April 10, 2026

Unsinkable Silver Investments? World Mints Unveil Centenary Titanic Coins

April 18, 2012 by 3 Comments

Titanic

The sinking of the Titanic has captured the imagination of people since the tragedy struck on the night of the 14th April 1912. The centenary of the disaster is being marked around the world and particularly in the UK and North America which were deeply affected by the tragedy. Victims of the disaster came from around the world and to mark the occasion three of the world’s major Mints are also marking the loss of the Titanic with issues of commemorative Titanic coins. As this is a major anniversary it is likely that these coins will be extremely popular and make an excellent addition to any collection – and one that should increase in value in the years to come.

The Unsinkable Titanic
The launch of the ‘unsinkable’ Titanic took place on 31st May 1911, and this centenary was marked last year in Belfast where the ship was launched from the Harland & Wolf shipyard into Belfast Lough. The Titanic set sail on her maiden voyage on 10th April 1912 – sailing with over 2,000 people on board. Four days later the ship famously struck an iceberg in the North Atlantic and, with her watertight compartments breached, she sank. An estimated 1,500 people lost their lives in the disaster and the event caused shock around the world. This year the Royal Canadian Mint, The British Royal Mint and the Australian Perth Mint are all issuing coins to mark the centenary. The Mints have commissioned unique designs for their coins and are all offering relatively low issues, which will make these coins of additional interest to collectors.

Canadian Coins
The Royal Canadian Mint issued a $10 Fine Silver coin, with a mintage of 20,000. The Canadian coin is the highest denomination coin but will have the largest mintage. The design features the Titanic showing the ship in full steam with an iceberg in the foreground. The obverse of the coin also features the 2003 portrait of Queen Elizabeth II created by Susanna Blunt. Canada played a significant role in the aftermath of the disaster and the port of Halifax in Nova Scotia received many of the survivors. It was also the burial site of many of the victims recovered from the North Atlantic. In addition to the $10 coin, the Royal Canadian Mint has also issued a 50 cent silver-plated coin and a 25 cent coin – featuring a full color design.

The British £5 Commemorative Coin
The British Royal Mint has issued a £5 silver coin to commemorate the Titanic disaster. Featuring a design by Lee Robert Jones, the image of the liner is illustrated alongside an image of the goddess “Thane”. A statue of Thane, a goddess of death, was erected as a memorial in Belfast in 1920 – eight years after the sinking of the liner. The Royal Mint issue is a limited edition of only 7,500 coins which is presented in a stylish case, with a certificate to authenticate the coin.

A Full Color Tribute
The Perth Mint in Australia minted the lowest number of commemorative coins with only 5,000 coins produced. The $1 dollar Australian silver coin features an attractive full color design by Aleysha Howarth, and is the only one of the various Titanic coin releases to feature a color design. This factor combined with the low mintage is likely to make it one of the most sought after Titanic commemorative coins.

Each Titanic coin comes in a handsome display case along with a numbered Certificate of Authenticity.  For orders and further information, please visit the Perth Mint Titanic product page.

 

This year sees the centenary of the loss of the iconic Titanic. Three major world Mints will mark the occasion with commemorative coins, all of which are likely to be highly sought after and prove to be a sound investment.

Filed Under: Featured, Perth Mint, Silver Tagged With: , , , , , , ,

Gold and Silver Bullion Coin Sales Rise In March

April 2, 2012 by 4 Comments

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
Filed Under: Bullion Sales, Featured, Gold, Silver, US Mint Tagged With: , , , , , , , , , , , , ,

U.S. Treasury Wants To Eliminate The Only Currency That Still Has Intrinsic Value

March 31, 2012 by 3 Comments

News that Canada will stop production of the penny has fueled speculation that the United States will also eliminate production or change the composition of both the penny and the nickel.  According to Bloomberg, Canada will withdraw the penny from circulation this year due to high production and transaction costs.  The Canadian penny currently costs 1.6 cents to produce.

The Royal Canadian Mint, which has produced 35 billion pennies since it began production in 1908, will cease distribution this fall due to the coin’s low purchasing power. Production and handling cost for the one-cent coin are a C$150- million drag on the economy, according to a 2006 study by Desjardins, a Levis, Quebec-based financial institution.

