Gold rallied 2% following news that China’s state holdings of the metal have been quietly raised by 76% since 2003. Rumours and speculation about Chinese buying have been rife for years, but many market participants remained in denial until this irrefutable proof was given. China is not only the world’s largest mine producer of gold, but also the fifth-largest individual country holder of gold with 1,054t.
I have just completed an analysis of the performance of the spot price of gold vs. Berkshire Hathaway. I think you will find the results are a little suprising.
Adrian Douglas of Market Force Analysis writes that in his experience, most ordinaly people have difficulty understanding why gold is the investment opportunity of a life time. Blaming the messenger, he explains it in simple terms, making a distinction between consumables and collectables:
MDC activist Sam Chakaipa returns to his village in rural Zimbabwe to find his friends and neighbours starving to death, reduced to panning gold powder from the rivers to exchange for food at an exorbitant rate. The Guardian via Youtube:
Gold Outperformed Most Assets in 2008 - Gold Up 3.9% in USD; Up 5.3% in EUR and Up 34.4% in GBP. Today’s London AM fix (23/12/08) was $844.01 (USD), £570.85 (GBP) and €603.72 (EUR). At the start of 2008 (January 2nd 2008), gold’s London AM Fix was at $840.75 (USD), £424.81 (GBP) and €573.34 (EUR). Thus, in 2008 gold is up by 3.9% against the dollar, up 5.3% against the euro and up 34.4% against the pound. The London AM Fix is a widely followed benchmark for physical gold and silver prices and is reported in major newspapers and at many gold-related websites. 23-Dec-08 Last 1 Month YTD 1 Year 5 Year Gold $ 845.15 5.77% 1.42% 4.16% 105.83% Silver 10.80 12.07% -26.85% -24.60% 89.21% Oil 39.82 -20.93% -59.84% -57.45% 24.63% FTSE 4,283 13.27% -33.66% -33.43% -3.55% Nikkei 8,724 10.27% -42.85% -42.82% -15.89% S&P 500 872 8.95% -40.64% -41.28% -20.25% ISEQ 2,384 2.72% -65.62% -65.57% -51.03% EUR/USD 1.3990 11.15% -4.08% -2.71% 12.85% © 2008 Goldassets.co.uk This has led to a sharp outperformance of gold vis-à-vis every major equity indices and commodity in the word, not to mention most property markets (see Chart and Performance table). In March, gold fell from a record nominal high of just over $1,000/oz but it is important to remember that gold is only down some 15% from that record nominal high and this is after surging nearly 60% in the previous 7 months. In the seven months from the start of the credit crunch and the collapse of Bear Stearns, gold had surged by nearly 60% - from $640 in August 2007 to over $1,000 in March 2008.
It wouldn't be suprising if you had never heard of backwardation. Though many commodities markets are frequently in backwardation, especially for seasonal or perishable/soft commodities, it has only happened twice in history in precious metals.
On the foot of recent reports that China is planning to diversify some of its massive foreign exchange reserves into gold, The Central Bank of the Russian Federation has released its latest
The Washington Times's Lawrence Hunter wrote last week that U.S. President-elect Barack Obama has an opportunity to reset the economy and restore the U.S. dollar to its preeminence as the world's reserve currency by reestablishing the gold standard.
Since 2003, GoldCore (then called Gold Investments) has clearly warned of property and stock market bubbles internationally, the risks in sharp falls in these markets, and the importance of diversifying into gold. This is our homepage from early 2004, when we warned about property and stock bubbles, and the importance of diversifying into gold - http://web.archive.org/web/20040324071856/http://www.gold.ie/ Our home page warned investors and savers as seen in this section:
Rollover is the story of faded Hollywood siren Jane Fonda who inherits a multi-million dollar company after her powerful bank president husband is murdered. While trying to find her dead love's killer, she runs his corporation with the help of charming banker Kris Kristofferson in the weeks before a worldwide currency and financial collapse. It was the 1981 movie Jane Fonda "got made" after her exploration of the dangers of nuclear power in the "China Syndrome" back in 1979. She was driving to tell the story of real money - gold and how people throughout the world value gold as real money while most Americans and people in western societies don't understand gold and have forgotten its importance and value. The plot line is about wealthy Arab investors not rolling over their certificates of deposits (CDs) in American banks and buying gold in order to hedge themselves against a fall in the dollar and paper currencies ... and what the loss of those foreign investments means to the financial establishment in New York and the international financial and monetary system. Rollover: Financial Apocalypse This movie was a "financial thriller" and there are not many of these movies made. Movies need bank financing, and banks usually won't finance anything that makes them look bad or stupid. They show "It’s a Wonderful Life" with Jimmy Stewart on TV only once a year now because it shows "run on the bank" at the Bailey Savings and Loan - not something the financial establishment wants Americans to even think about.
