Investment Guide|Precious Metal Investment Expert » gold coins

Gold ETFs Hold Record Amounts of Bullion

PreciousMetalInvestment.com — Mon, 16 Feb 2009 14:56:45 +0000

It is estimated that by the end of last week Gold traded ETFs had increased their bullion holdings to a record of almost 1400 tonnes while sales of gold coins by the US Mint is running at double that of a year ago.

Morning trading in Asian markets saw gold under some selling pressure with traders pushing the price below $938 an ounce but Europe’s opening quickly saw the price back above $940 an ounce.

Also no great show of profit taking became evident in the US on Friday ahead of the ‘three day’ weekend.

This resilience indicates that the underlying appeal of the metal as a safe haven remains strongly in place, with the fall off in jewelry demand from India, in part due to a weakening rupee, having little effect.

With global stocks looking vulnerable to more falls as the bad news continues, gold remains the only bullish play in town.

Technical analysts seem in agreement that the trend will remain in place with a variety of projections for the next key levels to be broached.

You can take your pick from anywhere between $955 an oz. to the March 2008 peak of $1033 an oz. In the longer term there are some technical expectations that the metal will climb well above $2000 an oz.

Regular readers of these reports will be aware that we have reservations about the merits of technical analysis.

Relying on historical data to predict future market trends can be manipulated to suit almost any set of circumstances.

It will be the analyst’s preference for the tools, chosen from the multitude available, and their application to whatever time scale he feels is appropriate, which will determine his forecast.

Sometimes an individual or group of technical analysts may get it 100% correct, on other occasions using the same formulae their forecast may be totally adrift.

Many investors, speculators, hedge fund managers, etc., make their moves by either following a chosen technician, using their own in house analysers or their own or computer based analytical models.

The question we ask is ‘which comes first, the chicken or the egg?’

This seems particularly relevant to the short-term speculators and scalpers where technicals do seem to provide plenty of profitable opportunities to these players.

In the longer term we only have to look at the forecasts emanating during the last eighteen months from some of the most (so called) respectable institutions and their analysts to see how wrong (or maybe biased) they have been.

In our opinion longer term gold investors should ignore the technical forecasts and projections and give their attention to the fundamentals, at present looking strongly in favour of a continuing bullish trend.

Lower supply and higher demand through 2009, expectations of an inflationary burst possible before the end of the year, if not, most certainly at some stage in 2010/11.

Prospects of more money being thrown at ailing banks, industries, infrastructure etc. by governments who have no choice but jack up the printing presses to further depreciate their fiat currencies.

All this and much more points to gold being the last resort as a safe haven store of value.

We do have one word of warning in this ‘golden scenario’. If the price rises fast and furious then we will have a bubble situation and we now have no excuse for not recognising the consequences.

We would like to see just a shallow upward curve having no shortage of higher lows and higher highs as market players go about their business in an orderly fashion having learnt from the recent past by not getting too greedy.

That leaves us with the producers and where they go from here. The share prices of both the senior and the better junior gold miners have yet to reflect the strong demand for gold.

If the this demand maintains its momentum then as surely as night follows day there will be some excellent opportunities for profits in the mining sector for wise pickers.

Our advice is to steer clear of miners with significant operations in politically unstable countries and any miner that is not predominantly a gold producer. Amongst the seniors there are a number who fit this bill and have strong balance sheets, good cash reserves (and how important is that these days!) and whose share price is still far from reflecting the strength of their product.

Carefully picked juniors can reap massive rewards in an environment where production is down, demand is rising and funds for exploration and development are restricted.

Those sitting on promising properties are a target for interest from the majors either to inject funds in exchange for shares or outright takeover.

Some activity is already evident so some research need not be a waste of time. The gold sector is on the move in the right direction and interest is growing rapidly so be careful not to be left behind.

How To Buy Gold – Bullion Bars and Coins

PreciousMetalInvestment.com — Sat, 01 Nov 2008 09:33:01 +0000

In these days of uncertainty, owning physical gold in the shape of bullion bars and coins and storing them at home, in a safe deposit box or secure vault gives many investors the confidence that they may lack in paper gold virtual promissory notes such as shares in gold investment or mutual funds.

Gold ETFs arguably also come into this category.

Gold bullion bars are available in various weights ranging from one troy ounce upwards as well as in metric sizes. For example a one kilo bar weighs 32.15 ounces.

Gold bullion bars will almost always sell at a smaller premium than the more popular coins, and the larger the bar the smaller the percentage mark up.

The most popular size for the average investor buying less than one hundred ounces of bullion is the one ounce bar; they are easy to store and readily saleable when cash is needed or profits taken.

Larger investors may opt for ten ounce bars and in India and Asia the kilo bar is popular. Larger bars are available up to one hundred ounces but none have been minted in the US since the nineteen eighties.

Gold bars and coins come in different degrees of purity. Look for .9999 fine, older bars available on the secondary market may be .9995 fine or even .995 fine. If buying in the secondary market be aware of the difference over the spot price plus premium if the bar or coin is not .9999 fine.

Newly minted bars will be well packaged and protected, older bars may have damaged packaging or none at all and may be suffering from minor damage such as fine scratches so be aware!

There are around fifty accredited manufacturers of gold bars worldwide.

Among the most well known are

Johnson Matthey
PAMP (Produits Artistiques de Metaux Precieux) based in Switzerland
Midwest Refineries in the U.S.

To avoid the many pitfalls of buying gold bars in the traditional manner, it is now easier to buy and trade physical gold, with access to up-to-date prices, charts and commentary on line.

Whilst we don’t guarantee this company we have sufficient confidence to commit our own funds to them.

Be sure to carry out thorough checks on any on line physical gold dealer as their authenticity is difficult to monitor over the internet, proceed with great caution before committing any funds.

Gold coins fall into two principal categories. Newly minted coins together with coins that are in effect bullion coins, the Krugerand is an example, and collectors gold coins.

There are numerous gold coins minted and issued by governments whose value is based upon their gold content, most usually one ounce or half an ounce in weight.

Purchasers must expect to pay a premium or mark up over and above the spot price of the coins’ gold content. There have been rare occasions when a direct application for a newly minted issue has not involved a premium but don’t hold your breath waiting for the next time.

The advantages of investing in gold coins are ease of storage and liquidity, although be prepared for the dealers profit margin when selling.

Collectors gold coins are a highly specialised market and is best left to the specialists or keen hobbyists. The premium is dependent upon the rarity of the coin and may even be double or more the value of the coins’ gold content.

When buying or selling gold bars or coins it is important to trade through reputable and reliable dealers. A list of authorised dealers can be obtained from the U.S. Mint.

Other countries have similar lists and in most cases these can be accessed on line.

For those who like the idea of building up an investment in gold coins, a good move is to establish a relationship with an established authorised dealer. As they are specialists in gold coin and bullion bars and rely on the goodwill of their customers they are in a position to give good advice to beginners in this investment arena.

Investment Guide|Precious Metal Investment Expert » gold coins

Gold ETFs Hold Record Amounts of Bullion

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How To Buy Gold – Bullion Bars and Coins

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