“Pennies take up too much space on our dressers at home,” Finance MinisterJim Flaherty said in the text of his budget speech in Ottawa. “They take up far too much time for small businesses trying to grow and create jobs.”

A story in the Wall Street Journal (Treasury to Cut Cost By Remaking Coins) seemed to suggest that a change in the composition of both the penny and the nickel were imminent.

Treasury Secretary Tim Geithner outlined how his department will find savings, including $286 million in the next fiscal year, by changing the materials that go into coins, replacing paper with electronic communications and consolidating internal agencies.

“Currently, the costs of making the penny and the nickel are more than twice the face value of each of those coins,” Geithner said in his remarks.

Treasury Secretary Geithner, in testimony to Congress this week, further pressed the argument that the penny and nickel should be made with cheaper materials.

The Budget also proposes legislation to provide Treasury with the ability to change the composition of coins to utilize more cost-effective materials.  Currently, the costs of making the penny and the nickel are more than twice the face value of each of those coins.  In addition to this proposal, Treasury is implementing measures to improve the efficiency of coin and currency production, including improved manufacturing practices and administrative cost reductions, which will save more than $75 million in FY 2013.

Is the long and rich history of the penny and nickel about to disappear from the American landscape?  It may not happen as soon as some seem to think.  Obama’s 2013 budget proposal was resoundingly rejected by Congress along with the request to  transfer authority over coinage composition from Congress to the Treasury.  According to Coin Update,

President Obama’s recently submitted 2013 Budget includes a proposal to provide the United States Mint with greater flexibility in the material composition of circulating coins. Specifically, the Budget seeks to enable the Treasury Department to explore, analyze, and approve new, less expensive metals for all circulating coins.

Currently, the authority to establish the composition of coins rests with Congress. In December 2010, the Coin Modernization, Oversight, and Continuity Act of 2010 was signed into law, which provided the Secretary of the Treasury with the authority conduct research and development activities for alternative metallic coinage materials. Within a required report due to Congress by December 2012, the Secretary may make recommendations for changes to the composition for circulating coins, however any changes would still need to be accomplished through an act of Congress. By contrast, the proposal included in the 2013 Budget would bypass Congress and provide the Secretary with direct authority to alter coin compositions.

The Budget provides justification for the change based on “volatile metal prices” which have contributed to negative margins on both the penny and nickel. During the 2011 fiscal year, the United States Mint’s unit cost to produce and distribute the cent was 2.41 cents and the unit cost for the nickel was 11.18 cents.

Since 2006, it has cost the US Mint more than the respective face value to produce the cent and the nickel. In the latest fiscal year, the losses generated from producing cents and nickels was $116.70 million. Since 2006, total losses from producing the two denominations has reached $359.80 million.

As a monetary unit, the penny and nickel are relics of the past, costly to produce and almost irrelevant as a unit of value.  Nonetheless, the penny and the nickel represent the only remaining general circulation U.S. “money” that still has an intrinsic value based on the metal content.  If Congress decides to retain their control over the composition of U.S. coins, Mr. Geithner may never get his chance to debase the penny and nickel.

Filed Under: Featured, US Mint Tagged With: , , , , , ,

Gold Stocks Remain Frozen In Time

March 29, 2012 by 4 Comments

Investors in gold mining stocks have had a tough five years.  Since 2008, the price of most gold stocks have remained frozen in time even as gold bullion has doubled in price.  Is the disparity in price performance between gold stocks and gold bullion a bullish set up or another false dawn for gold stock investors?

Gold - courtesy kitco.com

The PHLX Gold and Silver Index (XAU), which is comprised of 16 major gold and silver producers, is no higher than it was during the last quarter of 2007.   The large cap gold stocks represented by the Market Vectors Gold Miners ETF (GDX) have shared the same fate with no gain for the past five years.

GDX - courtesy yahoo.com

Beginning in 2011, the divergence between the price of gold bullion and gold stocks has widened even further.  Comparing the SPDR Gold Trust (GLD) to the PHLX Gold and Silver Index, we see that gold has dramatically outperformed gold stocks by a factor of five since early 2007.

XAU vs GLD - courtesy bigcharts.com

At this point, gold stocks are incredibly oversold and, in addition, represent sound fundamental value based on the price of gold bullion.  Given the notorious volatility of gold stocks, a move by gold above its high of last year could be the spark that ignites a huge rally in the gold stocks.

