Gold bullion or coins, which is better?

Commodity Online
Most of us are aware of the gold daily "spot" price that is updated and made available to us by the media. What the "Spot" value shows is the exact value of the one troy ounce of .999 fine gold bullion is at any given moment.

Gold bullion is usually presented in the form of bars and they do not have any numismatic value at all. Instead, the true price of gold bullion is judged squarely on its melt value.

When gold jumps $15 on one day, the price of the bullion jumps the exact same $15. If the “spot” value of gold falls $3 another day, then naturally, the gold bullion’s value falls down as well. Gold bullion is most often traded in 100-bar lots, named “contracts.”

Generally, the contracts are sold and bought without any physical exchanging of gold taking place. This is sometimes referred to as “trading paper gold.” The farther out the expiration date on the contract is, the higher the future value of the gold contract will be. The distinction between the daily “spot” price and the future delivery price is based on the interest of the money which is put up by the person guaranteeing the contract.

One of the advantages of buying gold bullion is that it is one of the most liquid tangible assets in the world, thus making it valuable everywhere you go.. No matter where you are - New Deli, Madagascar, France – everyone is familiar with the value of an ounce of gold.

However, one of the disadvantages of gold bullion is that a profit can only be made if the price of gold goes up. Any revenue you receive will be tied into the daily “spot” value of gold, unlike numismatic gold and to a somewhat lesser extent semi-numismatic gold. Buying Krugerrands, and other rarities Such items as Krugerrands, Canadian Maple Leafs, and American Gold Eagles, are also considered to be bullion gold. These are frequently called bon "coins," although they aren't coins at all, as they were never intended to circulate.

Semi-Numismatic Gold
According to US based International Rarities Corporation (IRC), a facilitator for investing in gold and silvercoins, semi-numismatic gold coins of USA and other countries behaves differently from bullion in the sense that apart from spot price variations that affects its prices, coin gold will rise on its own depending on how far demand outstrips supply. This is because supply of coins is fixed as they aren’t being made anymore. The mintage figure for a circulated $20 Liberty gold piece of 1898 will be the same 500 years from now as it is today and was over 100 years ago.

The term "semi-numismatic gold" usually refers to circulated United States gold coins struck prior to 1934 that carry a relatively small premium over their melt value.

Unlike bullion gold, semi-numismatic gold involves actual coins of the realm, both from the United States and foreign countries. The prices, at times, will rise and fall with the price of "spot" gold, but at other times semi-numismatic gold will rise on its own, as demand outstrips the supply. This happens because the supply of semi-numismatic gold is a fixed quantity, and a large gold strike in South Africa (or anywhere else, for that matter) won't affect the supply. Why? Because unlike gold bullion bars and gold bullion "coins," they simply aren't making them any moreYes, the supply will be much less due to attrition, but the mintage figure is a constant.

Another popular semi-numismatic coin is the Swiss 20 Franc gold piece. This coin is about the size of a United States $5 gold piece, and contains a little less than one-fourth of a troy ounce of gold, according to IRC.

Semi-numismatic coins do not offer the best of both worlds, but they offer a significant segment of both worlds, and make a viable investment alternative for certain portfolios.

Quality Numismatic Gold
IRC claims it is special to them. This category covers the very finest United States gold coins minted before 1934. These are the third-party certified coins of the highest quality that are hand-picked by the veteran senior numismatists at IRC.

Quality numismatic gold is restricted to Mint State 63 and better US gold coins. This includes high quality $20 St. Gaudens gold coins that were issued from 1907 through 1933, choice hand-picked $20 Liberty gold coins that were minted from 1850 through 1907, attractive $10 Liberty gold pieces that were struck from 1838 through 1907, dazzling $10 Indian gold pieces that were issued from 1907 through 1933, and other beautiful and desirable United States gold rarities. These coins are the performers, the ones with the best track records, the issues with the greatest demand and the smallest supply, according to IRC coins

(Courtesy: PRLog.org & IRCcoins.com)


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Official Google Blog: 100,000th knol published

Official Google Blog: 100,000th knol published

China Confidential: Gold Bullion and Equities Expected to Keep on Rising

China Confidential: Gold Bullion and Equities Expected to Keep on Rising

Randgold Resources: In Gold We Trust

In the closing weeks of 2008, Americans have once again been shocked by a massive Wall Street scandal. Former Nasdaq chairman, Bernie Madoff was arrested for masterminding a $50 billion fraud. The "Bernie Mad(e)off-with-investors'-money" Ponzi scheme is just the latest Wall Street scandal to see the light of day.

