Australians rushing to buy Swiss gold bullion

Precious Metal Division, Gold De Royale (10 March 2010)

BRISBANE, AUSTRALIA (Source of Information: Commodity Online): Australian investors are rushing to buy Swiss gold bullion following the sovereign debt problems in Greece and some expert predictions of an upcoming period of financial market meltdown has allowed many investors in Australia rushing to buy Swiss gold bullion says George Vo, Precious Metal Sales Manager of Gold De Royale (http://www.goldderoyale.com.au), Australia’s leading online Swiss gold bullion dealer.

Vo, explains “The Greek financial debt has worried many investors in Australia if it would contribute to the next financial meltdown. Economists around the world are worried of the Domino effect. That is, a Greek financial collapse would spread far and wide, much as the collapse of the Thai baht in 1997 which triggered an Asian meltdown and quickly turned into a global credit problem. The situation in Greece does not get any better. There is a high degree of speculation that buildings, companies and several uninhabited islands in Greece may be sold to repay their debt. This news has send shock waves around the world especially in Asia and Australia.”

Because gold is physically held onto by the investor, people do not have to worry about money which is left in banks. Unlike bank notes that can be printed to pump up the economy or save a country from collapsing, gold cannot be printed. It’s safe, it retains its value, and gold has been performing exceptionally well as of late, even more so than usual. Therefore, while most investors are mourning their losses in stock markets and in shares, smart investors are rushing to buy gold bullion.

When asked which are the best precious metals that investors need to buy, Vo states, “People need to always make sure that any precious metals that they buy must be accredited by the London Bullion Market Association (www.lbma.org.uk) as an acceptable Good Delivery Refiner or as a Good Delivery Referee. At Gold De Royale we sell the best precious metals that money can buy. In fact we only sell precious metals that meet the stringent standards of precious metal refining as set by the London Bullion Market Association."

"This makes us the only online precious metal dealer in the world that has truly set the standard in selling quality precious metals. We sell world’s most prestigious gold, silver, palladium and platinum bullion of refiners like PAMP Suisse, Valcambi Suisse and Argor Heraeus. There is currently a huge demand for the Argor Heraeus Kinebar in Australia. Argor Heraeus Kinebar is the only gold bar in the world that has a hologram that shines on the gold bar. It is magnificently refined and demand for the Argor Heraeus Kinebars has outweighed supply. The demand for the Argor Heraeus Kinebars was so high that sales had to be suspended on many occasions.”

It seems that the financial scene in Australia is not getting better at all. The Industry Super Network, which represents the non-profit superannuation sector in Australia, released their report the Supernomics last week. The report calculated that $47 billion dollars had been lost from retail super funds between mid-1996 and June 2009 because of fees and underperformance. If these trends continued, Australians who invested their super in retail funds would be $120 billion worse off over the next decade, the report said. This report has given way to many investors to set up their own self managed superannuation funds so that they can use that money to buy and invest in precious metals.

Can superannuation funds be used to buy precious metals?

Precious Metals Division, Gold De Royale (08 March 2010)

One of the questions that we get on a daily basis from many new clients is “can superannuation funds be used to buy precious metals?” The answer to the question is simple.

Self Managed Superannuation Funds also called as “SMSF” can be used to buy precious metals for investment purposes. That is, if you manage your own superannuation funds which are SMSF (not industry superannuation funds like Sun Super etc) then you can use that money to buy precious metals.

 

A new report called Supernomics released by the Industry Super Network on Friday 5^th March 2010 showed that Australians will lose $120 Billion Dollars in superannuation funds due to bad investment choices done by the companies who manage your superannuation funds. Keep in mind that, none of the superannuation companies will allow you to invest your money in precious metals. They will only allow you to invest your money in shares, funds, stocks etc. As per Australian government regulations, money invested in SMSF can be used to buy precious metals.

 

We are currently seeing a large number of people using their superannuation funds in buying precious metals. Starting an SMSF is as simple as starting a bank account. Any charted accountant or financial advisor can setup a SMSF for you within weeks.

 

You may want to read the following article to make an informed decision whether you want to manage your own superannuation funds or not. 

 

http://www.watoday.com.au/breaking-news-national/aussies-stand-to-lose-120b-in-super-20100304-plne.html

 

Keep in mind that superannuation funds are your hard earned money that you can use when you retire. There is no point in giving it to the so called Large Superannuation Companies who makes wrong investment decisions with your own money (not with their money).

Time to invest in palladium – make your fortune

Precious Metal Division, Gold De Royale (04 March 2010)

While investors are very familiar with gold, silver and platinum, palladium is often overlooked when considering it as a precious metal for investment purposes. Palladium is one of a group of six metals often referred to as PGM's, which stands for Platinum Group Metals. This group includes the well-known platinum and the relatively obscure metals called rhodium, iridium, ruthenium and osmium.

 

Platinum is 15 times more rare than gold. All the platinum man has ever mined, for example, would fit into a 25-cubic-foot room. Palladium is more rare than platinum. What these metals have in common is the ability to serve as a catalyst for chemical reactions, and a very high melting point (4000 degrees F). Not surprisingly, the biggest demand for both platinum and palladium comes from the global auto industry, which uses both in the catalytic converters necessary to meet increasingly stringent clean air requirements for the auto industry.

 

In 2005, approximately 40% of total platinum demand came from the auto industry. The figures for palladium were even higher; roughly 58% of palladium demand was for auto-catalysts. Since both are used to reduce auto emissions, platinum and palladium compete with one another on price. Automakers will use whichever of these two PGM's gives them a bigger bang for their buck. In early 2001 for example, palladium made a high of $1,090 per ounce. At the same time, platinum was trading for $623 per ounce. As a result, the auto industry retooled their catalytic converters to use mostly platinum. This process of retooling takes some time, and prices of the two metals adjusted as the switch took place.

 

The impact is still clearly visible in today's prices. As we write this, palladium is trading for US $447 per ounce, while platinum is trading for a whopping US $1577 per ounce. This imbalance will be corrected as automakers once again retool their production lines to accommodate the cheaper palladium. At some point the gap between Platinum and Palladium will narrow. Palladium has another advantage over platinum. A catalytic converter works only when hot, but 90% of tailpipe emissions occur before it heats up. To cut warm-up times, carmakers have moved the converter closer to the engine. Palladium, which is more heat tolerant than platinum, is better suited to this design. Another factor to consider is that in the world South Africa and Russia are the biggest suppliers of palladium and both have been dumping all they can produce on the market. Palladium is priced in dollars and today's low prices mean not only are both nations getting paid less for their metal, but also the dollar’s recent drop means they are getting paid less in terms of real value.

 

With a low palladium price and a declining dollar, how long will it be before these nations re-think their export policies, especially Russia, who accounts for almost 50% of annual global palladium supply? Russia holds the key to price and it t wouldn't be a surprise to see them hold back supply in order to raise prices.

 

Another reason why palladium prices have remained low is that the Ford Motor Company was convinced in 2001 that the palladium price would stay high and stockpiled 1.8 million ounces. It has taken the last four years to liquidate this stockpile, which is now almost exhausted. Once it is fully liquidated, a huge weight on the palladium market will be lifted.

 

If all that is not enough, perhaps the biggest demand for palladium could come from China, which is home to the fastest-growing automobile market in the world. In China last year, the number of cars on the road jumped by nearly 50%. Sales of domestically produced automobiles soared by 70%. The number of cars on the road is expected to increase at least 10% per year through the rest of the decade. The number could even be bigger because the Chinese are discovering new car financing. Imagine what will happen when 1.3 billion people discover no money down, five-year car loans!!! Not only is palladium a play on its historic and unsustainable discount to platinum; it is also a play on China, and the global move toward more stringent air quality standards. Because it is priced in dollars, it is also a back-door play on a weaker dollar. Should these powerful trends continue, we would not be surprised to see Palladium rally back above the $1,000 per ounce level once again.

Gold price goes up due to Greece’s debt crisis

Precious Metal Division, Gold De Royale, (03 March 2010)

Gold rose to the highest price in almost six weeks in New York as concern about Greece’s debt increased demand for bullion as an alternative to holding currency. The Greek government said it will announce new deficit cuts tomorrow. Greek government workers called a 24-hour strike on March 16 as Prime Minister George Papandreou prepares to meet German Chancellor Angela Merkel on March 5. European finance ministers the past few weeks put more pressure on Greece to rein in its budget deficit.

Gold is “security against any financial turmoil in any country,” said Wallace Ng, Hong Kong-based executive director of commodity derivatives at Fortis Nederland. “People are worried about national debt of the European countries, that’s why they sell euro and sell sterling. But if they are worried about the situation, they shouldn’t sell gold.” Gold futures for April delivery added $16.60, or 1.5 percent, to $1,134.90 an ounce on the New York Mercantile Exchange’s Comex unit at 11:37 a.m. local time and earlier today gained to $1,135.40, the highest price since Jan. 20. Gold for immediate delivery in London was 1.4 percent higher at $1,134.53.

The metal increased to $1,126.50 an ounce in the afternoon “fixing” in London, used by some mining companies to sell production, from $1,116 at this morning’s fixing. Spot prices reached a record 836.63 Euros today, while the metal climbed to an all-time high of 759.94 pounds. The dollar has jumped 5.7 percent this year against the euro as concern about Greece’s ability to reduce its debt cut demand for assets denominated in the single European currency. The greenback was little changed today, paring earlier gains of as much as 0.9 percent. Gold futures reached a record $1,227.50 an ounce on Dec. 3 and are up 3.4 percent this year.

A spokesman for Greece’s government said the nation will await reaction to the cuts before selling any bonds. European Union Monetary Affairs Commissioner Olli Rehn yesterday said Greece must reveal new measures “in the coming days” to allay officials’ concerns that the current austerity plan falls short.

“Gold is holding up well in a strong-dollar environment, supported by sovereign-debt worries,” analysts including Filip Petersson at Swedish bank SEB AB’s commodity unit said in a report. “Continued high liquidity, low interest rates, sovereign-debt and exit-strategy uncertainties as well as longer-term dollar skepticism are all likely to fuel demand and limit downside risk for gold prices.”

Bullion climbed to a record in pounds as the currency fell against the dollar amid concern Britons may fail to elect a government with a large enough majority to cut the country’s deficit. Sterling-denominated gold prices have advanced 12 percent this year, while the slide in the euro has pushed euro- priced bullion up 9 percent.

The impact of Greeks financial debt on the prices of precious metals

Precious Metal Division, Gold De Royale, (22 February 2010)

Last week in Australia and around the world we saw panic buying of gold and silver bullion when Greece announced that it may file for bankruptcy if the EU did not lend them more money. Many precious metal dealers had to work round the clock as people started getting rid of Euros and buying gold.

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.

Greeks aren't very welcome in the Rue Alphones Weicker in Luxembourg. It's home to Eurostat, the European Union's statistical office. The number crunchers there are deeply annoyed with Athens. Investigative reports state that important data "cannot be confirmed" or has been requested but "not received."

Creative accounting took priority when it came to totting up government debt. Since 1999, the Maastricht rules threaten to slap hefty fines on Euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.

The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009, it exploded to over 12 percent.

Now, though, it looks like the Greek figure jugglers have been even more brazen than was previously thought. "Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products.

Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date.

Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need Euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

In previous years, Italy used a similar trick to mask its true debt with the help of a different US bank. In 2002 the Greek deficit amounted to 1.2 percent of GDP. After Eurostat reviewed the data in September 2004, the ratio had to be revised up to 3.7 percent. According to today's records, it stands at 5.2 percent.

At some point Greece will have to pay up for its swap transactions, and that will impact its deficit. The bond maturities range between 10 and 15 years. Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.

While precious metal prices for gold bullion would have easily soared above US$1200 spot price, the prices were pulled down by Gold Cartels so that people would still trust in paper currency. But the question is how long can Gold Cartels suppress the actual price of gold?

Never been a better time to buy gold and silver bullion

Precious Metal Division, Gold De Royale (16 February 2010)

Global investing guru and publisher of the famous Gloom, Boom and Doom report Marc Faber says gold price may continue to drop as low as $950 to $1,050 an ounce, but that is not any reason to sell gold. The dip in gold price is a correction and this should be taken as a great buying opportunity, Faber said.

As gold price has surged to touch historic highs in the last few months, Faber, a gold bug, has been telling investing public that the yellow metal is cheap at $1,100 per ounce and it will be prudent if they buy the yellow metal at this rate or below so that they can reap rich dividends in 2010.

According to Faber, gold price has been falling in the last few weeks thanks to a temporary surge in the US dollar. But the weakness that gold has shown recently is no reason for investors to get out of gold investments. I still believe gold should continue to be part of every investors wise investment portfolio, he said.

Recently, Faber stated that gold price wouldn't drop below the $1,000 an ounce mark ever again. A renowned investor that he is, Faber feels that it is the right time to buy gold at these current levels, rather than dumping gold.

There is no doubt the printing of money from central banks around the world is generating inflation, and it will increase going forward. That alone is a good enough reason to have gold in your investment portfolio, Faber said.

Faber foresees the second half of 2010 when gold price will boom. Last month, Faber had said that the most interesting currency that people should invest in now is gold as the US dollar is on a bearish run. Gold remains the best bet as a currency these days because of the fact that the yellow metal supply is extremely limited, he said.

Faber says the gold price should be treated in the same way that a company’s stock is being treated by investors. A company’s stock could be less expensive at $100 than when it was selling for $10, because earnings growth has outpaced the appreciation of the shares and therefore its UP/E has declined, gold could be cheaper at the current price than when it was at less than $300 because of the explosion of foreign exchange reserves in the world, zero interest rates, the huge debt overhang, and the expectation of further money printing, he said. According to Faber, global reserves of gold have grown from about $1 trillion in 1995 to over $7 trillion. Therefore, the share of gold in the worlds official reserves has declined from 32.7 per cent in 1989 to a current record low of 10.3 per cent, he pointed out.

Faber said that he is still puzzled by the deflationists, who cannot understand that the explosion in foreign exchange reserves over the last 15 years is a symptom of a massive monetary inflation. Ergo, I could argue that gold is now actually less expensive than when it sold for around $300 per ounce, he said. Faber said that central banks in emerging economies keep only a tiny fraction of their reserves in gold. Eventually, I would expect them to follow the example of the Reserve Bank of India (RBI), which recently bought 200 tons from the IMF for $6.7 billion, Faber pointed out.

Now, just consider what the impact would be if China were to increase its gold holdings from presently less than 2 per cent of its $2.2 trillion reserves to 6 per cent or 10 per cent. Each 1 per cent increase in gold weighting would mean gold purchases of more than $20 billion, or nearly 600 tones, he said. Faber said that gold’s value may go from $1,100 per fine ounce to $1,500 or $5,000.

But he added that he would not invest more than a sliver of his wealth into something without intrinsic value, something whose positive value is based on nothing more than a set of self-confirming beliefs. Faber said that he is not a perennial gold bug. But, when governments spend far more than they collect in taxes (large fiscal deficits), and when central bankers engage in reckless monetary policies and, instead of treating the causes of the problems (excessive debt growth), treat the symptoms (deflationary forces), gold as a currency does make a lot of sense, he added.