John Hathaway of the Tocqueville Gold Fund (TGLDX), who has produced fabulous investment returns over the past decade, had this to say in his latest Investment Update.

Gold and gold stocks appear to be bottoming in the wake of a four month correction which began in mid -August when the metal peaked at $1900/oz. Bearish sentiment is at extremes not seen in many years. This and a number of other indicators, such as stocks that have been hit by negative sentiment, the downtrend in gold prices since August, and tax loss selling, support our view that a rally lies ahead. This very bullish market set-up, in our opinion, mirrors the extraordinary investment opportunity of the despondent year end in 2007. Even though gold prices have been declining for several months, they finished the year with substantial gains. This suggests that the value represented by gold mining equities held in our portfolio could be extraordinary.

Disarray in Europe is, in our opinion, a slow motion version of the global market meltdown in 2007. It appears to us that the U.S. Fed is once again acting as the lender of last resort to European central banks in their efforts to save the euro. As in 2007, U.S. sovereign credit will be substituted for failing credits, in this case, peripheral European states. The fig leaf to justify such action on the Fed’s part is sado-fiscalism, or extreme austerity packages administered by technocrats. Tough restraints on profligate public spending, which has become a way of life in all Western democracies, will not go down easily. These measures are deflationary and will be ultimately met by howls of protests from mobs demanding renewed money printing and deficit spending. In our opinion, the fundamentals for gold are stronger than ever because the outlook for paper currencies is dire. The difficult correction of the last four months has shaken out all but the strongest holders, a perfect set-up for advances to new all-time highs in 2012.

Over the past ten years the Tocqueville Gold Fund has had an average annual return of 24%, far exceeding the 3% return by the S&P500.   The top ten holdings and percent of total assets of the Tocqueville Fund are listed below.

TGLDX Holdings

Filed Under: Featured, Gold, Gold Stocks Tagged With: , , , , , , , , ,

What Precious Metal Has Performed Best In 2012 And Where Do We Go From Here?

March 20, 2012 by 1 Comment

After the recent volatility in precious metals, let’s take a look at the year to date performance of gold, silver, platinum and palladium.  The new year started off with a strong rally across the entire precious metals group which erased some of the losses seen in the second half of 2011.

The across the board rally in precious metals came to an abrupt halt in early March after serial dollar printer Fed Chairman Bernanke made comments suggesting that further quantitative easing was unnecessary (see The Flash Crash In Gold).  Gold, which had closed at $1781 on February 28, sold off sharply, losing $136.75 per ounce by March 14.  Silver, platinum and palladium also sold off and are currently below the highs of the year seen in late February.

The precious metal with the largest gain to date for 2012 is platinum with an impressive 19% gain.  Silver is up 12.72% on the year, followed by palladium with a 5.72% gain and gold is now in last place with a year to date gain of 4.5%.

Platinum may be the most undervalued of all the precious metals based on the fact that the platinum to gold ratio is at levels not seen since 1986  (see Platinum To Gold Ratio Plunges – Buy Signal or New Metric?).

GOLD SILVER PLATINUM PALLADIUM
JAN 3RD $1,590.00 $28.78 $1,406.00 $664.00
MARCH 19TH $1,661.50 $32.44 $1,673.00 $702.00
$ GAIN $71.50 $3.66 $267.00 $38.00
% GAIN 4.50% 12.72% 19.00% 5.72%

Based on previous history, serious precious metal investors probably gave little credence to Bernanke’s suggestion that further Fed monetary easing was not in the cards.  Indeed, barely a week passed before the Fed Chairman was again discussing a new version of quantitative easing known as “sterilized bond-buying.” The always astute James Grant of Grant’s Interest Rate Observer, dismissed the notion that central bank money printing was about to end anytime soon.  In a recent interview with Bloomberg Television, Grant had this to say.

The price of gold is the reciprocal of the world’s faith in the deeds and words of the likes of Ben Bernanke. The world over, central banks are printing money as it has never been printed before. The European Central Bank has increased the size of its balance sheet at the annual rate of 89%. It’s amazing. The Fed is far behind at only 15%. The Bank of England 67% over the past few months. These are rates of increases in the production of paper currencies we have never seen in the modern age. It takes no effort at all. They simply tap the computer screen.

