Gold Core

Beware of Exchange Trade Funds (ETFs) Bearing Gold

Published by Mark O’Byrne under Commentary | Gold |

Gold Bullion Unique as No Counter Party Risk

Gold is unique among asset classes as it is the only asset class not dependent on the performance of auditors, management, corporations, financial institutions, banks, politicians and governments. Nor should physical gold be dependent on the performance of trustees, custodians and or sub custodians. Gold does not depend on the performance and health of the wider economy and as importantly when you buy gold in its physical form there is no third party liability or credit risk. Or at least there should not be. Gold has an intrinsic value in and of itself that is not contingent on someone else’s or some entities performance or mere promise to pay. Thus, gold in its physical form is still the ultimate form of financial insurance. This is why every major central bank in the world still maintains a significant portion of their reserves in gold bullion and many, such as the Chinese, are now increasing their gold bullion reserves.

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FT: Ten Principles for a Black Swan-Proof World

Published by stephen.flood under Articles of Interest | Commentary |

The Financial Times published a relevant and interesting article by Nassim Nicholas Taleb, a veteran trader, a distinguished professor at New York University's Polytechnic Institute and the author of The Black Swan: The Impact of the Highly Improbable. 
1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest. 

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Adrian Douglas: Why Own Physical Gold & Silver

Published by Mark O’Byrne under Articles of Interest | Commentary | Gold | Silver |

Adrian Douglas of Market Force Analysis writes that in his experience, most ordinaly people have difficulty understanding why gold is the investment opportunity of a life time. Blaming the messenger, he explains it in simple terms, making a distinction between consumables and collectables:

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Gold Investments Year-End Review - Outlook for 2009

Published by Mark O’Byrne under Commentary | Gold | Silver |

Gold Outperformed Most Assets in 2008 - Gold Up 3.9% in USD; Up 5.3% in EUR and Up 34.4% in GBP.
Today’s London AM fix (23/12/08) was $844.01 (USD), £570.85 (GBP) and €603.72 (EUR). At the start of 2008 (January 2nd 2008), gold’s London AM Fix was at $840.75 (USD), £424.81 (GBP)  and €573.34 (EUR). Thus, in 2008 gold is up by 3.9% against the dollar, up 5.3% against the euro and up 34.4% against the pound. The London AM Fix is a widely followed benchmark for physical gold and silver prices and is reported in major newspapers and at many gold-related websites.

This has led to a sharp outperformance of gold vis-à-vis every major equity indices and commodity in the word, not to mention most property markets (see Chart and Performance table). In March, gold fell from a record nominal high of just over $1,000/oz but it is important to remember that gold is only down some 15% from that record nominal high and this is after surging nearly 60% in the previous 7 months. In the seven months from the start of the credit crunch and the collapse of Bear Stearns, gold had surged by nearly 60% - from $640 in August 2007 to over $1,000 in March 2008.

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Rollover: Essential Movie Viewing in these Unprecedented Financial and Economic Times

Published by Mark O’Byrne under Commentary | Economics | Gold | Video |

Rollover is the story of faded Hollywood siren Jane Fonda who inherits a multi-million dollar company after her powerful bank president husband is murdered. While trying to find her dead love's killer, she runs his corporation with the help of charming banker Kris Kristofferson in the weeks before a worldwide currency and financial collapse.

It was the 1981 movie Jane Fonda "got made" after her exploration of the dangers of nuclear power in the "China Syndrome" back in 1979. She was driving to tell the story of real money - gold and how people throughout the world value gold as real money while most Americans and people in western societies don't understand gold and have forgotten its importance and value.

The plot line is about wealthy Arab investors not rolling over their certificates of deposits (CDs) in American banks and buying gold in order to hedge themselves against a fall in the dollar and paper currencies ... and what the loss of those foreign investments means to the financial establishment in New York and the international financial and monetary system.

Rollover: Financial Apocalypse

This movie was a "financial thriller" and there are not many of these movies made. Movies need bank financing, and banks usually won't finance anything that makes them look bad or stupid. They show "It’s a Wonderful Life" with Jimmy Stewart on TV only once a year now because it shows "run on the bank" at the Bailey Savings and Loan - not something the financial establishment wants Americans to even think about.

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The Failout

Published by Edward Murphy under Commentary | Economics |

It's only Thursday and the Treasury has gone to the credit markets for $194 Billion so far this week for short term paper alone. Let's say they only borrow another $6 Billion tomorrow and end up at 200 Billion. Let's do the math. 200 Billion times 52 weeks is ..........$10 Trillion 400 Billion Dollars. This coincidentally equals the amount of the current national debt.

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British Gold Sovereigns - The Preserve of Collectors, Savers and Smart Investors

Published by Mark O’Byrne under Commentary | Gold | History |

Gold as Essential Diversification and Financial Insurance
Gold bullion remains an essential diversification and essential financial insurance to have in all properly diversified portfolios. Besides the ever more important factors of inflation hedging and financial insurance, gold is likely to continue to outperform other asset classes and to provide significant returns to gold buyers.

Many of the world’s major investment banks are in agreement that gold is again in a long term multiyear bull market. Many believe gold will surpass its inflation adjusted 1980 high of $2,400/oz in the coming years.

