April 25, 2024

American Silver Eagle Bullion Coin Sales Soar To All Time Record High

January 29, 2013 by Leave a Comment

With two days remaining in the month of January, U.S. Mint sales of the American Silver Eagle bullion coins have already established an all time record high.   The latest numbers from the Mint show total sales of 7,420,000 silver bullion coins as January 29, 2013.  Total sales during January 2012 amounted to 6,107,000 coins.  During January 2011 (the previous monthly record high for silver bullion coin sales) the Mint sold 6,422,000 coins.

The public demand for silver seems insatiable.  To put the unprecedented demand for silver into perspective, prior to the financial crisis of  2008, total yearly sales of the silver bullion coin averaged only about 9.5 million coins per year.  With the Federal Reserve furiously printing money to keep the financial system glued together, investor demand for both physical silver and gold bullion is likely to increase dramatically.

The US Mint has been unable to keep up with the demand for American Silver Eagles for the past two months (see U.S. Mint Sold Out).  During December, unexpectedly strong demand resulted in the suspension of silver bullion coin sales during mid December after the entire stock of 2012 coins was sold out.  At the time the Mint announced that the 2013 American Silver Eagles would be available on January 7, 2013.

Opening day sales on January 7th for the 2013 American Silver Eagle bullion coins turned out to be the largest on record with sales of 3,937,000 coins.  Demand for silver bullion continued to climb and by January 17th, the Mint once again announced that sales of the silver bullion coins would be suspended until the last week of January.  When sales resumed this week, demand was again much higher than anticipated.  Due to record demand, the Mint previously announced that they may have to institute rationing of the coins.  Since the US Mint’s production schedule has been blown right out the window for two months running, it would not be surprising if rationing of the coins was implemented.

Sales of the American Eagle Gold bullion coins has also soared during the first month of the year.  January sales to date of 140,000 ounces of gold bullion coins is the highest monthly sales since June 2010 when the Mint sold 151,500 ounces.

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

THE ONGOING COLLAPSE IN THE PURCHASING POWER OF THE DOLLAR IS IRREVERSIBLE – TEN STEPS TO PROTECT YOURSELF

January 8, 2013 by 1 Comment

By GE Christenson

  • Our financial system, as it currently operates, is unsustainable. Unproductive debt cannot exponentially increase forever. I assume this is obvious to almost everyone. Jim Sinclair says, “The financial system is simply FUBAR. It is that simple. The reason to own all things gold is that simple.” FUBAR has several meanings, but my interpretation of FUBAR is: “Fiscally Unbalanced Beyond Any Reconciliation.”
  • The U.S. government deficits are, on average, larger every year. This means that the total (official) national debt is not only increasing each year but also that the rate of increase is accelerating. Since 10/1/2000 the national debt has increased about 9.1% per year, but since 10/1/2007 it has increased 12.2% per year. Worse, this is only the official debt and does not even consider the net present value of unfunded Social Security, Medicare, Medicaid, and government employee pensions and liabilities. Depending on who is calculating the liabilities, the total unfunded liability is approximately $100 Trillion to $230 Trillion and the annual increase is perhaps $7 – $11 Trillion. (The entire U.S. GDP is about $15 Trillion per year – for comparison.) This will not end well.
  • In essence, the above two facts are incompatible – hence an economic train wreck is in process. What could happen? Follow the logic here.
  • When there is too much of something, it loses value. If we have too many eggs, the price drops. If too many autos are for sale, there will be lower prices for autos. Central banks around the world are currently producing amazing quantities of dollars, euros, yen, and most other unbacked paper currencies. Hence, their value will decrease against the commodities we need for survival – food, energy, and so forth.
  • There is too much debt in our financial system, whether measured in nominal value or as a percentage of GDP. Hence the value of that debt will decline. Some debts will default, bonds will decline in value as interest rates inevitably rise, and other debt will drop in value and purchasing power.
  • Politicians have made excessive guarantees for future benefits to Social Security recipients, Medicare recipients, government pensions, and others. Those guarantees cannot all be delivered as promised, hence they will decline in value and purchasing power, or the promises will not be fulfilled.

Why are the following ten steps necessary?