The full interview with Grant is well worth listening to and can be accessed below.

Where do we go from here in what could turn out to be a very interesting year for precious metals?  Here’s a brief roundup of interesting thoughts and analysis from around the web.

The Golden Trader discusses paper trading and manipulation of precious metal prices along with a technical assessment of gold and silver.

Mint State Gold explains why “all the major signs are showing that the quality rare coin market is starting its long awaiting rally. Let me explain why we could see a 30% move higher by year end.”

Why financial repression should be the focus of investor attention.

Filed Under: Featured, Gold, palladium, Platinum, Silver Tagged With: , , , , , , ,

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

March 16, 2012 by 3 Comments

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.

Filed Under: Bullion Sales, Featured, Gold, Silver, US Mint Tagged With: , , , , , , , , ,

Fed Manipulating Markets In Zero Sum Game To Create Higher Inflation

March 8, 2012 by 4 Comments

Presidential hopeful Mitt Romney recently said that “You know, I’m not willing to light my hair on fire to try and get support. I am who I am.”  If only the Federal Reserve Chairman could be so restrained.  Based on recent comments from Fed Chairman Bernanke, it seems likely that he would gladly set both his hair and beard on fire in order to accomplish his mutually exclusive goals of increasing employment while maintaining price stability.

With a stubbornly high rate of unemployment, massive fiscal deficits, very slow economic growth, declining incomes and debt levels that are strangling the U.S. consumer, the Fed is facing a quandary.  How can economic growth be stimulated without simultaneously igniting inflation?

Lower interest rates, the most powerful tool in the Fed’s arsenal, has already been fully exploited while providing  a zero net benefit for consumers.  The zero sum game of lower rates did not prevent the housing market from crashing, has not helped it to recover and has resulted in dramatically reducing interest income for millions of consumers.  Every dollar of interest saved by one consumer means one less dollar of income for savers, many of them retirees who suddenly have seen their CD rates drop to near zero.

With rates at zero, the Fed is now forced to use the last resort option of QE, risking higher inflation as it stokes the economy with digitally created dollar bills.  Increased inflation is the high risk option that the Fed is willing to take as explained in  Bernanke Seen Accepting Faster Inflation as Fed Seeks to Boost Employment.

Federal Reserve Chairman Ben S. Bernanke spent six years pushing for an inflation goal. Now that he has it, some investors are betting he’ll breach the 2 percent target in the short run to lower unemployment.

“The chairman seemed to suggest they will tolerate a misdemeanor on inflation as unemployment continues to fall toward their goal” over several years, said Mark Spindel, chief investment officer at Potomac River Capital, a hedge fund that manages $250 million in Washington.

Policy makers at a March 13 meeting probably won’t deviate from their commitment to hold the main interest rate close to zero at least through late 2014, even if their forecast shows a burst of energy-driven inflation, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. They’ll probably be more concerned that rising prices will hold back real spending, impeding growth and improvement in the job market, he said.

Crude oil prices have risen 32 percent since the end of the third quarter of 2011 and 6 percent this year. Energy prices could hold the Federal Open Market Committee’s inflation target benchmark, the personal consumption expenditures price index, above the Fed’s 2 percent inflation objective for much of 2012, Crandall said. The PCE rose 2.4 percent for the 12 months ending in January.

Also, workers have weak leverage for increasing wages to compensate for higher costs. Real average weekly earnings have fallen for 10 consecutive months on a year-over-year basis. As energy costs eat up more of consumer expenditures, companies have difficulty raising prices on other goods and services.

“To the extent that PCE inflation is somewhere around 3 percent while unemployment is still above 8 percent, I think there will still be no reaction from the Fed,” said Worah, who’s based in Newport Beach, California.

The expectation among investors that the Fed will allow for a temporary overshoot on the price goal has been “unambiguously bullish” for Treasury Inflation-Protected Securities, Worah said.

