CNBC: The Many Ways to Invest in Gold

August 30, 2011
Published: Monday, 29 Aug 2011 | 3:34 PM ET
By: Bob Pisani
Reporter

How can an investor get into gold? Let’s start with the obvious.

Gold bars and coins.

Gold bars can be bought and sold fairly easily. While the most well-known of all gold bars is the London Good Delivery Bar, which weighs approximately 400 ounces (nearly $700,000 at current prices), many companies produce smaller bars that can also be bought and sold.

Gold coins can be minted as legal tender in the country in which they are minted — that is, they have a face value independent of the amount of gold in them — or the market value can be determined solely by the value of the gold (minus any dealer markup).

The South African Krugerrand, first minted in 1967, is far and away the most widely minted gold coin. It contains one ounce of pure gold, though it’s actual weight is slightly greater — 1.09 ounces, the balance being copper. There have also been half-ounce, quarter-ounce, and one-tenth ounce denominations.

Several other countries have issued gold coins, including the Canadian Gold Maple Leaf (produced by the Royal Canadian Mint in 24-carat, pure, gold), the Australian Nugget (minted by the Perth Mint, also 24 carat), the British Britannia (22 carat gold, the remainder being silver, but still containing an ounce of pure gold), and the American Gold Eagle (22 carats, the remainder a mixture of copper and silver, but also containing an ounce of pure gold).

The World Gold Council maintains a list of U.S.-based dealers in gold bars and coins, and one of the widest sources of information on physical ownership of gold bars and coins is www.goldbarsworldwide.com.

What about storing it?

You can keep your gold bars and coins in your house, or in a safe deposit box. An alternative is to create an account with a gold-bullion bank and let them store the gold for you.

For most investors, gold accounts are not a practical form of investment, since most bullion banks required large minimum amounts of gold to be held on deposit, and typically only provide vaulting services for large customers that also hold other assets with the bank.

Gold is held by bullion banks in two different types of accounts — allocated and unallocated accounts.
In an allocated account, specific gold bars or coins are identified and assigned to your account. You have full ownership of the gold, but you also pay storage and insurance charges.

In an unallocated account, you do not have specific ownership of gold bars, you only have a claim on the gold stock held by the dealer.

Clients are technically unsecured creditors. Bullion banks will typically lease gold in unallocated accounts. In both cases you can take physical ownership of the bars, usually within two working days.

A number of private companies provide purchasing and gold vaulting facilities. They include Bullion Vault and Gold Bullion International.
Buying a bit at a time

Some banks and brokerage firms have established gold accumulation plans that allow investors to buy small amounts of gold every month. These are typically in pooled accounts. The World Gold Council also recently announced a similar gold accumulation plan in China.

CONTINUED: Futures, Options, and ETFs

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Gold Retracts In Early Trading

August 29, 2011

In a light trading day due to Hurricane Irene & a National Bank Holiday in London the Dow opened strong pushing Gold down over 2%. Gold is resilient & returning to over $1,800 before noon.

The rumor mill is churning out hopes of a QE3 in the coming weeks, this brings a smile to a flooded Wall-Street. Should another round of stimulus hit in the next month the smart buy will be in Gold & Silver. Until definitive proof emerges from Wall-Street of more jobs & a hold on inflation Gold should remain the favored safe-haven for the near and long terms.


Bernanke’s Non-Committal Speech Boosts Stocks & Gold

August 26, 2011

Fed Chair Ben Bernanke at the annual Fed Conference in Jackson Hole, Wyoming.

From Jackson Hole, WY, Fed Chair Ben Bernanke would neither confirm nor deny a third round of Quantitative Easing. What Bernanke did say was, a range of tools that could be used to provide additional monetary stimulus, the Fed will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days instead of one to allow a fuller discussion.

These comments sent Wall-Street up on the thoughts of QE3 arriving just in time for Christmas. It also pushed Gold higher moving back towards $1,800.  Wall-Street knows another round of QE will go directly to their bottom line. Gold is higher on the continued understanding that printing more money devalues the Dollar pushing it further towards bankruptcy.

My thought is as the economic recovery stagnates Bernanke will get nervous and pull the trigger on a third round. Once this takes place watch the droves that will run to Gold & Silver as a safe-haven for there financial health. Of course we recommend a conservative 10% to aggressive 20% of your net worth in a diversified Tangible Asset Portfolio. This should insure your financial future from the impending economic disaster.


Friday Fun: CNBC – What $1,000,000 Buys You

August 26, 2011

With the Dollar in a pro-longed slump being a millionaire isn’t what it used to be. Let us be honest Thurston Howell probably couldn’t afford the 3-hour tour that ended him & Lovey stranded with Gilligan & the Skipper.  Yet, even one million dollars can still purchase a few golden opportunities as you will see.


Margins Up Another 27% Good for Gold

August 25, 2011

Gold is retracting causing many talking heads to declare, as they have with each retraction in the previous decade, Gold is finished! Get out now! Remember the crash of the early 80’s! There are fundamental differences between now and then. Am I going to hold your hand and tell you it is all going to be OK? Nope, because that just wouldn’t be true.

