Author Archives: PBB Exclusive

Why gold’s price is destined to continue rising

Numismatic News/Pat Heller/8-8-2019

“While these can and do have a temporary small impact on the prices of gold and silver, the ultimate reason for the recent rise in their prices is the shortage of physical supplies in the New York COMEX and London markets.”

USAGOLD note:  We made this Heller opinion piece a Premium Bulletin Board exclusive simply because no on else to our knowledge has brought attention to this unusual development in the COMEX gold futures market. It has to do with registered inventories and he very well could be putting his finger on why we keep getting unexpected support on the price drops. An interesting read. . . .

Posted in Premium Bulletin Board |

Gold in the Attic

Every once in a while we rummage around USAGOLD’s creaky old attic and dust-off a golden vignette from our storied past. Most first appeared in our monthly client letter, but this one comes from the first chapter of The ABCs of Gold Investing – How To Protect and Build Your Wealth With Gold.  First published in 1996, it is a timeless story about gold’s ultimate value and it is called. . . . . .

Asset Preservation: Why Americans Need Gold

“The possession of gold has ruined fewer men than the lack of it.” – Thomas Bailey Aldrich

The incident is one of the most memorable of my career. Never before or since has the value of gold in preserving assets been made so abundantly clear to me. It was the mid-1970s. The United States was finally extricating itself from the conflict in South Vietnam. Thousands of South Vietnamese had fled their embattled homeland rather than face the vengeance of the rapidly advancing Communist forces.

A couple from South Vietnam who had been part of that exodus sat across from me in my Denver office. They had come to sell their gold. In broken English, the man told me the story of how he and his wife had escaped the fall of Saigon and certain reprisal by North Vietnamese troops. They got out with nothing more than a few personal belongings and the small cache of gold he now spread before me on my desk. His eyes widened as he explained why they were lucky to have survived those last fearful days of the South Vietnamese Republic. They had scrambled onto a fishing boat and had sailed into the South China Sea, where the U.S. Navy rescued them. These were Vietnamese “boat people,” survivors of the final chapter in the tragedy of Indochina. Now they were about to redeem their life savings in gold so that they could start a new business in the United States.

Their gold wrapped in rice paper was a type called Kim Thanh. These are the commonly traded units in Hong Kong and throughout the Far East. Kim Thanh weigh about 1.2 troy ounces, or a tael, as it is called in the Orient. They look like thick gold leaf rectangles 3 to 4 inches long, 11⁄2 to 2 inches wide, and a few millimeters deep. Kim Thanh are embossed with Oriental characters describing weight and purity. As a gesture to the Occident, they are stamped in the center with the words OR PUR, “pure gold.”

It wasn’t much gold—about 30 ounces—but it might as well have been a ton. The couple considered themselves very fortunate to have escaped with this small hoard of gold. They thanked me profusely for buying it. As we talked about Vietnam and their future in the United States, I couldn’t help but become caught up in their enthusiasm for the future. These resilient, hardworking, thrifty people now had a new lease on life. When they left my office that day, there was little doubt in my mind that they would be successful in their new life. It was rewarding to know that gold could do this for them. It was satisfying to know that I had helped them in this small way.

I kept those golden Kim Thanh for many years. They became something of a symbol for me—a reminder of the power and importance of gold. Today, when economic and financial problems have begun to signal deeper, more fundamental concerns for the United States, I still remember that Vietnamese couple and how important gold can be to a family’s future. Had the couple escaped with South Vietnamese paper money instead of gold, I could have done nothing for them. There was no exchange rate for the South Vietnamese currency because there was no longer a South Vietnam! Wisely, they had converted their savings to gold long before the helicopters lifted U.S. diplomats off the roof of the American Embassy in 1975.

Over the years, I have come to understand and appreciate the many important uses of gold—artistic, cultural, economic, and industrial. Gold is unsurpassed for jewelry and as a high-tech conductor of electricity. Gold has medical applications in dentistry and in treating diseases from arthritis to cancer. Gold plating is used in computers and in many other information-age technologies. In nanotechnology, it is used in a variety of cutting-edge medical diagnostic devices. As for its engineering uses, gold can be found in automobile anti-pollution devices, in jet engines, in architectural glass, and in a number of space applications. All of these pale, though, when compared to gold’s ancient function as money, as an asset of last resort and an unequaled store of value.


You can order The ABCs of Gold Investing here.

Posted in Gold in the Attic, Premium Bulletin Board |

Why are premiums on sovereign bullion higher than on generic bullion?

