May 18, 2024

Gold, Silver & Platinum 2009 Second Quarter Performance

July 3, 2009 by Leave a Comment

With the second quarter behind us, let’s take a look at the performance of gold, silver, and platinum for the second quarter of 2009 and year to date.

All of the metals posted gains, but at single digit levels. The best performer for the second quarter was silver with a gain of 6.33%, followed by platinum with a gain of 5.52%, and then gold with a gain of 1.96%. The closing numbers don’t tell the full story. At the beginning of June, precious metals prices had spiked. At this recent peak, silver had been up as much as 22% for the quarter. Platinum and gold were also showing heftier gains at this time.

2009 Second Quarter Gold, Silver, and Platinum Performance
31-Mar-09 30-Jun-09 Change Percent
Gold 916.5 934.50 18.00 1.96%
Silver 13.11 13.94 0.83 6.33%
Platinum 1,124.00 1186.00 62.00 5.52%

On a year to date basis, the top precious metal performer remains as platinum with a gain of 32.07% on the year. This is followed by silver with a gain of 29.19% and gold with a gain of 7.44%. The performance of the metals had lined up in the same manner at the close of the first quarter.

2009 YTD Gold, Silver, and Platinum Performance
30-Dec-08 30-Jun-09 Change Percent
Gold 869.75 934.50 64.75 7.44%
Silver 10.79 13.94 3.15 29.19%
Platinum 898.00 1186.00 288 32.07%
Filed Under: Gold, Platinum, Silver Tagged With: , , ,

Precious Metals Investment Tax Rates

July 1, 2009 by 2 Comments

Gains from the sale of investments in precious metals are currently subject to a tax rate of 28%. This compares to the current long term capital gains rate of 15%, which applies to other investment classes such as stocks and bonds. A bill has been introduced which seeks to tax precious metals investors at the same preferential rates afforded to other investors.

Precious metals investments are considered “collectibles” under the current tax code. Gold, silver, and other precious metals are lumped into the same classification as works of art, rugs, antiques, and stamps. The tax rate for “collectibles gains” is currently 28% regardless of whether the assets were held for more than one year.

The classification as collectibles comes from the section of the Tax Code which describes the capital gains tax rates which apply to different asset classes. This section references a definition of collectibles found in another section of the code, which interestingly provides an exception for certain precious metals. This exception is curiously disregarded for the purposes of capital gains taxation.

The bill S. 1367 Fair Treatment for Precious Metals Investors Act seeks to rectify the disadvantageous tax rates imposed on precious metals investors. The bill would amend the Tax Code to preserve the exception created for certain coins and bullion. After the amendment, common precious metals investments such as American Eagle bullion coins would no longer be classified as “collectibles” and would be eligible for lower long term capital gains rates.

In order to become law, the bill would need to be approved in the House of Representatives, the Senate, and signed by the President. A similar bill was introduced in 2007, but it never gained the support necessary to become law. You can following the progress of the current bill on GovTrack.

Filed Under: Other Precious Metals Tagged With: ,

US Mint Cancels 2009 American Gold Buffalo Bullion Coins

June 23, 2009 by 2 Comments

CoinWorld has reported that the US Mint has canceled the American Gold Buffalo bullion coin offering for 2009. The production of one ounce proof coins for collectors is still planned. This bullion coin program was originally launched in 2006, as the first 24 karat gold bullion coin offering from the United States Mint.

Update: 2009 Gold Buffalo bullion coins and 2009 Proof Gold Buffalo coins have been offered by the US Mint.

While the majority of the United States Mint’s gold bullion sales are derived from the 22 karat American Gold Eagle bullion coins, the Gold Buffaloes still account for a sizable amount of sales. Last year, Gold Buffalo bullion sales tallied 172,000 ounces, while Gold Eagle bullion sales tallied 860,500 ounces.

The Gold Buffalo Coins were also viewed as an offering which allowed the US Mint to compete with other world mints that offer 24 karat gold coins. The US Mint does continue to sell First Spouse Gold Coins minted in 24 karat gold, however, these coins are sold directly by the US Mint at high premiums usually associated with collectors coins. The half ounce gold coins are currently priced at $616 for the uncirculated finish.

