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US Mint Gold Eagle Coin Sales Research (1987-2011) Casts Doubt on “Gold Bubble” Assertion
Submitted by GoldCore
US Mint Gold Eagle Coin Sales Research (1987-2011) Casts Doubt on “Gold Bubble” Assertion
Gold is trading at USD 1,841.60, EUR 1,310.90 , GBP 1,148.90, CHF 1,593.10 and JPY 142,290 per ounce and is thus trading at levels seen at this time yesterday.
Gold’s London AM fix this morning was USD 1,827.00, EUR 1,298.88, GBP 1146.68 per ounce. Gold fixed lower in all currencies from yesterday’s AM fix - USD 1,844.00, EUR 1,311.99, GBP 1153.44 per ounce.
Cross Currency Table
New research from Dr Constantin Gurdgiev, Head of Research with St Columbanus AG, member of the investment committee of GoldCore and the adjunct lecturer in finance in Trinity College, Dublin, questions the widely held belief that retail investors are “piling into” gold in a speculative frenzy.
This assertion has been heard for many months now. It is one of a few simplistic assertions that are used by those who have been claiming that gold is a bubble – including by respected economists such as Paul Krugman.
In July, Krugman suggested somewhat simplistically that gold prices have risen to record nominal highs due to retail gold dealers in the US engaging in a “marketing scam” trying to aggressively sell gold coins by preying on people’s fears about inflation.
The very real and significant global gold demand, especially from Chinese and Asian store of wealth buyers and from central banks internationally who are set to be net buyers again in 2011, was completely ignored by Krugman.
Many have echoed Krugman’s assertion that retail demand for gold coins due to aggressive marketing campaigns by unscrupulous bullion dealers was leading to higher gold prices and creating a gold bubble.
The ‘gold bubble’ meme has been widely accepted and propagated by much of the non specialist financial press.
Constantin Gurdgiev’s article published in The Globe and Mail today looks at the facts and questions this widely held assertion and assumption.
The article, ‘If you’re looking for bubbles, don’t look at gold coins’, can be read here.
“The U.S. Mint data on sales of gold coins suggests that we are not in the last days of the ‘bubble’,” finds Gurdgiev.
Buyers of gold bullion coins such as the US Mint’s gold eagles are store of value buyers and sometimes collectors, Gurdgiev points out.
They are not speculative buyers trying to time the market and make a short term financial gain or speculative profit.
Buyers of gold bullion coins and bars are not speculators as speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum. Most buyers of gold coins are motivated not by a return on capital but by a return of capital and by wealth preservation.
This is particularly the case in today’s extremely uncertain world where some blue chip stocks, including bank stocks, have collapsed to become worthless and where a safe haven currency such as the Swiss franc can be devalued against gold and other currencies by more than 7% in a matter of minutes.
Concern, risk aversion and sometimes fear is leading to store of wealth demand. Demand today is not driven by greed, “irrational exuberance” or a mass mania to get rich by jumping on the latest bandwagon.
Gurdgiev points out that “gold coins are traditionally held by retail investors as portable units to store wealth. Due to this, plus demand from collectors, gold coins are less liquid and represent more of a pure ‘store of value’ than a speculative instrument.”
US Mint Gold Coin Sales and Nominal Gold Price (1986-2011)
The data shows that there has not been a dramatic increase in demand for the US Mint’s Gold Eagles with annual demand in 2011 set to be some 1,275,000 oz which is below the levels since back in 1986-1987, in 1998-1999 and more recently in 2009 when demand was 1,435,000 oz.
Gurdgiev points out that even if there was record demand for gold eagles today surpassing the levels seen in 1986-1987, in 1998-1999 and again in 2009, it would not necessarily be a contrarian signal that gold was a bubble about to burst.
“Classical bubbles arise when speculative motives (bets on continued accelerating price appreciation) exceed fundamentals-driven motives for holding gold. In later stages of the “bubble”, we should, therefore, expect demand for gold coins to fall compared to the demand for financially instrumented gold.”
This is something we have long pointed out. Demand for gold bullion coins and bars is not a good contrarian indicator of retail demand and the typical mass mania greedy buying that accompanies most market tops and most bubbles.
A far better indicator of this is the Commitment of Traders (COT) data from the COMEX and data from the global gold market and the increasingly important gold spot and futures markets in Dubai (DMCC) and especially Shanghai (SGE).
(COT data from the COMEX, as we pointed out last week, is far from the record levels seen in recent years and sentiment remains lukewarm today.)
The myriad of more liquid gold ETFs which cater for the less risk averse stock trading and investing public may also be a good benchmark of retail exuberance for gold.
Gurdgiev excellent article concludes that the data and evidence from the US Mint regarding the “behaviourally anchored, longer-term demand for gold coins as wealth preservation tool for smaller retail investors” does not “appear to support the view of a dramatic over-buying of gold by the fabled speculatively crazed retail investors that some media commentators are seeing nowadays.”
