While many players in the stock market decry gold because it brings nothing in, “it doesn’t work”, the yellow metal will soon become the currency of the Swiss stock exchange! A good way to make equity investments more attractive!

The Six Securities Services Company, specialized in the settlement and the delivery of equities, is totally innovating by offering payment of stock trading in gold: a world premiere.

Customers will soon be able to buy shares in Zurich and set in units of gold, the XAU (a unit of XAU equals one ounce of gold in US dollars). In order to pay their trading in XAU, investors must have an account in XAU with the SSS Company and that it is of course supplied.

This news provides opportunities as the introduction within weeks of quotation and trading of structured products negotiated in XAU.

Gold is back on the market as the currency exchange
We can consider several reasons for this initiative: in the current floating exchange rate system, the dollar is losing more value, from the urge to print, and the euro is endangered by the threat of Greek bankruptcy, the recapitalization of the banks and the likely printing of more paper money. As for the other hard currencies, like the Swiss Franc, they prevent their issuing country from exporting because they are too strong. So the central bankers do everything to prevent their currencies becoming too valuable and consequently a haven for Forex investors.

On the other hand investors bought a lot of gold in recent years. The gold fund is therefore to carry out the transactions XAU. But the other reason is that the market and the global monetary system being more uncertain than ever, they wisely invested in a wealth that would never lose its value : gold. It has become the new currency of trust. “We already have three foreign exchange settlements, gold is the new currency”, said the spokesman of Six Securities.

Evidence if need be is by becoming the currency of financial transactions gold does not only benefit from being a trend or a passage linked to the crisis. It should be seen as differently as the crisis and the lack of confidence in markets and economists is much deeper than it seems. Previously considered as “the currency of last resort”, gold became the official currency exchange. A sign that should worry everyone… except those with gold!

… It acts out its role as a hedge perfectly. It is exactly what the example of this investor illustrates, someone who, fortunately for him, had not put all his eggs in the same basket.

Didier L. bought gold coins, quite simply when the opportunity presented itself, at the beginning of 2011. The ongoing talk of the crisis, the instability of stock markets and gold as a safe haven helped him to decide to take the initiative by investing part of his assets in physical gold, in the form of gold coins. “I just simply asked one question about gold on the internet which led me to the blog articles on Goldcoin.org and then subsequently to the websites AuCOFFRE.com and LinGOLD.com . One thing lead to another and I found myself on a platform for selling and buying gold coins with which I was able to invest my available funds”.

The profile of the investor fell more within a long term investment.”Basically, I thought about hoarding money by buying full and half-size Napoleon gold coins, with the intention of reselling my gold coins at a good profit, before selling at a fixed date, so as to not pay capital gains tax” (which is 31% in France – editor’s note)

Weary, stock market shares in which he had invested part of his capital have seen a high depreciation this summer. The shares in his portfolio have all dropped. Fortunately, by selling his gold coins, our saver was able to quickly withdraw the cash he needed to compensate for this depreciation.

His gold coins were sold like hot cakes

Gold thus fulfilled its role as hedge and Didier L. was even able obtain a substantial profit by selling his gold coins. In the end, even if he did not lose money, his one small regret is that he knows that he could have made more if he had not been forced to sell his coins earlier than intended.

He was able to sell his gold coins at the quotation price which meant they went very quickly and the money immediately found itself in his current account. “I was surprised by the speed and the ease of execution of the process. It would never have been the case with a traditional bank, this speed favours trade and cash flow, it is therefore interesting. And it would have been just as quick with much bigger amounts.”

It is the right time to buy!

The worst, he says, is that the balance of the CAC 40 companies (in which he had some shares) is currently excellent but markets that are nervous, over-cautious, fearing the sovereign crisis in the euro zone tend to undermine companies that are doing well and which are more than viable by creating harmful doubt in their price. “But the shares that are currently at their lowest can only go up”.