News of the canceled bullion coin offering is particularly surprising given the news that the US Mint had ended rationing for other gold and silver bullion coins. This seemed to be an indication that supply constraints were lifting and heavy demand was falling, suggesting a return to normality. Also of note, other world mints are taking steps to expand their bullion coin offerings during this time of increased interest in precious metals.

The cancelation of American Gold Buffalo bullion coins raises many questions, but I doubt reasonable answers will be forthcoming.

Update: CoinWorld published a subsequent story stating that the 2009 Gold Buffalo Bullion coins are not canceled. The information received from the US Mint which was the basis of their initial story was not correct.

Filed Under: US Mint Tagged With:

Platinum & Palladium Bullion from Royal Canadian Mint

June 23, 2009 by Leave a Comment

The Royal Canadian Mint has revived two bullion coin programs that had been previously been suspended for a number of years. This includes the Platinum Maple Leaf, with bullion coins already available, and the Palladium Maple Leaf, which is planned for later this year.

The Platinum Maple Leaf was originally launched by the Royal Canadian Mint in 1988 and offered in 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz sizes. The platinum bullion coins were offered until 1999 when the price of platinum started to rise and demand for the coins started to drop. Ten years later, the RCM revived the program due to demand from distributors. So far, the 2009 Platinum Maple Leaf has only been produced in 1 ounce size. The RCM does not sell the coins directly, but they can be purchased through most bullion dealers.

For 2009, the RCM seems to be the only major world mint producing platinum bullion coins. The United States Mint typically produces the popular Platinum Eagle bullion coins. In late 2008, the US Mint announced that the launch of 2009 dated coins would be delayed. To date no coins have been available and no details have emerged about the status of the program.

The Palladium Maple Leaf was the world’s first palladium bullion coin offered. (Note: Some mints have issued commemorative or special issue coins minted in palladium.) The coins were introduced in 2005 and limited to production of only 40,000 coins, which were all sold. The novelty of palladium bullion wore off by 2007 when only 15,000 coins were sold and the program was ended.

Palladium bullion coins currently carry high premiums due to the fact that no major world mints currently produce the coins, and the brief production by the RCM was in very limited numbers. So far the RCM has stated that they intend to begin producing palladium bullion coins for 2009, but no availability date has been provided.

Filed Under: palladium, Platinum Tagged With: , ,

US Mint Gold and Silver Rationing Ends

June 17, 2009 by Leave a Comment

The United States Mint unceremoniously ended the allocation programs which had been limiting the number of Gold and Silver Eagle bullion coins that authorized purchasers could order. The announcement came in the form of a memorandum sent to authorized purchasers on Monday.

June 15, 2009

MEMORANDUM TO ALL AMERICAN EAGLE GOLD AND SILVER BULLION
AUTHORIZED PURCHASERS

SUBJECT: American Eagle Gold and Silver One Ounce Bullion Coin Allocations

Effective immediately, the United States is lifting the allocation process.

You may place your orders under the standard ordering procedures. The ordering minimum and incremental quantities apply.

Thank you for your patience during this past year. We appreciate your continued support.

Amidst high demand for precious metals and a constrained supply of precious metals blanks, the US Mint had implemented allocation programs for Gold and Silver Eagle bullion coins. The allocation program for the American Silver Eagle began on April 21, 2008 when the price of silver was $17.88 per ounce. The allocation program for American Gold Eagle began on August 15, 2008 when the price of gold was $786.50.

The United States Mint had also taken other measures to deal the physical precious metals shortage. First, they had restricted production to only one ounce gold and one ounce silver bullion coin options. Typically a range of fractional bullion coins including 1/2 ounce, 1/4 ounce, and 1/10 ounce coins is offered. Second, they had announced the temporary delay of production for platinum bullion coins and 24 karat Gold Buffalo coins. Third, they delayed the production of gold and silver coins produced for collectors in order to divert all precious metals blanks to the production of bullion coins.

The US Mint has not announced whether production fractional bullion coins, 24 karat gold bullion coins, platinum bullion coins, and gold and silver collector coins has resumed.

Filed Under: Gold, Silver, US Mint Tagged With: , ,

Gold Confiscation, Missing Royal Canadian Mint Gold, Bernard von Nothaus Indictment

June 8, 2009 by 2 Comments

As gold contemplates the $1,000 barrier, here’s a roundup of gold, silver, and precious metals related stories that are interesting for one reason or another. Each headline comes with a snippet of commentary. Enjoy.