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NEWS
(Reuters) -- Asia gold buyers rush in after prices sink; India eyed
http://in.reuters.com/article/2011/09/08/idINIndia-59216820110908
(Reuters) -- PRECIOUS-Gold rebounds more than 1 pct ahead of Obama speech
http://www.reuters.com/article/2011/09/08/markets-precious-idUSL3E7K80SF20110908
(Bloomberg) -- Gold Price’s Drop May Prolong 11-Year Bull Run, Top U.K. Fund Manager Says
http://www.bloomberg.com/news/2011-09-07/retreat-in-gold-prices-may-extend-11-year-bull-run-top-u-k-investor-says.html
(Bloomberg) -- Bolivia's central bank will buy domestic gold production to boost reserves
http://www.bloomberg.com/news/2011-09-07/bolivia-central-bank-to-buy-local-gold-output-to-boost-reserves.html
(AFP) -- And the heavens showered Earth with gold
http://www.google.com/hostednews/afp/article/ALeqM5jOwHjT9X6XMUy-FagqVtmgiAksKA?docId=CNG.4ecd62b490d0f49529b2cfb2c331d332.fd1
COMMENTARY
(Globe & Mail via GoldCore) -- Dr. Constantin Gurdgiev: If you’re looking for bubbles, don’t look at gold coins
https://www.goldcore.com/goldcore_blog/if-you%E2%80%99re-looking-bubbles-don%E2%80%99t-look-gold-coins
(The Telegraph) -- Ambrose Evans-Pritchard: German court curbs future bailouts, bans EU fiscal union
http://www.telegraph.co.uk/finance/financialcrisis/8748393/German-court-curbs-future-bail-outs-bans-EU-fiscal-union.html
(Open Europe) -- What will the German Constitutional Court ruling mean for the eurozone crisis?
http://www.openeurope.org.uk/research/Karlsruhefactor.pdf
(King World News) -- Embry - JP Morgan Trapped Short in Silver, Gold Strongly Bid
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/8_Embry_-_JP_Morgan_Trapped_Short_in_Silver%2C_Gold_Strongly_Bid.html
(GoldSeek) -- False Comparison to 2008
http://news.goldseek.com/GoldenJackass/1315425600.php
(ZeroHedge) -- The Chart That Shows QE3 Failed Before It Even Started
http://www.zerohedge.com/news/chart-shows-qe3-failed-it-even-started
Krugman: ‘Forget everything you’ve heard about gold prices, it’s wrong’
http://business.financialpost.com/2011/09/07/forget-everything-youve-heard-about-gold-prices-its-wrong-krugman/
»
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Precious metal stocks 'filled the gap' in trade yesterday and there was strong buying of GDX into the close. Looking bullish for the miners:
http://www.bullionbaron.com/2011/09/gold-stocks-hold-their-ground-gap.html
Confirmation is nice, but most educated gold buyers know this.
That second plot was a keeper. Goldcore has also really stepped up to the plate to provide interesting analysis.
Now for my own analysis:As long as sovereigns are net buyers (by intent), then the retail crowd is irrelevant. Moreover, unlike any other asset (yes, I am agreeing with Bernanke), I do not believe these sovereign buyers present any risk whatsoever in the foreseeable future that they will somehow scamper for the exits.
So here is the question that bothers me and maybe you bright folks (and, admittedly, Snark Geniuses) can help me out: I keep hearing the equities are cheap but I cannot easily make the case. Dividends (my favorite) are modest and p/e ratios (often above 20 with a relatively few exceptions) are OK but not great. To argue assets in the ground is the key doesn't makes sense to me. I think of it these companies as akin to royalty trusts. If you show me a royalty trust that can only pump out 4% per year, I am not going to call that cheap. I kept hearing about how they would print money with gold at $500. What am I missing? (For the record, I own a ton of them, so this is not baiting the bulls.)
Gold and silver bull since 1999...
Thomas..."I keep hearing the equities are cheap but I cannot easily make the case."
Thirty years or more ago I owned some mining stocks, but no longer. What I have heard recently is that the creation of ETFs diverted money that was formerly going into mining stocks. I don't know if this is true or not.
When I had jr miners they didn't do well. Too much dilution of stock, huge stk options gifted to the start up people, and outright fraud. So I got out of the miners when I was convinced that a miner was a liar standing next to a hole in the ground. Now I own physical only.
"I do not believe these sovereign buyers present any risk whatsoever in the foreseeable future that they will somehow scamper for the exits."
No scampering for the exits for soverigns... In fact they will soon be recapitalizing themselves with PMs.
I began buying gold in 1968... back then owning bullion was still illegal so I bought well worn double eagles, K rands, and Mex Gold Pesos... and a few other odds and ends. In 68 the black mkt in gold was well established and lots of Mex Gold Pesos were crossing a pretty wide open border with Mexico. K rands coming in from Canada. Krands went into production in 67 and were an immediate success worlwide.
I am glad to see this article. It helps confirm what I have been saying for years... The big driver for gold is coming from SE Asia, the Mid East and now Europe. Americans know next to nothing about gold as a store of value...but they are about to get a lesson in the school of hard knocks.
Experience is a hard teacher. She gives the test first and the lessons afterwards.
Countries can confiscate(tax 1000)%, ban and even erase it from the history books if needed at any moment. So much of safe haven.
That's a lame arguement as it doesn't just apply to gold. Governments can do absolutely anything if the people let them.
And the U.S. citizenry have proven 100%, beyond any shadow of a doubt, over recent years that they will allow their government to do ANYTHING.