CoinWeek/BullionSharkLLC/7-22-2019

“[I]t is important to understand why one pays a premium for 1 oz silver coins like the American Silver Eagle, Canadian Silver Maple Leaf, South African Silver Krugerrand, and many more sovereign silver coins. The premiums for these pieces can be in excess of $2 per ounce for silver when compared to a generic 1 oz silver round. The premiums for sovereign gold bullion can be in excess of $50 per ounce. Let’s dive into why.”

USAGOLD note: Our clientele almost always buys bullion in the form of gold and silver coins. This article provides an excellent overview if you are in the process of making a decision on what kind of gold and silver will best serve your needs.

Posted in Premium Bulletin Board |

What strategies are USAGOLD clients deploying now?

• Taking advantage of the high gold-silver ratio – especially in IRAs
• Buying US $20 gold pieces while premiums are at all-time lows
• Buying hard-to-get pre-1933 European gold coins at bullion-related prices

Here’s a quick snapshot-breakdown on each:

Taking advantage of the high gold-silver ratio – especially in IRAs

We have processed several swaps of gold to silver within IRA’s over the past 30 days.  At the moment, the ratio is almost 88 to one.  We haven’t seen the ratio that high in twenty years.  In fact, the only higher ratio over the past 30 years came in 1990 at 100 to one.  The ultimate goal for most investors is to end up with more gold by trading the silver back for gold when the ratio narrows, thus ending up with more ounces of gold.  That strategy worked well in both the early 2000s and in 2007-2008 just before the credit bubble implosion.  If you have an interest in taking advantage of this market opportunity, give us a call and we will be happy to walk you through the numbers and help you with the transaction.

For those, who own gold but don’t own silver, now would be a good time to add balance to your precious metals portfolio while prices are cyclically low.


ORDER DESK: 1-800-869-5115 x100/orderdesk@usagold.com

Here’s a gold-silver ratio chart for your review –

Buying U.S. $20 gold pieces while premiums are at all-time lows

Gold investors like to buy off the bargain table and the premiums on U.S. $20 gold pieces are now at all-time lows.  The volume in this area over the past six months at USAGOLD has been nothing short of remarkable with a large number of six-figure transactions processed.  There are a variety of options too numerous to list here.  Too, we try to fit the items purchased to the particular objectives the client has in mind.  Once again, the best way to go about this is to talk with your broker directly.  At times, we pick up special opportunities at good prices and we can pass those savings along.


ORDER DESK: 1-800-869-5115 x100/orderdesk@usagold.com

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Buying hard-to-get pre-1933 European gold coins at bullion-related prices

We offered a special last week of Australia minted British sovereign gold coins that sold out in less than three hours – a testament to the strength of this market.  It doesn’t hurt that gold itself is bumping along lows, but when you add to thae appeal with difficult-to-obtain items at a low premium, the offer tends to sell out quickly.  We now have a number of smaller lots available (including the French 40 franc lot posted below) that we can offer to those with an interest –  pre-1933 European and South American gold coins at bullion-related prices.  Call for details and to find out what we now have available.


ORDER DESK: 1-800-869-5115 x100/orderdesk@usagold.com

Posted in Premium Bulletin Board |

Gold and the law of long-term time preference

shloSuccessful investors have a philosophy, usually carefully cultivated, that they rely upon in their investment decisions no matter what happens in the markets in the short-run.  Successful investors are rarely shaken by short-term events and, rarer still, guilty of short-term thinking. USAGOLD has always nurtured the belief that gold should not be purchased principally as a speculative investment, but more as an asset accumulated for long-term asset preservation in the form of coins and bullion.  That, in fact, is a viewpoint it shares with the bulk of its clientele.

In A Layman’s Guide to Golden Guidelines for Wise Money Management [Link], R.E McMaster the long-time commodity market analyst and editor of the famed newsletter, The Reaper, offers this advice on “The Law of Long-Term Time Preference”:

“Those who plan, invest and execute long-term win. Win-win decisions, looking to the long term with short-term work and sacrifice, are historically the tickets to success in all areas of life – short-term sacrifice for long-term benefits, deferred gratification rather than instant gratification. This is the difference between wealth and poverty, between class and trash. Those who make primarily fear-based, ego-based, selfish, win-lose, lose-lose, emotional and/or short-term decisions as their primary mode of operation in life nearly always end up miserable, often as losers in a comprehensive sense in life. Such people are walking tornadoes to be avoided.”