The endless monetary debt cycle of the United States

Precious Metal Division, Gold De Royale (05 February 2010)

 

What would happen to your household if it spent $9,000 every single month but only brought in $6,000 every single month?  Well, you would quickly accumulate a massive amount of debt that you would very soon not even be able to pay the interest on.  You would probably have to end up declaring bankruptcy.  So if it is not okay for your household to spend like this, then why is it okay for the U.S. government to do it?  On Monday, Barack Obama unveiled his proposed budget for 2011.  It calls for 3.83 trillion dollars in spending, and it projects a deficit of 1.3 trillion dollars.  In other words, one out of every three dollars that the U.S. government would spend under Obama's proposed budget would be borrowed.  

 

In a statement about his proposed budget, Obama warned that we need to start thinking about controlling spending... "We simply cannot continue to spend as if deficits don't have consequences." That is very true.

 

We cannot continue to spend as if deficits don't have very serious consequences. And yet Obama is doing it anyway. Not that Bush was much better in this area.  Under George W. Bush, federal budget deficits absolutely exploded. But now Obama is taking things to an entirely new level. Obama’s proposed budget anticipates $5.08 trillion in deficits over the next 5 years.  Those projected deficits are 35 percent higher than the White House projected just 12 months ago. But the truth is that they are still numbers straight out of fantasyland. Why? Because Obama's budget is based on economic assumptions that are outrageously optimistic.  Just check out these numbers that Obama's budget is based on...

 

(a)Obama's budget projects that the U.S. economy will grow at a 3% rate in 2010, and then will grow by 4.3% in 2011 and 2012.

(b)Obama's budget projects a 1% inflation rate in 2010, and inflation rates of less than 2 percent for the rest of the decade.

(c)Obama's budget projects that the unemployment rate will remain at 10% in 2010 and then will decline to about 5% by the end of the decade.

 

So basically the White House expects the U.S. economy to miraculously recover and to grow at a robust pace with super low inflation and super low unemployment for the rest of the decade. And even with these incredibly rosy projections were true, they are still forecasting massive federal deficits for the rest of the decade.

 

So what if things don't go so smoothly? The reality is that the U.S. economy is simply not going to recover.  How bad are the deficits going to be if the U.S. economy really goes down the tubes? That is such a frightening scenario that it is hard to even think about it. Meanwhile, the watchdog in charge of monitoring the U.S. government's $700 billion bailout program says that TARP is simply not working. In his recent quarterly report to Congress, special inspector general Neil Barofsky said that TARP has basically completely failed to boost bank lending and has basically completely failed to halt the spread of foreclosures.

 

So why did we spend all that money if it isn't doing any good? After all, Obama promised that if we helped out Wall Street, they in turn would be more than happy to help out "Main Street". But a funny thing happened. The banks decided to hoard the cash. In fact, the Treasury Department reported earlier this month that the 22 banks that got the most aid from the government's various bailout programs have cut their small business loan balances by $12.5 billion since April. So they are not even lending as much money as they used to. It seems that very little of what the U.S. government is trying to do is working these days. But at this point there is not much that can be done.

 

As far as the economy goes, there are basically two choices.

1) The U.S. government could try to cut spending and balance the budget, but that would cripple the economy and it would potentially send unemployment soaring to Great Depression levels.  The U.S. would experience a deflationary depression that could take decades to recover from.

2) The U.S. government could try to stimulate the U.S. economy by borrowing even more money than before and by cranking up the debt spiral that our financial system is based on one more time.  Of course this could very well result in the complete destruction of the dollar and the complete destruction of our financial system, but it is the choice that would keep life in the U.S. somewhat "normal" at least for now.  This is essentially the choice that the Obama administration and the Federal Reserve have chosen.

 

Because of the gigantic mountain of debt that our society has accumulated, there really are no other alternatives.  We can try to put off the inevitable for a while, but the truth is that we will either be facing a deflationary depression or a hyperinflationary nightmare in the years ahead. 

 

All indications are that the Obama administration and the Federal Reserve are pursuing policies that will lead to a hyperinflationary nightmare.  They are hoping that all of this government borrowing can crank up the debt spiral the U.S. economy is based on one more time.  But ultimately this is only going to lead to hyperinflation and the destruction of the dollar. No wonder more than half of the people in the United States are stacking up their vaults with precious metals like gold bullion, silver bullion, palladium bullion and platinum bullion.  

When a loaf of bread costs ten dollars a whole lot of people are going to be really pissed off, but it isn't as if many of us haven't been trying to warn you. It simply was not realistic for the American people to pile up the biggest mountain of debt in the history of the world and to think that there would not be very serious consequences.

Silver bullion the most undervalued precious metal

Precious Metal Division, Gold De Royale (05 February 2010)

 

Silver prices still have a long way to rise before reaching their top.  From industrial applications to its relative value, it’s easy to make the case that silver remains one of the most undervalued commodities.

 

Industrial Fundamentals

Industrial uses for silver are abundant.  Ranging from electrical uses to photographic development, silver may be one of the most useful metals known to man. 

 

However, silver prices have yet to reflect the growing applications and uses for the precious metal, despite so many fundamentals suggesting silver prices should rise.  Silver's low price is mostly due to a poor economy, which has seen consumer spending go into a drought.  With consumers buying less big ticket items, such as washing machines, computers, and other consumer-grade electronics, which all contain silver, the amount demanded from the industrial sector is under its average. 

 

Luckily, economies do not stay in recessions or depressions forever, and consumer spending, as well as industrial silver demand, should skyrocket with any rebound.  Silver's price should follow closely behind.

 

Relative Cost

2008 was a record year for virtually every commodity across the board.  Oil soared as high as $147, gold pushed towards $850 per ounce, and agricultural commodities rode the rally as well. 

 

However, silver remained behind the pack, moving only as high as $15 per ounce, which is roughly one-third of its all time high set in the 1980s.  In fact, silver was the only commodity that had not beaten its previous highs in the last three years. 

 

When compared to energy commodities, gold and even stocks, silver remains heavily undervalued, despite a belief among economists and financial analysts that it represents one of the best investments in 2010 and beyond.

 

Silver and Gold Relationship

Gold and silver typically trade within a range of 20-70 ounces of silver to the price of gold.  Today, the ratio is roughly 62.2 ounces of silver to one ounce of gold, which is the highest it has been in years.  This ratio is often used by traders as an oscillator to decide when it is best to move from gold to silver or from silver to gold.  When the ratio nears 70, investors buy silver and sell gold.  When it nears 20, investors are selling silver to buy gold.  This ratio, which has long been important to commodity traders and long-term investors alike, suggests silver is ready for a rally.

 

Rounding it All Up

Even after rising nearly 350% from its 2000's low, silver is still heavily undervalued when compared to a slew of other commodities, setting the stage for a continued explosion in price regardless of the changes in other commodity prices.  Moving forward, silver has not only the fundamentals driving growth in consumption, but also investment, as more and more investors realize the untapped potential that resides in a healthy stock of silver. 

 

There is little time to wait, as silver's explosion could be just around the corner.  Should silver prices make a modest move from 1/62 of the price of gold to 1/40, investors will be rewarded with a healthy 50% in returns.  The time to invest is now, long before Wall Street realizes what a true bargain silver is.

Tungsten gold bullion in circulation – I am sure my gold is 999.9 pure gold (How sure are you?)

Precious Metal Division, Gold De Royale (29 January 2010)

 

In 1964 the US Govt introduced the zinc dimes clad with silver. They at least admitted the debauchery publicly. Now pre-1964 silver coins are all considered different, and valued differently too, higher. Rome committed the same coinage fraud 1900 years ago. Their Empire went bust as the city burned almost concurrently. Ayn Rand is a guiding light for Alan Greenspan, the enabling destroyer of the US banking system, destroyer of the US household archipelago, and dispatcher of the US industrial base to Asia. He is the hero icon worshipped by Wall Street.

The irony is thick, that his career was spent following Old Europe orders that delivered the slow motion coup de grace to the American Empire. Ayn Rand wrote "If you want to know when a society is set to vanish, watch the money. Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of moral existence. Destroyers seize gold and leave to its owner a counterfeit pile of papers."

The Chinese are learning this lesson the hard way, challenged to convert their USTreasury Bonds and USAgency Mortgage Bonds into true wealth before the paper becomes untradable. Actually, the bonds will eventually be redeemed by the USFed with newly printed money, when an avalanche occurs of foreigners seeking redemption en masse. For almost ten years they have been exchanging their finished products to the US & West for paper with ink on it, in questionable stored wealth. The Chinese are cashing in on their paper, trading it for new global power.

NEW TUNGSTEN MINE DISCOVERY

The tungsten deposits come in very high grade ore, located in shallow rectangular deposits dispersed widely across the world, segregated in unusual vault heap leach mineralizations. In October, the Hong Kong bankers discovered some gold bars shipped from the United States were actually tungsten with gold plating. This is the exact same Modus Operandi as the silver clad zinc dimes from 45 years ago. History repeats itself.

The parallels to mortgage bond fraud with either subprime borrowers or multiple property titles used in bond securitization is easy to spot. A consistent theme runs through the American management of finance and dissemination of fraudulent assets on a global basis. Tungsten gold bars is a feat difficult to surpass. Credit must be given for not leaving any potential for fraud untapped. Refer to insider flash trading, naked shorting of bank stocks, commodity trading on behalf of the USGovt, and much more. No disrespect is intended for the trillion$ counterfeits of superstar grade.

Refer defense appropriations, USTreasury Bond sales beyond issuance, and missing Fannie Mae funds. These are legacy crimes.

The initial discovery was something like four gold bars, which the Hong Kong bankers drilled invasively to test the contents. Reminds me of drilling the earth and measuring how many grams of gold per tonne. The HK bankers hoped to have 99% gold yield in their drill program for the resident bars. They found something like 1% instead and 99% tungsten.

By the way, tungsten sells for less than $70 per ton, which makes its swaps for gold to be 60x more profitable than silver bar swaps. Another handy usage for the Gold/Silver ratio in calculations. The hunt was on. Now not a single assayer on the planet is available, as all are tied up. They have been commissioned to test the gold bars shipped from the United States of Fraudulent Banker America in their own bullion vaults.

They use basic methods of four drill holes with direct assay of shavings, but also less invasive methods like electro-magnetic waves to examine the metal lattice structure. When highest level methods are needed, they turn to mass spectrometry. NOW ALMOST NO GOLD BARS WILL LEAVE THE LONDON OR NEW YORK METALS EXCHANGES WITHOUT SOME AUTHENTICATION, AS DISTRUST IS WIDESPREAD.

The global bankers must deal with toxic bonds and phony gold bars. Talk circulates that the entire contents of Fort Knox might have swapped a decade ago. Evidence is being accumulated and compiled. The assayers have also been commissioned to assist in authentication of gold bar delivery the world over from the US exchanges. Current estimates among the gold trader community run well past a few hundred thousand 'salted' gold bars, maybe over a million. So the introduction to sophisticated Wall Street methods of currency management during the Decade of Prosperity had a side game running simultaneously. In an age where the lines between patriotism and treason are blurred, this tungsten episode brings new meaning to the word HEIST.

BREAKDOWN AT GOLD EXCHANGES

The bust cometh, and it will be spectacular. The stories told in the press will be peculiar, since not told objectively. The headlines might be a comedy, with phony reports of foreign subterfuge, when the perpetrators are home grown. The focal point for attacks is actually London at their metals exchange. The early October events included numerous offers by exchange officials to settle gold contract deliveries in cash with a 25% extra vig bonus. Much gold was drained from London on demanded delivery, thanks to a small army of lawyers, a small blizzard of contracts, and a few key judges at the courts. They were all Asians, the majority Chinese.

Gold was taken, thus enforcing futures contracts, which happen to be binding contracts. The pressure at the end of November will be worse to make good on gold contract deliveries. Recall the stories back in April for a Deutsche Bank rescue by the Euro Central Bank with a very large (over one million oz gold position) provision made. DBank was in trouble. The pressures are mounting every couple months. Next March will be a climax of the breakdown, or else June.

Breakdowns come from extreme pressures. Each delivery month event includes more gold removed from the London exchange, more gold demanded from it, and more movement toward a breakdown. So the next events have even more pressure, with less gold supply and continued relentless demand. Recall also that the exchange, along with the COMEX in the Untied States, exempt certain parties from maintaining 80% collateral when they short gold & silver with paper contracts.

Thus the name suppression, or better yet corruption. They are being caught in their naked shorting game. The December 1st events surrounding settlement delivery demands will be more contentious and stressful than October 1st. In sequential manner, the March event will be even more pressure packed, with precious little physical gold in store and more targeted Chinese delivery demanded. The June event will be even more pressure packed still, a backup date for a potential breakdown if it does not occur in March.

The common denominator for the parties demanding gold delivery in London is simple: they are all Asians, all, as in all, and the great majority are Chinese. One can safely conclude that the US and British banks will be broken with the nexus being their gold management, which underpins the USDollar. Other pressure is sure to mount. Not the kind of pressure you might imagine. Pressure is mounting for senior bank executives and politicians to start revealing the identities, deeds, locations, and dates of the gold tungsten swap, the mortgage bond firehose, and other pervasive frauds protected by the USGovt and British Govt.

Palladium and Platinum demand strong for 2010 and 2011

Precious Metal Division, Gold De Royale (28 January 2010)

 

Platinum and palladium are poised to outperform other precious metals this year and next, with a new wave of investor demand boosting prices in anticipation of increased industrial use. Palladium is singled out as the top performer over the rest of the sector, according to the poll of 60 leading analysts and traders conducted in January 2010.

 

The median forecast of $434 an ounce was some 50 percent above 2009's median price according to Reuters data of $289. Last year platinum rose 59 percent, and palladium prices more than doubled.

The metal, primarily used in gasoline engines, is heavily exposed to the U.S. car market, which is expected to bounce back relatively well this year. As a smaller and less liquid market than platinum, it is also more volatile.

 

Platinum prices should also put on a robust performance, with a median forecast of an average $1,553.75 an ounce beating last year's median spot price by 29 percent. "Investment demand should continue to gain importance in the platinum market," said London-based BNP Paribas analyst Anne-Laure Tremblay. "We expect the platinum market to be in deficit in 2010 after registering a surplus in 2009." "Supply issues will remain," she added. "At the same time, fabrication demand should recover, especially in the first half of 2010."

 

Next year, the two metals are expected to keep climbing, with platinum seen averaging $1,650 an ounce and palladium expected to extend gains to $480 an ounce. Spot platinum was bid at $1,519 an ounce, while spot palladium was bid at $421 an ounce around midday in London.