  1. The best time to start preparing was about a decade ago. The second best time is today. Make a plan and act. Start by reducing living expenses and eliminating credit card debt.
  2. Expect sweeping changes! I hope the inevitable currency collapse is slow and gentle, not rapid and destructive, but history suggests rapid and painful are more likely.
  3. Phase out of paper assets and into something real. Gold, silver, diamonds, farm land, rental property, and buildings come to mind.
  4. Perspective – Perspective – Perspective! It is better to be early than late. It is better to trust yourself than to depend upon a government agency for your food and shelter. To whatever extent you can, take charge of your own financial affairs, savings, and retirement.
  5. Plan on huge inflation in consumer prices for food, energy, transportation, medical costs, and more.
  6. The middle class will be hurt the most. Those who plan and prepare will, as always, survive and prosper. Make a plan!
  7. Government control over the economy will increase. Surveillance on individuals will increase; there will be much less personal and financial privacy. Act accordingly!
  8. Social change will follow a currency collapse. It might be violent. The government is preparing in many ways for social violence. Are you?
  9. Currency induced cost-push inflation appears inevitable. When? As a guess, well before 2016. Gasoline costing $8.99 or more per gallon is a distinct possibility. Don’t discount this just because it sounds extreme. It might be a low estimate.
  10. Economic manipulations, mal-investments, and unsustainable policies will self-correct. Plan on corrections and adjustments that will bring painful consequences. The bigger the bubble, the more catastrophic the collapse and the larger the collateral damage. The sovereign debt and paper money bubbles appear VERY large and ready to pop.

Summary

Unproductive government debt cannot increase forever, but our financial system currently depends upon ever increasing expenditures and debt. There are far too many dollars in circulation, more debt than can be repaid, and massive unfunded liabilities have been created by the promises made by politicians. The purchasing power of the dollar must decline, many debts will not be repaid, and many promises for future benefits will be reduced in value or will simply disappear. Hence, the FUTURE income stream from debt-based assets is increasingly risky. A few to consider are:

  • Social Security benefits. The government must borrow or print to pay current benefits. The value (purchasing power) of future benefits will almost certainly decline.
  • Municipal and state bonds and pension promises are increasingly risky. Will more cities and states default on their bonds? Why are their pension plans, on average, increasingly underfunded? Will your pension plan remain safe? Consider moving your IRA into physical gold and silver safely stored outside the banking system.
  • US government 30 year bonds and 10 year notes will decline in price as interest rates rise, and will also decline in purchasing power as the dollar devalues. Why would you lend money (long-term) to an insolvent government at less than 3% interest per year when that government has assured you it will debase the currency and reduce the value of the debt you bought? Is this a financial train wreck in process?
  • Mutual funds and money markets based on bonds and other debt are at risk. If the underlying debt defaults, the value of the mutual funds and money markets will decline. Counter-party risk is real.

Why is debt based future income increasingly risky? The payoff will be delayed, defaulted or executed in mini-dollars after inflation and counter-party defaults have ravaged the purchasing power of those paper debts. We have Been Warned!

Would you prefer hard assets with no counter-party risk? Reread the Ten Steps To Safety, and then take charge of your financial life to whatever extent you can.

GE Christenson
aka Deviant Investor

Filed Under: Currency debasement, Featured, Gold, Silver, US Debt Crisis Tagged With: , , , , , , , ,

American Silver Eagle Bullion Coin Sales For 2012 Tops 33 Million Ounces – Mint Runs Out Of Coins

December 31, 2012 by Leave a Comment

According to the U.S. Mint, total sales of the American Silver Eagle bullion coins for December 2012 totaled only 1,635,000 ounces, down by 18.6% from 2,009,000 coins sold during December 2011.  The lowest monthly sales for the year occurred in February when 1,490,000 Silver Eagle Bullion coins were sold.  The highest monthly sales of the Silver Eagles occurred in January when 6,107,000 coins were sold.

Demand for the Silver Eagle bullion coins has been robust this year and the low sales for December do not reflect reduced demand but rather reduced U.S. Mint production.   As reported by Coin Update, the Mint reported in mid December that all Silver Eagle bullion coins had sold out and no additional coins would be struck during 2012.  The Mint announced that the 2013 Silver Eagle bullion coins should be available to authorized purchasers on January 7, 2013.

As with other bullion programs, the US Mint does not sell Silver Eagle bullion coins directly to the public, but distributes them through a network of authorized purchasers. The primary distributors are able to purchase the coins in bulk quantities at a price based on the market price of silver plus a fixed mark up. The coins are then resold to other bullion dealers, coin dealers, and the public.

