Posts Tagged ‘precious metals’

USA PreparesHere a summary I prepared of my December 24, 2013 appearance on USA Prepares with Vincent Finelli:

4m – Gold coins have been used for 2600 years in a wide-spread way, since the Roman Republic
4m – 40% backing of the money supply by gold in the u.s. from 1914-1933, so for every $5, they had to have $2 worth of gold
5m – 1933 gold confiscation, where most didn’t comply, and that’s good, because it was under false pretenses
5m – 1974 – Americans able to own gold again, a big increase from them until 1980, then a 21-year period of decline until around $250 USD an ounce
6m – Gold and silver confiscation show how valuable they are
6m – Numismatic gold free from confiscation
6m – Platinum as the overlooked investment metal and currency
7m – Silver’s a tighter market than gold – 70% of silver comes from base metal mining, so even when economy’s not doing so well, silver can still have a great investment value, because of tighter supply
8m – With gold, the central banks own a lot of it, in total
8m – They may want to back up IMF SDRs or other currencies with gold at some point
9m – Gold being thrown away by not recycling gold in old computers
10m – The reason why gold and silver haven’t reached the true market value they deserve is because of the paper futures market, said to be around 100 times the amount of physical gold
18m – Physical gold and silver vs digits on a computer
20m – No substitute for having actual tangible value for exchange
30m – On cash – it’s recognizable and more likely to be exchanged for smaller items than gold, and gold would be better for appreciating in value to buy more later on
31m – Big risk with cash of hyperinflation, if govt doesn’t honour its debt commitments
32m – Silver at $20 an ounce looks like a good investment to me
35m – Bitcoins introduced in January 2009, theory underlying them goes back to at least 1996
35m – Nodes facilitating transactions and being rewarded with Bitcoins for doing so
36m – The pros — privately issued, decentralized, infinitesimally low transaction costs, high divisibility, international recognition
37m – The cons — if the internet goes down, your Bitcoins are useless, govts getting concerned over their hegemony to issue money
38m – Silk Road shutdown
38m – Public record of all Bitcoin transactions — could be tied into govt intelligence operation — a giveway would be if mass media starts really promoting Bitcoin
39m – China requiring all Bitcoin users to be registered
40m – Bitcoin providing a great educational opportunity, and a great way to make (or lose) a quick buck, as these currencies are reminiscent of the Dot Com Boom (and Bust)
47m – I think the name Bitcoin, with coin in the name, was deliberately used as a marketing tool, to connote more tangible value to them
49m – From Bitcoincharts.com, it was trading that day with around 30% volatility
50m – Major U.S. retailer, Overstock.com, plans to accept Bitcoin by the second half of 2014, but will continuously convert them into dollars, to limit volatility

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Joseph MeyerJoseph Meyer, a financial analyst and publisher of the monthly newsletter, Straight Money Analysis, is scheduled to be my guest on Exposing Faux Capitalism on June 16, 2013 from 9 to 10 PM Eastern on Truth Frequency Radio to discuss pressing financial issues like the continuing challenges facing European countries, the precious metals markets, and other interesting developments discussed in his recent newsletter.

I previously interviewed Joseph on August 26, 2012.

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English: Silver bullion bar 1000oz bottom view...

Silver guru David Morgan said on the January 7, 2012 episode of The Keiser Report on RT (at 22:30):

If you go into the, we’re going into a huge deflationary mode, silver is a self-correcting situation, cause 70% is base metal mining.

This is why, despite detractors pointing to silver as primarily an industrial metal, its value is self-correcting when industrial production drops, if investors are looking for a safe-haven for their wealth.

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Mojave Nugget, a gold nugget weighing 156 ounc...

On January 21, 1980, the Dow closed at 872.78 and gold closed at $850 USD an ounce on the London Fix.

From the Bureau of Labor Statistic’s Inflation Calculator, $850 in 1980 has the same buying power as $2249.36 in 2010.

If gold had kept up with inflation since its 1980 high, it would be worth over $2249 instead of its January 14, 2011 close of $1367.00 on the London Fix.

The Dow closed at 11,787.38 on January 14, a 1351% increase versus gold’s 56.6% increase over the same period.

So much for the oft-repeated, often absolute statement that: “gold is a great hedge against inflation.”

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Back in April, there was the report that Canada’s largest precious metals bank and member of the London Fix, Scotiabank, had almost no gold in their vault.

From their FAQ:

How secure is a “gold certificate”?

Scotiabank gold certificates are backed by the assets of The Bank of Nova Scotia.

Nowhere do they claim to have any physical gold backing their certificates.

If you buy a certificate, you will see that they are legally required to deliver you the gold within a specified number of days after redemption, not immediately.

Given their membership on the London Fix, and history of precious metals trading, they will likely be able to deliver physical gold to you according to the contract, barring an all-out physical gold redemption bank run.

Even if you don’t get your physical gold, your underlying assets are denominated in USDs, so if the USD plummets, your holdings will be inflation-protected relative to gold, unlike if they were sitting in a savings account.

Given that the Big Five Canadian banks have been consistently paying dividends since the 1800s — 1832 in the case of Scotiabank — I think it highly unlikely that all your assets would go the way of those held in the 5000+ U.S. banks that collapsed from 1929-1932.

But, as they say in investment prospectuses, past performance is no guarantee of future results.

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Prior to the introduction of the Harmonized Sales Tax (HST) in Ontario on July 1, 2010, Canada Maple Leaf gold and silver coins sold to Ontario residents were subject to Provincial Sales Tax (PST) of 8%.

Foreign-made coins weren’t subject to the tax, which resulted in a significant disincentive to buy domestic coins. The introduction of the HST has now thankfully put the sale of foreign and domestic coins on an equal playing field.

From ScotiaMocatta’s FAQ:

“Do I have to pay any sales tax or GST / HST?

Precious metals are exempt from GST / HST.

A precious metal is defined as a bar, ingot, coin or wafer of gold or silver, refined to a minimum purity of 99.50% in the case of gold, and 99.9% in the case of silver.

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Kitco.com has been my primary resource for precious metal price quotes in the past few years.

However, yesterday, Bob Chapman, The International Forecaster, on his appearance on Radio Liberty with Dr. Stan Monteith, pointed out that Kitco’s numbers have been too frequently erroneous over the years.

At 50:24, he states:

Kitco’s notorious for putting out false information. I mean, you’ll go to another site, and you’ll get gold up $10, and you go to Kitco, and they got it up 50 cents. And that stays on for a long time — they don’t just change it. So, there’s no updating. And often, many times, I have found them to be untruthful about the things that they’ve put up.

On May 19, 2010, I noticed that their reported low for silver on their main http://www.kitco.com/market page was $16.67, when in reality, it hadn’t dropped much below $18.

Even today, it says silver’s low for the day was $18.11, but when you look at the daily chart, it shows it reached $18.05 several times.

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