Eagle gold bullion coins hit a record high during the financial turmoil of 2009 as investors eagerly purchased 1,435,000 ounces of gold.  Ironically, sales of gold declined during the next two years despite the fact that the financial system has become more unstable as sovereign governments worldwide continue to borrow and print fiat money on an unprecedented scale in an effort to prop up a world economy burdened by unsustainable debt levels and nonexistent economic growth.  The ongoing simultaneous collapse of the banking systems and economies of the Eurozone is the most obvious trigger for the next phase of the financial crisis.  As confidence in paper money evaporates, expect gold to soar as investors stampede into the only currency that governments cannot debase.

Gold Bullion U.S. Mint Sales By Year
Year Total Sales Oz.
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 280,500
Total 7,530,000
Note: 2012 totals through May 31, 2012

Sales by the U.S. Mint of the American Silver Eagle bullion coins for May almost doubled from the previous month.  Total sales of  silver bullion coins for May totaled 2,750,000 ounces, up 81% from sales of 1,520,000 ounces in April.  Year to date sales of the American Silver Eagle bullion coins through May 31st came in at 14,409,000, down by 23.8% from the first five months of 2011.  Sales of the silver bullion coins reached all an all time high during 2011.   Since reaching a multi decades high of $48.70 during April of 2011, silver has since corrected, closing out the month of May 2012 at $28.10.

Total annual U.S. Mint sales of the American Silver Eagle bullion coins since 2000 are shown below.  Sales totals for 2012 are through May 31.

In addition to gold and silver bullion coins, the U.S. Mint also sells numismatic versions (uncirculated and proof) of gold and silver American Eagle coins which can be purchased by the public directly from the U.S. Mint.  Gold and silver bullion coins are sold by the U.S. Mint only to authorized purchasers who in turn resell them to the general public and secondary retailers.

American Silver Eagle Bullion Coins
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 14,409,000
TOTAL 212,809,500

Are Gold And Silver Bullion Sales Reported To The IRS? Tips For Keeping Bullion Sales Private

Long term gold and silver investors who have gradually accumulated physical precious metals over the years have seen the value of their holdings increase substantially when measured against the value of the paper dollar.   Astute investors realize that a large part of the “gains” on their precious metals have merely preserved purchasing power compared to paper money which has been consistently debased by the monetary and fiscal policies of the government and federal reserve.

In the eyes of the taxing authorities, however, the increased value of an investment due to inflation is still considered a gain regardless of whether or not there was an increase in purchasing power.  As the chart below graphically depicts, a $4,000 investment made in 1986 and now worth $8,000 is still worth only $4,000 in purchasing power -thus the true economic gain is zero.  Try telling that to the IRS!  After paying long term capital gains on the phantom $4,000 “profit”, you are left with less that you had in 1986.

There is, however, a silver and gold lining for investors in physical precious metals since, under many circumstances, the sale of your gold and silver bullion is not reported to the IRS.  There are circumstances, however, in which a bullion dealer is required to file a Form 1099-B with the IRS which reports sales transaction proceeds, name, address and social security number.  It is obviously important to most investors to know what types of sales are kept private and what types of sales are reported to the IRS.

Thanks to our friends at GoldSilver.com, here is the essential up to date information that you need to know before selling gold and silver bullion.

Before we begin, the following information covers aspects of investor privacy, not an investor’s responsibility to pay income tax gains on any profits made from the purchase and sale of investment grade bullion products.  For tax questions, please seek professional tax consul.

We know investor privacy is very important to physical silver and gold purchasers and confidentiality is one of the values we covet most along with our customers.

For some bullion investors, ensuring themselves a private sale is their most important objective and we understand the myriad of reasons as to why this is so.

That being said, we must always adhere to the rules of our industry.

Being a bullion dealer, we are often asked by customers questions like…

– Are my transactions private?

– When I sell my gold bullion or silver bullion, is it a private transaction, or is it reported to the IRS?