The US Mint originally began accepting orders for the 2012 Silver Eagles from authorized purchasers on January 3, 2012. After a strong January, monthly sales trailed the levels of the prior year until October when demand started to move higher. In November, bullion sales continued their renewed strength, with sales of American Gold and Silver Eagles more than doubling the figures from the year ago period.

The strong sales in November caused the United States Mint to adjust their production plans for one ounce and one-tenth ounce American Gold Eagle bullion coins in order to avoid selling out prior to the end of the year. Apparently, the Mint did not adjust production plans for American Silver Eagle bullion coins.

The sales figures for December would likely have exceeded 3 million ounces if the Mint had produced enough silver bullion coins to meet demand.  Nonetheless, total sales of the Silver Eagle bullion coins for 2012 were the third highest on record with a total of 33,742,500 coins sold.  All time record sales of the Silver Eagle coins occurred during 2011 when almost 40 million coins were sold.

 

Demand for the Silver Eagles has soared since the financial crisis began in 2008 and recent announcements by the Federal Reserve and other central banks pledging unlimited money printing is certain to increase investors demand for safe haven precious metals.

Since 2000, investors have purchased an astonishing 232,143,000 American Silver Eagle one ounce coins worth over $7 billion at current market prices.

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

Gold Becomes The Ultimate Store Of Value As Central Bankers Create Unlimited Fiat Money

November 28, 2012 by 1 Comment

By Vin Maru

Lately we have seen many articles about China and many other central banks continuing to buy and increase their holdings of gold as part of their effort to continue diversifying out of foreign paper currencies. Who can blame them? Would you want to hold paper promises to pay off financial obligations from countries that are essentially bankrupt as a part of your currency reserve? China is doing what is the right thing and in the best interest of China, buying more gold to hold as a part of your reserves in order to make your currency more marketable. They want to make the yuan a competing currency to the other major currencies around the world and they will succeed and owning gold is part of their strategy.

There is some speculation that China is increasing its gold holding to make the yuan a gold-backed currency in an effort to make it a world currency reserve. While it is an interesting concept, it will most likely never happen. In order to back a currency, their gold holdings must increase or decrease alongside the increase or decrease in the number of currency units in the system. A gold backed currency would entail having a fixed rate of convertibility for each ounce of gold to a specific number currency units issued by that country. There is probably no country in the world that will honour convertibility on a fixed basis, it would be financial suicide and is part of the reason why Nixon closed the gold window. Also having a gold backed currency would mean the country would be continually increasing gold purchases to match the inflation of currency units issued. Tracking the amount of gold that is backing currency would also be next to impossible since there is a complete lack of transparency around the amount of currency units being issued by central banks and the amount of gold held by them. Currently currencies can be converted to gold on a floating basis at market price, but going to a gold backed currency would likely never happen.

China is making its currency more readily available for trade, thus bypassing the US dollar and making its currency the payment of choice for its export. Currently the yuan is fixed to the US dollar, but over time it will most likely have to adopt a floating currency like the rest of the world. Until then, expect China to continue adding to its gold reserve in an effort to make the yuan a competing currency for international trade. The US will lose its reserve currency status over time (most likely some time this decade) but it most likely will never go away completely and the yuan will not take over completely. We will most likely just have bi-lateral trade agreements with several national currencies being used for payments. The yuan is just the new kid on the block but there is still the Euro, British pound, Japanese yen, the US$ and probably the IMFs SDR that will also be used. Even the Canadian dollar has been strengthening lately, as the IMF said it’s considering classifying the Canuck buck and the Australian dollar as reserves currencies.

While gold may not be convertible at a fixed rate any time soon, VTB Group is Russia’s first lender to sell perpetual bonds and debt linked to the country’s benchmark equity index and is now selling the nation’s debut notes tied to the price of gold (see Bloomberg article). VTB is offering 1 billion rubles ($32 million) of securities that will be redeemed in December 2013 that will pay a rate on returns based on the gold price up to a limit of 20 percent. Being a pioneer in the Russian market, VTB is the 2nd largest bank and will provide pension funds an alternative to invest in gold without the limits placed on commodity holding by regulators. The article even talks about how even Western financial institutions such as JP Morgan, Barclays, and Credit Suisse are issuing notes tied to gold this month. This is just another example of how gold is becoming an important financial asset. The need to diversify and protect wealth becomes more apparent in an era of currency wars which will destroy the value of fiat money. Financial institutions realize that central banks will continue down the path of printing money, inflation and currency devaluation, there is no other choice. They see the writing on the wall and are now capitalizing on a new markets by providing financial assets tied to the price of gold price.

