Short On Cash Flow » Gold & Silver

The Gold System

Fred — Mon, 07 Jun 2010 22:32:10 +0000

Well, Gold prices are inching towards new highs again, well over $1200. Not too many people seem to trust the fake recovery the news media has conjured up.

What if the world decided to go onto a gold system? Not even a gold standard but a real 100% gold currency? It seems kind of odd because it’s this heavy shiny metal but with today’s technology its totally feasible.

I, for one, rarelly take around much cash. If I have more than 20 euros in my pocket that’s pretty odd. I pay everything with my debit card. What if the world just got sick of government run fiat currency systems?

What if a private corporation started storing Gold and issued Gold debit cards? You could go to restaurants and shops and pay with your gold debit card which would move whatever amount of gold in your account to the merchants account. Of course the merchant would have to accept gold payments and have a gold account as well.

The amount really wouldn’t matter because since its a computer calculating it could handle very small amounts, just fractions of grams of gold. The banks could preiodically settle up the totals with physical movements.

This way we could take back control of our money from government abuse. Let them print and devalue as many dollars and euros as they want, and for those who choose, they can spend and save in a real commodity with real value and limited supply.

How Much Silver Do you Need to Buy a Home?

Fred — Fri, 04 Jun 2010 16:19:29 +0000

In 1980 it took 1000 ounces of silver to buy a single family median price home. At that time the price of silver peaked at $52.80.

There is now more gold above ground in circulation than silver, for the first time in history. The price of silver currently remains so low that mining companies cannot make a profit from it and there’s isn’t much incentive to develop new mines or expand existing ones.

Historically 60% of silver production is a result of mining other industry metals like zinc, lead, tin and copper but these mining operations have slowed down greatly since the financial crisis el 2008.

Silver experts like Mike Maloney believe there is free market manipulation keeping the price of silver artificially low. They expect an upward explosion in silver prices in the near future. Maloney also states that he believes you will be able to buy a house for 500 ounces of silver.

Who knows if and when this could happen. I have been watching the price closely the past year and it just kind of bobs up and down between $16 and $19 per ounce.

How to Purchase Gold and Silver

Fred — Wed, 02 Jun 2010 13:12:15 +0000

Peter Schiff was video blogging today about some controversy over a precious metals seller called GoldLine. He was commenting on how they were charging about double the spot price for a certain coin and pushing buyers (at least his cousin who called them up) to purchase a certain coin.

What amazes me is how anyone could just buy coins without shopping around. I’ve been to different shops physically and online in Europe and have seen a range of prices. You would think that prices are very similar as they usually are for different purchase items when you compare them in different shops but there really is quite a difference in buying coins and bullion.

The cheapest we have found so far in Europe is in German shops, although if you’re a bit far way the shipping makes it more expense than buying locally.

If you’re not at all familiar with buying physical metals there’s one main thing you have to take into account. There are 2 types of coins, normal coins bought for the melt value of the metal (pure silver or gold for example) and coins that also have collector value. The second type is called Numismatics and unless you are a collector, you should avoid them. Some examples of normal coins bought for metal value would be Canadian Maple Leaf, American Eagle, South African Krugerands, American Buffalo, Australian Koala, Austrian Philamonic, etc…

Never buy gold and silver as an ETF. The great thing about the investment is you can actually own it, instead of owning a piece of paper that could be rendered worthless.

Anyways checked out Goldline’s Web site and looking at the page for a silver Canadian Maple Leaf I noticed that they don’t put the price or allow you to buy online, you have to call. My guess is you call and they hit you with a good sales pitch. I’ve never seen another site that doesn’t put the price of the metal on the page.

Well there’s nothing illegal or wrong about overpricing your products (and I don’t know if they do) but if it’s for people who are trying to make an investment then I personally wouldn’t feel too good about doing it.

The cheapest we have found so far in Europe is in German shops, although if you’re a bit far way the shipping makes it more expense than buying locally.

Never buy gold and silver as an ETF. The great thing about the investment is you can actually own it, instead of owning a piece of paper that could be rendered worthless.

More Precious Metal for Fred and Sally

Fred — Wed, 19 May 2010 19:22:09 +0000

Sally and I are adding to our Gold and Silver investments, little by little. Every month I try to better our position if just a little, as much as I can afford, as a habit. Sally amazed me by investing in Gold for the first time. I have been investing in Silver mostly.