 

First, when a customer buys from our dealership, the transaction is private.

We have specifically designated the current payment method options on our website so that investors who buy bullion from us, do so in confidentiality.

Secondly, when an investor sells their gold bullion or silver bullion to a dealer like us, some of these trades are private while some are not.

Depending upon what you are selling will depend upon whether the powers that be require us as a bullion dealer to fill out something called an IRS 1099-B Form.

 

 

IRS 1099 Gold Reporting & Silver Reporting

When you sell your bullion back to a dealer, the pertinent questions for a dealer are:

1) What form of gold and or silver bullion are you selling?

2) What amount of silver bullion and or gold bullion are you selling?

 

The following covers private investor sales of bullion products we currently offer at GoldSilver.com.

1099 EXEMPT PRIVATE SILVER BULLION

Private silver bullion ( IRS 1099 Form exempt ) consists of any quantity sold to a dealer of the following items:

– American Silver Eagle Coins

– Canadian Maple Leaf Silver Coins

– Austrian Philharmonic Silver Coins

 

1099 REQUIRED SILVER BULLION

Reported silver bullion ( IRS 1099 Form required ) consists of 1000 ounces or more sold to a dealer of the following items:

– .999 fine silver bullion bars  (any sizes)

– .999 fine silver bullion rounds  (any sizes)

 

1099 EXEMPT PRIVATE GOLD BULLION

Private gold bullion ( IRS 1099 Form exempt ) consists of any quantity sold to a dealer of the following items:

– American Gold Eagle Coins

– American Gold Buffalo Coins

– Gold Austrian Philharmonic Coins

 

1099 REQUIRED GOLD BULLION COINS

Reported gold bullion coins ( IRS 1099 Form required ) consists of 25 ounces or more sold to a dealer of the following items:

– Canadian Gold Maples (1 oz)

– South African Krugerrands (1 oz)

 

1099 REQUIRED GOLD BULLION BARS

Reported gold bullion bars ( IRS 1099 Form required ) consists of 32.15 ounces or more sold to a dealer of the following items:

– .999 fine gold bullion bars (any sizes)

***

These are the IRS 1099-B Form reporting requirements for the bullion products we offer at GoldSilver.com as of May 2012.

Stay tuned to GoldSilver.com for any future news or proposed changes to the current IRS 1099 gold and silver reporting requirements.

Gold And Silver Bullion Coin Sales Plunge In April – What Is John Q Public Thinking?

The latest sales figures from the U.S. Mint show a continuing trend of lower gold bullion coin sales. Sales of American Gold Eagle bullion coins hit an all time high in 2009 when the Mint sold 1,435,000 ounces. During 2010, sales declined to 1.2 million ounces and in 2011 only 1 million ounces of gold bullion coins were sold.

Sales of the American Gold Eagle bullion coins in April totaled only 20,000 ounces, the lowest monthly sales figure since June 2008 when 15,500 ounces were sold.  Total year to date gold bullion sales of 230,500 ounces through April 2012 are down a substantial 43% from the first four months of 2011 when the U.S. Mint sold 407,500 ounces.

If sales of the American Eagle gold bullion coins continue at their present pace, 2012 could turn out to be the fourth year in a row of declining sales.

Gold Bullion U.S. Mint Sales By Year
Year Total Sales Oz.
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 230,500
Total 7,480,000
Note: 2012 totals through April 30, 2012

Total sales of the American Silver Eagle bullion coins for April 2012 totaled 1,520,000 ounces, down from 2,542,000 ounces in March.  Year to date sales of the Silver Eagle coins through April 30 totaled 11,659,000 ounces, down by 23.5% from total sales of 15,248,000 ounces in the first four months of 2011.  Sales of the American Silver Eagle bullion coins reached an all time record high of 39,868,500 ounces during 2011.

Shown below are the U.S. Mint sales figures for the American Silver Eagle bullion coins since 2000.  Sales totals for 2012 are through April 30th.