I truely believe Obamma could go to the house of an average U.S. citizen, take a dump in the owner's mouth, while stating it is for national security reasons... and there would be little, if any, protest of his actions.
I get your point but you may be exaggerating a bit. Maybe pissing on one's child but shitting in one's mouth? Nah!
The Aristocrats: http://www.youtube.com/watch?v=CyKGHVA6rb0
This why black markets exist, coming to a mall near you soon
Precisely, and business has never been better.
Ya gotta work on those metaphors.
This reasoning will leave your poor!
yeah and those sort of things lead to black/free markets doing the price discovery. look for more shenanighans as the effort to continue the status quo farce become even more dire.
Utter nonsense. Just listen to yourself. Individual countries can try, but there will always be a market for history's most precious, and easily portable store of wealth. And no, you cannot erase gold from the history books. It is interwoven throughout all of our history, literature, and culture. But why listen to me? You have just lived through the greatest effort in human history to disparage, minimalize, and redfine gold, involving not just individual countries, but virtually all the nations on the planet. How did that little experiment work out?
Not only confiscate gold but make it illegal to own and put you in Jail.
Excellent piece here that needs reading by anyone even THINKING about owning gold. Only pertinent part to confiscation is shown below.
http://www.ritholtz.com/blog/2011/09/your-gold-teeth/?utm_source=feedbur...
Is Confiscation a Risk?
Since 1973, when it became legal again (after 40 years) for private parties in the US to hold gold, a perceived risk to holders of above and below-ground gold has been government confiscation. In fact, last month in Venezuela — a country where private property rights are not a high priority – the government effectively confiscated private sector gold mines. Is it possible that confiscation could occur in developed Western economies if/when it is perceived that such confiscation would serve the public good?
Anything is possible, but we think: 1) confiscating private gold would not solve anything for governments because doing so would not increase base money, which is the source of their economies’ leverage problems, and 2) confiscation is highly unlikely until governments are ready to formally devalue their currencies, which implies far more currency and levered financial asset deterioration in the markets vis-à-vis gold. So while anything is possible, we do not see confiscation as a risk to above- or below-ground gold owners.
To be sure, there is precedent for government confiscation within developed economies. President Roosevelt delivered Executive Order 6102 to Congress on April 5, 1933, which forbade “the hoarding of gold coins, gold bullion and gold certificates in the continental United States by individuals, partnerships, associations and corporations.” Roosevelt cited Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled: “An Act to provide relief in the existing national emergency in banking…”
[Read entire text of the Executive Order...]
So basically there seems to be precedent and we must presume it is legal for the US President to unilaterally decide what is and is not a legal form of savings and store of wealth for Americans. The rationalization for this order was clearly to save the US banking system. After confiscating privately-held gold from the public, Roosevelt then de-valued dollars vs. gold, from $20.67/oz. to $35.00/oz. He effectively tried to save private bank capital structures at the expense of private savers.
The differences between then and now are not as great as one would think. FDR formally devalued the dollar by re-pegging it to gold at a higher price. We think President Obama or whoever comes next will have no choice but to formally devalue the dollar by pegging it to gold. FDR had to re-peg dollars (devalue) because there was already a gold exchange standard in 1933, meaning the Fed could not create new money as it is doing today (through QE). FDR’s team was very conscious then that abandoning the gold-exchange standard would risk the dollar’s fate. It could have failed almost immediately as the Papiermark did in Weimar Germany 10 years before.
This time, we think a contemporary Cabinet will have to devalue and then re-peg (with a 40-year lag, since 1971) after it becomes clear that there are diminishing economy-wide benefits from central bank money printing and debt shifting. Formal devaluation will be the least painful way of de-leveraging economies.
For investors in gold today, we think the pertinent risk-related questions are these:
1. “Could the US government confiscate privately-held bullion and publicly-held shares in gold miners without significantly altering established property rights law? Wouldn’t economic conditions have to decline meaningfully first?”
2. “What justification would the US government have to confiscate gold and gold miners at a time when, unlike in 1933, gold does not back money?”
3. “Could the US government confiscate all shares in gold miners throughout all domains owned by international shareholders, or would Canadians say “get oot” and Australians say “G’Day”?”
While governments may try to do whatever they like, we think they would not succeed in the current environment. Confiscation would demand upending international property rights law and justifying it in the name of saving twelve money center banks no longer charged or expected to physically warehouse depositor savings. Further, unlike 1933, the Chairman of the Fed (at his last Congressional testimony) and everyone else freely admits gold is not money.
Structurally speaking it would be far easier for governments to ditch the existing monetary system entirely and start over with another baseless currency. Such a monetary reset was actually done in Weimar Germany on November 15, 1923, after massive hyperinflation forced the Papeirmark/US dollar exchange ratio out to 1,000,000:1. Papiermarks were replaced with the Rentenmarks at a USD exchange ratio of 4.2:1. The lessons of history are not easily dismissed. A monetary reset from paper to paper would be tantamount to admitting failure and bringing the legitimacy of the new currency along with government itself into question. The fall of the Weimar Republic and the rise popular discontent in Germany should serve as an example.
