Saturday, December 29, 2012

Itsy bitsy gold bars all the rage in Switzerland

itsy bitsy gold bars in Switzerland
Itsy Bitsy gold bars are all the rage in Switzerland with private investors who are keen to queue up and buy gold in the form of small credit card size bars that can be broken up into bite size chunks as emergency payments.

The Swiss refinery Valcambi, part of the U.S. mining giant Newmont, is keen to bring its bite sized "CombiBar" to, not only Switzerland, but also the United States and India, the worlds largest gold buyer. 
According to Reuters, “Investors worried that inflation and financial market turmoil will wipe out the value of their cash have poured money into gold over the past decade. Prices have gained almost 500 percent since 2001 compared to a 12 percent increase in MSCI's world equity index.”

More and more people are buying gold it seems. According to the World Gold Council, sales of gold bars and coins were reached $77 billion in 2011, up from just $3.5 billion in 2002.
"The rich are buying standard bars or have deposits of physical gold. People who have less money are buying up to 100 grams," said Michael Mesaric, CEO of Valcambi. "But for many people a pure investment product is no longer enough. They want to be able to do something with the precious metal."

Mesaric said the advantage of the "CombiBar", dubbed the "chocolate bar" because pieces can be easily broken off by hand into one gram squares, is that it can be easily transported and costs less than buying 50 one gram bars.

"The produce can also be used as an alternative method of payment," he said.
Valcambi is now building a sales network in India with plans to launch the CombiBar on the U.S. market next year.

Meanwhile in Germany demand is strong, "Above all, it's people aged between 40 and 70 that are investing in gold bars and coins," said Mesaric. "They've heard tales from their parents about wars and crises devaluing money."

Andreas Habluetzel head of the Swiss business of Degussa, a gold trading company said, “The CombiBar is particularly popular among grandparents who want to give their grandchildren a strip of gold rather than a coin and Demand is rising every week," Habluetzel continued, "In Germany, people are buying gold in the fear that the euro will break apart or that banks will run into problems."

As developments in the euro zone lurch from one crisis to another, the demand for gold that can be sold in vending machines is also growing.

"Sales rise according to the temperature of the crisis," said Thomas Geissler, whose firm Ex Oriente Lux operates 17 gold vending machines in Europe, the United States and the United Arab Emirates.
The machines saw record sales in 2010, one day after the then Deutsche Bank CEO Josef Ackermann raised doubts over whether Greece would be able to pay its debts.

Since the launch of the machines, which operate under the name "GOLD to go", 50,000 customers have withdrawn more than 21 million euros in gold. The average buyer is male, over 50 years old and well off.

"Customers are hoarding gold mostly at home as a precaution against a crisis, just as their fathers and grandfathers did before them," Geissler said.

It seems that itsy bitsy gold bars are all the rage not just in Switzerland but all over Europe and Asia for people that want to buy gold.


Friday, December 21, 2012

Gold is winning

Happy Holiday Season from
It is coming up to the end of the year and a look at why one should buy gold from the viewpoint of some prominent people around the world is fitting
This year, the Deutschebank called gold "good money" and paper "bad money".

The President of the German central bank, the Bundesbank, paid tribute to gold as "a timeless classic".

A leading member of the policy committee of the People's Bank of China calls the gold standard "an excellent monetary system".

In The China Post, a CNN reporter wrote that the "gold commission" plank in the 2012 Republican platform will "reverberate around the world".

The Subcommittee on Domestic Monetary Policy of the U.S. House of Representatives twice called on economist, historian, and gold standard advocate Lewis E. Lehrman to testify.

GoldMoney founder and GATA consultant James Turk, in an interview with  King World News, recently remarked that Western market manipulation can't stop the flow of gold into Asia and that paper gold owners eventually will realize that they don't really own the metal but rather a lot of counterparty risk. “At some point in the future, whether it’s next year or the year after that, people who own paper gold are going to recognize they have counterparty risk.  They don’t own gold, they only own exposure to the gold price and that exposure is dependent on their counterparty”.

According to Fund Manager Stephen Leeb, "There is a ritual we see in overnight trading. Gold is usually up $4 or $5 at around midnight or 1 a.m. East Coast time. I'll be watching gold trade at this time and I can't count the number of times that in just a minute or two, instead of gold being up $4 or $5, it's now down $20. No one is trading at 12 or 1 or 2 in the morning. Somebody is doing this and it always happens when there is no liquidity. So you have a game of desperation going on here and the Chinese are aware of this".

Mahatma Gandhi once said, “First they ignore you, then they laugh at you, then they fight you, then you win”.
Well, gold is winning, and so should we all be.


Sunday, December 09, 2012

Gold Rally

Gold Rally

The next gold rally is imminent according to some analysts.
The last big gold rally of 70% ran from December 2008 to June 2011 when the Federal Reserve introduced 2.3 trillion dollars worth of quantative easing (euphemism for printing more money) in two rounds.

With the imminent never ending quantative easing now beginning it is very likely we will see a comparable rally in the gold price coming up over the ensuing months.

At least that is what George Soros and John Paulson appear to think with their continuing purchases of gold.  Between them Solos and Paulson own more gold than many countries and both have proven to be no slouch when it comes to investing their assets for profit. So what do they known that we don’t?

According to the World Gold Council, the SPDR Gold Trust (GLD) holds 1,342.2 tons.
Soros has increased his investment in the trust to mind boggling 1.32 million shares in the third quarter of this year, the most since his purchase in 2010, according to a Nov. 14 SEC filing.