American Silver Eagle Bullion Coins
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 11,659,000
TOTAL 210,059,500

The American Gold and Silver Eagle bullion coins cannot be purchased by the public directly from the U.S. Mint. Instead, the Mint sells the coins to a network of authorized purchasers who in turn resell them to the public and secondary retailers.

Sales figures shown above do not include U.S. Mint sales of gold and silver Eagle numismatic coins.  The public is allowed to purchase numismatic versions (uncirculated and proof) of gold and silver coins directly from the U.S. Mint and sales of these coins have also been declining during 2012.

According to Mint News Blog, sales of the 2011 Proof Gold Eagles declined by about 50% from 2010 and sales of the 2012 Proof Gold Eagles have declined by over 60% from the previous year.  The same trend has been seen in the proof version of the American Silver Eagle with 2012 sales down 19% through April.

There are a number of factors likely contributing to the drop off in sales. Over the past few years, the US Mint has caught up with demand for bullion coins, allowing more certainty for the numismatic offerings. The sense of urgency and pent up demand that characterized the product return in 2010 has greatly diminished. There also seems to be a shift away from precious metals in recent months, with some moving back to collector coins. Sales of the US Mint’s Gold Eagle bullion coins were down 30% in the first quarter.

Gold prices may also be having an impact in various ways. For the past two years, the Proof Gold Eagles were released in an environment of rising prices. For the current year, prices have fallen over the past two months leading up to the release. Despite this recent drop, the initial prices for this year’s offerings were higher by the equivalent of $200 per troy ounce compared to last year, possibly making affordability a factor for some collectors. Finally, some collectors may have been delaying orders in anticipation of the price decrease which will take place later today.

With the world economy on the brink of collapse in 2008, Americans decided that they needed to prepare for a financial hurricane and subsequently purchased record amounts of both gold and silver.  Perhaps the public has not noticed that a financial crisis potentially worse than 2008 (and certain to impact the U.S. economy) is brewing “across the pond” with European governments and banks tottering on the brink of insolvency and many countries already in full blown depressions.

With the global economy drowning in debt and facing unprecedented financial problems, it is almost comical that many Americans are avoiding the only asset class able to preserve their wealth.

Gold and Silver Bullion Coin Sales Rise In March

Production figures from the U.S. Mint for March show a sharp increase in the sale of both gold and silver bullion coins from the previous month.

Total sales of the American Gold Eagle bullion coins increased in March to 62,500 ounces, up from 21,000 ounces in February.  Total sales of the American Silver Eagle bullion coins totaled 2,542,000 ounces in March, up from 1,490,000 ounces in February.  Sales of both bullion coins for the first quarter of 2012, however, declined from the prior year.

Sales of the American Gold Eagle bullion coins totaled 210,500 ounces for the first quarter of 2012, down 29.7% from the 299,500 ounces sold in the first quarter of 2011.  Total sales of the American Silver Eagle bullion coins amounted to 10,139,000 ounces during the first quarter of 2012, down by 18.4% from the 12,429,000 ounces sold in the prior year’s first quarter.

The all time record year for sales of the American Gold Eagle bullion coins occurred in 2009 with 1,435,000 ounces sold.  The all time high record for sales of the American Silver Eagle bullion coins was in 2011 when a total of 39,868,500 one ounce coins were sold.

Gold Bullion U.S. Mint Sales By Year
Year Total Ounces Sold
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 210,500
Total 7,460,000
Note: 2012 totals through March 31, 2012

The amount of physical gold bullion purchased purchased from the U.S. Mint over the past 12 years remains relatively small compared to the amount of gold invested in the two largest gold trust ETFs.  The SPDR Gold Shares ETF (GLD) is the world’s largest physically backed gold exchange traded ETF fund with current holdings of 41.4 million ounces of gold.  The iShares Gold Trust ETF (IAU) currently holds 6.2 million ounces of gold.

