Category Archives: Gold & Silver Bullion

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Is Gold entering a Bull Market?

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The world is a scary place these days. Fortunes can be made or lost in the blink of an eye, but through it all gold still remains a safe-haven investment. This month Gold broke through the $1,300 mark. There are a number of reasons that could set and sustain gold’s bull run.

Looking at all the geopolitical issues today, very few seem like they will be resolved anytime soon. North Korea has not been resolved, Israel is as volatile as ever, ISIS is not relenting, America won’t fix it’s dysfunctions and President Donald Trump won’t become anyone but himself. The stock market will also continue to look like a bubble unless someone decides to burst it.

The latest data from the Commodity Futures Trading Commission shows that money managers have taken a bullish stance with gold. Gold has been bullish for almost 11 months. This could be due to the following:

– Global interest rates staying negative.
– High broad equity valuations and complacency.
– The U.S. Dollar enters the bear market.
– The surge in demand for gold from countries like China

The most pertinent of these four is the broad valuations and market complacency. Let’s look at the valuations by starting with the S&P500.

It is currently overvalued because of this belief that Trump’s intention to cut corporate tax will drive future earnings in a positive direction. However, slashing corporate tax may have a bad effect on a company’s valuations.

We can debate how much of a safe haven gold is luckily, there is a well documented history of gold’s performance over the years. Between 1961 and July 2017, the gold price returns were positive, especially when inflation went up and stock market returns were in negative numbers. Indications show that we can expect gold to be strong against a weak dollar.

Complacency has affected a lot of market analysts and other qualified financial commentators. A lot of people expect the gold market to be sky high given the state of affairs in the world. Take into account, Brexit, Trump trade tariffs, the Iran deal, climate change, etc.

The best time to buy insurance, in this case gold being insurance against economic depression, is when the risk event isn’t the imminent threat at the forefront of investors’ minds. Gold is currently an under owned, underappreciated commodity which could turn out to be the best insurance to buy into right now.

According to JP Morgan’s money managers hold the view that gold could reach peaks of $1,400 by the end of the year. Gold’s fluctuations over and under $1,300 is an expected reaction as the market has to self-correct before it can begin to climb again. Banks like JP Morgan and many money managers believe that gold has entered a bull market.

If you have been sitting on the sidelines waiting to buy gold, then this could be lowest that gold will be for a while. We may be headed higher, but how long it will take and what will trigger that surge past the $1,300 threshold no one really knows. The time to buy gold is now!

 

Sources:

http://www.schroders.com/en/insights/economics/market-complacency-could-bolster-case-for-gold/

https://www.cnbc.com/2016/05/10/gold-has-entered-a-new-bull-market-jpmorgan.html

Buying Gold / Selling Gold Cash For Gold / Gold Buyers Economic Financial System Gold & Silver Bullion Gold Companies Gold History Gold Loans / Paper Gold Gold Refineries / Gold Refiners Gold Standard Uncategorized World Currency

The Volcker Rule and its Effects on the Precious Metal Industry

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Before moving on into the topic of how the Volcker rule affects the precious metal industry, it is crucial that the Volcker rule itself be understood first. The Volcker rule is basically a reformation act that restricts the banks in the United States from taking high risk investments, especially high risk investments that do not benefit the customers of the bank. In view of the major scandals involving banks using people’s money to make short term gains that saw profit flow into the banks but not to the customers, but when things go wrong, the customers bear the burden of the loss.

In other words banks are prohibited from investing in short term or long term hedge funds, speculative markets that are highly risky and it also prevents banks from investing in the precious metals industry (gold bullion / silver bullion). Banks are currently actually looking for loopholes in the legislation rather than comply to it, but according to the legislators the loopholes do not exist. How this would affect the precious metal industry is multi tiered, as some analyst say that banks are the biggest buyers and sellers in the precious metal commodity trade industry and that they are the main ‘market forces’ applied through hedge fund managers and their absence would create a huge void in demand and drive prices down. On the other hand there are those who believe that the absence of these speculative strong forces would provide stability to the prices of gold as most of the trading done by these market forces are for short term gains and in retrospect most of the gold bought by them are never held fopr more than a few days.