 

Both platinum and palladium are benefiting from investors' interest in new exchange-traded funds (ETFs) backed by the metals in the United States, which give U.S. investors exposure to the underlying spot price without taking delivery of the metal. The funds issue securities backed by physical stocks of the precious metals, so their launch may take significant volumes of platinum and palladium off the market. "Investors do want exposure (to platinum group metals) and that does mean the ETFs will be absorbing physical metal, which will further tighten the market," said Societe Generale analyst David Wilson.

 

Potential supply issues from South Africa may also support platinum. Producers there suffered a spate of power outages and labour issues last year, and analysts say plummeting PGMs prices last year may have led to cuts in capital expenditure. South Africa produces four out of every five ounces of the world's platinum and supply disruptions there were a key factor driving prices to a record $2,290 an ounce in 2008. Palladium supply is also heavily dependent on sales from Russian state inventories, which are uncertain.

 

"Palladium is only really in surplus because of Russian stockpile disposals," said Calyon analyst Robin Bhar. "There was a lot of talk throughout 2009 that the stockpiles may run out a lot sooner than people had reckoned." For the moment, however, dealers say supply of both is still plentiful in Europe, with weakness in buying by the automotive sector -- the source of over half of all platinum and palladium demand -- last year leaving material readily available.

 

Nonetheless, against a backdrop of limited supply and better demand this year, both metals are expected to keep climbing. This continued strong performance is in part on the back of an expected recovery in the automotive sector. China's auto sales surged past those in the United States to reach record levels last year, and automakers are poised for solid but slower growth in 2010. U.S. auto sales also ended 2009 on an upswing after a tough year. Recommended products to buy are the PAMP palladium bullion 1 ounce and the PAMP platinum bullion 1 ounce.

America’s financial collapse is inevitable

Precious Metal Division, Gold De Royale (27 January 2010)

We were blindsided. We never saw it coming. So said Goldman Sachs CEO Lloyd Blankfein of the financial crisis of 2008. He likened its probability to four hurricanes hitting the East Coast in a single season. Blankfein was reminded by the chairman of the Financial Crisis Inquiry Committee, Phil Angelides, that hurricanes are "acts of God." Financial crises are manmade. Yet Blankfein was backed up by Jamie Dimon of JPMorgan, who said, "Somehow, we just missed ... that home prices don't go up forever."

The Wall Street titans thus conceded they did not foresee the housing bubble ever bursting and they did not consider the possibility of a collapse in value of the sub-prime mortgage securities piled up on their books. Backing up Blankfein's plea of ignorance and incomprehension is this: The crisis killed Lehman Brothers and would have killed every one of them had not the Treasury and Fed, neither of which saw it coming, either, intervened with hundreds of billions in bailout cash.

Yet there were those who warned a housing bubble was being created like the dot-com bubble; others who predicted the Empire of Debt was coming down – as, today, there are those warning that the United States, with consecutive deficits running 10 percent of gross domestic product, is risking an eventual default on its national debt. The warnings come from the Committee on the Fiscal Future of the United States, chaired by Rudolph Penner, former head of the Congressional Budget Office, and David Walker, former head of the Government Accountability Office and author of "Comeback America: Turning the Country Around and Restoring Fiscal Responsibility."

With that share of the U.S. national debt held by individuals, corporations, pension funds and foreign governments having risen in 2009 from 41 percent to 53 percent of GDP, Penner and Walker believe it imperative to get the deficit under control. Unfortunately, it is not possible to see how, politically, this can be done. Consider. The five largest elements in the budget are Social Security, Medicare, Medicaid, defense and interest on the debt. With interest rates near record lows, and certain to rise, and back-to-back $1.4 trillion deficits, this budget item has to grow and has to be paid if the U.S. government is to continue to borrow.

Second, with seniors on fire against Medicare cuts in health-care reform, it would be fatal for the Obama Democrats to curtail Social Security or Medicare benefits any further this year. Next year, they will not only lack the congressional strength but any desire to do so, after their anticipated shellacking this fall.

The same holds true for Medicaid. The Party of Government is not going to cut health benefits for its most loyal supporters. Indeed, federal costs may rise as state governments, constitutionally required to balance their budgets, cut social benefits and beg the feds to pick up the slack.

This leaves defense. But the president is deepening the U.S. involvement in Afghanistan to 100,000 troops, and the military needs to replace weaponry and machines depreciated in a decade of war.

Where, then, are the spending cuts to come from?

Can the administration cut Homeland Security, the FBI or CIA after the near disaster in Detroit? Will Obama cut the spending for education he promised to increase? Will he cut funding for food stamps, unemployment insurance or the Earned Income Tax Credit in a recession? For the near term, the entitlements are untouchables. Is this Democratic Congress, which increased the budgets of all the departments by an average of 10 percent, going to take a knife to federal agencies or federal salaries, when federal bureaucrats and beneficiaries of federal programs are the most reliable voting blocs in their coalition?

What about tax hikes?

Obama has promised to let the Bush tax cuts lapse for those earning $250,000 but has pledged not to raise taxes on the middle class. Any broad-based tax would be politically suicidal for him and his increasingly unpopular party. But if taxes are off the table, Afghan war costs are inexorably rising and cuts in Social Security, Medicare, Medicaid and entitlement programs are politically impossible, as pressure builds for a second stimulus, how does one reduce a deficit of $1.4 trillion?

How does one stop the exploding national debt from surging above 100 percent of GDP?

America is the oldest and greatest constitutional republic, the model for all the others. But if our elected politicians are incapable of imposing the sacrifices needed to pull the nation back from the brink of a devaluation or default, is democratic capitalism truly, as Francis Fukuyama told us just two decades ago, the future of mankind?

World Gold Council – Demand for gold strong

Precious Metal Division, Gold De Royale (25 January 2010)

 
According to the World Gold Council, a mining marketing group, the gold price rose for the ninth consecutive year to $1,087.50 an ounce at the end of December, a 25% increase in the price of the yellow metal during the year. Investor demand for gold sent prices higher for the ninth straight year in 2009, according to an industry report Thursday.

The group's latest Gold Investment Digest shows that gold exchange-traded funds continued to attract new flows during the year. Investors bought 30 metric tons of gold via exchange-traded funds in the fourth quarter, contributing to an overall total of 1,762 tons of ETF gold holdings worth $62 billion at year-end prices.

Investor activity in the over-the-counter market also picked up strongly in the fourth quarter, according to GFMS--which carried out research behalf of the WGC--with substantial long positions being established in bullion.

The report said an important part of this demand is long-term in nature, likely driven by positive sentiment toward gold's supply and demand fundamentals and the corresponding price outlook.

Why buy gold bars only from LBMA accredited Refiners?

Precious Metal Division, Gold De Royale (18 January 2010)

 

Joan rings up every precious metal dealer in town to find out the price of a 1 Ounce Gold bar and finally she finds a seller who is selling a 1 ounce gold bar (999.9 purity) close to the spot price. She buys 10 of them. She spends roughly $12,400. Five years later when she moved to the United States she sells her gold bar, when the precious metal dealer assayed it, the gold bar contained half gold and half tungsten.  Her gold bars were worth no more than $200. This is a common practice that is done by many un-accredited refiners in all countries to make profit. It does not make a difference whether they are run by government or non-government, if they are not accredited by the London Bullion Market Association as an acceptable Good Delivery Refiner or as an acceptable Good Delivery Referee, you may share the same fate of Joan.  (Actual story that happened. Name of the client has been changed to protect their identity).

 

Questions that you need to be asking yourself:

 

1)     Why refiners that sell gold for a cheap price, close to the spot price, do not want LBMA accreditation?

 

2)     Why un-accredited refiners precious metals cannot be sold in international gold markets (NYMEX COMEX)?

 

3)     Why in Australia there is only one precious metal refiner (AGR Matthey) that is accredited by the LBMA? Why other refiners are not listed or even de-listed (kicked off) by the LBMA?

 

4)     How do you know that the precious metals you hold are of refiners that are listed by the LBMA as an acceptable Good Delivery Refiner or as a Good Delivery Referee?

 

Once you answer these questions, you will have a picture of what really happens within the closed walls of these refiners.

 

One of the most widely read article in the precious metal industry is the article written by Rob Kirby of Gold Seek who has extensively exposed how many precious metal refiners in the world make money by selling fake gold bars. His article can be accessed by the following link:

http://news.goldseek.com/GoldSeek/1258049769.php

Why did Platinum and Palladium prices sky rocket?

Precious Metal Division, Gold De Royale (13 January 2010)

 

Last week saw a major move taking place in the platinum group metals sector with the launch of platinum and palladium-backed exchange-traded funds (ETFs) on New York. With the launch of the ETFs in US, investors have got yet another option to put their money and year 2010 is expected to be the year of the white metal (platinum and palladium). Platinum is the best known of the six platinum group metals (PGMs). About half of the global demand for platinum comes from the auto catalyst sector, as the metal is a critical component of catalytic converters for automobiles. Other industrial demand comes from chemical, electrical, glass, and petroleum applications. Jewellery also accounts for a significant portion of platinum demand.

About 60% of global platinum supplies come from South Africa, with Russia, Canada, and the US among the other major platinum-producing regions. Following a spike in prices earlier this decade, recovery of platinum from scrapped automobiles has become an increasingly popular practice. Supplies derived from auto catalyst recycling increased from 420,000 ounces in 1999 to more than 1.1 million ounces in 2008.

The possible uses for platinum in a portfolio are numerous. As a precious metal, platinum and palladium could potentially provide protection against inflation or act as a safe haven investment in uncertain economic environments. Its prevalence in automobiles also makes this fund a way to bet on a sustained recovery in the global automotive industry. We recommend customers to purchase PAMP platinum bullion or PAMP palladium bullion as part of their investment portfolio.

Investing in LBMA accredited silver bullion

Precious Metal Division, Gold De Royale (08 January 2010)

 

Silver is often called by many precious metal analysts as poor man's gold. When precious metals are on the rise (as now), silver tends to be seen as a monetary metal. When times are bad, silver is seen as an industrial metal. Silver has a huge number of industrial uses; silver is the best conductor of electricity. Unlike gold, silver is actually used (and used up) in industry. Thus, a large amount of silver is lost every year. In contrast, 85% of all the gold ever mined in all history is still around.

 

Historically, when silver gets going, it tends to make huge percentage moves. For instance, back in November 2008, silver was selling for 8.65 an ounce. Today an ounce of silver is selling for 18.10 an ounce, more than double.

 

Silver is now climbing back from a drastic correction. In December, silver hit a high of over 19 dollars an ounce. Back in 1980, silver climbed wildly (limit up day after day), and it hit $50 dollars an ounce around January of 1980.

 

Silver is now in an erratic bull market. How high it may go we don't know, but we would not be shocked to see silver ultimately climb above its 1980 price of $50 an ounce. Many of our customers would like to how to invest in silver? We strongly recommend buying silver of those refiners that are accredited by the London Bullion Market Association as an acceptable good delivery refiner or an acceptable good delivery referee. As a general rule of thumb, the larger silver bullion you buy, the cheaper it gets. For example, at Gold De Royale we are now selling silver bars which weigh over 27 Kilos/bar. This is the best way to buy silver, as it’s only 2 Dollars above the spot price. If you cannot afford that much, then go for Heraeus Silver Bar or Johnson Matthey Silver bar which is of 100 Ounce/bar. If you cannot afford them, buy the Argor Heraeus Silver Bar of 100 Grams which is the best in the world. If you cannot afford the 100 grams, then go for the 1 Ounce coins.

 

One of the common misconceptions that many people has is that they think silver is always silver and they go and buy silver from unaccredited LBMA refiners. You will be surprised to know that many refiners in the world sell silver bars for a cheap price because it does not contain the complete 999.9 pure silver. In fact it will contain only half the quantity of silver and the other half will be some other sort of metal, and they still stamp it as 999.9 silver. This is a very common practice done by many refiners to make profit. The advantages of buying silver from LBMA accredited refiners is that, these refiners get audited on a regular basis and LBMA assays every silver bar/coin they produce. So you can be 200% confident that you are getting the best and pure forms of silver. This is one of the main reasons why we only sell top quality silver coins and bars at Gold De Royale.

The uncertain future of a great nation – Are we under siege?

Precious Metal Division, Gold De Royale (06 January 2010)

 

Abraham Lincoln once said, “It is God who gives wealth and power to a nation, but the day when its people reject God, that nation is doomed”.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 20th century is remembered as the century when America became a world power. World Wars I and II would decimate the then great powers of the world, e.g. England, Germany, Russia, France,  Japan, etc., leaving the US as the last nation standing—the world’s sole superpower. At mid-century, in 1950 the US would be the world’s banker, its only creditor and repository of the greatest hoard of gold in history; but in only 20 years most of the gold would be gone, the remaining owed but never paid and the US has become the world’s largest debtor, a virtual deadbeat who could only pay its debts by borrowing more. The 21st century would speed America’s decline. In the first decade, the US would launch an expensive war in Iraq then Afghanistan, further destabilizing its already heavily indebted balance sheet; and by 2009, China and Japan, its primary creditors, would significantly slow their purchases of US debt, forcing the US to begin borrowing from itself in order to continue spending what it did not have.

 

A former chief economist of the International Monetary Fund said that the finance industry has effectively captured the US government—a state of affairs that more typically describes emerging markets, and is at the centre of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

 

The above words prefaced The Quiet Coup, an article in The Atlantic Magazine, May 2009, written by Simon Johnson, in 2007 and 2008 chief economist at the IMF and currently a professor of economics at MIT. Johnson contends that a coup has occurred in America and that a financial oligarchy has taken control of the nation’s affairs and that America’s situation will soon worsen unless the power of that oligarchy is broken.

Johnson’s article is one that should be read by all; but, unfortunately, it will not as denial is preferable to the truth, especially in America where citizens would rather believe themselves free than realize they are not. Nonetheless, for those interested, Johnson’s article is at http://www.theatlantic.com/doc/200905/imf-advice

 

In actuality, the financial oligarchy seized control in America long before the current crisis. The actual coup took place in 1913; and, by virtue of that coup and the consequent consolidation of its power, America’s demise was set in motion.

 

Almost one hundred years later, bled dry by the financial interests who seized power in 1913, America’s fall is almost complete. The coup of 1913 gave the banking interests who profited from the rise and fall of England’s empire access to the vast productivity of America; and like England before it; America’s wealth would be completely drained by the banker’s debt-based banknotes in less than a century.

 

Americans still do not understand the significance of what has happened. The tragedy of America is that Americans see the present crisis in material terms. Americans still believe they are facing a crisis that can be cured with more jobs, more credit, a rising stock market and perhaps, God willing, another bubble to rescue them from the last. Today, as long as Americans qualify for a loan they believe themselves free. They also believe themselves better than those who do not qualify…at least until they no longer qualify themselves.

 

America long ago chose material security over liberty; but now that its material security is threatened and its liberties gone, it is clear America chose badly. Still, Americans prefer to imagine themselves as heroic, capable of understanding and overcoming life’s myriad challenges, unique in their ability to do so.

But today America’s founding fathers are nowhere to be found, its political process is in a mess and is run by people who no longer believe in God, which the founding fathers have ingrained even in their own currency “In God We Trust”.