All these currencies will continue to inflate and I doubt the bankers will allow gold to become a competing currency for everyday transactions. However its role as a store of value will continue to appreciate as long as fiat money continues to exits. So we should be happy that government and central bankers will continue to use and expand fiat currency, it makes their currency worth less and gold will continue to benefit in the long run.

What we are seeing now, with short term fluctuations in the price of gold is just market noise and short term trading opportunities created by the gold market high frequency traders and bullion banks. This will come to pass as the price of gold gets smoothed out and then slowly advances higher with a two steps forward one step back dance along a rising trend. All this talk about gold by mainstream media is just market noise to try and explain very short term movements in price. They have very little understanding of gold and the role it will play in the future as a store of value. Being the good slaves and puppets for the central bankers, MSM is only good at misdirecting the public and they are paid very well for doing so. Once gold finishes this consolidation, the price should continue to advance to all time highs in 2013 and 2014 with a possibility of doubling from the current price to reach a minimum target of $3500 in the next few years.

If you enjoyed reading this article and are interested in protecting your wealth with precious metals, you can receive our free blog by visiting TDV Golden Trader. Also learn how you can purchase and protect your gold holdings by getting a copy of our special report Getting Your Gold out of Dodge or protecting the stock investments you currently own with Bullet Proof Shares.

Regards,

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

Gold In The News – German Gold, Gold Confiscation, Technical Charts, New Perth Mint Coins

November 1, 2012 by Leave a Comment

Gold news from around the web-

Gold Confiscation?

Are those predicting the confiscation of gold by the U.S. government simply seeking headlines or seriously misguided?  Jim Sinclair has the answer.

I am sick of all this confiscation talk of gold and even gold companies. It emanates from gold people who do not know or understand the history of gold. We condemn MSM for inaccurate, false and misleading news. I condemn gold writers who practice sensationalism, who offer their opinions as if they were facts and simply make things up out of thin air as if they were insiders privy to things that no one else is. Right now leaders of this community are printing stuff as misleading as MOPE or MSM ever have.

Eric De Groot put what I have been trying to teach you perfectly today. In the 1930s gold was to the monetary system what QE is today, a means of increasing the supply of money for Fed and Treasury discretionary use. The US Secretary of the Treasury and President Roosevelt set the gold price higher at their daily breakfast together arbitrarily. Higher because to create money then the system required a higher value of gold to have more money outstanding. This is why Roosevelt ordered the confiscation of gold in order to unfold his type of monetary stimulation, his QE. This is what confiscationophiles simply do not know.

 Your fears and the outrageous untrue statement by the Scottish hedge fund manager are based on totally wrong reasoning and misunderstanding. Gold was not confiscated because it was going up in price. Gold’s order of confiscation came as a tool of monetary stimulation in order to create monetary creation in order to attempt to increase employment.

So, Exactly Where is Germany’s Gold?

The Germans, tough with monetary policy, turn out to be wimps when it comes to safeguarding their own massive 3,396 ton gold stockpile.  Turns out that the Germans, who allegedly hold most of their gold in French, British and U.S. vaults, never even bothered to conduct a physical audit of their holdings – talk about trusting your neighbors! After severe criticism and a national “Bring Back Our Gold” campaign, the Bundesbank is finally promising to conduct audits and bring their gold back home.  MarketWatch wonders if the expatriation of German gold may be the beginning of a move to a gold backed currency.

Gold and Silver Technical Charts

Some really amazing gold and silver charts suggest that we may be in the initial stages of a massive gold and silver rally.

Gold and Silver – The Ideal Holiday Gift

A stunning selection of new gold and silver coins from The Perth Mint  provides the answer to “what should I get her for Christmas?”  Included in the November product releases are some unique rectangular colored silver coins.

Gold Through the Centuries

One of the largest Roman gold coin hoards every found was discovered in Great Britain.  The coins are approximately 1600 years old.  Any guesses on what $10,000 of U.S. currency buried today would be worth in the year 3612??