Brother Mike seems to think we’re buying at the top of the market. He’s ‘bearish’ on precious metals because he sees deflation coming. He says all the money printing isn’t making it pasts the bank vaults so it won’t have a real effect on money circulation.

I just can’t agree. I’m no expert economist but when I see both the US and the EU printing and bailing out left and right it makes sense to hold something of real value. I’m to the point where I don’t even want to save money, aside for the money for buying our own home someday.

There’s basically no interest being paid right now on savings and the EU is showing no restraint in printing money so we can expect our Euros to go down in value.

I am happy although to see the euro dropping against the dollars and other currencies. This makes my Internet earnings in dollars worth more and my online products and services cheaper.

Canada-Maple Leaf Gold Coin

Sigmund — Sat, 05 Dec 2009 21:08:37 +0000

Canadian Maple leaf gold coin is the country's very own trademark gold coin, which is produced by the world-famous Canadian Mint. It is essentially made of the purest yellow metal of the regular 24-carat matter used by most countries as a gold coin. The complete absence of mixture of any other alloy or base like copper or nickel makes this maple leaf gold coin very special and precious. It is the finest gold from the rich gold mines within the Canadian border.

It was originally introduced in the year 1979 in competition to other bullion coin, which was rare and expensive. But the gold coins minted during the period from 1979 to 1981 have only .999 essence of pure gold in them, unlike the latest Maple leaf gold coin of .9999 essence purity. The coins are privileged and have proudly gained legal royal status in the country. The real value of these coins is much more than its supposed market value. The Maple Leaf gold coin are the true mark of symbolism and therefore very unique.

In the year 1994, gold coins worth $2 dollar per coin market value were minted. Majority of these coins were used in jewelry making. But it was not a successful venture and therefore stopped.

Some special features of the Maple leaf gold coin are as follows:

The maple leaf gold coins are popular all over the world; the distinct trademark maple leaf design is recognized for its unparalleled purity.

The first coins, which have 99.99% purity of gold, therefore these coins are worth preserving.

The gold ornaments made from these almost 100% gold metal is really worth their money and more.

Gives maximum value for liquidity and maintenance.

The Canadian government guarantees the purity and worth of these wondrous yellow metal coins.

The coin is embodied with the maple leaf on one side and the picture of Queen Elizabeth 11 adorns the other side.

The Canadian prides reflects the glory of its country, which is famous for its independent spirit, freedom of expression, secure and stable policies.

The market value of maple leaf is priced on the current value in market. This spot price for gold (which is changing in nature) is reported in all main news bulletins, national television network, radio and even online news portals.

American Eagle Gold Coin

Sigmund — Fri, 04 Dec 2009 21:07:05 +0000

In the year 1986, the US Mint released the American eagle gold coin, the official gold bullion coin of the United States . Since then, there has been no looking back for the American eagle gold coin, be it in terms of its quality or popularity. The coin is available in four types of weights: tenth of an ounce, quarter of an ounce, half of an ounce and one ounce.

However, the denomination of the coin does not affect its quality. Every American Eagle gold coin is made from pure gold and has to be produced within the USA . The gold coins do contain an alloy of silver and copper, however, but that is to ensure that the coin is more resistant to wear and tear. The U.S Mint as well as the Congress authorizes all the American Eagle gold coins.

The market value of these coins will depend upon the authenticity of the gold coins. According to the recent statistics, the set of values of the American Eagle gold coins that an individual could buy as in January, 2006, are as follows:

Face Value: $5, Market Value: $75

Face Value: $10, Market Value: $150

Face Value: $25, Market Value: $300

Face Value: $50, Market Value: $600

The price of gold, however, depends upon its market value which fluctuates a lot. Thus, it may be that you might get a price that is lower than the ones mentioned above. Remember that the price of your American Eagle gold coin depends upon the value of gold at a particular time.

Now it is obvious that you want to know how the American Eagle gold coin looks. The obverse side of the gold coin has the figure of Lady Liberty with her torch in the right hand and the olive branch in the left. You can get a glimpse of the Capital building in the left side of the statue. The reverse side of the coin bears the famous image of a male eagle carrying an olive branch to its nest where there is a female eagle with its young. This side of the American Eagle gold coin was designed by Miley Busiek and the other side was designed by Augustus Saint-Gaudens.