The most logical and politically expedient outcome is formal devaluation and transformation into a hard currency, executed by allowing central banks to tender for gold at a targeted, devalued dollar/gold exchange rate. More Federal Reserve Notes would be created and recorded as liabilities while the static quantity of gold would be recorded as an asset. Balance sheets would reconcile.
We wrote in “Apropos of Everything” about the mechanics of devaluation. The process of re-instituting gold-backed money would require a substantial devaluation of unreserved debt money (i.e. dollars, Euros Yen, etc) to gold. Perhaps this is why Western Treasury ministries and central banks cannot seem to accumulate gold fast enough presently while jawboning its barbarous qualities? And perhaps this is why Russian and Chinese governments have begun keeping much of their domestic gold mine output?
We conclude that gold would theoretically have to be deemed government-sanctioned money before it and gold mines could be confiscated by governments and by the time this would happen there would be no need for confiscation. We believe there will be confiscation of property but that it will be in real terms through currency devaluation. The time to convert paper money and assets to gold is prior to devaluation. Those entities with gold (including private holders), will effectively confiscate property from those entities without it through increased relative purchasing power. Governments have no incentive to confiscate the little gold held by private parties that would profit from devaluation.
In a stunning turn of events, GoldCore says gold not in a bubble! And one of their professors can prove it!
Before I get junked into oblivion, I'm a PM collector myself. I just find it funny that the people at GoldCore find it necessary to protest so much. I don't think it's a bubble, but I do think it is subject to speculation, like any other asset class, and there will be ups and downs.
Here's a question:
when prices rise - how can you tell if it's rising because it's a bubble? Isn't EVERY price increase "a bubble" once it goes down (as virtually all do)?
Now, I know I'll get some kind of flame on this, but think about it before you respond. Barring the few exceptions of companies that have lasted for long periods of time (GE, IBM, etc.), virtually all others have been a, or part of, a "bubble" that varies in length and scale.
Even those companies (GE in particular, until about 2002, was in a spectacular "bubble") have bubbled in the course of their long histories.
Bubbles are nothing except the nature of buying and selling in a trend or a group dynamic. The price of anything goes up if more people want it than the number who are trying to get rid of it. As the demand increases, prices go up. Simple. Now, if that happens because people fear or expect something to happen - why is this a "speculative bubble"? What if that thing happens (as it has, from time to time)? Suddenly it's NOT a bubble, and those people are "savvy investors".
The whole discussion of "bubble" irks me. I prefer to ask "is the price of something justified by the underlying values and trends?" Well, the trend for gold is undoubtedly up - so yes, that justifies the price. And the value of all available gold, when aligned to the entire stock of world currency in circulation is about $6,000 an ounce. So the underlying value is there. Even if you factor in other precious metals, such as silver or platinum, you can still make a case for gold being worth $3-4,000 an ounce. Given the nature of central bank behavior these days - that number is only going to rise.
<Isn't EVERY price increase "a bubble" once it goes down (as virtually all do)? >
PRICES going down, where do you live?.
I have never seena price decrease, they always go up, and stay up.
One exception sf fuel.
In my view a bubble is created through inflation. Inflation is not price increases. Inflation is expansion of the money supply. Printing more (QE) or low interest rates making it cheap and easy to borrow. If you question my definition of inflation just look it up in a dictionary prior to 1971. Why the change in such an important word used daily by our leaders?
The prices increase because of an increased artificial demand created by more money in the hands of potential buyers or through government price fixing and manipulations in the market. Would home prices have increased as wildly as they had without cheap access to money and government guarantees to buy all the mortgages in the land?
The price of gold may go up, it may go down. The bubble is in treasuries, dollar bills and all fiat currency around the world being exchanged for the gold acquired by hard working companies and producers having exchanged their efforts, time, and capital investment to pull out of the ground.
-pp
Good to see people are buying. At least some will be prepared and be able to help rebuild the economy with real assets after the implosion of the current economy.
As they say, it is the end of the beginning of the gold rise.
Confiscate and Erase Gold from History? Good luck with that. Let's see if they can erase flying lead.
My guess is that he means you can confiscate the gold, and make owning it illegal, as we have actually done from time to time.
You can erase flying lead, too. Just get a good history writer. The War Between the States was just a little episode of interstate fisticuffs, if you describe it properly and convince a large enough group of people.
Or, if you'd prefer, convince people that the flying lead is a real value, particularly when it impacts your body at high speeds because it makes you a "hero". Not trying to diminish the great things done by our fighting men and women - I respect them greatly and have nothing but the best wishes and desires for them. My comments are geared toward politicians who have never so much as argued a point vociferously but love to talk about how others gave up their lives for us. I wish some of these politicians were willing to do that.
Try this: ...as we have done once. It was done in 1933 and kept that way until the memory of gold's role in the financial well being of the country was erased from the collective conscience of the people. Then it was made legal. The Mint is selling gold and silver hand over fist. I guess the Government Mind Meld didn't work as well as they'd hoped.
It's the FRN and all other fiat currencies that have been in a bubble. What we are witnessing is the popping of the fiat currency bubble with the central bankers attempting to patch the holes to keep the air from escaping. These patches come in the form of comments such as, "IMF selling gold", raids on PMs from time to time, "gold is in a bubble", etc etc.