Filed Under: Currency debasement, Featured, Gold, Perth Mint, Silver Tagged With: , , , , , , , , , , , , ,

Is The Gold Correction Over? A Technical Look At Gold, HUI And The U.S. Dollar

October 24, 2012 by Leave a Comment

By Vin Maru

Gold Analysis

Looking at the gold chart below, we can see that gold has been correcting over the last two weeks. When applying some technical analysis to the gold chart, we can clearly see that there would have been overhead resistance at $1800 since most of the year gold has traded between $1550 and $1800. A few weeks ago, we also noticed a big build in the short position on the Comex’s Commitment of Traders report COT by the commercial and bullion banks. The effort to stop gold’s advance at a key resistance level was successful in part because of the huge increase in the short position at that level, which is why we knew to take some profits and that would be an ideal place for a correction to start.

Now that the correction has started and gold is giving back some of its gains from the summer, the question now remains: How much of a retracement will we see on the price of gold? While the shorts are currently in control of driving the price down, support will come from other central banks and buyers of physical gold.

With gold at $1701, it is currently (noon on Tuesday Oct. 24) sitting below the 50 dma at $1720 which is above the 200 dma at $1662. The first line of support for this coming week was at $1720 and if it holds above the 50 dma the correction in gold could be over. If we continue to see weakness in gold over the next week or two, we can expect the correction will continue later this month and going into elections. This is something I suspect could happen if the overall markets continue to remain week.

Looking at the chart we suspect that buying will come in at the new support price range at about $1650 (+ or – $20) if the 50 dma at $1720 doesn’t hold this coming week. One thing to note is that the 50 dma crossed above the 200 dma around the end of September, which is an over good sign. However it needs to remain above the 200 dma for this advance higher in gold to hold before it can go on to make new highs. We remain optimistic that gold will either bounce here at the 50 dma of $1720 or at a retest of the 200 dma of $1662, which would still be bullish over all. If you are looking to add to your physical gold holdings and diversifying them internationally, scaling in now and at the $1650 price range would be a good place to start adding to current or new positions. Keep in mind that the support at the 200 dma may not hold, which means the price of gold can retrace right back to longer term support at $1550 which has been in place all year. However, I give it a small probability that we will correct back to that price range as we are entering a seasonally strong part of the gold cycle in November and December.

While I hate making predictions on what the gold price will do short term, I suspect it could consolidate between $1650 – $1750 for the remainder of the year. While we are entering a stronger part of the gold season and the fundamentals are lined up to suggest higher prices, we have conflicting events such as a huge concentrated short position, the US elections, the US fiscal cliff and tax loss selling to deal with for the remainder of the year. With 2 strong opposing forces acting on one another, the price of the metal may consolidate around $1650 – $1750 for some time until either the bulls or bears clearly take this market in one direction or another. Until then, all we can do is sit around and wait for a clear break outside the trading range that has been established over the last year.

HUI Gold Miners Index Analysis

Just like gold, the HUI index is also correcting since September. Earlier last month, we thought index would trade to 520 before meeting resistance, which we can clearly see it has done and it is now in the process of correcting. It would not be unusual for the index to give back up to 50% of its recent gains from the summer lows. Back in July, it looks like a low of 385 was made on the index and a recent high of 525 was achieved back in September; this is a 140 point gain. So if the market was to give back 50% of this gain or 70 points, we can expect the HUI to retrace back to about 455, which would be the next best time to add to positions.

Currently the HUI is at 495 which is still above the 50 dma at 482 and the 200 dma at 465, which is a positive alignment if the index can hold these gains. One thing to pay attention to from the chart below is the price action on the HUI from April this past year to the end of August, a period called the summer doldrums. During this period support came around 385 and was tested 2 different times, while overhead resistance was at 450 which also was tested a couple of times. Back then 450 was overhead resistance which was finally broken with a strong move higher during September; we suspect this will now become the new support level while 520 will act as resistance.

While we still remain cautiously optimistic that a new uptrend has started longer term, the HUI will most likely correct back to the 460 range ( + or – 10 points) over the coming months and 520 will now act as overhead resistance as a new trading range will be set. In general, support around 465 (the 200 dma) is where we would look to initiate new positions in some of the senior producers and hold them going into the New Year. At some point, I do expect overhead resistance at 520 will be breached to the upside at which point the HUI index could run to 580 and higher, but that would mean gold would have to be on fire and trading above its overhead resistance at $1800 on a holding basis. Until then, the miners will probably trade in a range where the HUI fluctuates between 460 and 520 as long as gold stays above $1650.

US Dollar Analysis

While the US dollar is looking good at the moment and getting a nice little bounce higher lately, this could be very short lived. The up channel that has been in place from August 2011 to August 2012 has been clearly broken and now it has started a new down trend channel this past August.