If you don’t have the stomach for the ups and downs of this current market then pull your money out of everything place it in a jar & bury it in your back yard.  For those still with me here are the facts: Gold is still up for the year by almost 23% outperforming just about any investment. Second, the margins on Gold have gone up 50% in the last month thinning the herd of speculators in Gold.  Finally, Gold is still being purchased by central banks as they de-leverage from the Dollar.

Right now is one of the retractions that allow the smart investor to continue acquiring Gold & Silver for their Tangible Asset Portfolio. According to Marc Faber the current market calls for 25 percent to 30 percent in stocks, 20 percent to 30 percent in physical gold— in a safe deposit box ideally outside the U.S. in various locations because I don’t trust anyone —some cash, and up to 30 percent in real estate, particularly in Asia. While Faber’s advice is beyond our recommended 10% to 20% of net worth it bears taking under advisement from one of the best investors in the last 25 years.


Marc Faber Speaks – We Listen

August 24, 2011

This morning as I was doing my usual perusing of news, blogs, and assorted charts to gain perspective on golds current retraction I ran across a Marc Faber interview. Dr. Marc Faber is often referred to in this blog for his no nonsense approach to finance especially in areas concerning Gold & Silver.  What struck me with what follows is Faber’s ability to cut through the Wall-Street/Fed jargon and call them out as the architects of a decades long financial debacle.

So now with out any more gliding of the lily or further adieu – Dr. Marc Faber as reported on CNBC:

‘Very Muted Growth’ Coming for Next 10 Years: Faber

Published: Tuesday, 23 Aug 2011 | 10:36 AM ET
By: Jeff Cox
CNBC.com Staff Writer

Both the U.S. and Europe are facing a decade of slow growth brought on primarily by the blunders of central banks, noted doomsayer Marc Faber said.

Investors should protect themselves by buying plenty of physical gold and putting it in a secure location, preferably outside the U.S., the author of the Gloom, Boom and Doom newsletter told CNBC.

“If I look at the politicians both in Europe and the U.S., I don’t think that prospect (for growth) is very good,” he said. “If I also look at the entitlement system and the government expenditures and the fiscal deficits and the debt overhang, I think for the next 10 years we’ll have very muted growth in the Western world and standards of living for the average household will continue to decline.”

In other words, he said, the next 10 years are likely to be much like the previous decade.

“I think we never really came out of the recessionin many different sectors of the economy,” Faber said. “If you look back to say 1999 to today, the U.S. as an economy, macroeconomically speaking, is of course much worse off than in 1999—courtesy of the Federal ReserveI may add.”

Many prominent economists have joined Faber’s dour outlook for the U.S. economy, at least in the short term.

Goldman Sachs has cut its forecast for growth to 1.5 percent for the year, and other parts of the world are experiencing slowdowns, as well.

In such a slow-growth environment, Faber prescribed a diversified mix for portfolios—25 percent to 30 percent in stocks, 20 percent to 30 percent in physical gold—”in a safe deposit box ideally outside the U.S. in various locations” because “I don’t trust anyone”—some cash, and up to 30 percent in real estate, particularly in Asia.


CNBC: Gold Rises Toward $1,900 on Inflation, QE Talk

August 23, 2011
Published: Monday, 22 Aug 2011 | 4:30 PM ET
By: Reuters

Gold rallied almost 2 percent to a record near $1,900 an ounce Monday as a sputtering global economy boosted expectations for further monetary easing, raising bullion’s appeal as a hedge against inflation.

Bullion’s six-session winning streak came as Wall Street erased early gains. Global markets will focus on Federal Reserve Chairman Ben Bernanke’s speech Friday in Wyoming’s Jackson Hole, where policymakers and academics meet once a year to talk shop.

Analysts said anything short of a third round of quantitative easing would likely provide limited support for gold as the Fed had already vowed to keep interest rates low into 2013. Bullion could also correct sharply after it rose 6 percent in the last three sessions, and by $400 since July.

“Gold is driven by the expectation that at some point inflation will come back, and a continuation of people looking for a safe haven beside just the U.S. Treasury bonds,” said Leo Larkin, metals equity analyst at Standard & Poor’s.

“It’s still susceptible to a pretty big pullback as things are overdone based on technical indicators.”

Spot gold [XAU=  1875.64    -21.25  (-1.12%)  ] was up 1.6 percent at $1,889.29 an ounce, building on its strongest one-week rise since February 2009. It is one of this year’s best-performing assets, now up 33 percent.

U.S. gold futures  for December delivery settled up $39.70 at $1,891.90 an ounce. Trading volume totaled around 250,000 lots, in line with its 3ed that bullion’s over 15-percent rally just in August has been overdone, as the relative strength index spiked to 85, near its most overbought level in 12 years, technical charts showed.

“People talk about gold as an insurance premium, but right now it’s a really high insurance premium to pay,” said Bayram Dincer, an analyst at LGT Capital Management.

Bernanke’s much-anticipated speech Friday will be closely watched for any signs of Fed policy direction. At the same meeting a year ago, Bernanke announced a $600 billion bond-buying program that sparked a rally in gold.

Platinum rose 1.5 percent to $1,898.13 an ounce, having earlier hit its highest since July 2008 at $1,897.50. It is trading near parity against gold, with the yellow metal the chief recipient of safe-haven flows.

Palladium rose 2.1 percent to $760.47 an ounce.

Copyright 2011 Thomson Reuters..