The gold bubble can never pop because it doesn't exist nor will the fiat currencies survive because there is no way to save them barring a huge devaluation if one can even call that a save. That would be a temporary save at best.
It's a created credit fractional reserve FRN bubble. The FRNs are all digits on computers, even the EURO has more physical currency and coins in circulation than US coins and FRNs, and it has only been around for a decade or so as circulating fiat. Gold isn't trending up, FRNs and all the other fiat currencies are trending down as the banksters try to create digits to get out of the credit bubble.
The only reason the IMF ever sells gold is because it can get a higher rate of return impoverishing its debt slaves.
Excellent observation by Silverisking.
The gold bubble cannot pop because it doesn't exist. Therefore, all efforts to pop it, by the most powerful people on the planet, have failed. Bubbles don't reinflate. Once they reach the point where The Greater Fool principal takes over, they exist on confidence. Once that confidence is shaken, they cannot reinflate. We have witnessed multiple attempts to bring down gold and silver. The May attack on silver and August attack on gold were brutal, and yet, nothing popped. When the attacks ended, the price returned to trend. Therefore, there is no evidence of a bubble. All other discussion is just filling in the corners of the obvious.
I give all mine away to the poor. I buy PM's and go on the streets and give it away........
I gave bit of gold (profits) to Dr Paul this morning, donation to share the love.
Even if he is not "electable" he gets my cash for simply waking the masses.
Is their any truth to the theory that the US govt is pushing up the price of gold so it can more easily repay it's debt in gold? yes I know nothing about any of this........ a businessman in the rag trade from India told me this theory last night and that it's a view shared by some in India.
I give you this chart:
U.S. National Debt in Tonnes of Gold:
http://www.apmaz.com/joomla/images/stories/image001.gif
To put it into perspective: 165,000 tonnes of gold were ever mined. US government supposedly owns 8,000 tonnes of gold.
If you extrapolate the data in the chart debt would be payable with gold in 15-20 years.
What if gold were at 5k? The calc on my doesn't go up to trillions butnhow much would gold have to be at for them to pay off say 1trillion with 100 or 1000 tonnes of gold? Is this feasible?
8000 tons at $5K would be in the neighborhood of $1.3 trillion....not nearly enough to cover the $14 tril we owe today.
To pay 1 trillion with 100 tonnes of gold it would need to be at about 300,000/oz. With 1,000 tonnes for one trillion, 30,000/oz, which isn't a so absurd price.
Exactly. Any price is justified if it keeps TPTB in the seat of power. They will do anything. If that lesson hasn't been learned after the last four years, we will never learn it.
There are no rules. There is no law. There is only power, and TPTB intend to remain TPTB, even if it takes $100k gold. If necessary, they will take that step and just spin the news.
Now, with that established, you have to ask yourself how probable such high prices are. Let me answer a question with a question. Do TPTB have any other choice? How would you fix this messed up system? Was bankrupting the nations of the West to buy time logical unless the time they purchased led to them solidifying their control in the end? The ONLY long term action that has been taken is the central banks, all over the world, at the same time, started buying gold.
Hording gold at $1800 an ounce isn't going to dig them out. But stacking cheap gold and ramping prices to the moon, combined with judicious debt forgiveness will. They are going to do it, and $10k gold isn't going to get the job done. Hold on to your hats folks.
If you read the speaches of Congressman Luis McFadden and you believe that the man had knowledge enough to be accurate then you will understand that the current alleged worldwide gold holdings of aprox 36,000 tonnes is nothing compared to the 95,000 tonnes that was removed from this country in the 20s precipitating the bank runs and crash following a few well places rumors. This is in the congressional records. So if thats the case, there are nearly 60 kilotons of gold, for lack of better words, simply 'missing'. I counted the aprox value at $1776 oz then factored a sane 10/1 multiplier on the fiat and it came to something like 21 trillion dollars.
Makes sense, central banks report 36,000 tons or so...private ownership dwarfs this, I read 80% of gold is privately held...and how much of it gets buried like in that shrine in India that they dug up?
Yeah but the point being.. how did all that gold get into so-called private hands? If you read McFadden he is not kind to the Federal Reserve System owners and controllers and claims that the entire transfer of gold out of the richest nation on earth at the time (America) to European hands and into the BIS was a fraud of legendary proportions using German reperations bonds which the Germans never intended to pay off and even told us so. Anyhow, this gold just disappeared. Where did it go? It belonged to the American people. Directly after the contrived panic, FDR made it illegal to own gold by executive order -- then congress so as not to be hanged for treason passed Public Law 10 48 Stat Ch 48 also known as HJR 192 and so on. Diabolical shit, however this gold needs to be returned because as McFadden said, it was STOLEN using the same methods they use today. Rating a bond AAA when its junk. It's incredible and sad that noone studies real history in detail. These scumabgs have been doing this over and over and over and using the scenery of world theatre to make it seem like 'this time is different'. It may interest you that McFadden was later treated much like Rasputin in that he was shot, poisoned and then poisoned again which finally killed him. That is the reward for rebellion against the rulers of evil.
this is the $64,000 an ounce question. how much is gold is "missing" (or not Officially Reported) and whose hands does it tarnish? not that it will matter a hill of beans when dumped into the black hole of paper promises of course, but it may make the ride a little more dramaturgical.
sure will be bullish for zero hedge. more conspiracy theories coming to a vault near you...