 

Ten years ago the price of gold was $300 per ounce and the economic power of the US was unchallenged. Today, gold is $1100 per ounce and the US and global economy is on government life-support. Similarly, other precious metals like silver bullion, palladium and platinum bullion has sky rocketed at record levels in a span of 2 years.

 

The big question is – Are we under siege, by a system that we ourselves created? There are two answers to this question.  The first one is, be in a total state of denial and the second answer is, be prepared for what is going to come in the years ahead.

Platinum, Palladium and Silver big winners for 2010

Precious Metal Division, Gold De Royale (05 January 2010)

Gold prices sealed their biggest yearly gain in three decades with a small advance on Thursday, rising for an unprecedented ninth consecutive year as dollar-hedging traders and central banks joined the rally even as safe-haven buying subsided.

At the informal spot-market close of $1,096.20 an ounce, gold gained $218 this year, a sum eclipsed in recent history only by 1979's $286 surge -- gains that proved fleeting as bullion relapsed two years later. On a percentage basis gold rose 24.8 percent, short of 2007's 31 percent rise.

After 2008's roller-coaster, this year was one of fairly consistent gains for bullion, favoured as a hedge against economic uncertainties after the worst economic crisis since the Great Depression.

Gold hit a record high above $1,220 on December 3 on a combination of renewed central bank interest, worries over paper currencies depreciation and long-term inflation fears due to massive economic stimulus programs.

Central banks played a key role in aiding the rally during a year in which China revealed that it had secretly increased its reserves over the past five years to the world's fifth-largest by buying up domestic production, while India nearly doubled its holdings by buying half of the IMF's stockpile slated for sale.

The tone for the precious metals market in early 2010 will now hinge on whether the U.S. dollar will continue its year-end rally, and if the central banks will keep interest rates at record lows to boost economic growth.

Other precious metals staged equally impressive gains after last year's deep decline, with platinum rising a record 58.7 percent and palladium up 220 percent on improving economic conditions, as well as hope for a boost in physical demand from new U.S. exchange traded funds expected to launch soon. Silver also jumped by a record 49.1 percent.

We expect palladium and silver to rise considerably in 2010 and platinum following its footsteps. Investors can purchase PAMP palladium bullion and PAMP platinum bullion for investment purposes. In the silver category we recommend LBMA Approved Refiner Silver which is Heraeus silver bullion, Johnson Matthey silver bullion and Argor Heraeus silver bullion.

Why have gold and other precious metal prices gone down?

Precious Metal Division, Gold De Royale (23 December 2009)

 

Gold price fell in a span of 15 days from US$1215 to US$1081 losing about $135. This raised one of the commonly asked questions by many novice investors, which is, why did gold and other precious metal prices come down? The primarily reason why gold and other precious metal prices fell is because during November 15^th and December 9^th 2009, when gold prices were at all time high many investors started selling their gold to make short term profit. So there were more sellers than buyers in the market. So what happens is that there is too much precious metal floating in the market, and this leads to market saturation. So how do you stop this? You stop this by reducing the price of gold. When you reduce the price, people will stop selling (because they will be in loss). Lower prices (gold trading at US$1081) have given opportunity to people to buy gold and other precious metals. So this means now you will see a lot of buying in the market and eventually by January and June 2010 this will push gold prices again higher as the buying continues.

 

Always remember "Patience is a Virtue". Many people think that as soon as you buy any sort of precious metals, overnight you would become a millionaire. If you think you will become a millionaire overnight, we are sorry to disappoint you as this will not happen. People buy precious metals as part of their long term investment strategy. Long term means at least 5 years or more. For example, if you had purchased gold worth $120,000 in 2005 for $502 an ounce, today that much gold would have been worth $253,340. So in fact gold doubled in its value in a span of 5 years.  We strongly believe gold will double in a span of 3 years due to the mounting debt crisis seen around the world. Keep in mind that the US Economy and the US Dollar are the two key factors that determine to a degree future gold price.

 

Make no mistake, the developed world is drowning in debt and there are only two viable options – a global economic depression or very high inflation. It is our contention that the policymakers have chosen the latter option and over the following years, we will experience the trauma of severe inflation. 

 

The American government is staring at total obligations of US$115 trillion, America’s debt to GDP ratio is off the charts and the American public is also up to its eyeballs in debt. Under this scenario, you can bet your bottom dollar that the American establishment will try to reduce this debt overhang through a process known as monetary inflation.

 

It is notable that America is not alone in pursuing inflationary policies; most nations all over the world are printing money (not learned anything from Zimbabwe) and debasing their currencies. In this era of globalization, no country wants a strong currency and everyone is engaged in competitive currency devaluations. Given this reality, we firmly believe that this money and debt creation will cause an inflationary holocaust over the coming years. Inflationary holocaust could give rise to World War III; this is not a joke but a reality.

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We have no doubt in our minds that over the next decade, various central banks will intensify their money-printing efforts and Mr. Bernanke (Man of the Year for 2009 by Times Magazine) will lead by example. After all, America has run out of choices and if the Federal Reserve does not inflate away this mountain of debt, the biggest sovereign default in history is guaranteed. Now, given the ability of the Federal Reserve to create confetti money, we are convinced that it will opt for the inflation tonic. Remember, inflation dilutes the purchasing power of each unit of money and it will make America’s debt more manageable. Of course, this inflationary agenda is not a secret and this is why many creditor nations with huge reserves (China and India) are beginning to diversify out of the American currency.

It is our observation that throughout history, monetary inflation has caused asset prices to rise and this time should be no different. In the past, when inflationary expectations spiraled out of control, hard assets (gold, silver, palladium and platinum) were the prime beneficiaries and this trend is likely to remain intact in this inflationary episode.

Ben Bernanke named by Time Magazine as Man of the Year

Precious Metal Division, Gold De Royale (17 December 2009)

 

Time Magazine set off a controversy Wednesday 16 December 09 by announcing Ben Bernanke, chairman of the Federal Reserve, as its 'Person of the Year.' You heard it right! It’s not April Fool’s Day. Good on Ben Bernanke! This means that his viewpoints will bring more downfall (collapse) to the US currency.

Some lawmakers blame Bernanke for the nation's financial crisis. This is what Marc Faber (Global Economic Trend Analyst) had to say “Well, I basically think that Mr Bernanke is a money printer and it's interesting to see that since he was appointed Fed chairman, the price of gold has risen by 42 per cent so the market is not very happy with his bias towards money printing. All I am saying is if the Dow Jones here goes up three times because of money printing by Mr Bernanke and we have examples in financial history where a central bank printed money and everything went up, but in this instance I think that gold would significantly outperform the Dow Jones. So if someone says to me the Dow will go to 33,000, I say yes, it's possible but it will decline against the price of gold which will go up to $US5000, $US6000 an ounce. The US dollar is a doomed currency”.

What is the future of gold and other precious metals in 2010?

Precious Metal Division, Gold De Royale (17 December 2009)

Notwithstanding the recent fall in gold price (due to price manipulation) which has disappointed some investors, we cannot hide from the fundamental truth. This include inflation-fueling US monetary and fiscal policies; Central bank reserve diversification with the official sector being a taker rather than a supplier of gold in 2009 and the next few years; expanding retail and institutional investor participation in the United States, China, and around the world; and declining world gold-mine production.

Gold’s advance would be marked by occasional sharp reversals that would lead some to believe the long bull market in gold has ended. But this is not true. In the last 10 years, have you seen gold price going down or up? Obviously it has gone up. Sometimes it does come down due to price manipulation. Looking ahead to 2010, don’t be surprised to see gold at $1,500 or higher by the end of next year." This is what some of the prominent experts in the precious metal industry had to say:

 

Ted Scott, director, UK Strategy, F&C

"The only way that gold can underperform is if the US and other developed economies recover in a conventional way by cutting spending and raising taxes while at the same time embarking on a period of stable economic growth. This would prompt a strong and sustained rally in the dollar as confidence in the US economy rose together with bond yields and interest rates. Given the significant challenges ahead, a muted and fragile recovery appears more likely. With the likelihood that the world will take several more years to heal the wounds inflicted by the credit crunch an alternative asset like gold will remain attractive in such an uncertain environment. The price of gold may have risen a long way recently but in real terms is still well below today’s real price high of $2300 achieved in 1980. It is over-bought and is likely to see a correction when the dollar has a technical rally. Beyond that, gold remains an attractive each way bet."

Jim Rogers, commodity expert

"I have learned the hard way not to sell something short in a cyclical bull market. I am buying, I'll be buying silver and palladium that are very depressed," he said.

ODL Markets, London retail trading providers

The recent surge in gold prices has come as people move out of dollar holdings; but a resurgent dollar can have the opposite effect. We are now back down to the lowest levels seen in a few weeks but still remain just ahead of support at $1100. Support at that level will likely be tested and if support holds then we may see a move back higher for gold.

Macquarie Investment Bank

It has raised their forecasts for both gold and silver prices this morning. Their 2010 projections call for a $1,150 and $1,100 per ounce average gold price in 2010 and 2011, respectively. With respect to silver, Macquarie has raised their forecast to $17.69 in 2010 and $16.92 in 2011. Their research team also raised their projections for the industrial metals complex - boosting cooper, lead, and zinc price estimates.

Evy Hambro, BlackRock Gold & General Fund

“The recent new all-time high in the price of gold seems to have been caused by the convergence of a number of important drivers. Falling mine supply, weaker US dollar and the potential for a reduction in net central bank sales will all support prices over the medium term. The key factor, though, will be investment demand – which remains strong, according to the latest data from the World Gold Council.

World Debt Crisis – Dubai is just one of many

Precious Metal Division, Gold De Royale (16 December 2009)

 

The Persian Gulf emirate Dubai is seeking to defer debt payment on nearly $90 billion in liabilities from their state-run companies. Like many other over-leveraged enterprises and some countries across the globe, the government of Dubai made massive bets on real estate that have since gone sour. But no matter where in the world such a case occurs, the ramifications of taking on too much debt are always the same.

 

Unless the party in question can be bailed out, the deleveraging process usually leads to default and insolvency. It makes no difference whether it is a business or a country, the entity in question must always be able to service its debt either through revenue or taxation. If the enterprise or state becomes too extended, they become perilously dependent on a perpetually growing economy and on interest rates that remain perpetually low.

 

It is not just Dubai that needs to be concerned. Even great countries like Japan, Australia, United Kingdom and the United States need to take heed. The examples produced over the last few weeks and months should send a stark warning especially to the U.S. that we cannot continue to operate with this level of monetary and fiscal profligacy and expect to always have a favourable outcome from our Treasury auctions.

 

We know it is common knowledge that there will always be a healthy appetite for US debt. And that the world will always have an inexhaustible appetite to hold US currency. But remember it was also common knowledge that the value of real estate could never fall on a national basis. The facts are that we have never been more overleveraged as a country. Our record National debt now stands at over $12 trillion, while total non-financial debt as of Q2 is a record $34.3 trillion. Household debt as a percentage of GDP now stands at 96.5% and that same debt expressed as a percentage of disposable income is at 129%--both just under their high water marks.

 

And perhaps most surprising, given our record low and artificially produced interest rates, is that our Financial Obligation Ratio, (which measures debt service payments as a percentage of disposable income) is less than one percentage point off its all time high and now stands at 16.65%. And of course the icing on the cake is our projected debt over the next 75 years is over $106 trillion.

 

Our annual budget deficit of $1.4 trillion in 2009 shattered all previous records and the projections are that another trillion dollars per annum will be added over the next 10 years. The amount of debt that needs to be rolled over each year is increasing because of government's decision to finance our debt at the short end of the yield curve. The result of which means each year the U.S. Treasury must sell trillions of dollars in debt into the market -- not just the difference between revenue and expenditures.

 

So far there is little evidence of distress in the bond market. Last week the Treasury sold $44 billion in two-year notes at a record low yield of .802%. And even though the average yield on the 10 year note has been 7.31% for the past 40 years, the yield stands at just 3.22% today. The all important indirect buying (which includes foreign central banks) of U.S. debt jumped to 45% in 2009 from just 29% last year.

 

But the U.S dollar continues its vicious bear market that went into overdrive this decade. The deadly combination of skyrocketing debt sales along with a chronically weak currency may soon pull the rug out from our Treasury auctions. It is completely antithetical to expect record low interest rates to persist while debt issuance continues to break records. Interest rates must rise dramatically to reflect the record level of supply and the potential inflation represented by having a $2 trillion monetary base.

 

The added payments resulting from those rising interest rates will send deficits soaring even higher. Sooner rather than later foreign appetite for US debt will wane simply because they will have a concentrated position in an asset that is falling in value and held in a currency that is being debased. We must defend the value of the US dollar now and stop the endless cycle of bailouts, inflation and debt before the only person who shows up at our Treasury auctions is Banana Ben Bernanke with his printing press.

 

How long can the US government and big banking giants suppress gold prices, so that consumers will not invest in gold or other precious metals is a question that we need to ask? While it is easy to fool Anglo-Saxons saying “We will come out of the financial crisis, so don’t worry trust us (Government)”, this is not the case for Asians or the Europeans. Currently all Asian banks and European banks are getting rid of the US dollar and using that to buy gold. Therefore, there is currently a critical shortage of gold around the world. This high appetite to buy gold by European central banks and Asian central banks in India, Germany, Russia and others will only increase in the coming years and you cannot fool them about the mounting US debt. While they may say YES to the US “We will come out of the financial crisis” they are secretly stocking up their gold reserves.

 

It only takes common sense to know the amount of distortion that governments are telling the public to keep their faith in the so called man made financial system. The current financial systems in the world have NO HOPE. It is a system made of greed and nothing but greed. A system made on greed can never survive and one day or the other it is bound to be doomed. It is now only a matter of time and the clock is ticking fast!

Gold Price Manipulation by Central Bank Cartels

Precious Metal Division, Gold De Royale (11 December 2009)

 

The following article is an abstract of the interview with The Gold Anti-Trust Action Committee (GATA, www.gata.org) Chairman and Director, Bill Murphy.

 

For years GATA argues, Gold Prices have been kept artificially low. The big questions is who’s behind the gold price manipulation, and why? Bill Murphy calls them as "The Gold Cartel". The United States government is the main culprit, with "hit men" like Goldman Sachs and J.P. Morgan Chase, and other central banks, like the Bank of England. Murphy says that it's been going on for some time. Basically, it all started with [former US Treasury Secretary under the Clinton Administration] Robert Rubin, back when he was the head of Goldman Sachs in London. He would borrow gold from the central banks at a 1% interest rate, and then sell it. He took this idea and made it the essence of his "Strong Dollar Policy" [while at the US Treasury].

Then there was Lawrence Summers, who followed him as Treasury Secretary. He once articulated the relationship between gold and interest rates in his paper, "Gibson's Paradox and the Gold Standard". Keep the Gold Price down, he said, and you keep interest rates down.