Looking into the average investor who looks towards the shiny yellow metal as a safe haven to secure wealth, the absence of these speculative forces will actually bring about the true essence of the gold value and allow the average investor to sleep peacefully knowing that there are no hedge fund managers trying to manipulate the gold market prices. Many have applauded this move, especially the savers, as many have seen what has happened in recent years to big financial institutions that were financially ruined and in the process ruined many other lives of individuals who had trusted these financial institutions to keep their life saving safe.

The reformation brought about by the Volcker rule is expected to bring confidence back into the precious metal industry as smaller investors will no longer have to contend with big players who use other people’s money to fill their coffers. Nevertheless, prior to this there have been numerous other ‘so called’ rules that were supposedly supposed to protect the small people, however in light of what transpired during the global financial meltdown and other similar situations, how long this rule lasts before it is overwhelmed or manipulated by the powers that be would not be long, and those who want to place themselves within the safe zone amidst a financial crisis would typically be the ‘Average Joe’ with a fistful of gold.

Gold & Silver Bullion World Currency

Silver Prices Rising Due To Shady Transactions in India

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As in many other undeveloped countries, black money is abundant on every single level of the Indian economy. This is a matter that has attracted nationwide attention because it seems to be slowing economic growth. The national government has declared a war on this issue, trying to eradicate the flow of this money.

Measure after measure, people involved in these illegal activities are looking different ways to back up their wealth and transform their black money into “white”. According to a report from The New Indian Express, this is intensively happening in Salem City, in the state of Tamil Nadu.

How Is Silver Gaining From This?

In the constant quest of transforming black money, people involved in these activities are naturally attracted to precious metal. At first, most people were buying all the gold they could with their black money, but now they are more attracted to silver for obvious reasons.

“After demonetization, most of the black money holders in and around Salem bought gold bars. But, after information spread that government will next focus on gold sales, they are afraid that the gold rate will come down drastically in the coming days,” said a silver anklet shop owner that was interviewed for the news report.

Salem City has abundance in silver commerce, mainly in form of anklets. This is leading black money holders in the region to visit the city in order to spend their wealth and backing it up with a safe metal.

Legal Actions

The national government is committed to search and prosecute those people who are involved with black money, arguing the threat they suppose to the whole economy. In fact, the population that falls in this shady sector were buying gold by the ton before official statements.

“There have been reports from around the country that people were buying gold, often at a premium, with the demonetized currencies. Following this, the Central government responded saying they will track jewelers and purchases to crack down on black money holders,” says the article.

It is logical to think that this announcement affected the gold market and redirected black money holders towards silver bars, anklets, and other presentations that would result useful for backing up their wealth, enjoying a degree of liquidity which is much easier to manage than if they were to buy gold bullion or jewellery, which is of a much higher value per item.

Global Impact

There is no way to know if black money holders have the capacity to influence the global market of silver and gold. It’s true that this population handles a massive amount of money, also involving illegal businesses. But from this to pushing forward an international market, there is a lot to consider.

India represents the second global consumer of the yellow metal. Now those black money holders are afraid of putting their bet on physical gold, this could actually affect the market. This would be decreasing the national demand, not only in Salem City, where silver is more popular than anything else.

Nevertheless, India’s rural finances are stronger than ever, thanks to the good monsoon. This means that gold demand will continue to increase, because farmers have limited access to the banking system, pushing them to invest in metals.

Economic Financial System Gold & Silver Bullion World Currency

Is there a Pattern to the Precious Metals Market?

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The precious metals market unpredictability has many in a bind over which direction to go, those who are holding on to physical precious metals or even mining stocks are at the edge of their seats based on what has been unfolding, and many have actually turned towards the capital markets based on the more attractive returns that it has to offer.