I didnt realize congressional records are now classified as conspiracy theory. It wouldnt surprise me if the official announcement is made that it is.
Google the article "Your Gold Teeth" by Paul Brodsky, found on ZH yesterday. Yes it is feasible, but they could only do it with gold. Any other commodity raised to those prices would destroy whole industries. Only gold can go to any price they want with virtually no adverse repercussions, except to those who don't hold gold.
I believe that gold prices will be ramped when the central banks have all the gold they can get, or further can kicking is no longer feasible. I agree with the article that a combination of debt forgiveness and a gold related standard is coming. I don't think it will be a pure gold standard, all the gold is staying in their vaults, not coming out in the form of coins.
The one thing I loved about the article is it shared my belief that the coming shift to a gold standard and the ramping of gold prices constitutes a tax on everyone without gold. If the coming measuring stick of value is gold, and they double the price of gold, they just taxed everything you have, because all you own is instantly worth half as much.
Somebody has to pay for all this craziness, and it isn't going to be TPTB.
Worth repeating for fans of commodities:
"Any other commodity raised to those prices would destroy whole industries. Only gold can go to any price they want with virtually no adverse repercussions, except to those who don't hold gold."
Nothing has gold's "upside".
Why would they do that when they can just devalue the curreny and pay in worthless dollars, like every other overly indebted nation on a fiat standard has done? Your Indian friends attribute a little too much honor to the US gov't. How quaint.
Got it. he also told me his friends in diamonds r do well when customers can't pay up as they r not on the hook for dollar value of goods they took but the inventory, so the merchants get to re-posses stones that are now worth more than when orig sold
Normally, we would be discussing just one country going bankrupt, or a handful of countries like during the Weimar Republic, and you would be absolutely right, however the situation here is different and I think it affects how this will play out.
I don't think the Fed and the ECB want to completely destroy their currencies through hyperinflation and leave China in the driver's seat. Fiat is failing all over the world, all at the same time. They need to switch us into a new monetary system without upsetting the process which feeds 7 billion mouthes. One country can hyperinflate and do a chew and screw on its debts, but all countries, all at the same time? If all of the Western nations hyperinflate, we are going to see super high gold prices anyway, so why wouldn't the central banks harness that process to their benefit.
It was clear to them in late 2009 that the system couldn't be saved, and they all started to buy gold. I can't imagine them plowing money into tradition unless they thought that tradition was going to be key to their end game. Maybe I'm wrong and we will see hyperinflation, but I can't imagine the most powerful people in the world would wait that long and see their power threatened. They will stop kicking that can as soon as it suits them. You are not getting out of your mortgage for the price of a hamburger.
Suddenly, after the failure of "stimulus", all the central banks, all over the world, all at the same time, are buying gold.
Some nations, like China and Russia, are not allowing their gold output to leave the country.
Some nations like Venezuela, are nationalizing their mines and repatrioting their gold.There is no way to pay off the debt of the EU member states and the USG. They have spent themselves into the ground to kick the can. They must be stalling for some reason. The only long term action being taken isn't to fix the broken system, it is buying gold.
Now why would the USA, with the Fed and the ECB right at the center of this conspiracy, want higher gold prices when they are buying? the gold market isn't that big. The USG could ramp prices higher at will. Prices are being manipulated lower, not higher. Does that make any sense to you?
When the central banks stop buying because they can't get cheap gold anymore, THEN you will see gold prices manipulated higher by those with the gold, but not until then.
Hmm...Libya's CB sold their (physical) gold in April and May (29 tonnes) within it's borders...
http://af.reuters.com/article/metalsNews/idAFL5E7K81A620110908
Rebels know what the precious is worth and ain't nobody getting it (yet).
Most Americans can't afford to spare the $2,000 for a single Gold Eagle coin.
They need the money for GM and Chrysler no money down no interest loan payments on a Goverment Motors Union Car, credit card minimum payments, and $8 a pound ground coffee.
Yet these are the same people who take lavish vacations, buy oversized tvs, cars, and houses, and spend north of $100 a month on cable entertainment. When you think about it, it's all just a question of priorities.
B-but the Joneses!
Seriously, there's a horrible stigma against "poverty" in America.
Though cable is mostly useless, at least for me. Unfortunately here at home I'm guilty of having paid for TV, because of family that seldom watches anything but CNN.
You might want to try a different channel.
Or the family of three with smart phones paying $2000-per-year phone bills.
To some degree you are right, because money matters have been completely erased from our educational system and people are learning about money from parents that don't know anything either. So yes, people do stupid things with money.
However, that little rant of yours is part of the disinformation campaign of TPTB. People bought station wagons back in the day. They took vacations too, and many had vacation homes or cabins. How many people do you know with two homes today? People spent money going to the theatre, concerts, plays, and the opera back in the day. Today they stay home. So that depreciated $100 for cable doesn't seem all that extravagant to me. Most of all, people back in the day had one income and four or more kids. Today they struggle with two incomes, two or less kids, and still have to turn to credit cards.