We have the record of a very rare Eagle coin that was bought by a coin collector for an astonishing $5 million. This rare $10 gold coin was manufactured way back in 1804. This was a very special coin meant to be a gift for the then American president Andrew Jackson. The coin mentioned above is a rare piece and cannot be considered as being one of the American Eagle gold coins manufactured in 1986.

50 Dollar Gold Coins

Sigmund — Thu, 03 Dec 2009 21:06:12 +0000

During the period of 1948 and 1963 the silver half dollar was better known as the Franklin half dollar. The name was given mainly because one side of the coin bore the figure of Benjamin Franklin and the reverse side bore the liberty bell with a small eagle. When the coin was first coined it was mandatory that that the bell bore the eagle to it’s right. What is ironic about the whole thing is that Mr. Franklin actually opposed the use of the eagle. According to him a more noble bird, such as turkey, should have been used.

In 1963 after the assassination of the president John F.Kennedy the coin was changed. It was mainly because the price of silver shot up in 1962 to1963. Because of this acceleration in the value of silver, the coins of 1963 had more silver content than the coins that came out after that year.

In the beginning of 1963 the half dollar coins were being hoarded by a lot of people. The reason why the people were hoarding the coin was because of both economic and the sentimental reasons. People were hoarding the coins, as it was a reminder of the late president John F Kennedy who was really loved and respected by the masses. On the economic front people were hoarding the coin as it was one of the most valuable coin that was being circulated in US at that time.

At present the value of this half dollar coin is worth $4.8141724190. This value is the value of the silver that is contained in the coin. In order to determine this value the dealer will have to go through the following process. First of all they will find out the current prices of silver as well as copper. As the rates are provided in ounces the dealer will convert the weight of silver and copper of the coin in ounces. To find out the value all the dealer has to multiply the weight in ounces of the metals with the present value of copper and silver.

In order to get at the value of the coin the dealer can also melt the coin. Once the coin is melted the dealer will have to follow the same procedure as mentioned above. Once the dealer gets the value of both copper and silver all he has to do is to add up both the values in order to get the value of the coin of 1963.

Schiff, bullish on Gold and Silver

Fred — Mon, 23 Nov 2009 16:02:13 +0000

I noticed that over the past few weeks Gold has maintained its gains as the stock market has been jumping around. It’s becoming clearer and clearer that Gold is going to keep going up with all the funny money being printed by the Fed and other governments.

Silver has gone up some and is also fairly steady. Peter Schiff, a well known economist and author of “Crash Proof”, mentioned in a video blog that he believed Gold will begin to go up with increasing speed. He also mentioned that when he recommends Gold he also is recommending silver. He also says that he believes Silver is the better investment (whereas Gold is more of a hedge), following the same rational as Mike Maloney.

Silver is currently way way below it historical price ratio to Gold. Also when Gold reaches 3000 to 4000 per ounce people may rush into silver because it will be much more affordable, as compared to Gold, causing the price to skyrocket.

Sally and I are buying silver, little by little, with our limited monthly investment funds.

The Beginning of the Gold ETFs

Sigmund — Fri, 20 Nov 2009 20:09:55 +0000

Gold Exchange Traded Fund (GETF) is a unique type of exchange-traded fund for it tracks the actual price of gold in the market. But like any other stocks, they are traded in major cities of the world such as New York, London, Paris, Toronto and others. Simply put this way, these GETFs are the ones to acquire gold for you, of course using your investment, and converting it into paper. The paper can be in physical or dematerialized form, and is called a unit. Units are the counterpart of shares or stocks of a company. There are minimum units to purchase and it depends on where you are trading. Below are some of the major GETFs:

Exchange Traded Gold – sponsored by the World Gold Council and listed under Gold Bullion Securities (ASX: GOLD); Lyxor Gold Bullion Securities (LSE: GBS and Euronext: GBS); SPDR Gold Trust (NYSE: GLD, SGX: GLD, TYO: 1326); and New Gold Issuer (JSE: GLD). The most liquid and largest GETF in the market as of 2008 is SPDR Gold Trust.

iShares COMEX Gold Trust – launched in January 2005 and listed under New York Stock Exchange (NYSE: IAU) and Toronto Stock Exchange (TSX: IGT).