Although this may seem to be the best move currently and for the short run, those holding on to precious metals related assets are definitely in a better position for the long run. This based on the fact that the precious metals market has been pressured into submission by the powers that be, and it is only a matter of time before the lid pops open sending the precious metals markets soaring. Gold related assets are and have always been long term investment schemes and buying gold with the intention of making gains in the short term is not only unadvisable, but it is also extremely dangerous from a financial perspective as the precious metals market is known to fluctuate steeply in both ways triggered by the slightest economic spark and unless would be investors have enough patience and resources to endure market pressures working against their positions it is best not to dabble in it.

Most gold bugs who own physical bullion however are optimistic about the current lower prices of gold as it is allowing them to bring the cost of their physical gold holdings by at least 10 % giving them better margins for the future.
What exactly is happening to the precious metals industry is pretty obvious, despite the current shaky global financial situation and volatile markets the strength of the dollar and the appeal of the capital markets are holding ground. Coupled with lower oil prices and governments trying to stimulate economies which require them to inject funds into the markets, the lure of the capital markets is difficult to resist. This has also rendered conventional theories related to the commodity markets and how they respond inapplicable as markets are anything but predictable these days. One thing that is for certain is the fact that the disorganized and fragile global financial system is destined to crumble as even well informed financiers are uncertain of the mechanics that are at work and over the last two to three decades the financial machine has become too obscure to a point that it has become mystical and the only constant in the equation seems to be the fact that gold and other precious metals are still being considered as a safe haven by everyone and it does seem that most have a finger or two in precious metal pies in the event that the capital markets disintegrate.

Many have grown tired of waiting for gold prices to rise and gold bugs are reeling from the losses that they are incurring from the costs of holding, storage and insurance and many gold bugs fear that when the time does come to sell, the margins will not be justifiable.

Economic Financial System Gold & Silver Bullion Gold History Gold Standard World Currency

Golden Conflicts

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It is not new to the world when certain factions misuse natural resources to finance or advocate conflict which has become a common phenomenon over the last few decades: from crude oil in the Middle East, timber in Cambodia, blood diamonds in Sierra Leone and Angola and even gold in low income countries. Very often natural resources provide a means to finance as they are internationally tradable assets which are mobile and easy to dispose off. Without appropriate measures, these assets may find their way towards funding armed groups that are conditioned to overlook human rights and grossly neglect humanitarian laws.

The Democratic Republic of Congo for Instance was responsible for 0.8 % or 22 tonnes of newly mined gold, but because of the countries weak governance coupled with the fact that most of the gold mines are artisanal small scale mines, they are often subjected to the whims and fancies of armed groups who frequently extort them, therefore the possibility of the gold produced in the Democratic Republic of Congo getting into the gold supply chain is minimal. These are only some of the issues as incidences of forced labour by armed groups, low wages, adverse working conditions, negligent mining practices and conflicts continue to be highlighted and the only way to deter these incidences is by obstructing gold mined under these conditions to get into the supply chain.

However this is not an easy task as gold from independent small mines are usually melted down and mixed with gold from other sources (usually with recycled gold – 35 % of the annual gold supply comes from recycled gold) and sent off to end users through a complex transactions which make them virtually impossible to be traced back to its origins. It is largely due to the availability of ready buyers that these armed groups are brazen about their activities as once the gold artisanal and small scale mines reach a refinery, their origins cannot be traced and therefore refineries have become a strong element in the value chain of armed groups and establishing a relationship with a refinery that would accept their gold (knowingly or unknowingly) is all that they need.

Recently the World Gold Council has launched a ‘conflict free gold program’ which aims to stop or prevent gold from conflict zones or high risk areas from reaching refineries and subsequently end users as this would be an effective measure towards eliminating these conflicts and bring reprieve to those who bear the brunt of these armed groups.

However, it is undeniable that artisanal mining is a vital economic activity in some places and if it was not for the gold, the communities in these places would be left without nothing and based on the fact that a significant proportion of mining in these places are illegal and operate beyond government supervision it is prone to smuggling which is often backed by armed groups.

Proving that a gold batch is from these situations or sources is the first step, but a difficult one undeniably.