The total sales of gold and silver bullion coins detailed above do not include U.S. Mint gold and silver numismatic coin sales which are directly sold to the public.  American Gold and Silver Eagle bullion coins are only sold to a network of authorized purchasers  who in turn resell the coins to secondary retailers and the public.  The U.S. Mint decided that using  Authorized Purchasers to sell gold and silver bullion coins to the public was the most efficient means of selling the coins to the public at competitive prices.

Shown below are the U.S. Mint sales figures for the American Silver Eagle bullion coins since 2000.  Sales totals for 2012 are through March 31st.

American Silver Eagle Bullion Coins
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 10,139,000
TOTAL 208,539,500

U.S. Mint Sales of Gold and Silver Bullion Coins Jumps 100%

The U.S. Mint reports that March sales of the American Eagle Gold and Silver Bullion coins are on track to more than double from February sales levels.  Sales during February were unusually low with gold bullion sales down 77.3% and silver bullion sales down 54% from the prior year.  Shown below are the U.S. Mint sales figures for gold and silver bullion coins through March 15, 2012.

The U.S. Mint bullion program has been extremely popular with the public and sales of the bullion coins has soared since 2007.  The gold and silver American Eagle bullion coins are sold by the U.S. Mint to authorized purchasers who pay the U.S. Mint for the cost of the metal plus a mark up to cover operating costs.  The dealers, who are required to maintain a market for the coins, sell to the general public at the market price of the coin plus a premium to cover operating costs.  The weight, purity and content of each bullion coin is guaranteed by the United States Mint.

During the U.S. Mint’s fiscal year 2011, demand for bullion coins reached all time highs with sales of 45.2 million ounces of silver and gold bullion coins, up 26.2% from the prior year.  Total U.S. Mint revenue from the sale of the bullion coins also hit an all time record high of $3.5 billion.  Demand for the American Eagle Silver Bullion Coin was especially robust with sales more than doubling from the previous year’s total.   Last year’s sales of the American Eagle Gold Bullion coins, however, declined by 22.7% due to the higher price of gold and a change in the product release schedule for the American Gold Buffalo Bullion coin.

U.S. Mint Bullion Sales

The U.S. Mint also produces numismatic proof versions of the American Gold and Silver Eagles coins which are sold by the Mint directly to the public.  Due to unprecedented demand for gold and silver, the U.S. Mint was unable to offer the proof coins during fiscal year 2009.

The top selling numismatic coin for the past two years was the American Eagle Silver Proof 1 ounce coin with sales of 850,000 coins  in 2010 and 751,000 coins in 2011.

The 2012 American Silver Eagle Proof coin is scheduled to go on sale April 12, 2012 at an expected price of $59.95.

Gold and Silver News and Headlines – Gold Owners Get Nervous

Precious metals advanced across the board today, with palladium the stellar performer with a 2.86% gain.  Gold gained $9.70 to $1685.30, silver tacked on $0.48 to $33.53, platinum rose $18 to $1633.00 and palladium jumped $19.00 to $689.00.

Although precious metals recently hit a selling storm (see The Flash Crash in Gold), precious metals remain up strongly on the year and gold is up $257.20 per ounce or 18% over the past year.  The following chart show the gains for the year on the precious metals group.  All prices per the London PM Fix closing price.

GOLD SILVER PLATINUM PALLADIUM
JAN 3RD $1,590.00 $28.78 $1,406.00 $664.00
MARCH 7TH $1,677.50 $33.17 $1,627.00 $678.00
$ GAIN $87.50 $4.39 $221.00 $14.00
% GAIN 5.50% 15.25% 15.72% 2.11%

Here’s a brief round up of some of the latest thoughtful coverage on gold and silver related news.

Free Von Nothaus from the tyranny of unjust government actions – Judging Silver or Something Else?

As I look at the circumstances, I do not see that von Nothaus or his Liberty Dollar products victimized anyone. In contrast, those who chose to keep Federal Reserve Notes and coinage of the U.S. Mint have been victimized by loss of purchasing power. If anything, and I say this with all due respect, it seems to me that it would be more sensible and appropriate to prosecute those who have victimized American citizens through the depreciation of the “money” issued by the U.S. government.