Gold, up 18% over just the past year, is also telling us that the Fed is likely to shoot past its goal of attaining a 2% inflation rate.  Furthermore, the Fed’s goal of accepting increased inflation as an acceptable risk for increased economic growth is a self defeating zero sum game.  By driving up inflation, the Fed has increased living costs for the average consumer, negating any positive net affect from stronger economic growth. Consumers, whose spending makes up 70% of GDP, ultimately can’t spend more without real income growth.

In an interview with CNBC, Jim Grant of Grant’s Interest Rate Observer, and a frequent critic of destructive Federal Reserve monetary policies, says the Fed is manipulating interest rates for the sake of achieving “desirable macro outcomes”.  Discussing the Fed’s latest scheme to expand money printing, known as “sterilized bond-buying”, Grant says he is uncomfortable with the program which will create inflation and distortions that will destabilize the entire debt market.

Grant also feels that Bernanke, a self proclaimed “expert’ on the depression of the 1930’s is making fundamentally flawed decisions to forestall Depression II that many feel is looming in front of us.  According to Grant, Bernanke can’t “stop talking about the ’30s”, but when the economy fell off a cliff in 1920 – 1921, the government actually balanced the budget and the Fed raised interest rates and the economy soon recovered on its own and not due to running “immense deficits”.

The full interview with Grant is worth listening to. Please click on this link if the video below does not play.


The Fed has only one hand left to play and it will continue to print money, a fact that has not gone unrecognized by the gold and precious metals markets.

Filed Under: Featured, Gold, US Debt Crisis Tagged With: , , , , , , , , ,

Gold and Silver News and Headlines – Gold Owners Get Nervous

March 8, 2012 by 1 Comment

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.

 

Filed Under: Bullion Sales, Featured, Gold, palladium, Platinum, Silver, Statistics, US Mint Tagged With: , , , , , , , , , , ,

Bernanke Broods Over New Ways To Print Money – Waiting For Gold To Explode

March 8, 2012 by Leave a Comment

Perhaps it was the realization that the U.S. Federal Reserve was losing to the ECB in the money printing race.  Perhaps it was the realization that the only way to prevent a debt imperiled economy from imploding was by supplying new doses of the only remedy left in the Fed’s medicine bag.  In any event, Federal Reserve Chairman Bernanke made it clear today that his determination to continue quantitative easing has not diminished.

In an effort to silence critics who equate QE with currency debasement and inflation, the Chairman has come up with an improved version of QE that will boost the economy without creating inflation or boosting oil prices – in effect, the modern equivalent of turning lead into gold.  The new and improved version of QE even comes with a new and impressive sounding moniker -“sterilized bond-buying”.

The Wall Street Journal’s explanation of how this new money creation engine of the Fed would actually work probably left many lesser mortals scratching their heads.  See if you can follow how new money creation by the Fed creates wealth and prosperity, while maintaining a sound dollar and zero risk of inflation blow-back.

Third, in the new novel approach, the Fed could print money to buy long-term bonds, but restrict how investors and banks use that money by employing new market tools they have designed to better manage cash sloshing around in the financial system. This is known as “sterilized” QE.

The Fed’s objective under any of these programs would be to reduce the holdings of long-term securities in the hands of investors and banks. The Fed believes that reducing the amount of long-term bonds in the hands of investors drives down long-term interest rates, encourages more risk-taking, and thus spurs spending and investment by households and businesses.

Under the third approach, the Fed would create new money as it buys long-term bonds. But then it would effectively lock up the money rather than letting it loose in the broader economy. The Fed would do this by borrowing the money back from investors for short periods—say, 28 days—in exchange for some low interest rate it would pay investors.

Will this new genius wealth creation mechanism of the Fed actually work or will it wind up driving gold into the stratosphere as the average American finally begins to realize that not only does the Emperor have no clothes, but that he is also delusional?

Here’s the take on the new and improved QE (sorry, I meant to say “sterilized bond-buying”) by astute observer Jim Sinclair, who is never at a loss to expound on the monetary mess we are in.

This would be a hat trick because it assumes the Fed would borrow back funds they have created by good ole debt monetization. It assumes there is no purpose to QE in the first place. It is monetary double talk beyond MOPE or maybe MOPE at a spiritual level. It is an attempt to intellectually cloud the process and to give plausible believability to PR lies.

This is a statement that says we will step on the gas and then equally apply the brakes which means you go absolutely nowhere. It is a statement that is total gobbledegook to deflect the fact that QE is going to infinity. It is a statement that only those who do not understand monetary science might give credibility to.