A Myth Concerning Gold Confiscation

Examination of a clause in Executive Order 6102, which receives little attention. In addition to the exemption from confiscation for numismatic gold, there was also an exemption for up to five ounces of gold per person.

U.S. Gold, Going or Completely Gone?

According to the United States Geological Survey, nearly 3,000 metric tonnes of gold were exported during 2008 in the form of “gold compounds.” Gold compounds consist of products containing gold content such as gold paint. The amount of gold claimed to have been exported in this format is more than 14 times the annual US gold mine production. What is going on here?

Mint can’t account for missing gold

In another story about missing gold, an audit of the Royal Canadian Mint turned up a discrepancy between the mint’s accounting records and physical precious metals holdings for gold, silver, and other precious metals. The article also describes the largest reported theft from the mint when a machinist pocketed 85 ounces of gold.

Liberty Dollar – Federal Indictment

Bernard von Nothaus, who created an “alternative currency” of gold and silver Liberty Dollars was formally charged “with uttering and passing, and attempting to utter and pass, a coin of silver in resemblance of genuine coins of the United States in the denominations of five dollars and greater, and intended for use as current money”. More than a year ago, the headquarters of his company was raided by the federal government and more than two tons of gold, silver, and copper coins were confiscated.

Buffet Gets ‘Comeuppance’ After Gold Outperforms

Every time someone writes a negative article about gold, they invariable measure the returns since January 1980 to support their preordained conclusion that gold is a bad investment.  Someone has finally turned the tables and compared an investment in gold to an investment in Berkshire Hathaway stock since May 2005, a much more favorable investment time frame for gold.

Gold: Headed For a Bubble?

A particularly vacuous article courtesy of the Wall Street Journal. From the title of the article I thought it would at least have some substance, but it turns into another run through of the “risks of buying bullion” and the lack of a measurable intrinsic value. The author winds up the article by suggesting that Treasuries are a preferable safe haven to gold.

Northwestern Mutual Makes First Gold Buy in 152 Years

For the first time in history, Northwestern Mutual, the third largest US life insurance company, has invested in gold. A great quote from CEO Edward Zore, “The downside risk is limited, but the upside is large. We have stocks in our portfolio that lost 95 percent. Gold is not going down to $90.” Indeed.

Filed Under: Uncategorized Tagged With: , ,

US Mint Gold and Silver Bullion Sales Through May 2009

June 5, 2009 by Leave a Comment

As in the past, I wanted to write another post examining the US Mint’s monthly gold, silver, and platinum bullion coin sales. Previously these figures were a flawed method of examining demand for physical precious metals due to the rationing program in place from the United States Mint. As long as authorized purchasers of US Mint bullion coins were restricted in the quantities they could purchase, it was difficult to ascertain how much unmet demand existed behind the rationing wall.

However, this month the figures might be closer to providing a useful measure. As I mentioned in several posts this month, a likely combination of decreasing demand and increasing supply has turned the Gold and Silver Eagle shortage to a surplus. For the first time since the rationing programs began, authorized purchasers did not purchase the maximum number of coins allotted by the US Mint.

Here’s a look at the US Mint gold, silver, and platinum bullion sales for the month of May 2009, along with a year to date total in the final column.

April 2009 US Mint Bullion Sales
1 oz. 1/2 oz. 1/4 oz. 1/10 oz. Total oz. YTD Total oz.
Gold Eagle 65,000 – – – 65,000 554,500
Gold Buffalo – –
Silver Eagle 1,904,500 1,904,500 11,579,500
Platinum Eagle – – – – –

There were sales of 65,000 ounces of gold during May 2009. Once again this consisted entirely of one ounce 2009 Gold Eagles, as the US Mint did not offer fractional coins or the 24 karat Gold Buffalo. This was a big drop from the prior month when 147,500 ounces were sold, however it is more than double the number of coins sold in the year ago period of May 2008 when 31,500 ounces were sold.

There were sales of 1,904,500 ounces of silver during May 2009. This was a decline from the prior month when 2,518,000 ounces were sold and a decline, but still up from the year ago period of May 2008 when 1,516,000 ounces were sold. Sales of silver bullion still remain on pace for a record breaking year. The current record was set during 2008 when 19,583,500 ounces were sold for the entire year.