All we are seeing is a current bounce from oversold levels on the RSI and MACD and it already seem to be stalling out. The US dollar could move slightly higher to test the 50dma of 80.38 or the top of the new down channel at 81, but the rally should stop there. One thing to note is that the 50 dma just crossed below the 200 dma in the last few days, that is not a good sign. Once this relief rally is over, the dollar should continue downward and possibly to the bottom end of this downward channel. This could mean a definitive move below recent support around 78 on the index, if this happens and support is broken, it could lead to a cascading move downwards towards 75 or possibly 73.75 as the next major support level. If the dollar does break down, gold and silver will shoot much higher.

The best hope for the US dollar is for it to sit in a channel between 78 and 81.50 which is where I think it could trade sideways for some time until we clear the elections and get some direction on fiscal policy from the Fed.  If the dollar goes sideways, G and S will also trade in a sideways channel. More than likely we will get some clear direction once the election are done.

 

If you enjoyed reading this article and are interested in protecting your wealth with precious metals, you can receive our free blog by visiting TDV Golden Trader.   Also learn how you can purchase and protect your gold holdings by getting a copy of our special report Getting Your Gold out of Dodge or protecting the stock investments you currently own with Bullet Proof Shares.

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

Gold As An Investment Will Continue To Shine

October 18, 2012 by Leave a Comment

Despite the non stop rally in the price of gold for over a decade, every normal pullback has been proclaimed as “the end of the gold bull market” by the mainstream media.  Will gold eventually become an over-owned and overpriced asset?  Yes – but that day will not arrive until gold is many thousands of dollars higher.   Long term gold investors who have stayed with the primary trend have already outperformed every other asset class over the past decade as shown in this neat infographic from the Visual Capitalist.

visualcapitalist.com

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

Ron Paul Accuses The Federal Reserve of Devastating America

October 2, 2012 by Leave a Comment

While Wall Street cheers the Federal Reserve’s decision to engage in perpetual quantitative easing, Congressman Ron Paul says the Fed is devastating the U.S. economy through its blatant manipulation of interest rates.  According to Ron Paul, manipulating interest rates to the zero bound level has caused a massive misallocation of capital, destroyed the purchasing power of the U.S. dollar and will eventually lead to another financial crisis.

Ron Paul’s warnings have been routinely dismissed by both Wall Street and his colleagues in Congress.  The majority of the American public know that something is seriously wrong with our financial system but can’t quite connect the dots between the Fed and lower wages and higher prices.  Those who do understand how the Fed is destroying the U.S. economy and are worried about preserving their wealth, should simply copy the investment strategy of Ron Paul who has gone all in on gold and silver.

By Ron Paul

One of the most enduring myths in the United States is that this country has a free market, when in reality, the market is merely the structural shell of formerly free institutions. Government pulls the strings behind the scenes. No better illustration of this can be found than in the Federal Reserve’s manipulation of interest rates.

The Fed has interfered with the proper function of interest rates for decades, but perhaps never as boldly as it has in the past few years through its policies of quantitative easing. In Chairman Bernanke’s most recent press conference he stated that the Fed wishes not only to drive down rates on Treasury debt, but also rates on mortgages, corporate bonds, and other important interest rates. Markets greeted this statement enthusiastically, as this means trillions more newly-created dollars flowing directly to Wall Street.

Because the interest rate is the price of money, manipulation of interest rates has the same effect in the market for loanable funds as price controls have in markets for goods and services. Since demand for funds has increased, but the supply is not being increased, the only way to match the shortfall is to continue to create new credit. But this process cannot continue indefinitely. At some point the capital projects funded by the new credit are completed. Houses must be sold, mines must begin to produce ore, factories must begin to operate and produce consumer goods.

But because consumption patterns have either remained unchanged or have become more present-oriented, by the time these new capital projects are finished and begin to produce, the producers find no market for their goods. Because the coordination between savings and consumption was severed through the artificial lowering of the interest rate, both savers and borrowers have been signaled into unsustainable patterns of economic activity. Resources that would have been used in productive endeavors under a regime of market-determined interest rates are instead shuttled into endeavors that only after the fact are determined to be unprofitable. In order to return to a functioning economy, those resources which have been malinvested need to be liquidated and shifted into sectors in which they can be put to productive use.