I firmly believe that the Madoff $50 billion Ponzi scheme will be just the first of many Wall Street frauds that will be revealed in 2009. In the past, Americans trusted their hard-earned savings to Wall Street bankers, brokers, fund managers, and so-called professional money managers.

I seriously doubt that most Americans will do so in the future. Many Americans are now very understandably asking, “In whom can we trust?”

In Ben We Trust?

Americans should also be asking that same question with regard to the Federal Reserve's attempt to inflate its way out of massive US debt and a nasty downturn in the economy. This economic downturn is different in that it was born not just from excessive speculation but also of massive leverage and downright fraud. So there are an awful lot of excesses that need to be wrung out of the system.

The debts of the United States already stand at five times America's annual GDP and rising rapidly. Some Americans, such as us here at Oxbury Research, are now questioning how these huge loans will ever be repaid. Unfortunately, the answer is that the loans will be repaid by every current holder of US dollars and by future generations of Americans. It is sad that generations still unborn will be paying for the immense greed of a few.

Both President-elect Barack Obama and Fed head Ben Bernanke are students of the Great Depression and FDR's economic policies. I only hope that they don't adopt all of FDR's policies, particularly what FDR did in 1934.

First, FDR confiscated all gold from American citizens. Then, more importantly, FDR devalued the US dollar by 75 per cent versus gold. Since the US was still on a gold standard, all Americans and all overseas holders of US dollars lost 75 per cent of all their monetary wealth almost instantly. This was the easy way for the US government to wipe out 75 per cent of its national debt in one day!

Can something similar happen again? I believe it can. This time, however, the US government will be more subtle. The Federal Reserve will simply “print” so much money that the value of the US dollar will decline steadily which, in turn, will allow the US government to pay back their debt with much “cheaper” dollars.

Ben Bernanke is already rapidly going down that path and creating incredible amounts of “funny money” almost daily. The effect of his policy will be the same as FDR's policies were in 1934 – a drastically reduced lifestyle for most Americans.

In Gold We Trust

What can someone do to preserve their purchasing power and to preserve the wealth that they do have for their descendants? I believe the answer lies in something that has been a store of wealth for people for thousands of years – gold.

Gold is respected throughout the world for its value and rich history. Coins containing gold first appeared around 800 B.C., and the first pure gold coins were struck during the reign of King Croesus of Lydia about 300 years later.

There are myriad reasons to own gold. Some of the reasons would include: US dollar weakness, inflation, deflation, supply & demand, geopolitical risks, and diversification. A wonderful article titled Eight Reasons to Own Goldwas written by yours truly and can be found at Investopedia.com, which is an online subsidiary of Forbes magazine.

There are, of course, numerous ways for investors to own gold – gold bars and bullion, gold coins, gold ETFs such as GLD, gold mutual funds, or individual gold stocks. Today I want to draw investors' attention to one specific gold stock – Randgold Resources.

Randgold Resources (GOLD)

Randgold Resources is a gold mining company with major gold mines located in politically-stable areas of Western Africa. Major discoveries to date include the 7.5 million ounce Morila deposit in southern Mali, the 7+ million ounce Loulo deposit in western Mali, and the 4+ million ounce Tongon deposit in the Ivory Coast.

Gold production at the company's flagship Loulo mine in western Mali is being expanded. Higher output from the Loulo mine means that Randgold Resource's annual gold production will jump 50%, rising from 400,000 ounces in 2008 to more than 600,000 ounces in 2011.

Randgold Resources trades on the Nasdaq exchange under the symbol of GOLD. It is a very liquid stock with average daily volume in excess of 1 million shares. The company's market cap is in excess of $3 billion.

Randgold Resources is one of the few mining companies whose shares have actually risen in 2008! I believe that this is so because the company is extremely well-run. The company's CEO, Mark Bristow, has stuck to a “boring” long-term strategy and has eschewed deal-making and debt.

Mr. Bristow has instead focused on organic growth. He pursued only projects that would generate returns of at least 20 per cent, and repaid any debt incurred out of cash flows. As a result of Mr. Bristow's conservative strategy, the company is completely debt-free and has more than $250 million of cash sitting on its balance sheet!

Randgold Resources's stock price has ranged between $22.28 and $56.28 over the past 52 weeks. The stock is currently trading near $43. I believe that this price offers an excellent entry point for investors looking to own a high-quality, well-run gold company.