Economic Gold & Silver Bullion

Gold Mining Companies & Investments

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Investing in gold does not necessarily mean buying gold bars by the dozen and storing them in a impregnable safe tucked away behind a portrait of the Mona Lisa, although that is an option and according to most gold bugs, it’s the best way to invest in gold, there are investors who prefer to take a much more indirect approach towards investing in the shiny yellow metal. They do it by investing in gold mining company stocks; however, before you take the leap into this realm, there are some things that an investor should essentially know if he or she is going to use this approach to invest in gold.

The good thing about gold mining stocks is that gold mining stocks are rather easy to buy or sell hence if the situation arises whereby you need instant cash you would be able to sell your stock immediately and in comparison to physical gold bullion that you have stored in a safe, the process may take a tad bit longer as it goes through the assaying process and getting a buyer who would be willing to pay a reasonable price for it.

On the flip side however, if at all the gold mining stock that you own belongs to a company that is embroiled in some kind of issue that may range from low production, lack of funds, pollution or land acquisition issues, it may not be quite as easily traded. Always remember that by buying a gold mining stock, the investor is actually buying a portion of the company that is mining the gold and although there is potential for additional upsides the downside risks are more often than not equal.

For instance, gold mining is capital intensive meaning that it requires a substantial amount of cash to develop and operate a mine, hence buying into a mining company that has a sound financial background is one of the most vital aspects. Gold mining companies are also known to play the market by lowering production when gold prices are low and increasing production when prices are favourable to maximise profits, thus gold mining stocks may tend to undergo massive price swings making patience a key component in being successful with gold mine investments.

Nevertheless the main thing about investing into gold mining companies is in being able to identify good gold mining stocks and this obviously would take a significant amount of research. Most seasoned investors go for value-plus proposition which in layman terms mean that if the price of gold rises significantly they expect the mining company to be able to offer a 1x plus gain as an additional profit potential, because if that is not in the option, then the investor might as well invest in physical gold and as mentioned earlier store it in a safe hidden behind a DaVinci painting.

It is also imperative that the gold mining company has distinct qualities that make them good investments such as effective management, competent with environmental and political risks and also has the ability to obtain finance at the drop of a hat.

Economic Gold & Silver Bullion Gold History

Canadian Gold Tales: The Canadian Wild West

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Towards the end of the nineteenth century around 100,000 people overpowered the Klondike area arranged within as far as possible searching for gold, is a noteworthy piece of American history. Presumably, a couple made their riches, yet most lost all that they had. The Klondike’s record is one of disturbance and obsession that passed on them to the region, and in addition brought the most exceedingly terrible out of a huge part of them. Gold fever held people all over the place all through the United Sates and when news of Klondike gold spread like crazy flame and people like George Carmack, Skagway criminal Soapy Smith and others, for instance, Mountie Sam Steele got to be enlivened.

Brutality, starvation and even the unforgiving atmosphere of the Yukon and were not satisfactory to keep mineworkers away. Stories of the Klondike has wound up central to Canadian history and also the gold business as it arrived that excavators started obtaining and offering cases instead of burrowing for the gold themselves as a result of the way that, if whenever there was a spot on the planet where burrowing was in every way that really matters unbelievable for individuals with picks, hammers and tomahawks – it was the Klondike. The masses extended so fundamentally (from 500 to 30,000 within months) that the immediately manufactured wooden structures as often as possible seethed to the ground and to compound matters unsanitary conditions killed various.

On the other hand, various don’t have the foggiest thought regarding exchange drivers behind the dashes for unheard of wealth of the Klondike, it was not on account of the interest of the significant metal alone, it was in like manner as a result of the mistake of the cash related structures in the US, banks were falling level all through the United States and various were about section 11 in the midst of that time, and when news of the gold disclosure went to these people, it was all in all the principle decision they expected to recoup their financial strength. Another component that empowered the Klondike dash for unfathomable riches was furthermore the high rate of unemployment that stretched out from San Francisco to Seattle. Each one of these segments was the key components that drove such countless prospect for gold in the Yukon.