And Paulson is the proud owner of an enormous 21.8 million shares in the SPDR Gold Trust.  This makes him the biggest shareholder.  He has recently raised his stake by a massive 26 percent in the second quarter of this year which means that his holding of 66 tons of gold is bigger than many countries gold reserves including Brazil, Bulgaria and Bolivia.

Now these guys are not buying up gold because they think the price is going to drop. Or because they are idling away time, or as a hobby to play with.  This is serious money and these guys play for keeps.  Google George Soros and John Paulson and you will see their history and how they continue to make money hand over fist.

This, coupled with the central banks buying gold as fast as they can, China still buying gold heavily and Indians, ignoring their banks pleas to stop buying gold, means that those that can are continuing to buy gold regardless and that means that the gold price is expected to rally very soon.
As the world financial and economic climate deteriorates and frantic efforts to bolster it by printing more money and imposing more austerity measures continue, it is evident the wisest know a gold rally is imminent and are taking appropriate steps to buy gold.
Perhaps that is what we should all be doing also.

Wednesday, November 21, 2012

Central Banks Returning to the Gold Standard

Central Banks Returning to the Gold Standard
It appears the Central Banks are secretly returning to the gold standard, giving substance to the evident failure of President Nixon’s action in 1971 on the then Bretton Woods global financial exchange system.  Since the gold standard was removed massive printing of paper money and spiralling inflation, has resulted in the global financial situation we now find ourselves.
Perhaps the central banks have realised this, or it may be a case of shoring up the diluted liquidity of their massive currency reserves.
Starting in 2010 central bank gold purchases jumped to a then all time high of 455 metric tons.  The biggest buy gold by central banks since 1964.
This year they are looking at a further 493 tons and Thomson Reuters of GFMS recently commented that central banks will remain, ‘a significant gold buyer for some time to come.”
In a recent interview with William Patalon of EFT Daily News, Real Asset Returns Editor Peter Krauth explained he completely agrees with that assessment.  “You can see their thinking, Bill … you can see them saying: “We have enough of all these fiat currencies in our bank reserves – now we want something that’s going to counter those holdings, that’s a valuable asset and that has all the right fundamentals in place.’ And that asset is gold.”
Banks have raised the gold capital adequacy ratio* to Tier One so gold is now viewed as a core capital of equity and disclosed reserves. 
Originally it was Tier Three, with a 50% risk weighing. The Basel Committee for Bank Supervision (or BCBS) met some months ago and decided that gold should be made a Tier 1 asset for commercial banks with a 100 percent weighing instead of the existing Tier 3 with just 50 percent weighing. A monumental step in restoring a gold standard.
We are seeing the results of this in the gold market place with Turkey purchasing 6.8 tons in September, and Brazil buying gold again after four years.  1.7 tons in fact.  Other countries aggressively buying gold include: South Korea, The Philippines, Kazakhstan, Russia, Mexico, Turkey, Argentina and the Ukraine.
“All the fundamentals are in place for this to continue,” Continued Peter Krauth, “These guys tend to have a long time frame in mind. So when you see a shift like this, it’s a big deal. And the chances are that this could last for a very long time.”
According to a recent World Gold Council report, gold rose by over 11 percent and is up 16 percent on a yearly basis, outperforming almost all the worlds’ stock markets.
To illustrate the point here are the top twenty central banks gold holdings for 2012.
European Union                   10,787.4
USA                                       8,133.5     
Germany                                3,396.3     
IMF                                        2,814.0     
Italy                                        2,451.8     
France                                    2,435.4     
China                                     1,054.1     
Switzerland                           1,040.1     
Russia                                      936.7       
Japan                                       765.2       
Netherlands                             612.5       
India                                        557.7       
European Central Bank           502.1       
Taiwan                                     422.4       
Portugal                                   382.5       
Venezuela                                372.9       
Saudi Arabia                           322.9       
United Kingdom                   9100.3
Lebanon                                  286.8       
Spain                                       281.6       
Austria                                    280.0       
Although many are reticent about how much gold they are buying, many of these above have added or are supplementing their gold reserves. In particular China and India. Both of whom have added hundreds of tones of gold to their reserves over the past couple of years.
In fact some analysts believe there has been consistent gold buying over the past 2 years by many Asian countries. “The thing that’s caught people’s minds is the massive increase in Chinese buying,” remarked Ross Norman of Sharps Pixley, a London gold brokerage.
On this Peter Krauth stated, “Even if you look at this conservatively, it’s clear that we’re just at the start of this – meaning the central bankers are going to be buyers for an extended period. Even if this upturn in buying only lasts half of [the 22 year downturn], we’re talking 11 years – meaning we’re only two years into this.”
“Some investors look at the current price of gold, and view it as expensive because it’s more than doubled in the last few years alone,” Peter said, “But given what I see coming at us, I can say this with a high degree of confidence: Three or four years from now, we’re going to look back on this as a period when gold was still cheap, and where the profit potential was vast, because of where prices are going to go from here.”
With the central banks buying gold, albeit slowly and quietly so as not to cause the price to raise, should this be looked at as a enormous hedge against a potential collapse of paper currency?  The Central Banks seem to think so.  Raising the gold capital adequacy ratio to the first tier. Buying gold like it is going out of fashion. All the indicators are there. Central Banks are returning, quietly, to the gold standard.
Now is the time to buy gold, while the price is still low.
* Capital adequacy ratio is the ratio which decides the ability of a bank to meet its liabilities in the agreed upon time frame.