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

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Looking at the Market Through Slightly Bullish Lenses

As of the close on Wednesday we got another buy signal on the markets and I thought to myself that the whipsaws occurring these days are ridiculous. I’ve said this before that almost every time for the past two months the market looks like it wants to move in one direction and starts to gain steam it reverses course.

Looking at the chart below (click to enlarge), I drew some simple lines connecting recent highs to lows and lows to highs to show how much it resembles an EKG. If you're a swing trader like myself it makes it really difficult to enter positions and hold them longer than a few days because the trend reverses so quickly. For this reason I’ve mostly been trading gold/silver as the trend there seems to be a little bit longer, not changing every 4th day.

But the last time I got a bullish sign on the Dow I entered some longs and did fairly well, so near the close Wednesday I decided to enter a few long positions despite what common sense is telling me. What I mean by that is that it doesn’t feel quite right to buy this light volume holiday rally, but I’ve read that the difficult trade to make is more often the profitable trade. In fact, most traders I follow on Twitter or blogs I read seem convinced this market is going to roll over and play dead starting in January.

I wouldn’t be surprised to see heavy selling starting as early as today, but that’s one reason why I think we may move slightly higher than most expect. I’m not calling for a new bull or anything, just a continuation of this current bear market rally and I’m positioning my portfolio accordingly.

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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Remember What Happened In the Market a Year Ago?

In looking through material from exactly one year ago in preparation for tomorrow's all-important (and exceedingly difficult) predictions for the new year, the following chart popped up from the January 2nd post titled "That was interesting".



It seems that the first day of trading last year set the tone for the next six months.

While broad equity markets set out on their year-long decline, oil began at just under $100 a barrel and got a good head start on its move to almost $150 from which it began tumbling in July. Similarly, gold was priced about $50 below where it stands today but was getting ready to surge to over $1,000 in March when the Bear Stearns leg of the credit crisis began.

A short excerpt:

Well, that really started the year off with a bang. Of course it probably wasn't the kind of a bang that most people were expecting but it was a bang nonetheless.

Oil hit $100 for the first time (briefly, so they say) and finished at over $99. This Bloomberg report said, "Three-figure prices may bring energy costs near the tipping point that will cause global economic growth to falter."

Didn't they say that about $50 and $60 and $70 and $80 and $90?

Gold made a new all-time high at over $860 closing in New York at $856.70. This Bloomberg report noted, "Investors are pouring money into the precious metal as part of a commodity surge with the dollar under pressure from the prospect of more cuts in U.S. borrowing costs."

Memories...

When the damage was tallied, it turned out to be one of the worst opening days in history. A USA Today report the next day was the subject of this post that contained an interesting graphic and some bad math along with some ominous parallels courtesy of Floyd Norris.

USAToday reports on yesterday's dismal performance of U.S. equity markets noting that the decline was the steepest opening day loss since 1983.

Hopes for a strong start to the new year barely lasted a half-hour Wednesday as stocks ran smack into the exact same fears that caused so much trouble in 2007.

All three major stock market indexes started sliding following a morning report showing manufacturing activity slowed in December, and the selling accelerated after oil prices briefly spiked above $100 a barrel. The news fanned concerns that the economy could be teetering on the edge of recession — and triggered Wall Street's worst January-opening performance in 15 years.

Maybe my math is wrong, but that looks more like it should be 25 years, not 15 years.

Floyd Norris at the New York Times reported on the relative damage to the S&P 500 via numbers provided by Howard Silverblatt. In this tally, yesterday's 1.4 percent plunge ranks as the 6th worst start to the new year.

Every one of the previous five came when the economy was in a recession, or not far from one.

Here’s the list:

1. 1932, down 3.7% on the first day. Thus began the last year of the worst part of the Great Depression. The National Bureau of Economic Research thinks the recession that began in August 1929 lasted until March 1933.
2. 2001, down 2.8%. A recession began in March.
3. 1980, down 2.0%. A recession began that month.
4. 1949, down 1.6%. A recession had begun in November 1948.
5. 1983, down 1.6%. A recession had ended in November 1982.

Now even if you make the leap that this somehow forecasts the economy, it doesn’t do much for the stock market investor. The stock market had great years in 1980 and 1983, and a good year in 1949. On the other hand, getting out at the beginning of 1932 or 2001 turned out to be a wise decision.

Today should be better.

Though it wasn't known until almost a year later, a recession was already officially underway at the time and, as it turns out, the next day was indeed better. After the 1.4 percent drop on Wednesday, the S&P 500 finished Thursday exactly where it began at 1447.16.