However within a few years, gold had been found in Alaska and the scene was an extraordinary arrangement also obliging to prospect for gold in examination to the Klondike that enacted another move, the Klondike district was left for a time span, before people started mining the Klondike scope of and on. At whatever point a noteworthy gold piece was found in the Klondike and news spread, “littler than anticipated” undertakings for incredible riches consistently came about, however these downsized dashes for inconceivable riches when in doubt, did not last over a month preceding mineworkers left.

Economic Financial System Gold & Silver Bullion

Gold Bullion Investments

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It is a commonly known fact that the ultimate hedge against inflation has and probably will always be precious metals, particularly gold. The best way or approach towards investing in gold is also (hands down) ownership of the physical metal itself while mutual funds or mining stock do provide a little hedge, nothing can be compared to owning gold bars on your person. As it provides the most direct counter to the dollar if the dollar was to fall, which it will not too long from now, judging from the way things are transpiring. This is so due to the fact that when the dollar falls, the value or price of gold will inevitably rise and at that point in time buying gold would not only be counterproductive, but plain foolish as the prices will rise quickly and without warning. According to Dailyreckoning.com, the dollar is on a self destruct path faster than most other currencies as the finance of the US economy is being raised on debts. However there are ways to position portfolios in a manner that lowers risk levels and increase real potential for profits in time to come – in a long time to come.

It is becoming more evident that the future growth of economies will be based on gold bullion stocks as the world economy will inevitably head back towards the gold standard. However how you invest in gold bullion besides purchasing physical gold is an entirely different matter, it all comes down to your level of market expertise or experience as the more familiar you are with gold related derivatives the better you will be able to handle the case scenarios that would present themselves.

Direct ownership is the best way to own gold bullion it is without any doubt the ultimate expression of pure value. As most of us already know civilizations over the eons have recognized the permanence of gold’s value to an extent where great wars were fought for the sole purpose of pillaging stores of gold. The reason for it simple – Gold, silver and other precious metals are the only real money that has value which cannot be manipulated or controlled by any faction, including governments. If gold bars do not appeal to you other forms of gold bullion include gold coins such as the South African Krugerrands, Canadian Maple Leafs, or American Eagles. Other forms of gold bullion investments that could be considered but not recommended unless you have a good grasp of trading is Gold exchange-traded funds or more commonly known as ETFs. In recent times exchange traded funds have become popular as they provide an interesting way to invest in gold. In essence they are similar to mutual funds that trades trade in the stock exchange like an ordinary share. However an ETF’s portfolio is fixed and does not change.

Gold mutual funds on the other hand are more suitable for those who are not too keen to invest in physical gold, but still want a piece of the precious metal industry action. They are good for diversifying portfolios. For more on ETFs and Gold Mutual funds visit: http://www.nasdaq.com/etfs/what-are-ETFs.aspx

Buying Gold / Selling Gold Gold & Silver Bullion

Bullion Treasure Chest

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It is no secret that the precious metals industry is indeed capital intensive and the reason for it is not only because precious metals are rare, but there is also the business of constructing mines and building production facilities in the middle of nowhere and these initiatives takes a lot of capital. However, this does not mean that investing in bullion is a non profitable initiative as a matter of fact the only reason any individual should invest in gold is to protect themselves from economic conditions that are uncertain. It is imperative for anybody who is planning on investing in gold bullion to understand this.

It is also important for would be investors to understand the factors that play a big role towards how gold prices are influenced in the market. These influences may range from variables such as fabricator demand, expected inflation as well as central bank demand which has a tremendous effect on the demand curve that push supply lines that in turn creates upward stress on the price ceiling or resistance levels of the market. Thus if we look at the structure of how gold bullion prices work it becomes more obvious that gold is heavily pegged to the patterns or the whims and fancies of the supply-and-demand patterns. Another aspect of the industry from a ‘production perspective’ is the fact that when the prices of the precious metal is low production is low due to the fact the mining companies would not be able to make profits when gold prices are low and most resort to keeping the stock of until prices are more feasible for release and of course in contrast high prices result in high production. Nevertheless it is market forces that determine price the prices of gold, silver and other precious metal bullion. This simply means that controlling costs is vital towards maintaining the financial health of mining companies when prices are low.