Now, the US is very concerned about stock market interest rates, the Dollar and so on. The main way to control all that is to keep the Gold Price down. So they'd borrow central bank gold and surreptitiously put it in the marketplace, via various leasing and swap operations. It's this gold that has kept the price from being $2,000 an ounce – or well over it.

One of the reasons why big banks are involved is because there is a very close relationship between Goldman Sachs and the US Treasury. Half the Treasury is staffed by Goldman Sachs people. And the Federal Reserve, well J.P.Morgan is the Federal Reserve's bank. They've worked closely together, sharing information, certainly helping in trading. Being able to borrow gold means it's like free money when you lease it in the marketplace, as long as the price stays the same or doesn't go up too much. So they've made money trading this market against the specs, with the government's help, for well over a decade. And they made a lot of money doing it.

But now they're running out of central bank gold to meet the heavy demand showing up from everywhere. It's reported that the central banks have 30,000 tons of gold in their vaults. Three of our consultants have shown through different methodologies that they have a good bit less than 15,000 tons, which is less than half of what they say they have. The difference is the gold that's been used over the past decade in the gold price suppression scheme. So it's become a very risky deal. If gold were to shoot up $250 in the next few weeks, what would everyone talk about? They'd talk about too much inflation, the Dollar falling apart; they might talk about a financial crisis. It would be all negative for the politicians in power, the banks and Wall Street. Gold is a barometer of US financial market health, which is why they try to control it.

The question is how such a gold price manipulation work? Banks let out gold "surreptitiously". J.P.Morgan goes to a central bank and borrows gold, leases it at, say, a 1% interest rate. Then they take the physical gold and they dump it into the marketplace, which adds to the supply. That supply helps to meet demand; without that supply, demand would overpower the dwindling stuff coming out of mines and scrap supply.

Gold has gone up nine years in a row. It's way up this year. Now they're in what we call a "managed retreat," because they can only stop the excitement so much, and they're just trying to manage it. They don't want gold to get out of control. But it's coming, and it's so strong that they're in deep, deep trouble (A GREAT Financial Meltdown is on its way).

Some people do ask what evidence is there suggesting price manipulation? We have nothing but evidence that we've collected for 10 years. We haven't found anything in 10 years that shows us we were wrong, and we're always looking. A lot of it is on the public record, such as Alan Greenspan saying "Central banks stand ready to lease gold in increasing quantities should the price go up." Well, that's what they did.

At the GATA African Gold Summit, in May 2001, Frank Veneroso, who is a consultant of ours, delivered a brilliant presentation that said they would run out of gold in 7 to 10 years, based on his work. Well, that's about where we are.

In addition, European central banks can sell 9.7 tonnes of gold per week as part of the Washington Agreement. But they're not even selling 1 tonne. So we believe demand is 1,000 to 1,200 times greater than mined and scrap supply. That deficit was being met by the Gold Cartel's surreptitious selling of central bank gold. But now instead of getting 500 tons from the European central banks to help, their supply is drying up. They don't want to sell anymore.

Assuming the price of gold has been kept artificially low, how much has the price been altered as a result? Had the Gold Price kept pace with US inflation, it would be $2,300 per ounce, let's say between $2,000-$2,400 an ounce.  Back when we had our Gold Rush 21 Conference [in 2005], the price was $436, and I said it was going to take $3,000-5,000 an ounce price to clear the market. And I think that's the kind of price you're going to see in the years ahead. Once it takes out $1,000, gold's just going to take off like you won't believe.

Gold price correction

Precious Metal Division, Gold De Royale (9 December 2009)

 

Leading up to the latest sharp fall in the gold price, which so far has dropped it back more than $70 an ounce. The fall is a temporary correction opening up the market for buying at prices which may not return back to these levels for some time to come.

 

On balance we would reckon the latter is the case - much depends though on whether a major buyer comes in to the market - and for major buyer China or India. It has been accepted that certainly China has been buying gold on dips - although there is little concrete evidence to support this, but the gold price pattern of late suggests that some entity has been doing so. Now the markets have to wait for next week to see if whoever has been doing this jumps back into the market and stabilizes prices at the current level, or drives it back to the $1200 level again. If the latter then this is very definitely a sign that the gold bull market remains with us and more new highs will be reached sooner rather than later.

 

In the way that India's purchase of 200 tones of gold from the IMF was the trigger that drove prices up into the $1200s, a combination of news items prompted the recent fall. Better than expected U.S. labor figures, although they only suggested a slowing of the downtrend, not an end to it, temporarily boosted the dollar - and gold on balance moves counter-cyclically to dollar strength; Barrick's announcement that it had completed its gold dehedging program also suggested that the gold purchases theoretically needed to unwind the hedges had been completed, while perhaps most significantly the Chinese central bank vice governor had given a warning of price bubbles and a indicated also that China was probably not in the market for the rest of the IMF gold on sale. It took a bit of time for these elements to be considered together, but when they were the gold price dropped very sharply indeed losing around $50 in little more than a few hours before a brief small recovery set in just before markets closed for the weekend.

 

But gold often confounds. A correction in an ongoing rising price pattern seems the most supportable concept for now. The question is how deep the correction will be before it unwinds?

US debt is becoming as big as Mount Everest – Good News for Gold, Silver and Palladium

Precious Metal Division, Gold De Royale (07 December 2009)

 

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

 

Put the two numbers together. Then ask yourself, how in the world can the US Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of US entire GDP. And US is the world's biggest economy. Where will the money come from?

 

How did the US end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss."

 

What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt... at ever shorter durations... at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.

 

When governments go bankrupt, it's called a "default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.

 

The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money-management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."

 

The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

 

So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default.

 

The U.S. holds gold, oil, and foreign currency in reserve. It has 8,133.5 metric tons of gold (it is the world's largest holder). At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. The United States short-term foreign debts are far bigger.

 

According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we've been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.

 

Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.

 

So... where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual funding requirement equal to roughly 40% of GDP.

 

Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or Russian central banks, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tons this month. Sources in Russia say the central bank there will double its gold reserves.

 

So where will the money come from? The Printing Press (Remember what happened in Zimbabwe. To save Zimbabwe’s economy, they started printing money, now their currency is worthless and has a value of a normal A4 size paper). The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.

 

Don’t wait till gold, silver and palladium prices sky rocket. It’s still not too late to buy.

Gold hits record high above $1,221.20 an ounce

Precious Metal Division, Gold De Royale (3 December 2009)

 

Gold hit a record high above $1,221.20 an ounce today morning, defying a stronger dollar as hedge funds and other institutional investors piled into Swiss bullion amid doubts of a coming economic US dollar collapse.

 

So far this year bullion has gained nearly 40 percent, driven by central bank buying, paper currency depreciation and inflation worries, as governments flooded the system with money (money printing madness) to push the economy out of recession.

 

Although the dollar held broadly firmer against the euro and other major currencies, low U.S. interest rates plus fiscal and monetary stimulus would keep the dollar on the back stage and gold well supported for many months to come.

 

Speculators are betting on further buying by central banks, particularly in Asia and in Europe, after many years of net official sector sales. India's purchase of 200 tonnes of gold, announced in November, sparked a 13 percent price rally that month. We believe that a key fundamental supporting factor for gold is the continuing shift of central banks and governments from being net sellers of gold to net buyers.

 

Platinum also shot to its highest since August 2008 at $1,506.50 an ounce. Silver and palladium hit their highest levels since July last year. As gold prices keep going up, we are currently seeing a high demand for Swiss gold, silver, palladium and platinum bullion. Time is still there to buy Swiss bullion before the prices sky rocket in 2010.

Gold price soar beyond US$1215.85

Precious Metal Division, Gold De Royale (2 December 2009)

 

Gold hit 1,215.85 dollars on the London Bullion Market, one day after breaking through the 1,200-dollar barrier for the first time. After reaching a new high on Wednesday, gold pulled back slightly to trade at 1,210.50 dollars at about 0740 GMT.  Gold has smashed record after record over recent days and weeks on the back of inflationary fears and increasing moves by central banks to diversify assets away from the dollar, which has weakened against the euro and yen. The yellow metal, whose two main drivers are jewellery and investment buyers, has also won favour in the uncertain economic climate and fears of a mounting Dubai debt crisis. As Europe has taken the role of a new world leader, United States of Europe, they are currently stock piling their gold reserves, which have lead to a worldwide demand for gold.

 

Gold is traditionally viewed as a safe-haven investment during economic uncertainties.

Gold Crosses US$1200 as the Lisbon Treaty comes in to full force

Precious Metal Division, Gold De Royale (02 December 2009)

Gold continues to make new record highs, having just broken through the $1,200.00 per ounce barrier. This news comes on the implementation of the Lisbon Treaty in Europe as Europe has emerged as a new World Superpower. Gold De Royale was the first precious metal dealer to accurately predict that on December 1^st, 2009 gold will surge $1200 due to the implementation of the Lisbon Treaty. You can check our previous newsletters and research articles on what we said that will happen on December 1^st, 2009. As we have a strong presence in the European Gold Markets we can to a certain degree accurately predict the future of precious metals. No other precious metal dealer in Australia or around the world has this advantage. As far as we know, 99.9% of the precious metal dealers in Australia have never even heard of the Lisbon Treaty. Many analysts have already predicted the surge past $1,200.00 and still others are predicting that gold could go as high as $1,500.00 per ounce very soon. A number of factors, including news about the Dubai World debt restructuring and a weakened U.S. Dollar, are driving this surge in the gold spot price.  You can buy your Swiss bullion (unmistakably the best) online 24/7.

Lisbon treaty implemented – The Rise of a New World Superpower

Precious Metal Division, Gold De Royale (1 December 2009)

 

Gold De Royale and its staff would like to take this opportunity to congratulate all our European business partners, clients and our customers as the Lisbon Treaty has come into force from today. Lisbon treaty is a dream come true for Europeans as it will be called from today “The United States of Europe”. The impact this treaty has on the precious metal market will be updated in the Gold Bullion Research section shortly.

Impact of the looming news of bankruptcy in Dubai on the precious metal market

Precious Metal Division, Gold De Royale (30 November 2009)

 

Gold came down upon the disturbing news from Dubai that it can't meet its debt obligations any longer. Sure enough the dollar caught a serious safe haven bid (although it isn't a safe haven by all means) and gold sold off in a knee jerk reaction. The fact that gold found itself in severe overbought territories wasn't a big help for gold which made the downturn an exaggerated one. Gold initially fell to its 38.2% FIB retracement level where it bounced back strongly. How long (and how deep) this correction will last is too early to tell but nothing changes the big picture which is a collapsing financial scene and a flight into real money which is of course gold bullion.

 

Dubai is one of seven city states that make up the United Arab Emirates, along with Abu Dhabi. On Wednesday, it announced that it intends to request a "standstill" for at least six months on the maturing debt of Dubai World, its largest and most-indebted state-run holding. That sent jitters through major world stock markets on fears of a potential default by Dubai, which has a total debt of around 80 billion dollars, mostly owed by state companies.

Standard and Poor's estimated last month that Dubai state-related companies are due to repay some 50 billion dollars in debt over the next three years, which represent 70 per cent of the emirate's gross domestic product. The ratings agency said on Wednesday that Dubai World's action amounts to a default and it downgraded companies in the group by several notches. On the immediate horizon, Dubai World construction unit Nakheel was due to repay 3.5 billion dollars on December 14 in the form of maturing Islamic bonds.

But although the picture appears bleak, Dubai's oil-rich leading partner in the UAE, Abu Dhabi, is seen as likely to shore up the emirate. "Abu Dhabi would not allow the financial collapse of Dubai," said Dubai-based analyst Ibrahim Khayat. But he said the UAE heavyweight, which sits on more than 90 per cent of the federation's oil reserves and owns the world's largest sovereign wealth fund, might seek to bring Dubai under its control.

"Abu Dhabi could allow the weakening of Dubai within the framework of the competition between the two, but a collapse of Dubai would also affect Abu Dhabi," Khayat said. Monica Malik, from EFG-Hermes investment bank out that it is not just Dubai that would be affected.  "This announcement highlights the substantial headwinds facing the UAE economy," she said.

 

If countries like United Arab Emirates face problems of debt (as they hold US Dollars), even though they have huge reserves of oil wealth, we can just imagine the situation with Western Nations. The question is who you trust during financial uncertainties. Do you trust governments who say “We are out of a recession and we will completely come out within 2 years time and we will be able to repay all our national debts?” or are you capable of making up your own mind on what is going to come soon in the world financial markets!

The United States Dollar Meltdown – Gold Prices to Soar

Precious Metal Division, Gold De Royale (27 November 2009)

The poor outlook for the dollar continues to provide good prospects for the price of gold. According to Jim Sinclair, chairman at Tanzanian Royalty Exploration, the price of the yellow metal could reach as high as $1650 by the end of 2010 and moving into the beginning of 2011. But, the man admits that, given recent happenings, this could be a bit of a low estimate.

"My thesis is that gold is a contra to the US dollar and recent statements out of the Federal Reserve that interest rates will remain extremely low until 2012 is really a go ahead single for gold to continue to perform as it has until at least 2012."

Speaking to Mineweb Radio, Sinclair explained his reasoning: "If you look at the way US foreign debt is just about touching $3 trillion in 2009 and our economy is not responding as China has, we have very serious systemic problems that have resulted in high levels of unemployment and I can't buy on to a new normal economic recovery devoid of hiring people."

He adds that the US is now beginning to apply fiscal stimulus, which has "a habit of sucking inflation out of monetary expansion."

"I do think we are going to see the currency influenced inflation event that is hard for people to understand given the difficult conditions in the job market and with the only booming business being Wall street."

Given his view of gold's relationship to the dollar, Sinclair was asked about the dollar's continued status as the reserve currency.

"We can clearly see that the dollar is no longer the universal reserve currency as it was back in 2000; currency values come from momentum so you don't need heavy selling of a currency for it to decline you just need less buying”.

"I would think that the dollar will always be around at whatever value the market makes for it and it will always be part of reserves but it won't be the universal reserve currency.”

He adds that national strength and influence socially and politically has always followed the strength of currencies and it is very clear that Wall Street is no longer the financial centre of the world. We will very soon see the dawn of a new era in the shift of world powers on December 1st, 2009 when the Lisbon Treaty comes in to force. Euro will be the next world reserve currency and gold will be far beyond many people’s reach from December 1st, 2009.

Gold touches US$ 1192 – Day of Reckoning is On the Door Steps

Precious Metal Division, Gold De Royale (26 November 2009)

 

Gold prices today hit record highs nearing $US1192 as a weak greenback and inflationary fears fuelled demand for the precious metal, analysts said. Prices also won support from a report that India was moving to purchase more IMF gold reserves, they added. The precious metal hit $US1194.95 an ounce in afternoon trade on the London Bullion Market, after striking a series of historic peaks in recent days and weeks. Gold is setting new highs because of "the (weak) dollar ... (and) also rumors (in the) Financial Chronicle that India is ready to buy more IMF gold", VTB Capital commodities analyst Andrey Kryuchenkov told. "$US1200 is still in sight, being the next target."