US Mint Drops Price of Gold Products

With all of the pricing data now available, the US Mint’s gold numismatic products are set for a two tier decrease. This will reduce prices by the equivalent of $100 per ounce of gold content.

Owning gold is a “privilege, not a right”.  Why The US Confiscated Gold in 1933 and Can It Happen Again?

We previously stated that gold ownership was made illegal on 1st May 1933. What we did not tell you was that U.S. citizens, under Order 6102, were allowed to own up to $100 in gold coin [+5 ounces].

Congress could easily revoke the privilege again. In fact, at no time during this century has the U.S. government recognized the right of private gold ownership.

The privilege, not right, to own gold was restored to U.S. citizens on the 15th August 1974 (not 1971, when Nixon floated the USD against gold and stopped foreign central banks from converting USD to gold). It is pertinent to the thinking behind this series, to understand the importance to government of gold and that the right to confiscate may not be restricted to individuals or institutions but could embrace a nation or two.

It’s believed that some 60% of Germany’s gold is stored outside of Germany and much of it in the Federal Reserve Bank of New York. If this is the case one has to ask, in the light of the massive currency swaps engineered by the Fed and the E.C.B. to raise the two tranches of cheap money for European banks, “Was gold swapped too, or was it pledged as collateral?”

The public pressure to repatriate national gold reserves has heightened considerably in the last year. Should Germany want its gold back home, we ask, “Can it get it back or has it already been used in these ways?

Germany to Review Bundesbank Gold Reserves in Frankfurt, Paris, London and Federal Reserve Bank of New York

German lawmakers are to review Bundesbank controls of and management of Germany’s gold reserves.  Parliament’s Budget Committee will assess how the central bank manages its inventory of Germany’s gold bullion bars that are believed to be stored in Frankfurt, Paris, London and the Federal Reserve Bank of New York, according to German newspaper Bild.

There is increasing nervousness amongst the German public, German politicians and indeed the Bundesbank itself regarding the gigantic risk on the balance sheet of Germany’s central bank and this is leading some in Germany to voice concerns about the location and exact amount of Germany’s gold reserves.

The eurozone’s central bank system is massively imbalanced after the ECB’s balance sheet surged to a record 3.02 trillion euros ($3.96 trillion) last week, 31% bigger than the German economy, after a second tranche of three-year loans.

The concern is that were the eurozone to collapse, Bundesbank’s losses could be half a trillion euros – more than one-and-a-half times the size of the Germany’s annual budget.

In that scenario, Germany’s national patrimony of gold bullion reserves would be needed to support the currency – whether that be a new euro or a return to the Deutsche mark.

Bernanke Spooks Gold

Instead, this selloff was sparked not by a development, but a non-development. In his address to Congress, Fed Chairman Ben Bernanke offered no clue as to when the Federal Reserve would unleash its next round of quantitative easing.

The markets took this as a sign that the monetary madness is coming to an end, which would bode poorly for precious metals. Metals are increasingly seen as substitutes for continuously debased fiat money, and tend to do well when new liquidity injections are announced.

Bernanke’s failure to telegraph more printing means nothing. Investors are craving a return to normalcy, which means more prudent monetary policy. As a result, many are grasping at straws. But I believe these hopes are premature, and that gold will be buoyed by easy money for quite some time.

In addition, gold will likely be favored by the greatest financial struggle of the coming decade: China’s plans to replace the United States as the dominant economic power.

Buy Japanese Bonds At 0.05% And Get A Gold Coin

Japan began selling special government bonds Monday aimed at raising funds for reconstruction from the March 2011 earthquake and tsunami, saying it will present buyers with commemorative gold coins imprinted with an image of the “miracle pine” that survived the killer tsunami when the bonds mature in three years.