The claim that QE can be controlled by equal stimulation and draining adds up to nothing whatsoever. The idea that the Fed could so perfectly orchestrate pulling and pushing is denied by the fact of where we are right now.

Only gold can protect you from this sinking ship without hope of rescue as there is no captain at the helm.

I am horrified by today’s total distortion of fact of how the monetary mechanism works by the Federal Reserve. We will win the war by jamming the accelerator to the floor and jumping on the brakes simultaneously, therefore stimulating the dead cat bouncing economies of the Western world to prosperity and avoid sovereign debt failure.

My god that is nonsense.

Meanwhile, for those keeping score, the European Central Bank has powered ahead of the Federal Reserve in the money printing race.  The Fed’s balance sheet has ballooned to triple its size from 2008 as the Fed printed $2 trillion in new dollars to purchase mortgage backed securities and treasury debt (effectively financing 40% of the U.S. Government’s deficit).  As of the end of February, the Fed’s balance sheet stood at $2.94 trillion.

Faced with the total collapse of the banking system, wild money printing by the European Central Bank (ECB) makes the Fed look like an amateur.  After dishing out $1.4 trillion to 800 problem banks since December, the ECB’s balance sheet has exploded to $3.96 trillion.

Other central banks worldwide are following the desperate actions of the Fed and the ECB.  The combined balance sheets of the ECB, Federal Reserve, England, Germany, Switzerland, Japan and China and Great Britain has expanded from $6 trillion in mid 2007 to over $15 trillion today.

Most of the central bank money has been used to liquify insolvent banks by purchasing bank assets of dubious value.  A good portion of the funds received by banks has in turn wound up as idle excess reserves, as the banking industry refuses to expand lending to already over-leveraged or insolvent borrowers.

There will be one surefire way to determine when the money created by the central banks eventually works it way into the real economy – the price of gold will explode upward with a concurrent rise in inflation and wide spread debasement of virtually every world currency.  In the meantime, as we watch the “QE to infinity” process unfold before our eyes, gold remains on the bargain table.

Filed Under: Featured, Gold, US Debt Crisis Tagged With: , , , , , ,

The Gold Bubble Debate And The Flash Crash In Gold

March 1, 2012 by 3 Comments

The “flash crash” in gold that occurred on Wednesday seemed to have as much logic behind it as the infamous stock market flash crash of May 6, 2010 when the Dow Jones quickly plunged 1,000 points for no particular reason.

Yesterday’s extraordinary price action in the precious metals has again resulted in mainstream press speculation about whether the “gold bubble” has burst.  For some perspective on that topic, Gold Bullion International has put together a great graphic – “Is Gold A Bubble?” which can be viewed below.

 

 

 

 

 

 

There is also a very bullish aspect to gold’s flash crash which has gone relatively unmentioned.  For every seller there is a buyer and someone was more than happy to buy millions of ounces of gold at a discount.  Discussing this bullish side of the gold smash down, Barry Stuppler of Mint State Gold asks “Who Bought The 34 Million Ounces of Gold?”

First of all, the volume for the CME’s most active gold contract, which is now April 2012, was 344,994 one hundred ounce contracts (34,499,400 oz was traded) a record high. Gold prices dropped $77 per ounce yesterday based on slightly negative news, specifically the lack of mentioning a possible QE3 by Fed Chairman Ben Bernanke. Mr. Bernanke’s congressional testimony does not change any of the fundamental reasons to own gold.

During my 50+ year career of trading gold I have seen similar exceptional days like this.  Traders call this type of day “shaking out the weak hands”, because many small investors and speculators are driven out of the market by stop loss sell orders and margin calls. So, who bought the 34 million ounces of gold and what will happen next?

I think that trading on today, Friday and Monday will tell the tale. If gold can stay above important $1,700 per ounce level by the end of Monday’s trading and hopefully rally above $1,725 per ounce, I believe this will tell us it was a cleaning out of small investors and speculators.  On the other hand if gold stays below $1,700 per ounce and begins trading at $1,680 or below, that could indicate that today’s rally was at “Dead Cat Bounce”.

Filed Under: Featured, Gold Tagged With: , , , ,