Posts Tagged ‘platinum’

On July 17, I wrote about Scotiabank’s near-empty gold vault and gold certificates.

From their 2009 annual report, on page 123, they don’t list gold and silver bullion and certificates separately.

Under “11   Other liabilities” as of October 31, 2009, they list:

Gold and silver certificates and bullion

For 2009, they reported $3.856 billion, and for 2008, $5.619 billion.

From their annual report, there is no way of separately knowing the value of gold bullion, silver bullion, gold certificates and silver certificates held for their customers.

Also, despite them selling platinum and palladium products, they’re not listed on their annual report at all, despite palladium outperforming gold, silver and platinum in 2009, and platinum being the overlooked investment metal and currency.

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All traded on the NYSE:

Physical holding funds:
CEF – Central Fund of Canada (founded 1961)
GTU – Central Gold Trust (founded 2003)
PHYS – Sprott Gold (founded February 2010)

Exchanged Traded Funds (ETFs):
GLD – SPDR Gold ETF (founded 2004)
IAU – iShares Gold ETF (founded 2005)
SLV – iShares Silver ETF (founded 2006)
PPLT – ETFS Physical Platinum Shares ETF (founded January 2010)
PALL – ETFS Physical Palladium Shares ETF (founded January 2010)

Purchase company:
SLW – Silver Wheaton Corp. (founded 2005)

It should be noted that serious questions have been raised about the reliability of the GLD, IAU and SLV ETFs, and they may be big bubbles waiting to burst, unlike the physical holding funds, especially CEF, with its 49-year track record.

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There is growing talk about another confiscation of gold by the U.S. government as gold prices continue to set new all-time highs since 2008. I’ve heard at least three shows this week raise that possibility.

On May 22, 2010, Al Korelin, host of the Korelin Economics Report, had Louis James of the Casey Research Organization on in the last segment of the first hour.

Al Korelin: “One of them is the question of government confiscation, which is something I haven’t thought about, but more and more of my guests are bringing it up. I think that’s an interesting consideration. It has happened before.

Louis James: “It is something that has been done before, and not just by banana republics. The United States government confiscated privately held gold, during the Great Depression era, and yes, that could happen again. Our feeling has long been that that could happen, but the point at which that would happen, the point at which the government would even be willing to talk about gold being an issue, we would already see huge increases in the price of gold. It would become a public problem before the government were to take action. So there would: a) be warning and b) already huge increases for holders of gold and gold in dollar terms.

I agree with James that there would be warning, and a substantial increase over the current price of gold of around $1200 USD an ounce before the U.S. government is likely to confiscate gold again.

It is important to remember that if gold is confiscated again in a similar way to the 1933 precedent, there would be certain exceptions. At the time, they included:

“Gold coins having a recognized special value to collectors of rare and unusual coins,” and “gold coin and gold certificates in an amount not exceeding in the aggregate of $100 belonging to any one person.”

Gold then was worth $20.67 an ounce before the confiscation, and $35 an ounce from then until August 1971, which was equal to 2.8 to 4.8 ounces of gold during that time.

If a future gold confiscation is similar to the 1933 confiscation, it is likely that individuals will be able to keep a similar amount of non-collector gold. The way to keep all your gold in such a scenario would be to buy numismatic gold. That is, gold with a significant premium value over its metal content.

To really be on the safe side, you should consider diversifying into silver, and especially platinum and palladium. Find out why platinum is the overlooked investment metal and currency, and how palladium was the best performing precious metal currency of 2009.

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Gold closed at the end of 2009 at $1104.00 USD on the London Fix, while silver closed at $16.99, platinum at $1466.00 and palladium at $402.00.

Yesterday, gold closed at an all-time high of $1222.50, while silver closed at $18.42, platinum at $1689.00 and palladium at $521.00.

While gold was up 10.7%, silver was up 8.4%, platinum was up 15.2% and palladium was up 29.6%.

Why do platinum and palladium continue to be overlooked as investment metals among the four precious metals with an international currency code? Palladium was the best-performing metal of the four in 2009, and continues to be this year. Platinum outperformed gold in 2009 and continues to outperform gold this year.