Please reconsider your position. It is disinformation to take the public's attention away from them being used by the system. Their currency is being debased, the stock market is a scam, interest rates are at zero, they are having less kids, later in life, they are working as hard as they can, AND THEY STILL ARE NOT MAKING IT. The public was just as greedy and stupid in the past. It is not the greed or stupidity of the public that caused this. That is a bold faced lie which you can see if you consider the facts.
Back in which day?
If you want to be grammatically correct (if there is actually anybody left nowadays who cares about grammar), and not sound like an ignorant ghetto dweller, the proper phrase is "back in the day when ......".
I don't think the US gubermint has a keen interest in seeing Gold going higher. If anything, they are working through central banks to keep a lid on it. Hoping this fiat shit storm they created will blow over.
Silver, bitchez.
So tired of bubble calls. Really getting old. Our Debt is a bubble, not gold.
I just figured out whats going on! The Bernank is angry and so halted the credit computer because.... He is upset that like Sir Alan.. he has not been knighted yet by the rulers of Babylon. He is waiting to be adorned with the reglalia of Sargon to prove to the vulgar masses that he is infused with the authority of Marduk to prosecute anyone who dares use of the wicked metal in rebellion against the Mark Of Cain! Yahweh is not pleased!
That spike in coin buying in 1998-99 must have been due to concern about Y2K, which fizzled. In the immediate aftermath, buyers may have felt they were faked out. But actually, they got in just before liftoff (in 2001). It seems like a case of being wise to panic first--and having the last laugh.
It was. Extracted from http://www.cmi-gold-silver.com/90circulated.html
Y2K Buying Spurs Junk Silver Coin Buyers
Fearing that the world's computers would quit working on Januarys 1, 2000, many people began preparing for the worst. Their fears were exacerbated as respected economists issued warnings and wrote books. Newsletters were dedicated to teaching people how to prepare. One recommendation was that circulated US silver coins be stashed away so that they could be used as money when banks closed and ATMs no longer spewed $20 bills.
Consequently, in 1998 and 1999 people fearing Y2K bought junk silver coins at whatever prices, and bags picked up 50% premiums. The Y2K scare showed just how quickly US silver coins can pick up big premiums and that premiums on 90% silver coins can rise while the price of silver remains stagnant. During 1999, the price of silver was essentially unchanged.
Silver Eagles, Silver Maple Leafs as alternatives
Other popular alternatives to junk silver coins during the Y2K buying were the US Mint's Silver Eagles. Silver Maple Leafs, which are Canadian silver coins minted by the Royal Canadian Mint were popular with Y2K buyers who lived along the Canadian border. Overall, Silver Eagles were much more popular and remain more popular today than Silver Maples Leafs.
Y2K Buyers Start to Sell
On January 3, 2000, as soon it became evident that the world's computers were not going to fail, investors began selling, and they sold throughout the year and into 2001, forcing down prices on US silver coins until they sold at discounts (below the value of their silver content). Untold quantities of bags were refined into .999 fine silver bullion, and now bags of pre-1965 US silver coins are in short supply.
Before Y2K, an order for 100 bags of junk silver coins could be filled with a phone call to any one of several wholesalers. By the first half of 2002, an order for 20 bags often took two or three phone calls.
While junk US silver coins held huge premiums during the Y2K buying frenzy, many CMIGS clients-at our urging-swapped their junk silver coins for 100-oz bars or 1-oz rounds and increased their silver holdings by 35% to 45% without laying out additional cash.
After Y2K became a nonevent, the premiums on bags of US silver coins fell to where junk silver coins became cheaper than 100-oz silver bullion bars. Still, the potential for 90% silver bags to pick up big premiums justifies the buying of bags circulated silver coins by investors who can handle the bags' weight and bulk.
I'll be the contrarian.
Premise: Fools like bubbles. And there's a rule somewhere that says fools part with their money relatively quickly.
Conclusion: Promote the Gold Bubble.
Any similarities to policy that attempts to over spend as a means of reducing debt, but without the huge fail at the end, are entirely coincidental.
This story is based on static analysis. Now that ETFs are availible to the retail investor the gold coin has natually lost some appeal. http://rosenthalcapital.com/blog/
I really hate when I fail to take that into consideration. Thanks
Article by Krugman on gold is kinda funny...refers to 1974 paper on Hotelling effect V Government gold sales..1968 to 1974 gold went up 3.5 times...what Krugman leaves out in his analysis of the anticipation of gold prices is that gold buyers anticipate that governments will listen to people like him...well, I found that funny. I gotta get out more.
The 2011 Gold Eagle has not been the perfect coin to buy for a couple of reasons;
1. The Gold within has been debased, it is now only 22 carat gold.
2. The Mint has maintained outrageous prices, often commanding a premium of over $300 per ounce.
I have been buy anyway, and if I had not started to question my local supplier, I would still be buying there. But,.........
If you want pure gold you can buy Buffalos, though I think the premium will be higher in this case.
Pure gold is too soft to be handled safely. That's why they add some copper to make the coin harder.
The premium you pay for the coins returns to you. The gold in coins doesn't need to be tested by melting, a process that can cost up to 25% of the gold value.
I'd advise you to stick with the coins. They are very 'liquid', which means you can sell them easily.
Going Loonie,
Dude, do your homework.
An Eagle has 1oz of 24k Gold in it, the coin is just alloyed to make it harder.