 

A struggling dollar makes the precious metal cheaper for buyers using other currencies (mainly US Dollar), stimulating demand for the metal and in turn pushing up gold prices. Kryuchenkov added that gold futures were winning support also from a report in India's Financial Chronicle newspaper that claimed the emerging nation was mulling the purchase of more IMF gold. The price of gold has rocketed since the start of November when India's central bank bought 200 tons of the metal from the International Monetary Fund.

 

Fears about a future spike to inflation have also fuelled demand, with gold viewed as a "safe-haven" investment in times of economic uncertainty."Gold prices continue to set fresh highs, buoyed by strong investor demand and a change in the official sector appetite for" the metal, said Barclays Capital analyst Suki Cooper.

 

Moreover, the debt weighing on national budgets will have soared by up to 45 percent worldwide in the period from 2007 to 2010, leading ratings agency Moody's estimated on Wednesday. Preliminary estimates suggest that the total stock of sovereign debt will have risen by as much as 45 percent or 15.3 trillion dollars (10.2 trillion Euros) from 2007 to 2010," Moody's analyst Jaime Reusche said in a statement. These figures are alarming and could lead to what many say, “day of reckoning of the world financial system”. 

 

This is "over 100 times the inflation-adjusted cost of the Marshall Plan," the huge US investment programme launched to revive Europe after World War II, he added. Moody's estimated in a report that the total global debt in 2010 would reach more than 49 trillion dollars. The members of the G7 grouping of rich countries will account for more than three-quarters of the increase, "as their fiscal accounts have been hit hardest by the crisis," Reusche said.

 

"As growth turns negative in 2009 for most countries, the relative government financial debt load becomes harder to bear." Several major economies including the United States, Australia, Japan and Germany have slightly emerged from recession in recent months, but observers have warned of risks to recovery, partly from the debts accumulated in tackling the downturn. As governments take on a huge debt load in their fight to ease the effects of recession, the global ratio of debt to economic production is forecast to hit 80 percent in 2010 from 63 percent in 2008, Moody's said.

 

During global financial uncertainties, people (who are commonsensical) put their trust in gold bullion and other precious metals than in the so called paper currency.

Gold price sneaks to US$1175 territory – What does this mean?

Precious Metal Division, Gold De Royale (25 November 2009)

Yesterday night gold made another historic high, touching US$1175. Once again, what was interesting was that the upward momentum continued despite the fact that there was no real news in the market. Over the two weeks the price of gold has moved upwards in a series of higher highs. We expect the prices to be higher when the Lisbon Treaty comes into force on December 1^st, 2009. This level could be broken and gold could easily hit US$1200. The price of crude bounced between US$80 and US$77 and the EUR/USD see-sawed between 1.500 and 1.4800.

According to an article from Bloomberg Nov. 19, the U.K.’s Royal Mint, more than quadrupled production of gold coins in the third quarter. Output rose to 32,735.8 ounces from 7,500.2 ounces a year before, according to data obtained by Bloomberg News under a Freedom of Information Act request. Production in the first nine months more than tripled to 100,391.3 ounces, the data show. Sales of American Eagle gold coins by the U.S. Mint more than doubled in the first nine months to 954,000 ounces. 

In a statement made by the World  Gold Council, demand for gold has climbed 10 percent in the third quarter to 800.3 metric tons from the previous three months after investors bought the metal as a currency hedge and as jewellery purchases picked up.

With the continuing weakness in the US dollar, low interest rates around the world, increasing investor demand and a growing concern about the value of these fiat currencies, it is not surprising that the price of gold is performing so well.  A fiat currency is a currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves of gold. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith on paper money. Most of the world's paper money is fiat money. Because fiat money is not linked to physical reserves (gold or silver), it risks becoming worthless due to hyperinflation. If people lose faith in a nation's paper currency (Zimbabwe is the perfect example), the money will no longer hold any value.

Perhaps one of the most frequent questions that we get from new customers is, “Am I too late to participate in this current gold bull market.”  The answer is NO, as gold prices will continue to soar in years to come. In 2006 and 2007 the so called gurus (Financial Experts) warned investors that gold is nothing more than a barbaric ancient relic purchased by fools and is useless as an investment item as it doesn’t pay any interest. Those people who used common sense (who purchased gold) have all made their fortune and those people who trusted in shares and other sorts of investment ideas lost all they had when the financial system collapsed.

If you are a long-term investor and looking at a time horizon of more than 2 years, then it is still not too late to participate in the precious metal market. In fact it is essential that you diversify some of your assets into precious metals. Therefore, buy the best precious metal bullion that money can buy which includes PAMP Suisse gold bullion, Valcambi Suisse gold bullion and the prestigious Argor Heraeus Kinebar.

Silver Bullion: Gold’s Cousin

Precious Metal Division, Gold De Royale (24 November 2009)

 

For centuries silver has always played "second fiddle" to its "prettier, more popular cousin," gold. While gold has continued to be the precious metal that everybody wants, loves and adores, wise investors are now beginning to take a good look at the value of silver in a diversified portfolio.

 

Here's why: As the entire world continues to rapidly advance into the realms of modern day, state of the art technology, medical research and infrastructure building, silver is duly noted as a far more useful metal that touches all our lives on a moment to moment basis.

 

The basic science of silver is simple. It possesses the highest conductivity of electricity than any other element, as well as the highest thermal conductivity than any other metal known to man. In the ancient world, silver was often valued above gold, not just for its easily malleable properties which made for such beautiful and ornate works of art and jewellery, but for the mythological beliefs that it mystically possessed the luminary powers of the moon, just as much of the ancient world believed that gold supernaturally retained the metaphysical essence of the sun.

 

As the progressive value and utilization of silver continues to increase with each passing day, especially in the industries of energy, medicine and technology, smart investors are beginning to see beyond the mere shine and allure of gold's facade to realize that silver is actually doing more and more to enrich our lives as well as our portfolios.

 

In a forward thinking effort toward “Green Technology,” Apple Corporation is already moving towards the next generation of batteries that will be used to energize everything from “iPods to laptops” and silver will be a major component of those long life batteries.

 

So beyond the traditional usages of silver, such as: coinage, photography, jewellery, dentistry, art, cutlery, silverware and table settings, silver continues to play a larger and larger part in the research, development and production of batteries, bearings, brazing and soldering, catalysts, as well as it's increasingly expanding role in electronics, fusion and nuclear reactors, medical applications, mirrors & coatings, solar energy, water purification, as well as one of the most effective catalysts.

 

These days, for many investors, Swiss gold bullion (PAMP Suisse gold bullion, Valcambi Suisse gold bullion, Argor Heraeus Kinebar gold bullion) is simply not an option, with it currently being priced out of reach for many people. This fact has proven to make silver the proverbial “apple of so many traders eye,” as it is viewed as a very affordable and logical alternative. Historically, silver has shown a consistent tendency to track pretty much right alongside the rise and fall of the value of gold.

 

Therefore, many investors, when believing that gold is about to “break out,” feel quite confident that, theoretically, they can equally capitalize on the move with the purchase of silver, and gain the same relative profit on the investment, without having to come up with the large price that gold currently demands.

 

So should everyone sell their stockpiles of precious metals and jump aggressively onto the “Silver Streak Train to Abundant Prosperity?” Not necessarily! You need to wisely analyse your specific, particular circumstances, along with your investment strategy, style, goals, objectives, time-lines and personal comfort levels.

 

At Gold De Royale we sell the best silver bars and coins that money can buy. Therefore, if you are an investor or a collector we have the best silver which includes:  Canadian Silver Maple Leaf Coin, Johnson Matthey Silver Bar, Heraeus Silver Bar, and American Silver Eagle Coin.

Hedge inflation with gold bullion and not with gold stocks

Precious Metal Division, Gold De Royale (22 November 2009)

 

According to David Ranson, retirees and those saving for retirement know the most fearsome risk to their portfolios in the long run is inflation. We've all heard of pensioners living on "fixed incomes" or non-indexed pensions whose standard of living would be seriously eroded by 20 or 30 years of chronic inflation. There are two things to consider in creating portfolios to deal with this: How real is the threat and what types of investments best minimize inflation?

 

Ranson is president of Massachusetts-based H.C. Wainwright & Co. Economics Inc. He says investors are confused because they see two types of inflation. The first is based on the official consumer price index (CPI). Ranson said governments construct the index to deliberately understate inflation. Among their reasons are to keep payments low on government-issued inflation-linked bonds. In the United States, these are called Treasury Inflation Protected Securities (TIPS); in Canada, Real Return Bonds (RRBs.) The other inflation is the one consumers experience every day: The prices of food, gas and everything else we purchase seem always to be rising. Ranson provides a personal illustration in the services realm, which makes up 80% of the CPI. The price of his haircuts has not risen over five years, but his barber takes less than half the time he once took. Such corner-cutting crops up throughout the service economy.

 

You don't need to be bamboozled by the CPI and central-bank statements designed to lull us into believing inflation is "under control." Investors have a more accurate measure called the market: the leading indicator is commodities, especially the price of gold and precious metals. What are recent record highs of gold telling us? To Ranson, its obvious inflation is about to rear its ugly head. Measured properly, it might be in double digits already and even government-recognized inflation could hit that level in 18 months, he says.

 

Fortunately, gold -- real gold bullion, not gold stocks is a good inflation hedge. He's no fan of Federal Reserve chairman Ben Bernanke. He said the U.S. Federal Reserve is "following a policy in which the price of gold is completely ignored." While the Fed believes near-zero interest rates will boost the economy and keep the country out of depression, "my argument would be zero interest rates are a travesty." The tug of war on rates will eventually be decided in favour of the market. "The Fed will break and won't be able to maintain short-term interest rates. It will have to give up on its targets and the market will force rates to go up."

 

But at 67, he no longer owns stocks himself. He views commodities as a better play. The rest of his own portfolio is in gold-- which has risen to a 50% weighting.

Governments are digging their own graves

Precious Metal Division, Gold De Royale (20 November 2009)

 

According to Scott Reamer of New York based hedge fund Vicis Capital, global central banks and government agencies have thrown upwards of $30 trillion dollars at the markets through direct lending and indirect backstops, with roughly 65% of that coming from stateside sources. That begs the natural question of whether the needle is now pointing towards hyperinflation.

 

"Not necessarily," says Reamer, "If they were creating currency , that would be the most probable path and I would own any physical asset I could get my hands on. But since they're creating credit , it's an entirely different analysis with regard to how other countries will respond." That jibes with my view that we're sitting at a critical crossroads, one that will come to define the socioeconomic state of the world; the resulting dynamic may indeed be binary.

 

The first scenario is the continued socialization of markets, bearded nationalization of troubled institutions and inflation through dollar devaluation, punishing savers who've preserved capital. By administering drugs that mask the symptoms rather than medicine that cures the debt disease, the crisis could evolve from the percolating societal acrimony to social unrest and quite possibly, geopolitical conflict.

 

The other path is the destruction of debt that paves a path towards true recovery through an eventual outside-in globalization. This dictates a higher dollar and lower asset classes in the intermediate-term but creates a solid infrastructure for economic expansion thereafter. It would be a bitter pill for many to swallow but most medicine that works typically is.

 

The banking system, stymied with credit dependency, is not operating normally. Hidden behind a litany of bailouts, stimulus, conduits, mortgage freezes, foreclosure programs, working groups and government sponsored investment efforts are politicians attempting to engineer a business cycle that long ago lost its way. Alan Greenspan was the chief architect of this grand experiment, trying anything and everything to juice risk appetites -- including his infamous endorsement of adjustable rate mortgages -- before whispering "recession" over his shoulder as he rode into the sunset. He then handed the economic reigns to Ben Bernanke, a gentleman who once opined he would "drop money out of a helicopter" if necessary to induce inflation.

 

Deflation in a fractional reserve banking system means policymakers have, for all intents and purposes, lost control of the economy. It would also impact the top-tier of the societal spectrum tied to financial assets, which would be problematic for politicians and the constituencies that bankroll them. Election aspirations, however, may be the least of the concerns; this economic maelstrom is bigger than any particular political agenda.

 

Policymakers understand the enormous stakes given our derivative-laced finance-based economy. They've postured, positioned and proffered assurances, pulling out all the stops in an attempt to flush the system with liquidity despite the clear and present danger of a total system unwind, with currency markets possibly providing the release value. As the state of our economic union steadily deteriorated the last eight years--a dynamic masked by the lower dollar and skewed by the spending habits of a slimming margin of society--the greenback was intentionally devalued with hopes that a legitimate economic recovery would replace the debt-induced largesse that dominated this decade.

 

As the world reserve currency lost 38% since 2002, foreign holders of dollar-denominated assets have grown increasingly frustrated with the status quo. Liu Mingkang, chairman of the China Banking Regulatory Commission, and Don Tsang, Chief Executive of Hong Kong, are among the latest leaders to voice displeasure, warning of "unavoidable risks" and "the next global crisis," respectively. Shortly before the credit mess arrived in September 2008, we warned it would manifest as a cancer or a car crash. The government responded by buying the cancer and selling the car crash, staving off a systemic collapse by inhaling the disease in its entirety. It worked, but it came at a profound cost.  

 

Asset classes continue to trade as a monolithic monster on the other side of the dollar. We call this dynamic "asset class deflation vs. dollar devaluation" in Minyanville and while both sides of the equation can decline, they would be hard pressed to rally in sync. That's important to remember, particularly as the carry trade becomes part of the mainstream lexicon.

 

The favored scenario of those pulling the strings is akin to a bovine relay race. The 2009 government sponsored euphoria enabled corporate America to roll mountains of debt, potentially buying itself a few more years. If the plan plays through, those same corporations will transfer the risk (through issuance) to an unsuspecting public before the next wave of crisis arrives. Rinse and repeat again and again, consistent with the definition of insanity.

 

This progression is predicated on the rest of the world cooperating, presumably because they're unable to extricate themselves from the interwoven financial machination. The other alternatives are isolationism and protectionism, which could conceivably separate world commerce into standalone regions as nations attempt to protect their interests at all costs. While the path of deflation and debt destruction would cause paper wealth to evaporate, it would forge a path towards a prosperous future. Rich nations would pour real money -- as opposed to cheap debt -- into developing economies as a redistribution mechanism of wealth and the resulting global community would be more profitable, and dare I say safer, for generations to come.

 

It's not too late to reverse the curse of the lost cause of capitalism. If our policymakers make proactive decisions, demonstrate humility and take steps to rebuild a stable foundation for the future, we could avoid waking up one day to find that our policy has been altogether outsourced to foreign central banks."

 

"Albert Einstein once said that the definition of insanity was doing the same thing over and over again and expecting different results. Through that lens, the current course of fiscal and monetary policy is absolutely insane. One would hope we've learned from the past as we prepare for the future but there's little evidence we have. Consistent with previous patterns of government intervention, policymakers -- many of whom never saw the cumulative imbalances building -- have overcompensated with reactive response and created the conditional elements of the next phase of financial crisis, that some have termed it as DOOMS DAY”.