Today's Daily Mail has a rare picture of the Bank of England's Gold Reserves You are looking at the room most likely to weather the credit crunch, a vast vault filled with the final word in financial security: gold. As stocks and shares tumble, house prices crash and previously unassailable institutions crumble into dust, the sight of several thousand 28lb bars of 24-carat gold stored in the Bank of England's massive underground
In a very interesting video about the gold market today, Stephen Flood of Gold and Silver Investments is interviewed by Javier Blas of the FT .
Government bailouts of the financial system will destroy the dollar, euro and sterling because of hyperinflation, Martin Hennecke, senior manager of private clients at Tyche told CNBC. But Todd Everts, president & CEO of Wall Street Global, disagreed. "The privatization of the banks is the first step down the road to hyperinflation," Hennecke said Monday.
[caption id="" align="alignnone" width="518" caption="Click for larger (readable) version"][/caption] Yet Gold is off $28 and Silver $1.20 today. What is going on in the futures market?
Further news about the divergence of the futures and physichal bullion markets.
This fascinating, frightening and compelling video details the plundering of Austrian, Czech, Polish and other national gold reserves and the theft of German and european citizen's (especially the Jews) gold for the Reichsbank. . Gold was moved to a secret potassium mine in Merkers in Thuringia in the very heart of Germany. .
Gold & Silver Investments very own David Russell appeared on CNN on Friday:
Shortages of certain bullion products is possibly the most important issue facing the gold and silver markets today. The sole maker of South African Krugerrands, Rand Refinery Ltd., largest gold refinery in the world, today ran out of the iconic bullion coin after an 'unusually large' order from an unnamed buyer in Switzerland. Rand Refinery has delivered more than 46m blank coins over the years since it opened in 1967. [caption id="" align="alignleft" width="360" caption="South African Krugerrand"]
Gold as Essential Diversification and Financial Insurance Gold bullion remains an essential diversification and essential financial insurance to have in all properly diversified portfolios. Besides the ever more important factors of inflation hedging and financial insurance, gold is likely to continue to outperform other asset classes and to provide significant returns to gold buyers. Many of the world’s major investment banks are in agreement that gold is again in a long term multiyear bull market. Many believe gold will surpass its inflation adjusted 1980 high of $2,400/oz in the coming years. Citigroup’s former head of technical research and managing director of Yamada Technical Research Advisors LLC., Louise Yamada sees gold on its way to $3,000 within a decade. "Gold is the purest play against the dollar,'' said Louise Yamada, Yamada is highly respected and was voted Wall Street’s best technical analyst from 2001 to 2004. Credit Agricole’s (France's largest bank and the fourth largest bank in the world) brokerage, Cheuvreux see the possibility of a rise to $2,000/oz or higher. How to Invest in Gold in Preparation for 2,000/oz Gold? Gold and Silver Investments Limited agree and believe gold will surpass its inflation adjusted high of $2,400 per ounce in the next 5 years. This is why we continue to advocate investors continue to diversify and increase their gold holdings. So, how should one invest in gold? There are many different ways to invest in gold and one’s motivation for buying gold should dictate how one buys gold. Are you a speculator, investor or saver? Are you buying to make a capital gain or as a hedge against systemic risk and using your gold as financial insurance? Is your motivation a little of each? ETFs, mining funds, digital gold, Perth Mint certificates, gold bullion coins and bars in one’s possession and or semi numismatic gold coins are good ways to buy gold. Given the extent of current macroeconomic and systemic risk a diversified precious metals holding makes sense and it should not be a question of “either or” rather a combination of these various ways. Having eggs in various gold baskets so to speak is the most sensible and prudent strategy. As part of this mix, older gold coins should be looked at. Classic European and world gold coinage is an often overlooked but extremely important sector in today's gold market. Pre 1933 and 19th Century European and world gold coins are an intelligent alternative to modern gold bullion coins or bars as there is often more room for appreciation with these beautiful old coins due to their rarity and yet they can often be bought at bullion prices. [caption id="" align="alignleft" width="150" caption="2006 Gold Proof Half-Sovereign depicting Saint George"][/caption] Importantly from an investment point of view is the fact that gold bullion and older gold coins are not subject to VAT due to the EU Gold Directive. Even more important is the fact that unlike the other forms of gold investment outlined above, British gold sovereigns are also not subject to capital gains tax (CGT). Thus all post-1837 British gold sovereigns due to them being legal tender and having a legal tender face value are capital gains tax free, which is obviously a massive benefit to investors vis-à-vis other gold investments. The prices of these beautiful coins are only slightly more expensive than modern gold bullion but offer many advantages. Besides not having to pay CGT, other advantages include increasing scarcity, aesthetic value and historical significance. European and British gold coins are recognised as one of the most advantageous ways to invest in “bulk” gold, by sophisticated investors. European, American and world gold coins are bought by both collectors and investors at a small premium to the price of bullion coins. Perhaps the most popular semi numismatic gold coins internationally are British Sovereigns.
Few are aware that America may be on the brink of a financial meltdown. I.O.U.S.A. explores the country's shocking current fiscal condition and ways to avoid a national economic disaster.
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