If what you think were the case you would be gettting screwed.
And your not.
I troy oz is in there, of the real deal.
GoingLoonie, I'm not sure the gold content of the coin has changed. They mix copper into the coin to make it less likely to wear or scratch, but there is still one ounce of pure gold in the coin.
So I think you will find the coin weighs a bit more than an ounce, reflecting what they mixed in to produce a 22 karat coin. You still get your ounce of gold.
This is correct, anyone, or am I mistaken?
Gold Eagles have always been 22 karat and have not been debased. $300 over spot for one ounce gold from U. S. Mint? Are you talking proofs or uncirculated? Does not sound correct? Anyway, you are smart enough to be buying gold so good for you!
Nouriel Roubini: Hyperinflationists misunderstand "the relation between bank reserves and lending." and "What do banks actually lend? Their own IOUs."
http://www.economonitor.com/lrwray/2011/09/07/helicopter-ben-how-modern-money-theory-responds-to-hyperinflation-hyperventilators-part-3-2/
I no longer accept bank IOUs.
Hhmm. Lots of folks preaching to the choir this morning.
I guess I would say that there are several "bubbles" out there, the largest of which is the humanity bubble and the increase in human stupidity. Can't wait for these to pop.
Hedge accordingly.
The number of coins sold may be down, but the price wasn't the same. About $1 billion of eagles sold in 2009 at $875 and about $2 billion sold in 2011 at $1850. Of course the year isn't over yet, there could be a dramatic uptick. I'd say double the dollar sales in 2 years is a dramatic increase, especially when Americans don't buy gold as much as some other countries buy it.
Americans generally don't buy gold, but I'd bet a large number of bankers and their families are among those purchasing now.
"gold coins are less liquid and represent more of a pure ‘store of value’ than a speculative instrument."
Gold coins are as liquid as any hard asset on earth. Go to your local dealer to buy or sell or get online or on the phone and you can be locked in with a buy or sell price in a few minutes. Good article but his liquidity statement makes zero sense to me. If he is comparing liquidity between derivatives (digits on a screen) and hard assets he is comparing apples and oranges. If the electricity goes down the digits disappear, perhaps forever. Is that liquid?!
dissapointing, GoldCore! it's crappy report, it assumes US is the center of the world and a sufficient benchmark for global economy. in some parts in Europe, dealers report problems with access to bullion, coin are delivered with delays, some bullion producers ran out of stuff and can't keep up with orders.
now, the answer to question "is gold a bubble?" is simple: look at Belarus. are they dumping gold or national fiat? what happened there within last year is what is happening to us now but only an order of magnitude slower.
Is gold a bubble?
The litmus test is the price of gold versus ALL major currencies. The fact that Gold is up versus every single major currency pretty well destroys the bubble argument.... not that we needed another reason to dismiss the bubble heads.
If gold is in a bubble then it's the first ever WORLD bubble!
'All the world's gold and platinum ore came from outer space after a mammoth meteorite shower battered the Earth more than four billion years ago, scientists revealed today.
Researchers also discovered there is enough gold and platinum in the Earth's core to plate the surface of the globe with a layer of priceless bling four metres thick.'
Must be true - I read it in the Daily Mail!
So let me ask the crowd here.
You live in the US, not really close to the Canadian border. Would it be better to buy gold eagles or maple leafs (leaves?)
I believe there are some tax advantages to owning eagles--and also some other legal advantage. Other commenters will surely fill in the details.
I would feel better if the sale of gold eagles or maples was through the roof. It would provide pretty solid fight against spot takedowns with un-liquidity.
Look for paper pushers and industry heads that need silver/gold for production to start lobbying government to regulate the sale of silver & gold to institutions only. (That lobbying has probably begun already) The first step will be a change in the tax structure surrounding the investment metals. In five years I see the only way into the market is with "Precious Metals" accounts at your local institutions. They will use your gold & silver to backstop the US currency with out ever declaring the intent or buying a bar for themselves.
mr gurdgiev of trinity college may be confusing mint production of 1 oz (? i ass-u-me) eagles with retail sales/gold demand, since the mint produces many gold coins, such as buffalos, fractionals in both these, including proofs, commems. and the prezidential spouse series, and so on. furthermore, there is a "primary dealer" network which is (i believe) required to buy certain amounts of inventory of gold & silver production, ergo, mint sales certainly do NOT equal retail sales. another furthermore is that these primary dealers then disrtribute to other dealers, who then sell and BUY from retail customers
as w_dawg pointed out above, goldcore can be counted on to do shit like this regularly, which is why many people don't pay much attention to them after a few reads
here we have their "expert" also pointing out (paste): Gurdgiev points out that even if there was record demand for gold eagles today surpassing the levels seen in 1986-1987, in 1998-1999 and again in 2009, it would not necessarily be a contrarian signal that gold was a bubble about to burst. (end/my emph) another wtf for goldcore (& tyler?)
however, they do tend to give a poor-to-fair "summary" of what happened yest, but if you miss a day, just miss a day, and you won't hafta put up w/ their "experts" blowing smoke up your ass, or just go to golldSeek (which publishes them) and read the other articles you missed, ditto kitco, etc. they don't just disappear, ya know