The coins — worth ¥10,000 each, and silver coins worth ¥1,000 — are engraved with the design of the 30-meter-high pine in Rikuzentakata, Iwate Prefecture, that was the only one of about 70,000 pines on a stretch of coast to survive the massive tsunami.

Peter Schiff on why Buffett is wrong about gold – Buffett’s Bursting Bubble

The gold doomsayers have found their champion in the media’s favorite financial advisor and one of the world’s richest men. Warren Buffett, the man dubbed the “Oracle of Omaha,” has repeatedly and publicly denied that gold is an investment, and called gold buyers “speculators” and people “who fear almost all other assets.” In fact, Buffett claims that gold’s rise has the same characteristics as the housing and dot-com bubbles, and it is only a matter of time before it reverses course. He doesn’t mean that the price will decline because of austerity measures and a free-market interest rate, mind you. He just asserts that because he’s deemed it a bubble, it will inevitably burst.

Gold prices will only go down when governments change course and make significant cuts. Until then, gold is not in a bubble. It’s the only way to protect your wealth; and in the current economic condition, it’s poised to go much higher. I think it’s high time Buffett takes to heart his father’s wise words: “For if human liberty is to survive in America, we must win the battle to restore honest money.”

The Volatile Ride To Higher Gold

Back in 1980, Phase Three only lasted for 21 days, but increased 66% in that time span. Considering the ten year time span of Phase One, and my projection for Phase Two, I feel that Phase Three (which starts in 2015) will last for six months and drive gold up to over $6,000 per ounce. If the world’s financial leaders decide to return to a Gold Standard, or if gold bullion confiscation becomes the government’s reaction to severe inflation, my projections would escalate. Possible other government reactions that can affect my projections negatively are: limiting gold ownership, restrictions on transporting or trading, and any Gold windfall profits tax.

 

Gold And Silver Bullion Coin Sales Plunge In February

The latest production figures from the U.S. Mint show a dramatic decline in the sale of both gold and silver bullion coins.

According to the U.S. Mint, sales of American Gold Eagle bullion coins in February 2012 totaled 21,000 ounces, a decrease of 83.5% from January sales of  127,000 ounces.  Gold bullion coin sales declined by 77.3% from the prior year when a total of 92,500 ounces were sold in February 2011.

Sales of the American Gold Eagle bullion coins during February is the lowest since June 2008 when the Mint sold 15,500 ounces.  During 2011, the U.S. Mint sold an average of 83,333 ounces of gold bullion coins each month and rang up annual sales of 1,000,000 ounces.  During 2011, sales of the gold bullion coins declined for the third consecutive year.

Sales of the American Silver Eagle bullion coins also declined dramatically during February.  The U.S. Mint reports total February sales of 1,490,000 silver bullion coins, down 76.6% compared to 6,107,000 during the previous month.  Sales of the silver bullion coins during February declined by 54% from February 2011 sales of 3,240,000 ounces.  Sales of the American Silver Eagle bullion coins were the lowest since November 2011 when the U.S. Mint sold 1,384,000 ounces.

Gold and silver sales detailed above do not include U.S. Mint gold and silver numismatic coins which are sold directly to the public.

The American Gold and Silver Eagle bullion coins cannot be directly purchased by the public from the U.S. Mint.  The U.S. Mint sells the gold and silver eagle bullion coins only to a network of authorized purchasers (AP’s) who in turn resell them to the public and secondary retailers.  The U.S. Mint determined that the AP distribution system was the most efficient means of retailing coins to the public at competitive prices.

Total yearly U.S. Mint gold bullion coin sales from January 1, 2000 to February 29, 2012 are shown below.

Gold Bullion U.S. Mint Sales By Year
Year Total Ounces Sold
2000 164,500
2001 325,000
2002 315,000
2003 484,500
2004 536,000
2005 449,000
2006 261,000
2007 198,500
2008 860,500
2009 1,435,000
2010 1,220,500
2011 1,000,000
2012 148,000
7,397,500
Note: 2012 total through February 29, 2012

Shown below are the yearly U.S. Mint sales figures since 2000 for the American Silver Eagle bullion coins.   Sales totals for 2012 are through February.

