Posted on 11/18/2008 5:05:32 PM PST by LegendHasIt
THERE'S a worldwide run on gold coins.
Even as the price of the precious metal itself comes under pressure along with commodities like oil and copper, people around the world are demanding so many of the valuable coins that government mints are having difficulty filling orders.
A spokesperson for the US Mint tells me that gold coins in this country, for the past month, "are being allocated because of an increased demand."
And the price that the government charges coin dealers has recently been increased by as much as 10 percent for a 10-ounce coin.
Robert Mish, a coin dealer in Menlo Park, Calif., says customers who want to purchase 200 gold coins often have to wait up to two weeks. Six months ago, he said, a purchase that size could have been filled immediately.
(Excerpt) Read more at nypost.com ...
Another thing that I think is making the unexpected (sort of) low price given demand is that with the speculators sitting this out until the chaos eases up is that the speculators don’t necessarily take delivery of actual gold. They just trade ownership of a piece of paper saying that there is gold in a vault somewhere.
The people who are buying now are people who are going to put it under the mattress or in safe deposit boxes “just in case”... And they want the real stuff, not a piece of paper saying they own something that may not actually exist by the time they need it.
IF it all comes down like a lot of people believe, (sort of a survivalist mentality), people will want something that they can swap directly for beans, bread and bullets.
IMHO, anyway. And government minted gold coins are the easiest way to do that.
I haven’t read that there is as much delay on plain old gold bars from the refiners as there is on minted coins... Although I hope to be able to say for sure on that in the near future.
“IF it all comes down like a lot of people believe, (sort of a survivalist mentality), people will want something that they can swap directly for beans, bread and bullets”
Avoid the gold middle man, buy beans, bread and bullets first. (I’m adding bacon and whiskey to my survival portfolio.)
The coins are worth less as metal than they are as coins. If you want to invest in gold you should just buy gold."
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I'm thinking that you are thinking of something different than what we are talking about. (No offense, I hope).
We aren't talking about collectors coins, we are talking about government issued bullion coins.
There IS a premium on them, but not like collectors coins, be they either circulating coins of old, or special minted coins like proofs.
Some people prefer the government minted bullion coins as they are more difficult to fake than refiners bullion bars. and available in smaller denominations than the refiners bars.... It is easier to trade a 1/10th oz gold coin for a box of bullets than a ten ounce bar, and expecting ome gold or silver coins in change.
So, people are willing to pay a premium above actual value for the Govt's promise of purity and convenience in trading.
Sure.
Gold can be several types of investments for people. Some buy it to speculate on the price going up. Some buy it as a hedge against inflation. Some buy it because it is a commodity with an ability to barter with, when paper money is worthless.
Part of the increase in the price of gold earlier was the fear of inflation.That fear abated because the inflation we had was not traditional inflation, but commoditized inflation. The commodity that caused the inflation was oil. When oil rises, the cost of everything else inflates, because you need to use oil to produce things or transport them. The oil bubble burst, and the inflationary fear faded.
Gold is also used as a hedge against currencies. The US Dollar was much weaker earlier in the year, and is peaking now. Less worry about a weak dollar makes gold less attractive as a hedge against it.
Ironically, it is the stronger Dollar that has caused the price of oil to plunge. OPEC has always priced crude in US Dollars. If the Dollar is weak, you need more dollars to buy a barrel of oil. If the dollar is stronger, you need less to buy that barrel of oil. The price of oil peaked exactly when the dollar started climbing, and has fallen ever since.
In reality, gold is holding up pretty well considering what other commodities have done with the stronger dollar, and this is is because Obama won the election. People may want to use real gold bullion at some point in the future, for one reason or another....
The coins are worth less as metal than they are as coins
Well, this is true. OTOH, what if paper money is mostly devalued and credit money is worthless. What makes a better medium of exchange than a gold or silver struck coin? They're certainly more convenient than little gold or silver bars. You don't need a lot, just a few OZ in tenths for the bug-out-bag....
Seems odd to me also. With demand greatly exceeding supply, why aren’t we seeing upward pressure? Man, silver at $9.56 an ounce (at close today) sure seems like a deal in these times.