Posted in Premium Bulletin Board |

How billionaires are preparing for the next bear market

Visual Capitalist/Jeff Desjardins/5-16-2019

“In bear or bull markets, billionaires are constantly worried about one thing: protecting their wealth. This video shows how some billionaires protect themselves from downturns – including turning to uncorrelated assets such as gold.”

PBB note:  Most billionaires do not take delivery of their gold because of the storage problem. That is not the case for the small private investor. A quarter of a million dollars or less in gold coins stores neatly in a modest-sized safe deposit box. Of course, if you would rather store your gold and/or silver at a depository, we can help with the arrangements. Safe storage includes insurance and the costs are not prohibitive. In fact the annual fees on storing are roughly comparable to what most ETFs charge with the added benefit of a delivery option on the coins or bullion stored. To learn more, we invite you to contact our Order Desk directly.


ORDER DESK: 1-800-869-5115 x100/orderdesk@usagold.com

Posted in PBB Storage, Premium Bulletin Board |

Beware: Grossly overpriced American Eagles and Buffalos

Numismatic News/Staff/6-7-2019

“The personal finance market is filled with slick advertisements touting gold bullion coins labeled with a superb grade or in holders with decorative, autographed inserts. These may be fine collectibles for some, but you could pay more than twice the value of the precious metal content of the coin. There certainly are better ways for investors to buy bullion coins much closer to their actual intrinsic value,” stated Barry Stuppler, president of the Professional Numismatists Guild (PNG).”

USAGOLD note:  To say that we agree with this Numismatic News piece is an understatement. We have been at the vanguard warning investors about this type of offering for a number of years. We get calls almost weekly from individuals involved in one of these transactions. Unfortunately there is not a great deal we can do to help, although we might be able to help mitigate the losses, i.e. get you to break even sooner if the gold and silver prices rise. The point is to avoid this sort of thing altogether and stick with owning bullion coins as gold items that are priced at minimum premiums over the gold content.

Here is a warning we published all the way back in 2013.

Posted in Premium Bulletin Board |

CLIENT MEMORANDUM

Preparing for a potential gold confiscation

by George R. Cooper, J.D.

We view confiscation as a possibility, rather than a probability, and see historic gold coins as an important hedge for those interested in addressing those concerns within their gold holdings. It should be emphasized that there is a whole genre of pre-1933 gold coins that can be acquired at moderate premiums over contemporary bullion coins and still fall within the category of items excluded from the U.S. government seizure of gold in 1933 and the subsequent ownership ban of gold bullion that extended to 1975.

[An In-Depth USAGOLD Client Alert]

 

Posted in OOD Client Reports, Premium Bulletin Board | Tagged |

Why British sovereigns are the best selling historic gold bullion coin

Global market
Historic British sovereigns minted in the late 19th and early 20th century are traded all over the world especially in nation states that used to be part of the old British empire – India, Hong Kong, Singapore, South Africa, Australia, Canada – even the United States.

Liquid market
A client of USAGOLD tells an interesting story.  He has always had an interest in gold – even as a young man when he served in the military. When he was stationed in Viet Nam during the war, he recalls being astonished upon visiting villages far off the beaten track, that he would find merchants willing to trade for merchandise using the gold British sovereign in payment.  Too, American pilots and special forces units were issued British sovereigns as part of their survival pack simply because they were accepted in payment in so many places around the world.  Today, the British sovereign remains one of the most highly traded historic bullion gold coins in the world with buy-sell spreads posted daily wherever gold is traded.

Low premiums
Because of the strong global liquidity, British sovereigns have always tracked the gold price and sold at reasonable premiums over the gold price.  For today’s pricing, we invite you to go here.

Privacy/Confiscation
As historic gold coins with a provenance dating before 1933, British sovereigns fall within the category of items excluded from the U.S. government seizure of gold in 1933 and the subsequent ownership ban of gold bullion that extended to 1975.  A large number of our clientele choose to purchase historic bullion items because they track the gold price, provide good liquidity and trade at relatively low premiums over the gold price.  If you would like to learn more about privacy issues surrounding gold and how you might hedge the possibility of a future gold seizure, we invite you to visit this in-depth study titled Preparing for a Potential Gold Confiscation.