Citigroup’s former head of technical research and managing director of Yamada Technical Research Advisors LLC., Louise Yamada sees gold on its way to $3,000 within a decade. "Gold is the purest play against the dollar,'' said Louise Yamada, Yamada is highly respected and was voted Wall Street’s best technical analyst from 2001 to 2004.

Credit Agricole’s (France's largest bank and the fourth largest bank in the world) brokerage, Cheuvreux see the possibility of a rise to $2,000/oz or higher.
How to Invest in Gold in Preparation for 2,000/oz Gold?
Gold and Silver Investments Limited agree and believe gold will surpass its inflation adjusted high of $2,400 per ounce in the next 5 years.

This is why we continue to advocate investors continue to diversify and increase their gold holdings. So, how should one invest in gold?

There are many different ways to invest in gold and one’s motivation for buying gold should dictate how one buys gold. Are you a speculator, investor or saver? Are you buying to make a capital gain or as a hedge against systemic risk and using your gold as financial insurance? Is your motivation a little of each?

ETFs, mining funds, digital gold, Perth Mint certificates, gold bullion coins and bars in one’s possession and or semi numismatic gold coins are good ways to buy gold.
Given the extent of current macroeconomic and systemic risk a diversified precious metals holding makes sense and it should not be a question of “either or” rather a combination of these various ways.

Having eggs in various gold baskets so to speak is the most sensible and prudent strategy.

As part of this mix, older gold coins should be looked at. Classic European and world gold coinage is an often overlooked but extremely important sector in today's gold market. Pre 1933 and 19th Century European and world gold coins are an intelligent alternative to modern gold bullion coins or bars as there is often more room for appreciation with these beautiful old coins due to their rarity and yet they can often be bought at bullion prices.

[caption id="" align="alignleft" width="150" caption="2006 Gold Proof Half-Sovereign depicting Saint George"][/caption]

Importantly from an investment point of view is the fact that gold bullion and older gold coins are not subject to VAT due to the EU Gold Directive. Even more important is the fact that unlike the other forms of gold investment outlined above, British gold sovereigns are also not subject to capital gains tax (CGT). Thus all post-1837 British gold sovereigns due to them being legal tender and having a legal tender face value are capital gains tax free, which is obviously a massive benefit to investors vis-à-vis other gold investments.

The prices of these beautiful coins are only slightly more expensive than modern gold bullion but offer many advantages. Besides not having to pay CGT, other advantages include increasing scarcity, aesthetic value and historical significance. European and British gold coins are recognised as one of the most advantageous ways to invest in “bulk” gold, by sophisticated investors.

European, American and world gold coins are bought by both collectors and investors at a small premium to the price of bullion coins. Perhaps the most popular semi numismatic gold coins internationally are British Sovereigns.

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Only the fittest SMEs will survive the coming recession

Published by stephen.flood under Commentary | Economics | Recession | SME |

Small to medium enterprises are the life blood of modern economies. In Ireland for example, up to 56% of the national workforce is employed in by Small to Medium Enterprises, that is to say companies that employ less the 250 employees and would include local industries and mom and pop business outfits.

From the United States to Germany and beyond small to medium enterprises are responsible for a large component a countries transactions, employment, provision of goods and services and general day to day activities and are critical to the health of any economy.

Given the increasingly uncertain economic climate critical questions must be asked – How can these critical and indigenous industries survive a rapid economic contraction – can they react to a swift fall off in demand for goods and services; do they have the management skills and Management Information Systems to not only recognise the problems but be able to formulate a cohesive response; how robust are their finances; how flexible are their employees?

Concerns are growing that with the economic success enjoyed by many countries over the past ten years we have inadvertently created a weak and desperately soft underbelly – That is to say we have forgotten how to manage our business competently. Many small businesses have grown lazy and despondent and lack the management skills needed to properly navigate their business through difficult times.

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Are we heading towards an Iceberg?

Published by Marc Westlake under Commentary | Economics | Wealth Management |

Early evening on the April 14th 1912 and a passenger on the first class deck of the Titanic would be, no doubt, enjoying the opulence of their surroundings, and the wealth that the British Empire had created. More recently, the “Celtic Tiger” has created new wealth in Ireland so that one can now enjoy a similar fine dining experience as the passengers of the Titanic as the menus show. Yet, we know that the very next night it all lay at the bottom of the Atlantic and no amount of Edwardian engineering could save the ship. One of the key lessons learnt from the Titanic tragedy was that there weren’t enough lifeboats for all the passengers. Today, we are in the midst of a Global crisis and potentially face a new breakdown in the established world order. Just as the death of Queen Victoria in January 1901 at the peak of the British Empire was followed by two World Wars and the emergence of the United States as the dominant Global Hegemonic Power, many commentators such as Paul Kennedy in his bestseller The Rise and Fall of Great Powers, are claiming that Global Hegemony is in the process of shifting. It is possible if not probable that even within our lifetimes, this power will shift east to China or India and just like the situation faced by Great Britain at the turn of the Twentieth Century there is nothing the United States can do about it. This time it isn’t Edwardian engineering that is failing to save us, but financial engineering. Of course nobody knows for sure how events will play out or if we are heading for a recession or even a depression.

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