ZKB Gold ETF – based in Switzerland with a symbol of ZGLD. Its minimum buy is one unit and shares are sold in 1 kg gold units.

Central Fund of Canada –headquartered in Alberta, Canada and a close-end fund. Listed in Toronto Stock Exchange (TSE: CEF .A) and New York Stock Exchange (NYSE: CEF).

ETFS Physical Gold

Gold Benchmark Exchange Traded Scheme – founded by Benchmark Asset Management Company of Mumbai, is listed on the National Stock Exchange of India with ticker symbol “GOLDBEES”.

Gold-Price-Linked Exchange Traded Fund – launched on August of 2007 and has a code “1328”. Smallest purchase of ten units, shares are sold in 1-gram gold units.

But before you get a little excited remember that every venture has its own pros and cons. Do take time to evaluate each item on the list, and who knows it may save you some trouble in the future…

PROS

- Tend to increase its value when other segments of the market are losing thus can be used as a hedge.

- Investors do not have to worry storage and management.

- No more uncertainties on the quality of gold.

- Saves time and effort for investors who do not know where and how to buy gold bars or coins.

CONS

- During a depression, GETF assets can be subject to an obligatory purchase by the government.

- Many investors still believe that it does not produce an actual value including one of the world’s greatest stock market investors and philanthropist Warren Buffet.

- Investors only become general creditors when an ETF provider goes into liquidation.

Again, these are just basic guides. Aside from the above mentioned points, you could also ask around. The Internet is a powerful medium in gathering vital information and evaluating your options. You can also watch specific TV programs that feature experts and actual investors on GETFs to get the latest trends and free tips. Remember it pays to know!

The Beginning of the Silver ETF

Sigmund — Wed, 18 Nov 2009 20:06:18 +0000

Silver exchange-traded funds (ETFs) are the second most popular amongst the metal commodity ETFs, next to gold. Commodity ETFs are not governed as investment companies under the Investment Company Act of 1940 in the U.S. Though its public offering is reviewed by the SEC and requires an SEC no-action letter based on the Securities Exchange Act of 1934. During the first day of silver ETFs trading a few years back, it gained approximately 8%. Even before its first day of trading, the Silver Users Association (SUA) had already tried to stop it by sending a letter to SEC in February of 2006. Contrarian investors’ opposition was due to the concerns that silver ETFs may remove large volume of silver from the market. During the last 10 years, the supply of silver has been continuously declining. Silver is used in manufacturing of various goods such as phones, refrigerators, keyboards, and electrical items because of electrical and thermal properties.

Below are 2 silver based options in the ETF market:

iShares Silver Trust Fund (SLV) – since its launched on April 2006, it has become the biggest single buyer of silver. The goal of SLV is for the value of the shares of iShares Silver to reveal the price of silver that iShares Silver Trust own at that time minus their expenses and liabilities.

PowerShares DB Silver Fund (DBS) – managed by DB Community Services LLC and is based on the Deutsche Bank Liquidity Commodity Index Optimum Yield Silver Excess Return.

And like any other investments silver ETFS have its own strength and weaknesses… No matter how good the trends are, you should always try to weigh things

Pros

- Like gold ETFs, investors do not have to worry where and how to store their silver.

- Supply of silver has not been able to cope up with the demand that can result to increase in prices of silver.

- Some investors used it as a hedge against certain economic crisis.

- Can be a good addition to portfolio especially for people who can predict the dollar since silver prices tend to go up when dollar goes down.

- Very large industrial users of silver can take advantage of the potential of silver ETF to deliver direct supply of silver.

Cons

In the last couple years, investors have observed the volatility of silver ETFs.

Like other metal commodity ETFs, investors are not sure if the silver ETFs are backed up by actual stored silver or simply buying a promise.

- Many analysts have forecasted that silver demand will soon reach its peak which will drag down prices of silver.

In the first week of June 2008, Mexican silver company Fresnillo PLC went public in London. Bullish silver investors were surprised that it debut a 7.5% decline on its initial public offering (IPO) even though the prices of silver are doing strong. But still the interest of investors on silver ETFs remain upbeat and only time will tell how far it can still go after it astonishing performance in almost 2 years.