Other formats of bullion trading would include commodity ETFs or Exchange traded funds which is available for gold, silver and platinum. ETFs are instruments that are typically convenient for purchasing gold or selling gold and are easily liquidated with a push of a button. However, ETFs does not necessarily mean you will get the gold at the end of the transaction as it is a promise of gold delivery OR a sum of money that is equivalent to that of the gold you hold on paper. Other formats of gold related investment instruments include Common Stocks and Mutual Funds which are basically shares of precious metals mining companies and unless you have a good definition of how mining stocks values are arrived as it would be much safer to use the services of fund managers who have a proven track record. If you do not have sufficient funds for engaging fund managers, then the best option is to buy small gold bars from a reputable dealer systematically and slowly. The smaller the gold bar denominations you buy, the better it is for your future liquidation purposes.

Economic Financial System Gold & Silver Bullion World Currency

China’s Market Cash And PBOC’s Measures Could Open A Window For Gold

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Recent financial mayhem in Asia could be the perfect chance for gold to recover its lost value during the last five years. China’s market crash and PBOC’s decisions, especially the multiple devaluations on the Yuan, can open a profitable window to the gold industry.

Everyone was worried and talking about Greece and its bailout trouble. In the meanwhile, China had (and still have) bigger problems. The market crash occurred recently represents a great threat to worldwide economies. Now, the disaster has been appeased and the media is optimistic about it. But devaluing three times in a row a currency as the Yuan is no good signal.

Despite the Greek crisis mentioned above, gold hadn’t the chance to rebound. In fact, it was the US Dollar which got stronger during those confusing days. It must be thanks to the FED’s promising aspirations of raising the interest rates. By the way, those aspirations were a lie or naive assumptions, because the FED chairman publicly disbanded those intentions on Bloomberg TV. That same day, gold recovered a little bit.

Even with the disappointing declarations, the US Dollar keeps growing these days. And still offers an attractive interest rate. Something gold can offer the investment. The precious metal sacrifice a return over the safety of being a safe-haven asset.

World Gold Council stated that the low prices will cause an imminent drop in gold supply. Producers will offer less and less every day if the prices keep falling in the future. This action will be taken in order to prevent higher costs. Decreasing the metal output, the prices will be forced to go up in the mid-term.

That shortage on supply would help the gold to slowly recover within the year but, that is not the greater news. Investors must need about the demand during the Greek crisis. The media stated that the European investors didn’t bet in favor of the precious metal, because the prices didn’t go up. In fact, a relevant share of the European investors did buy an important volume of gold in order to store their wealth, addressed by the panic. The only detail was that the demand wasn’t enough to raise the prices in relation with the supply.

At the same time, Chinese gold consumption drops about 3 per cent during the same period of the year. Local observers pointed out that Asian investors preferred to put their money in the Shanghai stock market, looking for short-term profits. In the meanwhile, climatic problems suffered in India affected local jewellery demand.

Why this is so relevant to the global prices? Jewellery demand represents almost 60 per cent of the total global consumption of gold but, this statistic has been affected by the decreasing demand within China and India. Those two countries represents by themselves almost the half of the gold demand worldwide. Any distortion in those countries will surely impact on the gold prices, hard.

Now, the problem that China is suffering could open a window for the gold sector. If a supply decrease is combined with a sudden Asian demand hike, caused by panic, gold prices could sky-rocket to record-high numbers, at least for this year trade.

The PBOC’s devaluations had triggered already a big purchase of gold. The progression of the situation should show more direct interaction with gold as a safe-haven for Asian investors. Despite the late aversion to the precious asset, investors are going back to the basics. Even a falling US Dollar can be seen in the near future as a cause of the financial hardships in progress. If there is any contagion effect in the next months, gold would shine again.