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I did post this on here didn't I ?!

 

From: http://www.youtube.com/watch?v=3q-hGMu_gNg

 

From 2:20.

Base money - the amount of cash in circulation, and deposits at the Federal Reserve.

Total value of all paper dollars that exist.

 

1918: Start of base money data.

1934: Unpegged dollar from gold. US$ sank from 1/20oz to 1/35oz.

1971-1980: US$ came off gold. Gold went to $850/oz.

 

Sep 2008: Bailout of Fanny May & Freddie Mac. US$825billion +900billion -> 1.8Trillion.

Mar 2009: +1.2trillion -> 3trillion paper dollar now exist.

 

For gold to cover the amount of paper dollars that now exist, as it did in 1934 & 1971, it would have to rise to US$15,000/oz.

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http://online.wsj.com/article/SB1000142405...0380620612.html

 

JULY 7, 2009

 

Sales of Silver, Gold Coins Surge

 

By ALLEN SYKORA

 

Sales of gold and silver bullion coins were up sharply in the first half of 2009, when dealers were citing strong physical demand amid worries about other investments.

 

Sales remained strong but abated somewhat in late spring and early summer, but there are at least some signs it might be on the rise again, said one dealer. “Over the last 30 days, business has picked up again mostly because, I believe, there is a lot of skepticism still in the market about which way the economy is heading,” said Scott Thomas, president and chief executive of American Precious Metals Exchange in Edmond, Okla.

 

Bullion coins are meant to provide investors with a convenient and cost-effective way to add small amounts of precious metals to their portfolios. It is valued by the weight and the type of precious metal.

 

This is different from numismatic coins, which are valued on the basis of factors such as limited mintage, rarity, condition and age. The only coin in this category sold by the Mint in the first half is the 2009 Ultra High Relief Double Eagle Gold Coin that was launched in January. Sales hit 68,445 in the first half, the Mint reported.

 

The outlook for bullion-coin sales may hinge on whether inflation begins to rear its head or whether there are more credit-market problems, said James Cook, president of Investment Rarities in Minneapolis.

 

The U.S. Mint said it sold 680,500 one-ounce American Eagle gold bullion coins in the first six months of the year.

 

By contrast, in the first half of 2008, the Mint sold 180,000 one-ounce Eagle coins and 67,000 American Buffalo coins. (Release of 2009 Buffalo bullion coins is planned for later in the year, the Mint said.)

 

For all of 2008, sales of one-ounce American Eagle bullion coins totaled 794,000 and sales of one-ounce Buffalo coins totaled 172,500.

 

Any comparison to year-ago totals must take into account Mint sales of half-, quarter- and tenth-ounce American Eagle bullion coins that have been suspended this year due to a shortage of blanks. When including these, the combined weight of all Eagle gold coins sold in the first half of 2008 amounted to 197,500 ounces, still far short of the 2009 total of 680,500.

 

For all of 2008, a total of 1,172,000 Eagle coins were sold totaling 860,500 ounces, which, in turn, was a sharp increase from 409,500 coins totaling 198,500 ounces in 2007.

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I'm starting to get an itchy finger and question when I should cash in my GBP's for some more of the yellow stuff. During the recent highs I stopped buying and with the more recent falls the total Gold weighting in my portfolio is at uncomfortably low levels. This is coupled with my belief that UK PLC is definitely trying to create inflation and so steal from me.

 

http://www.iii.co.uk/investment/detail?typ...;chartwidth=500

This suggests 4500 could be reached however will we get there before inflation shows its head? As I've mentioned elsewhere RPI inflation in UK is already starting to occur and I'm getting nervous.

 

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Saw an advert on the front page of the FT this morning

 

ASCENT - Anticrisis settlement & commodity centre

 

www.sterligoff.com

 

appears to be a way for businesses to pay each other in gold.

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...

The diverse French 20 franc coins are a bit more expensive per gramme than the sovereigns but not a massive difference. The Austrian 8 florin (same size as a 20 franc) is the cheapest of this size of coin.

 

Are 20 franc coins very popular in the UK or elsewhere? I like the way that several countries had 20-franc coins with exactly the same amount of gold (France, Switzerland, Belgium, Italy and Austria for sure - any other countries?).