Posted in Premium Bulletin Board |

NotableQuotable

“Those people who know how to listen are also people who learn. The moment you stop learning, you die.  Age is not the number of years you have been living.  Age is the condition of your soul.” – Armen Sarkissian* (Lunch with Financial Times, 6-15-2019)

“Life is always preparing you for something you just never know what.” – Armen Sarkissian

“If you don’t own gold, you know neither history nor economics.” – Ray Dalio, Bridgewater Associates

For twelve consecutive years, gold was up every single year whether there were inflation fears, deflation fears; strong dollar, weak dollar; political stability, political instability. It didn’t matter – strong oil, weak oil. . . Gold went up for twelve years. . . When gold embarks upon its next move, I believe that you will see that long wave take gold relatively quickly, but it will be measured in years, up to $3000 to $5000 target that I believe is fundamentally justified based on the facts we have today.” – Thomas Kaplan, Electrum Group (Peer to Peer Conversations with David Rubinstein)


* Armen Sarkissian is the president of Armenia. Prior to his stint in politics, he was a theoretical physicist in the old Soviet Union where he won the prestigious Lenin Prize.

 

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Disinflation: The elephant in the room (sitting on the gold price)

Economic Research Cycle Institute/Lakshman Achuthan/5-30-2019

“The [U.S. Future Inflation Gauge] turned down early last year, and by summertime it was clear that a fresh inflation cycle downturn was taking hold. That inflation cycle downturn wasn’t obvious to the Fed, which hiked rates in September and December. Despite being forced to pivot hard early this year, Fed Chairman Powell just this month called low inflation ‘transitory.’ Bond markets were also caught flat-footed, with the 10-year treasury yield around 3¼% in October, and again in November, as inflation expectations remained high through last fall. This is the elephant in the room crushing bond yields. It’s really about the inflation cycle.”

USAGOLD note: Investors often ask why the gold price has been stuck at the $1300 level for so long with the amount of danger present in financial markets and the economy. Why didn’t gold rocket higher when trade negotiations between the United States and China broke down?  Why didn’t gold react positively to the Fed’s transition from rate hikes to a rate pause?  Why hasn’t gold responded to the upside with all the political turmoil in the nation’s capital?   Etc. . .

The answer lies in a term rarely featured in gold market discussion – disinflation.  At present, it is the elephant in the room, as ERCI describes it above. Just as it crushes bond yields, it sits on the price of gold – at least for now. But that could all change at a moment’s notice.

The problem with disinflation is that occasionally it slips the gate. General malaise gives way to a deeper crisis.  Some of you who were clients during the 2008 financial crisis probably remember that gold was slow to react. In 2006-2007, it was bumping along in a narrow range on either side of the $650 mark in a disinflationary environment very similar to the one we are experiencing now. (Please see chart below.)

Then, in late 2007, the roof began to come down on financial institutions – Lehman Brothers, Bear Stearns, IndyMac, Washington Mutual, Fannie Mae, Merrill Lynch, just to name a few of the big-name casualties.  Only then, as investors moved aggressively to gold for its safe haven and store of value attributes, did the price begin to move higher with some authority. In 2008 it reached $1000 per ounce.  By late 2009, gold had kicked into overdrive. It began a rapid climb that culminated at a record high of over $1900 per ounce. The whole run – from $650 to over $1900 – occurred during a period when disinflation dominated the financial landscape.

During disinflationary periods like the one we are experiencing now, gold owners must practice patience keeping in mind the real reason for the investment – to act as a safe haven and store of value if the wheels come off elsewhere in the portfolio.  Gold is wealth insurance first and a speculative investment second. As the old saying goes, you do not need gold until you need it, and then you might need it more than you thought.

Final note:  Though disinflation dominates the markets today, that might not always be the case.  With the announcement this past week of tariffs on Mexico, the Trump administration has now levied tariffs on America’s two largest importers accounting for almost one-third of U.S. imports.  Some economists think that the tariffs could become a source of consumer price inflation in the months ahead (not to mention the potential for a myriad of other unforeseen and unintended consequences).  In fact, several large retailers including Walgreens, the Dollar Store and Costco (among others) have already warned of higher prices in the not-too-distant future. Those warnings came before the recent announcement of tariffs on Mexican imports.

If the dominant economic paradigm shifts to inflation, gold will remain an important choice for prudent investors looking to hedge uncertainty. As I wrote many years ago in The ABCs of Gold Investing – How To Protect and Build Your Wealth With Gold, “Inflation, deflation, disinflation, stagflation, and hyperinflation—it matters not. Gold protects against any or all and no matter in which order they arrive. I is for the Inflation-Deflation debate—Buy gold and let others worry about what’s next for the world economy.”

–– Michael J. Kosares

Posted in Premium Bulletin Board |