On a side note, I stopped by Wal-Mart to pick up some 9mm Winchester white box, and they were out of nearly everything.
That link that BGhater posted in #5 is sort of related too;
And another article by the same guy from today is pretty good as well.
http://news.silverseek.com/TedButler/1227032447.php
The latter article is a pretty decent basic primer that anyone thinking of buying silver as an investment OR a ‘hedge against 0bama’ ought to grasp; and despite it being about silver, a lot of the stuff is applicable to gold too...
Not much of the info there was new to ME because in a ‘past life’ I was in the mining business myself, and I have spent more time in silver, lead, zinc and copper mines than most people have spent pushing ‘lead’ around in pencils.
Oil peaked when the Dollar was low in July, and oil and other commodities have gone down with the Dollar's rise. This will change if you see some larger rate cuts in Europe and Asia, specifically China and Japan. The Dollar will come back down at that point.
Although let me add to that last article link I posted, that I don’t quite see ANYTHING as a sure thing anymore, unlike the author, who DOES think that it is.
This thread wasn’t intended to be for people who want to MAKE money.... Just for people interested in KEEPING it.
Ha! i'm using 100 round .40 for bookends! It was on sale before the elections...
On the contrary - FDR showed them exactly how.
Are there still places that will smelt the nuggets into bars for you?
When you purchase physical metals, do they log the purchase so they know who to come after and how much?
“Are there still places that will smelt the nuggets into bars for you?”
I don’t know the answer to that. The last thing we would do is “smelt the nuggets into bars”. The value of nuggets is much higher than the spot price for gold. Smelting them would decrease their value.
And here is a new article on the basic subject we have been discussing:
ARTICLE HERE.
"NEW YORK (MarketWatch) -- Retail investors sharply increased their demand for gold bars and coins in the past few months as they struggled to find a safe place for their money amid the financial crisis, research shows.
But institutional investors have kept the upper hand, according to Wednesday's report from the World Gold Council, a gold mining industry association. Heavy selling by institutions has more than offset retail buying and pushed gold prices to their lowest level in more than a year.
President of the Midas Funds, Tom Winmill, explains to Dow Jones' Simon Constable why retail investment demand for gold bullion more than doubled during the third quarter. (Nov. 19) Moves by retail investors, including demand for bars and coins, resulted in a net inflow of 232 tons (7.46 million ounces) in the third quarter, compared to 105 tons in the same time frame a year ago.
The figures, compiled independently for the council by GFMS Ltd, a precious metals consultancy, show strong bar and coin buying in Swiss, German and U.S. markets.
Meanwhile, gold holdings in exchange-traded funds rose 150 tons, compared with an increase of 4 tons in the second quarter and 139.5 tons in the third quarter a year ago. The peak in ETF inflows occurred in late September after the collapse of Lehman Brothers.
Much of that money added to the gold holdings in the SPDR Gold Trust.......SNIP....."
Is “Gold” lost in the smelting process? So you are saying a nugget with potential impurities is worth more than smelting it to purify it? Interesting.
No, GOLD isn’t lost during the smelting process (well, barely perceptable amounts can be).
But I THINK what Caribou was referring to is that some years ago, all but the very small nuggets could be sold for significantly above their metals value to mineral collectors... and/or jewelry makers who used the raw nuggets in making jewelry, not melted down and made into structural components, but more like gemstones are used.
It is a ‘trendy’ sort of thing that recurs every 20 years or so.
That sort of stuff is out of style pretty much everywhere, (except perhaps in Alaskan tourist traps) right now. But nice, big, well formed nuggets or gold crystals will always have a value well above the metals prices.
It is fairly likely that Caribou and a few of his friends make good money selling their nuggets to the guys that make the jewelery for the Alaska tourist trade,and a few non-trendy people in the rest of the world. But they will undoubtedly be selling all but the VERY best of the products of their pans, sluices and dredges to be melted down by some refiner, IF the economy goes to hell and the feces hits the air circulating device.
I see that LegendHasIt answered your question, neb52. Visitors to Alaska still like to purchase gold nuggets as do mineral collectors worldwide. And LegendHasIt is quite right in saying that jewelry makers also need the nuggets.
A one ounce natural gold nugget is rarer than a 5 carat diamond.
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