Another effect of the injections of credit into the system is that prices rise. More money chasing the same amount of goods results in a rise in prices. Wall Street and the banking system gain the use of the new credit before prices rise. Main Street, however, sees the prices rise before they are able to take advantage of the newly-created credit. The purchasing power of the dollar is eroded and the standard of living of the American people drops.

We live today not in a free market economic system but in a “mixed economy”, marked by an uneasy mixture of corporatism; vestiges of free market capitalism; and outright central planning in some sectors. Each infusion of credit by the Fed distorts the structure of the economy, damages the important role that interest rates play in the market, and erodes the purchasing power of the dollar. Fed policymakers view themselves as wise gurus managing the economy, yet every action they take results in economic distortion and devastation.

Unless Congress gets serious about reining in the Federal Reserve and putting an end to its manipulation, the economic distortions the Fed has caused will not be liquidated; they will become more entrenched, keeping true economic recovery out of our grasp and sowing the seeds for future crisis.

Filed Under: Currency debasement, Featured, Gold, Silver Tagged With: , , , , , ,

Gold Bullion Coin Sales Soar 76% In September, Silver Sales Up 13%

October 1, 2012 by 1 Comment

According to the latest report from the U.S. Mint, demand for both gold and silver bullion coins during September surged to the highest levels since January.

Total sales of the American Eagle Gold bullion coins during September soared 75.6% to 68,500 ounces from 39,000 ounces in August.  Monthly sales of gold bullion coins have fluctuated widely during 2012 with a high of 127,000 ounces in January and a low of 20,000 ounces in April.   The average monthly sales of gold bullion coins through September is 53,500.

Total sales of the American Eagle Gold bullion coins through September total 481,500 ounces.   Unless sales surge dramatically during the last three months of the year, 2012 will be the fourth year of declining sales of the gold bullion coin.   As detailed below, the all time record for sales of the gold bullion coins was during 2009 when sales exceeded 1.4 million ounces.

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
Sept-12 481,500
Total 7,731,000

U.S. Mint sales of the American Eagle Silver bullion coins during September totaled 3,255,000 ounces, up 13.4% from August sales of 2,870,000 ounces.

Investor demand for the American Eagle Silver bullion coins has been relatively consistent throughout the year.  After a very strong January during which over 6.1 million coins were sold, demand remained strong with monthly sales well in excess of 2 million ounces except for February when sales slumped to 1,490,000 ounces.  If monthly sales of the American Eagle silver coins continue at the September sales pace, total sales for 2012 will be close to the record year of 2011 when almost 40 million ounces were sold.

Total annual sales by the U.S. Mint of the silver bullion coins since 2000 are shown below.  Sales for 2012 are through September.

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
Sept-12 25,795,000
TOTAL 224,195,500

The American Eagle gold and silver bullion coins produced by the U.S. Mint can only be purchased by Authorized Purchasers who in turn resell the coins to other dealers and the general public.  Numismatic versions (uncirculated or proof) of the American Eagle series coins can be purchased by the public directly from the U.S. Mint.

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

Gold Mining Industry Becomes Attractive To Capital Markets

September 20, 2012 by Leave a Comment

By Vin Maru

Over the past summer we suggested that we would see more money become available to quality mining projects from banks sitting on tons of cash ready to loan out on credit worthy projects in their ever increasing need for higher yield. In our September 11th, 2012 blog post we stated that “Project funding will become available via bank loans on favourable projects; we can expect alot of money coming into the resource space and new projects will move towards production”.

Here is an exerpt from the TDV Golden Trader newsletter sent out to subscribers on July 23, 2012:

I suspect alot of that money will come into the commodities market and especially into the mining sector. There are many great projects which show great preliminary economic studies with today’s current prices of commodities. Banks can provide the funds necessary to help put projects into production by way of corporate bonds or loans with higher interest rates. Even with a 7-10 % rate, many of these projects are very economical, provide a positive IRR and have short payback period (3-5 years). Potential producers should really look at this option for funding their projects, the interest rates are reasonable and this would eliminate the need for further dilution.

It is also in the bankers’ best interest in making these loans to the various development projects for many reasons. First, they will be making a much higher positive yield over the next 3-5 years than most other fixed income investments. They can probably become first in line as a creditor guaranteeing their investment and using the company assets and reserves to help determine valuations as possible collateral. Also, their funds are probably safer at a cash flow positive producing mine versus buying bonds of a pig country that can only make interest payment by robbing Peter to pay Paul. In their need to make secure investments, banks can also guarantee their payments will not be interrupted by keeping a floor under the commodities prices. This floor price can be achieved by forcing the producer to hedge part of their production at current prices, thus guaranteeing a predictable minimum future cash flow.