Platinum bullion coins were still not offered for sale by the US Mint. No platinum bullion coins have been offered since November 2008. The US Mint has not provided any additional statements on the status of platinum bullion coins. Notably, the Royal Canadian Mint has been able to produce and sell their Platinum Maple Leaf coins during 2008.

Based on the figures for the gold and silver bullion sales, demand for physical precious metals is apparently dropping significantly at a time when the market prices of the metals seemed to be gaining some momentum. This could be a seasonal impact since prior sales figures show the sales trailing off during the summer months. Or it could be a signal that some buyers are taking pause to see if the much ballyhooed “green shots” actually take root or whither up and die.

Disclosure: Long physical gold and silver

Filed Under: Bullion Sales Tagged With: , ,

Gold and Silver Eagle Shortage Becomes Surplus

May 27, 2009 by 1 Comment

For countless months, authorized purchasers of US Mint gold and bullion coins have been subject to a rationing process, which limited the number of coins they could purchase. The rationing program had been put into place after the demand for gold and silver coins exceeded the US Mint’s ability to supply them. In a few recent posts I have provided some indications that the shortage of American Silver Eagles and American Gold Eagles might be ending. There’s yet another indication that the end of the shortage and rationing is close at hand.

Throughout the rationing period, the entire supply of coins available from the US Mint had been divvied up and sold to the authorized purchasers. For the first time since rationing began, the US Mint failed to sell their total production of Gold and Silver Eagles.

Dave Harper, the editor of Numismatic News, writes:

In the prior two weeks, the 14 purchasers authorized to buy the American Eagle coins from the U.S. Mint have not taken the maximum number of coins that are available, leaving the Mint with an extra 39,000 one-ounce gold American Eagles and 185,000 extra silver American Eagles.

To my knowledge, the rationing program for Gold and Silver Eagles still remains in place despite the surplus of recent weeks. The US Mint is likely waiting to build an inventory of bullion before attempting to remove purchasing restrictions completely.

When the rationing program was instated by the US Mint, it generated a lot of attention from blogs and news sites. The rationing was cited as evidence of the overwhelming demand for physical precious metals that would eventually carry market prices higher. With the opposite situation developing, opposite predictions have emerged.

In befuddlement to both arguments, the the disconnect between physical demand and market price continues. Amidst the unraveling of the physical scarcity situation, the prices for gold and silver have risen to multi-month highs with many predicting impending breakouts, which will carry prices even higher.

Filed Under: Gold, Silver Tagged With: , ,

Gold Dispensing ATMs, Hedge Funds Buy Gold, World Gold Production

May 22, 2009 by Leave a Comment

With gold now reaching it’s highest price of the year, gold related stories seem to be popping up in more places. Here are a few gold related articles and blog posts from the past week that are worth the read.

German firm plans gold ATMs to meet growing demand

It seems like other countries are always creating new ways to make gold easier to purchase amidst growing demand. India started selling gold coins in post offices around the country. Now Germany, Switzerland, and Austria will have gold dispensing automatic teller machines in various public locations. In the United States, the response to high demand has been to ration the supply of gold.

Hedge Funds Making Big Bets on Gold

Hedge funds are waking up to gold. Paulson & Co bought 31.5 million shares of the gold ETF worth $2.8 billion. Stephen Mandel’s Lone Pine bought 26.5 million shares worth $2.4 billion.

Bullion Premiums Now Normal

As I have explored in some other recent posts, the premiums for gold and silver have been contracting recently amidst the rising prices. Premiums are now back to normal for most gold and silver coins.

Gold production in the world

A recently published piece examining gold production in 2008. World gold production peaked in 2001 and has been on the decline ever since. Also, there have been some interesting shifts in top gold producing countries.

Money Magazine, gold, and hedge funds

Watching Money Magazine as a contrary indicator. They recently pass off gold as a “speculative play” that has delivered “lousy returns” since its below the peak reached in 1980. They conveniently ignore gold’s 300%+ return since 2000.

Gold’s Extremists

Is it just me, or does it seem like mainstream publications all start publishing negative gold stories when the price starts rising? Forbes trots out some analyst zingers, “fundamentals not supportive”, “crowded trade”, and “ripe for correction”. Excuse me while I go buy some more gold.