They all stem from the earlier ducats that many different countries produced. These in turn all stem from Roman coinage which at the end of its empire was a series of coins made from different metals that weighed approximately 3.4 grams. They are mainly made from 22ct gold because refining techniques during the 1400’s were capable of producing this purity of gold consistently and coins of that carat can also take a reasonable amount of wear and tear.

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Make of it what you will but I spent some time yesterday talking to people in the coin business and all are experiencing an increase in inventory of gold coins, the number being offered to them has increased quite dramatically. In talking to the sellers the coin dealers are reporting that the main reasons for sale is that people cannot wait for financial Armageddon, gold has fallen and they don’t want to lose any more money, they need the cash for holidays and the classic

 

‘It’s all getting better now isn’t it, the TV says so’

 

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The diverse French 20 franc coins are a bit more expensive per gramme than the sovereigns but not a massive difference. The Austrian 8 florin (same size as a 20 franc) is the cheapest of this size of coin.

 

Are 20 franc coins very popular in the UK or elsewhere? I like the way that several countries had 20-franc coins with exactly the same amount of gold (France, Switzerland, Belgium, Italy and Austria for sure - any other countries?).

 

Francs were used by the Bank of International Settlement until very recently (last few years). Pretty much every bank in the world would have accepted them and I bet they still would.

 

The coins will be accepted as money throughout Africa.

 

And also Asia because it is very easy to convert francs in to Tola. 40 Francs = 1 Tola (give or take some rounding)

 

ubsgoldbar10tolas400.jpg

 

BTW, Bairds produce Tola bars as part of their standard range

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... Are 20 franc coins very popular in the UK or elsewhere? I like the way that several countries had 20-franc coins with exactly the same amount of gold (France, Switzerland, Belgium, Italy and Austria for sure - any other countries?).

Here some information on why gold coins around 7g-8g (1/4 oz) are so popular (they're just the ancient Roman standard size).

 

http://en.wikipedia.org/wiki/Aureus

400px-8denarii.jpg

...

The aureus (pl. aurei — "golden") was a gold coin of ancient Rome valued at 25 silver denarii. The aureus was regularly issued from the 1st century BC to the beginning of the 4th century AD...

Caesar struck the coin more frequently and standardized the weight at 1/40 of a Roman pound (about 8 grams). The mass of the aureus was decreased to 1/45 of a pound (7.3 g) during the reign of Nero.

... Analysis of the Roman aureus shows the purity level usually to have been in excess of 99%...

This is in line with:

 

http://www.museumoflondon.org.uk/archive/e...coins/index.htm

45 aurei were intended to weigh one Roman pound or libra (327.45g)

Which implies 7.27g for one aureus.

 

This was standard size of a Roman gold coin in the early years (before their great inflation), which is why the British Sovereign weighs 8g or 7.32g/0.2354oz gold content and similarly the German 20 Mark (Goldmark) weighs 7.965g or 7.17g/0.2305oz gold content. So, in a way, we are still on the Roman gold standard (a very sensible thing to do). An aureus would be a soldier's monthly salary.

 

http://en.wikipedia.org/wiki/Denarius

The denarius was first struck in or about 211 BC during the Roman Republic and at the same time as the Second Punic War, with a weight of 4.5 grams on average at the time or 1/72 of a Roman Pound. It remained at this weight for a while and then decreased to about 3.9 grams during the second century BC (a theoretical weight of 1/84 of a Roman pound). It then remained at almost this weight until the time of Nero, when it was reduced to 1/96 of a pound, or 3.4 grams.

So, 1/40 to 1/45 Roman pounds of gold (an aureus) where worth 25/72 to 25/87 Roman pounds of silver (a denarius). The Roman gold:silver ratio was therefore between 13.9:1 and 12.9:1, which is also very sensible.

 

http://www.museumoflondon.org.uk/archive/e...coins/index.htm

# 12 aurei represented the salary of a Roman legionary soldier for 1 year

# 8 aurei would buy 1 boy slave

# 8 aurei would buy 23 acres of woodland in Kent

# 1 aureus would buy 400 litres of cheap wine

# 1 aureus would buy 200 pounds of flour

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Make of it what you will but I spent some time yesterday talking to people in the coin business and all are experiencing an increase in inventory of gold coins, the number being offered to them has increased quite dramatically. In talking to the sellers the coin dealers are reporting that the main reasons for sale is that people cannot wait for financial Armageddon, gold has fallen and they don’t want to lose any more money, they need the cash for holidays and the classic

 

‘It’s all getting better now isn’t it, the TV says so’

 

do you think this is because the price spiked more dramatically in £ than $. Meanwhile in the US:

 

Sales of Silver, Gold Coins Surge

 

edit - removed question

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Please be aware that I know nothing of Gold or investing*. I was just searching around and found this:

 

http://seekingalpha.com/article/148409-pre...-finally-bottom

 

It may or may not help you guys...