Lately we have seen more debt offerings, issuance of debentures and credit being given to mining companies who can prove strong economics on new projects or expansion to current mining operations. Here are few examples from the last few months:

Stornoway Diamond Corp. (TSX:SWY) has entered into a mandate letter with seven financial institutions concerning debt financing for the company’s Renard diamond project in northern Quebec. The mandated lead arrangers are Bank of Montreal, Caterpillar Financial, Export Development Canada, Investissement Quebec, Nedbank Capital Limited (London Branch), Societe Generale (Canada Branch) and The Bank of Nova Scotia which will arrange senior loans of up to $475 million, the company says.

Lake Shore Gold Corp. (“Lake Shore Gold” or the “Company”) (TSX:LSG)(NYSE MKT:LSG)  announced today that the Company has completed the previously announced public offering (the “Offering”), on a “bought deal” basis, of C$90 million principal amount of 6.25% convertible senior unsecured debentures (the “Debentures”) maturing on September 30, 2017.

Kirkland Lake Gold Announces $50 Million Private Placement of Convertible Debentures – The Debentures will mature on June 30, 2017 (the “Maturity Date”), unless earlier redeemed, and will bear interest, accruing, calculated and payable semi-annually in arrears on June 30 and December 31 of each year, at a rate of 6.0%. 

While the quality juniors have been able to raise capital in the last year, most are still finding it difficult to raise funds. In the past, small producers and exploration companies relied on the capital markets to raise funds by way of private placement and issuing shares which have been highly dilutive and overall negative for investors in these companies. We have a feeling that many juniors will be able to raise capital in this market, but they will have to be creative in their approach to getting funding deals done without diluting shareholders.

Private Sector Enters the Gold Mining Industry

However, the nature and investing climate for the mining sector has changed recently. We are now seeing investment funding and credit becoming available to mining companies from the private sector. Cluff Gold (TSX:CFG) a West Africa focused gold mining company recently announced a strategic alliance with Samsung C&T Corporation where Samsung will provide an unhedged US$20M facility to Cluff Gold in a Memorandum of Understanding (MOU). The MOU also provides a framework for the potential long term funding of Cluff’s Baomahun project and other development opportunities.

In my opinion, Samsung, being a visionary in the electronics industry, has realized it needs to make strategic investments with its cash in order to protect purchasing power and secure availability of gold and silver to be used in its products. This is a game changer and as fiat paper currencies get destroyed by the central banks and governments, the smart money will continue to gravitate towards gold, the true store of wealth. This could be the start of a new trend where private sector corporations start paying attention to gold as currency and hedge against paper assets. I would expect this trend to continue as more private companies and fund manager will find a need to diversify out of paper money and into the currency of last resort: gold. While it may be difficult for these companies and institution to buy the physical metal on the open market, the smart money will go right to the source and get invested where profits can be maximised, which means going to the miners.

We are in next phase of this bull market in precious metals, and gold and silver will continue to move higher now that printing money to infinity has become official policy. It will be the miners who are still undervalued and have growth potential that will really benefit from this next round of QE and rising gold prices. Expect to hear more stories about investments coming to the mining sector and as this trend grows, so will the attention being paid to the minors. While the ETFs may be a good way to trade the price of metals rising, the leverage and exponential gains will be made with selecting the right mining company. The next leg of this bull market will benefit the miners and they could easily outperform the gold price over the next few years, this is where we see the real gains to be made.

I will be speaking at the Cambridge House Toronto Resource Investment Conference on September 27 and 28, 2012. You may register here to attend the show. I will be presenting a 30 minute workshop on Friday the 28th at 4:00 pm on “Trading Opportunities: Looking for Catalysts and Developing Strategies to Trade Precious Metals Shares”. On Thursday morning I will also be a panel speaker alongside Bill Murphy, Chris Powell, and Jay Taylor discussing gold’s diminishing supply and increasing demand.

If you enjoyed reading this article and are interested in protecting your wealth with precious metals, you can receive our free blog by visiting TDV Golden Trader.

Filed Under: Bullion Sales, Featured, Gold, Gold Stocks, Other Precious Metals Tagged With: , , , , ,