Filed Under: Uncategorized Tagged With: , ,

Coming Soon: Rhodium Bullion Coins

May 20, 2009 by 10 Comments

Rhodium is a member of the platinum metals group. It is silvery white in appearance and highly reflective. It has been used as a finish for jewelry and mirrors, electric connections in aircraft turbine engines, in catalytic converters of automobiles, and in alloys with platinum and palladium. Rhodium is known as one of the most scarce and expensive precious metals, but there have been few avenues for investing in the rhodium. This will soon change when the world’s first rhodium bullion coin becomes available.

Total rhodium supply for 2008 was a mere 695,000 ounces according to Johnson Matthey. To put this in perspective, for 2008 total platinum supply was 5.97 million ounces and total gold supply was 3,468 tonnes. Two regions account for the majority of all rhodium supply with 82% coming from South Africa and 12% coming from Russia.

Total demand for the rhodium in 2008 was 689,000 ounces. Demand by application was dominated by auto, which accounted for 84%.

Rhodium reached a peak price of $10,010 per ounce in July 2008 before experiencing a precipitous drop which brought the price below $1,000 per ounce. The price of rhodium is now back up to $1,300 per ounce. The incredible price decline for this scarce metal has tantalized bargain hunters, but there have been few options for investing in rhodium. The few options available include pooled accounts or the purchase of scientific element samples. The upcoming rhodium bullion coins will provide an easier alternative, especially for investors.

The Cohen Mint produced the first investment grade .999 fine rhodium coin on April 29, 2009. The coins are expected to be available for sale to the public within the next few weeks. Eitan Cohen, the owner and operator of the Cohen Mint, was kind enough to answer a few questions on rhodium and the new rhodium bullion coins.

How many rhodium bullion coins are being produced and when will they be available?

We have the capability of producing as many coins as there is a demand for. We will be selling the coins individually, and also in wholesale. There will not be any minimum order requirements.

What sizes will the coins be available in? Can you provide an idea of the projected price?

Initially, the Rhodium bullion will come in a 1 gram size. We decided both in terms of pricing as well as recognition, the 1 gram size would be perfect for this new bullion piece. The projected price at current raw material values hovers around $100.00. Now that price not only includes the coin, it includes the sealed plastic coin slab that will securely encase the coin, which is perfect for display as well as protection, a certificate of authenticity with each coin, and free priority shipping to your door.

How long have you been working on perfecting the process of minting coins in rhodium, and how does minting coins in rhodium differ from other metals?

We’ve been working on this for over a year now, its cost us a lot of money as well as time. The work involved in getting this project off the ground has been tremendous, easily the biggest thing our company has ever done. This is really an historic moment, where a truly unique precious metal product comes onto the market, and we’re just excited to be the ones to have pioneered it.

Making coins out of Rhodium has got to be as different from making other kinds of coins as can be. Normally, making coins is a very straightforward process. You roll an ingot out into a sheet, punch blank disks, and then stamp the disks with the design to make coins. This process works with just about any metal you can think of, copper, silver, gold, platinum, palladium, etc. You try and do that with Rhodium and you’ll end up with a bunch of broken flakes and powder. Rhodium has uncommon properties that make it extremely hard, brittle and down right stubborn, features that do not lend themselves to making coins easily.

The way we had to approach it was to come up with a completely new method, a method that was developed through trial and error, through extensive research, and through our own testing here at our facility. After nearly giving up a dozen times, we reached a “eureka” moment a couple of weeks ago, when we realised that we finally cracked the code, and would be able to set up full scale production. Boy, was that exciting.

After rhodium climbed above $10,000 per ounce, the price collapsed below $1,000. Demand continues to be dominated by a single industry. What is your take on the market for rhodium?

There will always be demand for Rhodium, and the price is temporarily depressed due to the terrible state of our economy and the even worse state of all automobile manufacturers. What’s important to keep in mind is that this artificial price dip is not forever, and there will come a point in the near future when people will start demanding cars again, manufacturers will start building them again, and the prices for many commodities will start to rise. Rhodium will be on the vanguard of this revival, and will climb back up to prices that will make us look back longingly at present values.

As the green movement takes a bigger hold on our world, Rhodium’s use in cleaning factory and power plant emissions will grow to be a substantial chunk of global Rhodium usage. Internal combustion engines are not going away any time soon, and of anything, emissions standards are only going to get stricter. This metal, along with platinum and palladium will feel a resurgence once the economy begins to pick back up and consumer confidence reawakens. Now is a great time to buy.

Filed Under: Other Precious Metals Tagged With: ,