 

 

 

* Not strictly true. I am investing in myself. There are some good ideas and good sense on this site. Hope to contribute soon in some other areas.

 

 

VB

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Finally read it! He's just looking at this from an investor's perspective, which isn't the right outlook IMO given the severity of this crisis. What was it that you didn't agree with? I didn't think his views differed too much from ours, apart from the trading bit.

 

I'll put them back in the fridge for the moment. :rolleyes:

 

Get them back out, it's back up :D

 

I hope you have a good supply :D

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Commodity exchanges can dump gold debts on ETFs - "The Alchemists"

 

The New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.

 

So what this means is that contracts can essentially be settled without going through the COMEX warehouse. Futures contracts and a physical commodity equivalent can be exchanged outside of the exchange and an EFP form can be filed to the clearing department at the COMEX. What's more, the physical commodity doesn't have to meet the specification of the COMEX Gold Contract of being a 100 troy ounce bar or three 1Kg bars of .995 fineness.

 

A futures market is supposed to provide price discovery for a commodity. In the gold market this notion has been hijacked because settlement can be made with a derivative instrument, such as an unbacked or partially backed ETF share. If that derivative instrument is not backed by gold on a 1:1 basis the scheme allows an artificial apparent increase in the supply of gold and so distorting price discovery toward lower prices.

 

Why was it necessary to introduce a mechanism to exchange ETF shares in lieu of physical gold? Where there is smoke there is fire.

 

http://www.gata.org/node/7586

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do you think this is because the price spiked more dramatically in £ than $. Meanwhile in the US:

...

 

Quite possibly, the Sterling drop definitely did help to spike the fear factor of impending doom and a run into gold investment. Although gold jewellery is down by the equivalent drop in Sterling yet they are effectively the same thing but it seems perceived differently :blink:

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Although gold jewellery is down by the equivalent drop in Sterling yet they are effectively the same thing but it seems perceived differently :blink:

 

Surely not - jewelry is neither liquid (unless you melt it! :lol: ) or tradeable, unlike bullion bars or coins, you also generally pay a large premium above spot due to the work that goes into making the jewelry, shop markups etc. I think it's right to perceive jewelry (luxury) purchases as distinct from bullion (investment) purchases.

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Surely not - jewelry is neither liquid (unless you melt it! :lol: ) or tradeable, unlike bullion bars or coins, you also generally pay a large premium above spot due to the work that goes into making the jewelry, shop markups etc. I think it's right to perceive jewelry (luxury) purchases as distinct from bullion (investment) purchases.

Quite true but there is a long history with many cultures where investment gold is jewellery, for example consider Indian dowries. Whilst the Western mind perceives investment gold as one thing others do not. One of my coin contacts is also an Indian jeweller who also reported a similar experience that a lot of jewellery is being sold back and not replaced.

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Surely not - jewelry is neither liquid (unless you melt it! :lol: ) or tradeable, unlike bullion bars or coins, you also generally pay a large premium above spot due to the work that goes into making the jewelry, shop markups etc. I think it's right to perceive jewelry (luxury) purchases as distinct from bullion (investment) purchases.

In the west maybe, but in HK (and as I understand it, in India) you pay spot plus apx 1-5% based on quality of workmanship, and sell back (to a shop) for spot.

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Not good for gold full stop, but nevertheless no worse than it currently stands IMO. The Fed are between a rock and a hard place, if they let gold rise it makes it look like there is a problem with the reserve currency (cough... cough... splutter...), conversely if they whack it too hard China are going to become incredibly wealthy when the capping ends.

 

Not good for Goldmoney?

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Why? They have the real stuff.

 

I thought they buy their physical through exchanges and take delivery? So if they use Comex, they can't be sure they get the real stuff?

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