United States dollar meltdown: What does this mean in the coming years?

Precious Metal Division, Gold De Royale (20 November 2009)

 

Many of our staff at Gold De Royale had the opportunity in the last few weeks to read the book “The Dollar Meltdown” by Charles Goyette. The book portrays the actual situation of the United States economy and what lies ahead for US. It brings out many fears that many of us have when the system collapses what will happen? With the monetary chaos (US currency collapse) will come the emergence of an authoritarian government. He devotes a chapter to speculation about the forms of coercion to which Americans will be subjected in the coming years, which is effective both because of its clarity and because it shows how similar things have already happened or are being considered today. Some of things that may happen as per Mr. Goyette includes:

 

In a monetary breakdown the government may try to stop you from moving your money out of the country or investing it abroad. In reality, during 1968 President Johnson implemented mandatory controls on foreign investments and on loans made abroad. The headline in the New York Times on January 2, 1968, read, “Johnson Acts on Dollar: Curbs investing Abroad and Asks Cuts in Tourism.”

 

In a monetary breakdown the government may confiscate pension plans and retirement accounts. It may institute forced savings schemes or other appropriations. In reality, during October 2008 the U.S. House Education and Labor Committee heard testimony from an economist proposing replacing 401(K)s and IRAs with government retirement accounts.

 

The last few chapters cover the familiar but essential waterfront of investments that should do well in a currency meltdown: gold bullion, silver bullion, palladium bullion and other precious metal commodities.

The Rise of Silver: Silver bullion prices to soar in 2010

Precious Metal Division, Gold De Royale (19 November 2009)

 

Silver may yet outshine gold in 2010 in relation to spot prices due to the prospect of a surge in industrial demand. With a little additional help from investment demand, silver may even rally into the $25 an ounce range.  So says Chintan Parikh, a commodity analyst at the CPM Group, a leading New York-based commodities research, consulting, asset management and investment banking organization. "Prices may spike as high as $25 an ounce, spot price," he says. At the very least, it should breach its most recent high, which was set at $20.79 in the spring of 2008, he adds.

 

Parikh says much of this impetus for higher prices is being driven by the fact that traditional industrial end users of silver, such as the ever-burgeoning global electronics industry, have in recent weeks begun to replenish severely depleted inventories. In fact, silver inventories became so run-down during the financial crisis that it may take up to six months to fully rebuild them to normal levels. Mr. Parikh also notes that demand from the industrial sector tends to be quite price inelastic, meaning that buyers have few options other than to pay prevailing prices.

 

Another key driver for 2010 will be the advent of new market places for silver, including pent-up demand for silver-zinc batteries in ‘smart' automobiles and an array of portable electronic devices, Parikh says. In fact, the widespread adoption of silver-zinc batteries is going to be "one of the major drivers behind a rise in prices because it may absorb a lot of silver," he adds. Though this important new application for silver might not necessarily become a major factor in demand for silver as early as next year, it promises to become a very sizable marketplace, he suggests especially for automobiles.

 

However, the restocking of inventories for more of silver's traditional uses will likely be the most powerful demand driver in the near-term. It may even help propel silver prices into new territory to the extent that "a peak (in prices) could occur late this year or early next year."

 

"Silver is a unique metal that wins whether the economy is going well or is in bad shape," he says. "In the latter, the investor buys it as a hedge against the downturn in the economy and the markets. And if the economy improves, then the industrial demand increases." All of this is good news to the ears of silver miners, who are already ramping up production to satisfy newly resurgent industrial demand for silver.

Investing in PAMP Swiss Palladium Bullion

Precious Metal Division, Gold De Royale (18 November 2009)

When palladium spiked to $1100 in late 2000, most palladium investors sold their bullion coins and bars into that rise and exited the market. During the ensuing years, the demand for small palladium coins and bars was so small that most mints quit producing palladium bullion coins and private refineries ceased making palladium bullion bars. Because it was industrial buying that sent palladium soaring-and not palladium investors-nearly all palladium bars and coins sold in 2000 ended up being melted. Now, though, palladium bullion bars and coins are being produced to meet renewed palladium investment demand.

 

Popular forms of palladium are the PAMP Suisse 1 Ounce Palladium Bullion and Credit Suisse 1 Ounce Palladium Bullion. Palladium is one of six metals that form a group of elements referred to as the platinum group metals (PGM). Palladium has a resistance to oxidation; one reason palladium is growing in popularity for jewellery, especially in Asia. Still, the primary use for palladium is in autocatalytic converters, where palladium reacts similarly to platinum in combating pollutants. Herein lays the reason for volatile prices in the palladium and platinum markets.

 

From time to time, it seems about every five to seven years, some major auto maker and its catalytic converter manufacturer announce that they are switching from platinum to palladium, or vice versa, in the manufacture of converters. This causes the metal being dropped to fall in price and the metal doing the replacing to rise in price. Frequent production and supply problems in South Africa and Russia, the two major sources of platinum and palladium, add to volatility in the metals' markets. Currently there is a worldwide shortage for palladium bars as China has announced that it will increase its palladium importation to be used in the car manufacturing industry. There is no doubt that palladium will double in its price in 2010.

 

Customers who would like to buy PAMP Swiss palladium bullion of all sizes 1 Ounce, 10 Ounce and 1 Kilo, please contact us via email as we have these beautiful bars in stock.

Buying gold from non-accredited refiners may drop its value

Precious Metal Division, Gold De Royale (17 November 2009)

 

With the Lisbon treaty coming into force from December 1^st, 2009, there is a general tendency for accredited precious metal refiners of the London Bullion Market Association (LBMA) to buy gold below the spot price from refiners that are not accredited by the LBMA as a Good Delivery Refiner. Czech Republic’s, Precious Metal Analyst Lago Dmitry said “...we may soon see LBMA accredited refiners buying gold from other refiners at below the actual spot price. This means that it would be hard for un-accredited refiners to make a margin which may lead the precious metal refiner to apply for bankruptcy. Once the unaccredited precious metal refiner is out of the market this will seriously devalue the gold, silver and other precious metals that people have purchased from that specific refiner. This means that precious metal dealers would buy your gold only for half of the normal spot price if the refiner is unaccredited. The option for the precious metal refiners is to improve the refining standards, that is, be an accredited LBMA refiner or face the obvious” (Prague Reuters).

 

While many people around the world would buy gold from any refiner, this tendency would do more harm than good. Moreover, there is no point in having gold bullion with you from a non-accredited refiner, when precious metal dealers would pay only half of its actual value when you sell it. Quality always pays a better deal at the end of the day.

 

The world is running out of gold bullion. Can this lead to a drastic surge in gold price ?

Precious Metal Division, Gold De Royale (16 November 2009)

 

Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly one million ounces a year since the start of the decade. Total mine supply has dropped by 10% as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run. "There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London.

 

"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find quality ore," he said. Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970. The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday. The key driver over recent days has been the move by India's central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money (US Dollar) and debt.

 

China has quietly doubled holdings to 1,054 tonnes and is thought to be adding gradually on price dips, creating a market floor. Gold remains a tiny fraction of its $2.3 trillion in foreign reserves. Output fell a further 14% in South Africa last year as companies were forced to dig ever deeper - at greater cost - to replace depleted reserves, not helped by "social uplift" rules and power cuts. Harmony Gold said yesterday that it may close two more mines over coming months due to poor ore grades. Mr. Norman said the "false mine of central banks" had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.

 

Even in Australia successful mining companies like Kingsgate Limited are now exploring new gold mines in countries like Thailand. These should tell us the coming demand for gold bullion in one to two years time and it is of no wonder that many precious metal analysts have said that gold will break the $2000 barrier.

UK and US what are they doing? Its impact on the price of gold bullion

Precious Metal Division, Gold De Royale (12 November 2009)

 

Gold prices are on the run again. Each time the US and UK announces a drastic step to save their economy, we see gold prices soaring. Today gold prices soared to a record level of US$1119.90 per ounce.  UK banks have gone absolutely out of control that some commentaries have said to “protect your wealth from the Banks money printing madness”.  It’s true; Bank of England has done it again!

 

The Bank of England began printing more money officially called quantitative easing in March this year. So far it's pumped a staggering £175bn into the economy, and it's going to spend another £25bn over the next three months. Bear in mind, British GDP is about £1,400bn, so we're talking about nearly 15% of GDP in total here. However, printing extra money can potentially lead to high inflation rates, eroding the value of existing British cash savings.

 

On the other hand, Jefferson County in the US could apply for bankruptcy unless the US government starts printing more money to save it. For most economists and politicians, however, the economy is merely another human activity to be managed, a game of benevolent brinksmanship in which bankers and political leaders run up debt and print money for our own good, while trying to avoid riling national confidence. There are two questions to be answered, when will it stop and how will it stop. As there is a saying - the more money you print, the more tempted you are to print more. While politicians and businessmen have made their fortune, it will be common people like many of us who will be the victims of this money printing insanity. There is no doubt that one day we all will enter into a modern day slavery of debt that will be passed down to at least 10 generations. Time is still there before the so coming DOOMS DAY of the world financial system, people who see what’s happening will put their trust in gold.

What can we learn from one of the greatest rulers in the world who had an enormous gold bullion wealth?

Precious Metal Division, Gold De Royale (10 November 2009)

 

Frequently we hear in Forbes Magazine, Times Magazine, every year the richest people in the world. In 2009, the top two richest people in the world according to Forbes were William Gates (who had US$ 40 billion) and Warren Buffett (who had US$ 37 billion). Can there be anyone who is richer than them or was there anyone who was richer than them, should be the question that we need to ask.

 

If you remember history, there was a great ruler and a king who lived in Israel whose name was King Solomon. That is a name that we all remember. The Holy Bible which is the inspired word of God says “...King Solomon became greater than all the kings of the earth in riches and in wisdom” (1 Kings 10:23, NASB). Bill Gates and other billionaires in the world derive their wealth primarily from their companies. So the question is, where did King Solomon derive his wealth from, did he have a company called King Solomon Finances Inc, or was it called King Solomon’s Stock Exchange? How did a wise King like him became so rich that God himself said that he was greater than anyone else in his riches. The answer to that question is simple. King Solomon did not invest in shares, he did not invest in monetary coins, he did not buy real estate properties because he was wiser than all of us. He invested only in GOLD. That’s right; he was the only King in History that invested all his wealth in Gold. Let’s now look at the amount of gold bullion he had.

 

According to the Holy Bible, King Solomon received 666 talents of gold per year as his salary.  He also received other moneys from various merchants, traders and surrounding governments.  If we just look at his annual salary, one talent of gold is approximately equal to 34.5 kg which is about 1109 troy ounces.  At current market prices (November 2009), one troy ounce of gold trades for about $1100 U.S. Dollars (USD).  Multiplying $1100 x 1109 troy ounces x 666 talents = 812,453,400 or roughly 812 million dollars per year.  Keep in mind this was only his annual salary, not including any bonuses or investments.  King Solomon ruled for 40 years so multiply 812 million dollars per year x 40 years.  If you take into account all the extra income he surely would have received, we guess his net worth to be somewhere around 200 billion dollars.  

 

The whole point of this discussion is, there are vital lessons that we need to learn from King Solomon’s wisdom which are (a) he always knew that Gold being a precious metal is more valued than monetary currency; (b) for a nation to thrive in the future they must have enormous gold bullion amounts in their central banks; and (c) great leaders would take the lead and tell people to trust in gold rather than paper money. During King Solomon’s reign, gold was so common that even a common man used to drink in a gold cup.

 

Will the Western nations ever have a wise leader like King Solomon? Only time will tell.

Prepare for the inevitable collapse

Precious Metal Division, Gold De Royale (9 November 2009)

 

Last week gold bullion prices rallied over US $1100.20. This has made financial analysts and reporters around the world to contemplate if we are going to witness the modern day collapse of the so called financial system.

 

Australia’s respected financial commentary read by millions of Australians, Money Morning on 7th November 09 reported “Prepare for Doomsday - Governments are printing money and pretty soon - if it isn't already - your wallet will be full of coloured plastic. Pretty, but worthless plastic” (Shae Smith, Assistant Editor).

 

Moreover, with reckless government spending in countries like United States, United Kingdom, and other nations to recover their economy by “printing money” will speed up the crash. In the United Kingdom where the first round of printing money has not revived the economy, has given the pretext to politicians to print more money. At the end of July 2009, UK public sector debt was over £800 Billion Pounds which is 56.8% of the National GDP. These figures should alarm you. What this means is that you can never ever repay this much amount of debt. It will take at least four generations for any nation to even start repaying these debts. Some respected religious analysts has pointed out that the only way for any nation to pay of these debts is to enter into a modern day SLAVERY, where the borrower becomes a slave to the lender.

 

If you think we are better than the US or UK economy, think twice. Prime Minister Mr. Kevin Rudd admitted that our national gross debt would reach $300 billion over the next four years. A couple of years back, we used to have a surplus, now from a surplus we have an astounding debt.

 

The only way to protect our wealth is to diversify our money and buy gold bullion. At least this way, when everything collapses one day or the other we can use gold to buy our daily bread.

National budget deficits risk United Sates dollar collapse

Source: Precious Metal Division, Gold De Royale (6 November 2009)

 

David Ross, Chief Investment Officer of Radiant Asset Management, warns that continued record deficits in the US, risk collapse of the U.S. dollar, stagflation at home and civil unrest in China. In a white paper released today on China and the U.S. debt, Ross, an expert in U.S. Treasury securities, cautions that the world may abandon the dollar as a reserve currency unless the US Federal Government takes decisive action to curb spending and control the dollar's collapse.

 

A collapsing dollar forces the Obama Administration to face three unpopular choices: cut spending sharply, raise interest rates to make U.S. debt more attractive, or default on the debt through inflation. Unless spending is quickly brought under control, the choice for the U.S. will be a sharp recession, runaway inflation, or both.

 

Internationally, a free-falling dollar would collapse the Chinese export industry. In his paper, Ross analyses the co-dependency dynamics that have developed between China and the United States, the demographic reasons why China will continue to purchase U.S. debt, and threat of Chinese civil unrest a collapsing dollar would bring. With so much of the world's reserves held in U.S. dollars, a sharp dollar collapse could trigger an exchange rate crisis and disruption of international trade, leading to a protracted world-wide recession or worse.

 

One of the questions that many people ask is when the US dollar collapses; will the Australian dollar follow its footsteps? Trust for paper money around the world is diminishing and people are diversifying their wealth portfolio with gold bullion all around the world.   

The emergence of a new super power – United States of Europe

Source: Precious Metal Division, Gold De Royale (5 November 2009)

 

Yesterday marked an historic day in the history of Europe and the dawn of a new shift in world power. The Lisbon Treaty considered by many analysts as one of the most controversial treaties in the world has finally been approved by the last remaining European country which is the Czech Republic and was signed by the Czech President Vaclav Klaus. Currently 27 European countries in the world including United Kingdom and Ireland have signed this landmark treaty. This marks the end of an almost decade-long saga to reform the cumbersome institution and give it a stronger, more unified voice on the global stage. "The Lisbon Treaty has the potential to herald the emergence of a new world actor — a Europe that can look upwards and outwards and is equipped with the bureaucratic tools to do so," says Daniel Korski, a senior policy fellow at the European Council on Foreign Relations (ECFR).