On Friday, however, the index plunged a whopping 2.4 percent (no, it doesn't seem like a lot now, but it did back then) before going on to lose five percent for the month of January in the beginning of what would turn out to be the worst year for stocks since the Great Depression.

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Gold Shines Brighter Thanks to Fed

By Don Miller

The currency markets' reaction to the Federal Reserve’s recent interest rate cuts has ignited a rally in gold, as investors weigh the benefits of owning the yellow metal versus U.S. Treasuries and the dollar.

As a result, gold has started to shine again as a stable source of value at a time when the dollar and other commodities – like oil and copper – have fallen hard. The spot price of gold has climbed above $870 an ounce on the New York Mercantile Exchange, up about 20% from its October lows.

Gold has been on a roller coaster ride in 2008, moving from its all time high of $1035 in March, to as low as $681 an ounce. Some of that decline occurred during the recent stock market plunge. Many investors were forced to liquidate profitable gold positions in order to raise money to cover their paper losses.

Its decline was then accelerated by the recent onslaught of financial bailouts, as many investors held a preference for liquidity and safety in the form of cash holdings guaranteed by the U.S. government. That was reflected in the skyrocketing prices of government bonds and investments in government-backed banks, which also lowered yields.

But with the Fed’s recent decision to cut its target interest rate to a range of 0% to 0.25%, the dollar has suffered a significant decline. Suddenly, foreign investors who were scooping up dollars have cut back on their flight to safety, knocking the dollar index ((NYBOT: DX)) down 10% in the last month. The index reflects the dollar’s value against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc.

The Fed’s interest rate cut may also have given gold a comparative boost in the eyes of investors. Gold, which never pays interest, suddenly doesn’t look so bad when compared to T-bills, which also are paying zero interest lately.

Volatility has risen this year compared to previous years, and the last few months have been the most volatile of all – an indication of investor ambivalence. But any uncertainty about the increasing price of gold may have been waylaid by the Fed’s recent rate cut and its dampening effect on the dollar and Treasuries.

Consequently, don’t expect this rally to be short-lived. As we pointed out in our 2009 Outlook Report on Gold, the fundamentals in the market hold the promise of more gains ahead.

It appears unlikely central bankers around the world will stop stimulating economies, printing money and doing whatever it takes until growth and confidence are restored – even if the cost is rampant inflation.

Consider these wild card inflation indicators that Money Morning Contributing Editor Martin Hutchinson believes will carry gold prices to $1,500 an ounce by the end of 2009:

• Over $7 trillion of freshly minted U.S. dollars are now in circulation with the aim of saving the global financial system.


• The incoming Obama administration has promised that another $1 trillion or so stimulus package is on the way.


• It’s likely the Fed’s interest rate cuts will soon be followed by central banks around the world.

These economic stimuli are designed to do one thing – get the consumer spending again.

The bailout of the banks was the first step, but the banks are still keeping a tight rein on credit. Now the government is trying to get easily available, cheap money back into the hands of the consumer by running the printing presses around the clock.

“The government is pumping money in so many banks, and that money has to come out somewhere,” said Hutchinson.

Some of that money will “come out” into the economy in the form of higher stock prices. That will make consumers wealthier, and could give them more confidence in the economy. More confidence means more spending. As that happens, prices for goods should begin ticking upward, giving another booster shot to gold prices.

For instance some of that money is already going into gold bars and coins. In fact, the U.S. Mint was forced to suspend sales of the popular American Eagle and Buffalo gold coins for extended periods twice in the last year. The mint was unable to secure enough gold blanks from suppliers to match demand.

“I’ve never seen a case where demand was so high and supply was so short,” Chicago coin dealer Harlan Berk told the Associated Press.

With massive amounts of capital floating around, the time it takes to re-inflate the global economy will be far shorter than most analysts expect. Governments fear deflation more than anything. It appears they will only fight inflation when they are assured they have won the first battle, which is growth at any cost.

When inflation kicks in, the dollar’s buying power will suffer long-term. In fact, we expect a decline in all the world’s paper money, over time. Historically, investors in gold have prospered during periods of weakening fiat currencies.

That leaves gold as a bright light in the investment world, making it an odds-on favorite to open a new leg of a long-term uptrend.

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GoldTraderAsia.com - Where to Buy and Sell Gold Bullion Bars, Gold Ingots, Gold Coins Collection and Gold Jewellery in Singapore.

To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold Bullion Bars to find out more. You may Sell Gold Bullion Bars to us too.
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