Previously, I wrote why platinum is the overlooked investment metal and currency.

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Since 2009, I have heard two prominent financial analysts repeatedly make the claim on multiple programs, including two major ones with over a million weekly listeners, that gold and silver are all you can rely on. But what about platinum?

How much can you really rely on gold and silver, when gold was confiscated by the U.S. government in 1933 at the height of the Great Depression, and silver in 1934. And how can you specifically rely on gold when it’s the commodity most controlled by the international bankers, and a reserve currency for national and international banks?

Unlike gold and silver, a confiscation of platinum is unlikely for several reasons:
1) It’s not a reserve currency for national and international banks like gold is.
2) It isn’t as widely held as gold and silver.
3) Its historical investment and currency use is shorter than gold and silver.
4) Its decreased demand relative to gold and silver in a recession, due to its overwhelming industrial demand, leading to better performance during the subsequent recovery.

When I mention platinum as an investment comparable to gold and silver, I’ve been told that platinum has little to no historical use as a currency. As I wrote previously, platinum has an international currency code along with gold, silver and palladium. Since 1988, one ounce platinum coins from the Royal Canadian Mint have a legal tender value of $50. Since 1997, American Platinum Eagles from the United States Mint have a legal tender value of $100.

From 1967-1978, the first and only regularly minted gold coin available for the masses was the South African Krugerrand. However, due to trade sanctions imposed by many Western countries on South Africa for their policy of apartheid, the Krugerrand’s availability was severely limited from the 1970s until 1994.

It got some serious competition in 1979, when the Royal Canadian Mint began minting Canadian Gold Maple Leaf coins. Just nine years later, at the height of sanctions on the import of Krugerrands, one ounce platinum coins were minted by the Royal Canadian Mint between 1988, and continued to be minted until 2002, and were reintroduced in 2009.

Not only can you rely on platinum as a historically non-confiscatable metal, you can also rely on it historically trading at a substantial premium over gold. Over most of the past decade, platinum has traded at a 50 to 100% premium over gold. At a 38% premium over gold at the end of January 2010, it still has plenty of room to appreciate to its historical trading premium relative to gold.

Recently, platinum outperformed gold in 2009, and for the first month of 2010.

Now ask yourself why you’re being told that gold and silver, and not platinum, are the only things you can rely on, why gold and silver are being pushed so much, and not platinum, and why most of you haven’t heard these things about platinum before.

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From the historical London Fix data for 2009 on Kitco.com:

Gold went from a low of $810.00 USD an ounce on January 15, to a high of $1218.25 on December 3 — a 50% increase.

Platinum went from a low of $915.00 an ounce on January 15, to a high of $1500.00 on December 3 — a 64% increase.

Silver went from a low of $10.51 an ounce on January 15, to a high of $19.18 on December 2 — an 82% increase.

Palladium went from a low of $176.00 an ounce on January 15, to a high of $402.00 on December 31 — a 128% increase.

To those who say palladium has no historical use as a currency, consider that it has its own international currency code (XPD), along with gold (XAU), silver (XAG) and platinum (XPT), the Canadian Mint minted one ounce coins from 2005-2007 and in 2009, and you can purchase that and other palladium bullion here, and from other stores like Kitco.

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On Wednesday, October 14, 2009, LewRockwell.com featured an article with the headline, “The Best-Performing Asset of the Decade: Gold, of course

But one shouldn’t pass judgment on the entire decade based on the value of gold relative to other precious metals on a single day.

Had the article been written on March 6, 2008, the title would’ve been, “The Best-Performing Asset of the Decade: Platinum, unfortunately”

Unfortunate, for gold bugs that is! Silver also outperformed gold as well. Ouch!

On December 30, 1999, gold had a London Fix afternoon price of $290.25 per ounce, while silver and platinum had a value of $5.33 and $443.00 per ounce, respectively.

On March 6, 2008, gold had a London Fix afternoon price of $986.25 per ounce, while silver and platinum had a value of $20.80 and $2249.00 per ounce, respectively.

Over the decade, platinum increased its value by 4.51 times, silver by 3.90 times, and gold by only 3.40 times.

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