American Silver Eagle Bullion Coin Sales
YEAR OUNCES SOLD
2000 9,133,000
2001 8,827,500
2002 10,475,500
2003 9,153,500
2004 9,617,000
2005 8,405,000
2006 10,021,000
2007 9,887,000
2008 19,583,500
2009 28,766,500
2010 34,662,500
2011 39,868,500
2012 7,597,000
TOTAL 205,997,500

The U.S. public has acquired over 200 million ounces of American Silver Eagle bullion coins since 2000 which are now valued at roughly $7.4 billion.  By comparison, the iShares Silver Trust ETF (SLV) currently holds 313 million ounces of silver bullion valued at $11.7 billion.

Gold and Silver News & Headlines – February 2012

Gold and silver continue their strong 2012 advance with relatively sparse mainstream press headlines.  Gold is now only $114 per ounce below the all time high of $1,895 reached on September 6, 2011 and silver looks more and more like it is getting ready to challenge the $50 range last seen in mid 2011.

Based on the closing London Fix Price, gold has advanced from $1,598.00 at the beginning of the year to today’s closing price of  $1,781.00, for a gain of 11.5% or $183 per ounce.  Silver’s advance has been even more dramatic.  Since the start of the year, silver has risen 23.7% to $35.60 per ounce, a gain of $6.82 per ounce.

Here are some recent links to excellent gold and silver related stories and blog posts:

One-Half Ounce Proof Gold Eagle Sold Out, Some Silver Products Suspended

The one-half ounce 2011 Proof Gold Eagles have sold out at the U.S. Mint.  The one ounce Proof Gold Eagle had previously sold out last October.  In addition, some silver numismatic product sales have been suspended pending pricing updates due to the rapid rise in silver prices.

The Financial System Is Sick – Are Precious Metals The Cure?

Over thousands of years, gold and silver are the only currencies that have not failed and have protected wealth.  With rampant worldwide money printing, the wealth of nations is being stolen through endless money printing.  Expect the severely undervalued gold stocks to rally strongly.

Gold Market of the 1970s Was A Dress Rehearsal

Jim Sinclair sees QE to infinity and persuasively argues that the only tool left in the toolbox is money printing which is required to prevent a global implosion from towering levels of debt.

Gold Should Be $2,100 – $2,200 Right Now

Great interview with Jim Puplava who discusses central bank money printing, financial repression, economic issues and why gold is undervalued by at least 22%.

Why The U.S. Government Confiscated Gold in 1933 – Can It Happen Again?

The U.S. government is already seizing the wealth of millions of Americans through financial repression.  Through executive order U.S. citizens were forbidden to own gold from 1933 through 1974.  Julian Phillips examines the reasons why this occurred and wonders if  it could happen again?

Silver Price Rises Twice As Fast As Gold As The Eurozone Floods With Money

Silver has been on a tear this year, up 24% compared to an increase of 12% for gold.  How should investors react to position themselves  if gold soars over $2,000 and silver spikes to over $50?

Ex-Fed Governor Warsh Again Confirms Gold Price Suppression

GATA highlights the role of governments in financial repression and suppression of gold prices.  Ex Fed Governor Kevin Warsh notes the growing call in Europe and the U.S. to devalue debts through money printing and higher inflation.  Warsh says that “Such an inflation tax would transfer wealth from those who have lent money, in good faith, to the borrowers.  Inflation is a blunt and inappropriate instrument for assigning winners and losers from profligate fiscal policy or excessive borrowing by private individuals and firms.”

If Gold Could Talk

Terrific article on the enduring characteristics of gold, why gold is money and how much gold should an investor own?  Be prepared to get your checkbook out after reading this article.  Whatever amount of gold you currently own, it’s not enough!