 

If the US dollar collapses it is evident that gold will be valued against the Euro. With the declining power of the United States of America and with its increasing national debt, there is no way that US can remain a superpower anymore. As the European Union becomes incredibly powerful from December 1st, 2009 it wants to do many things in the global financial markets to rectify long standing problems.

 

Some analyst have said that the Lisbon treaty can make things worse for Western nations because of the way the treaty is been written. The signed countries give all their military power and financial backing to one centralised power (EU) which makes the decision and is headed by the voted President of the EU. From a gold perspective, this means that all gold that each Central Bank of the 27 countries hold should be transferred to a Central Bank in Europe which is run by the EU. Analysts have long warned of giving such powers to any union of nations, as we all know what history tells. We strongly believe that when the Lisbon Treaty comes into force, gold prices will cross US$1205.

 

Precious metal analysts around the world are watching the impact this new treaty has. The BIG Question is, will the US dollar be replaced by Euro and will gold bullion price be fixed in Euros?

Can world governments not repay their debts?

Source: Precious Metal Division, Gold De Royale (4 November 2009)

 

The governments of every major nation are going to default on their debts. There are two relevant questions: How and When?

 

Establishments all around the world will deny this. They have gained power and wealth by means of the expansion of government. They have justified their success by insisting that the government-business alliance is the only way to establish economic growth and economic security for the masses. This claim rests on a more fundamental claim, namely, that an unhampered free market is destructive of economic stability and will inevitably lead to economic depression.

 

The Establishments are universally Keynesian. John Maynard Keynes' book, The General Theory of Employment, Interest, and Money, was published in 1936. It defended in theory what all Western governments had been doing in practice for at least five years, namely, running huge deficits. Keynes became as close to an academic high priest as any modern scholar ever has. He was the apostle of national government debt. His ideas today are more influential than they were at his death in 1946. We live in the age of Keynes.

 

We can think of only one major Establishment figure who has broken with the Establishment on the question of the great default: Peter G. Peterson, who was the chairman of the Council on Foreign Relations until 2007. He now runs the Peter G. Peterson Foundation, which focuses on the looming bankruptcy of the U.S. government. More than any other person of influence, he has warned of the bankruptcy of the Medicare/Social Security programs and their equivalents in the West.

 

Peterson a decade ago said that he had spoken with the major leaders of the West about the impossibility of funding these social programs. They all told him the same thing: "I will not be around at that time."

Why did the Indian Central Bank purchase 200 Metric Tons of Gold Bullion?

Source: Precious Metal Division, Gold De Royale (4 November 2009)

 

India purchased $6.7 Billion Dollars of Gold bullion (200 Metric Tons) from the IMF (International Monetary Fund) today. This action shocked the precious metals market, causing the COMEX December Gold price to surge upward to a market close of $1,085.30 at 12:30 EDT and to head towards $1,100.00 in aftermarket trading.

 

This drive forward represents a 1.35% increase in the value of gold over just the past 2 weeks. India's purchase is half of a planned purchase with the IMF, and it surprised traders, who expected China to be the most likely buyer.

 

 “The fall in the U.S. Dollar seems to be pushing all the central banks to strengthen their portfolio with gold,” said N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy in New Delhi. “Gold is a safe store of value compared to the U.S. Dollar.”

 

The continued slide of the U.S. Dollar (due to national debt) and increasing fears of inflation in the U.S. and in the global economies has many investors closely watching events. Some analysts have stated publicly that they believe gold could rise to $1,200 to $2,000 per ounce in 2010! If you have been planning on adding gold bars to diversify your investment portfolio, now may be the perfect time, before prices rise even further due to fears of financial instability.

Can the US dollar become worthless like the Zimbabwean dollar?

Source: Precious Metal Division, Gold De Royale (2 November 2009)

 

In Zimbabwe, inflation is measured by the hour, not monthly as in the United States and the rest of the developed countries like Australia. A long time back the Rhodesian dollar which was the currency in use in Zimbabwe, had a value even more than the US dollar. Then what happened to this booming nation Zimbabwe. When Robert Mugabe became president, he embarked on his program of confiscating white-owned farms, and white-owned businesses in the name of land redistribution and Indigenous people rights, which lead to mismanagement, failed crops with disastrous results. This resulted in massive unemployment and skyrocketing national debt levels.

 

The quick fix solution to this problem (as decided by the government) was lets print money and the more money we print the better our economy can become. As the economy started collapsing with this money printing scheme, the so called government plan to revive the economy helped only to speed the descent. When you print money as much as you want, then start circulating it to revive the economy, there can only be one probable result- hyperinflation. All existing money in circulation rapidly becomes worthless. On 12 January 2009, Zimbabwe introduced the $50,000,000,000 note. On January 16, 2009, Zimbabwe announced plans for imminent issue of banknotes of $10 trillion, $20 trillion, $50 trillion, and $100 trillion. At the time of the announcement, the latter was valued at around 30 US dollars.

 

One of the most respected economist and investor in the United States Mr. Marc Faber said the following on May 2009 about the US economy

 

“The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates. Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office. “I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

 

With hyperinflation to set in, one can only imagine the actual cost of a one ounce gold bullion in one to two years time. If you would like to know the actual national debt of the United States as of now, please visit the following website http://www.usdebtclock.org/

What is the difference between a precious metal miner, refiner and a dealer?

Source: Precious Metal Division, Gold De Royale (31 October 2009)

 

Often people get confused between a precious metal gold miner, refiner and a dealer. Some think that they are the same, other things they do all the three functions and others are not sure what each one does.

 

A precious metal miner is a company that mines and explores for gold and other precious metals. An example of a precious metal miner is Kingsgate Consolidated Limited (Kingsgate,www.kingsgate.com.au) which is a highly successful gold mining and exploration company in Australia. The company owns and operates the low cost Chatree gold mine in central Thailand through its Thai subsidiary, Akara Mining Limited, using world's best practice for safe, environmental and socially responsible operations.

 

A precious metal refiner is one who refines gold after it has been mined. An example of it is PAMP precious metals refiner located in Switzerland.

 

A precious metal dealer is one who deals in precious metals. They sell precious metals to the public. An example of it is Gold De Royale in Brisbane, Australia.

US currency was linked to gold, once upon a time.

Source: Precious Metal Division, Gold De Royale (29 October 2009)

Because we are living in a financially uncertain world, it is important to explore the role that central banks have. A central bank which is also called as a reserve bank in many Asian and European countries is a bank that lends the government of that nation its currency. One could say that it is a bank that is in charge of creating the currency of that nation. In 1900 the United States signed the Gold Standard Act. This act specified the US dollar to a specific amount of gold in the US gold reserve. This is how it should always be. The act set the value of gold at $20.67 per troy ounce for a $20 currency. In 1971, gold was repriced to $38 per ounce, then again to $42 per ounce in 1973. As the dollar devalued, it motivated people to sell their greenbacks for gold. Finally, in late 1973, the U.S. government decoupled the value of the dollar from gold altogether in order to finance the Vietnam War and the rest is history.

The total amount of gold that has ever been mined has been estimated at around 142,000 tons. Assuming a gold bullion price of US$1,000 per ounce the total value of all the gold ever mined would be around $4.5 trillion. This is less than the value of circulating money in the U.S. alone, where more than $7.6 trillion (no idea how much is in print today) is in circulation or in deposit.

In the world there are currently somewhere between 120,000 and 142,000 tonnes of gold. To visualise this imagine a single solid gold cube with edges of about 19 metres (about three metres short of the length of a tennis court). That's all that has ever been produced. Divided amongst the population of the world there are about 23 grams per person, about 1.2 cubic centimetres each. This equates to about $250 - $350 worth per person on Earth, depending on the current price.

The value of that short tennis court sized cube is about $1.8 trillion. This compares to the US government’s sovereign debt of $11.9 trillion (increases every second, visit www.usdebtclock.org), which until 1971 was part-backed by gold. The US Gold Reserve is just over 8,000 tonnes - which is about 6% of the total gold ever mined. It is worth about $100 billion, or 1.5% of the US national debt.

$1.8 trillion is about one fourteenth of the paper based international bond markets, which themselves, at about $26 trillion, are about two thirds composed of western government sovereign debt almost all of which has appeared, co-incidentally, since 1971 and the declared supremacy of paper money, which was what allowed governments to borrow without caution. The total gold content of the world would pay - at current values - about 7% of the international bond market's sovereign debt.  But of course 75% of the world's gold is not available to governments - being held privately as jewellery, bullion and coin.  In fact only about 30,000 tonnes, about 1% of the world's sovereign debt is what is held in central bank gold reserves.

Meanwhile the entire gold stock of the world - including the privately held bulk - is much less than one half of one percent of the underwritten risk in the global financial derivatives markets.

The economic system powered by greed has placed absolute trust in paper currency denominated assets and this trust in paper currency will collapse one day.

The last days of the US Dollar, with gold bullion prices to go over $2000 an ounce.

Source: Precious Metal Division, Gold De Royale (26 October 2009)

 

Economists around the world are battling the rapid decline of the US Dollar with many financial experts in the US worried of what will happen to their currency. With a never ending recession in the US, and on top of that the non-stop printing of the US currency (money which it does not have), the value of the US dollar is declining rapidly. Many precious metal dealers in the US are currently running out of gold bullion as people are disposing their currency and buying gold. This will further increase the value of gold prices in the coming days.

 

One of the well renowned precious metal experts Jim Rogers has said in his recent interview that “quite sure gold will go over $2000 per ounce during this bull market."  Rogers' confidence gold will continue to rally stems from a view the U.S. dollar is on its way to losing status as the world's reserve currency.

 

"Is it going to happen? Yes," Rogers says. "I don't like saying it [and] I'm extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was]."

 

Rogers didn't offer a timetable, and it's likely gold would exceed $2000 per ounce if the dollar were to lose its reserve status.

Exploring the most widely used phrase by gold bullion dealers, gold is the same!

Source: Precious Metal Division, Gold De Royale (23 October 2009)

 

Over time and time again we hear many gold bullion dealers in Australia and across the world convincing people that pure gold is the same, there is no difference. But is this statement really true? If you ask well known experts in the precious metal market industry they would say it is not true. There are many reasons why the statement is not true. Let’s look at a scenario. You buy a car that is made in Australia and you buy a Rolls Royce. Now everyone knows that both are cars. Both perform the same function. But the question to be asked is why a car that is made in Australia cost’s AUD 39,000 and why does a Rolls Royce in Australia cost $322,000. How can there be so much variation in the cost? Isn’t car, car!  Why is Rolls Royce charging $322,000 and why is the seller who sells a car made in Australia charging $39,000! From basic common sense a normal person would know it’s because Rolls Royce represents the best that there is in the car industry. That is, it is manufactured from the highest quality materials made in the automobile industry and is absolutely perfect in its beauty. Also Rolls Royce has the highest standard rating in the world given by the Automobile Industry for many years in relation to its manufacturing details.

 

Now let’s shift the scenario from the automobile industry to the precious metal industry. In the precious metal industry consumers must be aware that the international body that certifies a refiner for its quality in refining gold is the London Bullion Market Association (LBMA). This is the peak body. Their main role is to recognise refiners that use the highest standards when they refine and manufacture precious metals like gold, silver, palladium and platinum bullion. This is the most important and fundamental concept that people need to understand.

 

Most refiners in the world would normally apply to the London Bullion Market Association for recognition as a Good Delivery Refiner and to be included in their Good Delivery List. In doing so they must meet very strict criteria that are used when refining precious metals. If they don’t follow them, they cannot get the recognition. On the LBMA website you can see for yourself the names of all refiners that are accredited by the LBMA in all countries. Now if you buy gold from these accredited refiners you can be definitely be assured that you are having one of the purest forms of gold. If the refiner that has manufactured the gold that you have purchased is not there in the list, then this is something that you really need to think about. When you look at the list you can see in the whole of Australia there is only one refiner that has this status which is the AGR Matthey. AGR Matthey solely supplies to international markets and treasuries. They do not sell bullion in small or large amounts where a person can purchase them. As we scroll down the list, we see the names of all refiners that are accredited by the LBMA in Switzerland. These include PAMP, Valcambi and Argor Heraeus of Switzerland.

 

The question that must be asked is why are the other refiners in Australia not recognised? The answer to that question is simple. It’s all about how the gold is being refined, manufactured and its actual purity. That is why at Gold De Royale we only sell precious metals of those refiners that are accredited by the LBMA as an approved Good Delivery Refiner. These refiners show the highest industry standards when they manufacture precious metals.

 

So the next time if you notice someone selling gold bullion in Australia manufactured by a refiner that is not accredited by the LBMA at a low price, it’s good to think twice before you purchase it.

Why people must seriously consider holding on to their gold bullion?

Source: Precious Metal Division, Gold De Royale (22 October 2009)

With gold prices going at record levels many economists around the world are contemplating on what would be the price of gold ahead in the coming months or years. Some have argued that the current gold prices are too low (does not reflect the actual price) and the actual price of a one troy ounce gold bullion should be around US Dollar $2100. While some economic analysts are true on the predicted figures, the price is mainly based on the strength of the US dollar and its economy. Once we understand this basic concept, we can to a degree predict the future of gold prices.

Currently the United States debt is at a whopping figure of $11.6 trillion and is the sum of all outstanding debt the US Federal government owe to many countries. These figures are on the rise daily and should not be taken as a comic story. Some analyst has argued that the US economy has come to such a point that it has been labelled as “point of no return”. Many years back the US were the biggest lenders to many countries in the world and today they have become the biggest debtor in the world.

Many of the foreign holders of US debt are investing more in their own economies. Over time, diminished demand for US Treasuries will increase interest rates, thus slowing the economy. Furthermore, this lessening of demand is putting downward pressure on the US dollar. That's because dollars, and dollar denominated Treasury Securities, are becoming less desirable, so their value declines. As the dollar declines, foreign holders get paid back in currency that is worth less, which further decreases demand. China holds approximately $3.2 trillion and Japan holds around $3.0 trillion dollar denominated treasury securities. Therefore, countries like China and India are in fact telling all their Citizens to no more hold United States currencies and rather use that to purchase as much gold bars they can. This has lead to one of the biggest gold rushes in today’s modern era. Moreover, unlike paper currency that can be printed as much as you want, one cannot print gold. Gold being a precious metal is nowadays becoming a scarce commodity that big miners have begun mining exploration in other countries. This demand will continue to rise in the coming months and years with gold prices further moving forwards.

With gold prices at US $1060, many people are using this opportunity to sell of their gold bars. This is an incorrect move as the prices will continue to soar and you can accumulate more wealth in the future buy holding on to them. We have devised a graph that shows the average price of gold for the past 10 years that will be useful for investors.