In spite of the heavy loss that he has suffered to his share portfolio, our investor advises those who have the cash to buy shares in the CAC 40 and in companies whose economic growth prospects are certain, such as ErDF (a utility company) and those in the sector of sustainable development. Cautious but strengthened by experience and conscious of the progression which the price of gold will continue to achieve, he tells us in confidence “now or never is the time to buy gold to secure one’s savings!”. “Saving with gold can be as much about liquidity if you need to sell and cover hedges elsewhere as well as buying at the right time to protect your wealth”.

Where should one go to buy one’s gold coins with confidence?

“The purchasing of gold coins is not a trivial matter, but contact with the consultants of AuCOFFRE.com or LinGOLD.com , (the web based established platforms where I bought my gold coins), are excellent. I never have to wait for advice and the people I deal with are obliging, available, friendly and reassuring”.

Moreover the coins are certified, sorted, sold with a bar code and each specimen is unique. It applies to semi-collectible coins (like the 5F Napoleon) and “investment quality” coins.

“Not only is the commission on purchases or sales charged by AuCOFFRE.com or LinGOLD.com tiny (1%), but furthermore  the coins have already been appraised and verified which represents time and money saved. This gives one confidence and that  is something priceless”.

LinGold.com and AuCOFFRE.com will unveil their innovative new gold coin, the VERA VAOR, during a private function for their Members on December 3rd 2011. The general release is scheduled for December 5th when everyone will have a chance to see the first ever bullion 1 ounce “round bar” made from pure gold of “clean extraction”.
Minted in Switzerland, the Vera Valor has characteristics comparable to that of a Chinese 1 ounce Panda (purity 999.9, 32mm diameter, 31.10 grams and 2.7mm thickness) but it has its own unique and innovative features.
Firstly it is a true universal coin and has no control or allegiance to a country, religion, culture and especially not to any financial institution.
This is reinforced by the choice of 5 languages for the word ounce, notably in Chinese and Arabic.
Also it will use the best of safeguards used with bullion bars and be one of the few (if there are any others?) to propose an individual unique reference number along with the hallmark of the world renowned assayer and mint Valcambi, thus guaranteeing the integrity of this unique product.
The “icing on the cake” for the lucky Members who are able to order these coins is that they will be able to personalise/customise their coins by adding three letters (initials etc.) before the serial number (eg. CUP3418).

The first series will be the 2012 edition of 1000 pieces which will be numbered from 000 to 999.
For the moment that’s as much as we know but the guys at LinGold and AuCOFFRE tell us that since its launch 2 days ago they’ve already had preorders in excess of 350 pieces. All this from an image of the Obverse only – the Reverse is a closely guarded commercial secret which will be revealed in early December (we have it on good authority that it is a world’s first and unimaginably innovative).
Sounds like a great welcome awaited this product which suggests it has a bright future ahead.

The idea behind this coin was to promote a universal coin, and to provide an alternative “clean extraction” 1 ounce gold product to the Krugerrand, Nugget, Eagle, Panda, Philmarmonica etc.
It’s price will always be close to these types of products and will reflect it’s pure gold content , universal nature and totally new and unique design.

The Vera Valor is exclusively available as a pre-order via LinGOLD.com and AuCOFFRE.com – the coins will be in Members accounts during the period 5th – 9th Dec 2011.
If you wish to know more please click the link to contact LinGOLD.com directly.

We are late July and it is time to look at the gold accounts for the first half of 2011! Hinde Capital Fund Management conducted a study in June 2011 entitled “A Golden Renaissance, Precious Metal Dynamics ” which confirms the upward trends in physical gold (but not in “paper gold”).
Another analysis conducted by Goldsphere Edmond from the Rothschild Fund also confirmed this rise in demand in countries with a strong geopolitical risk despite stagnant mining production.
We were expecting a correction in the Gold Trend this summer and yet just the opposite has happened.
The Eurozone and American debt crises have helped this push upwards which has not been this significant since the beginning of the century.
Gold has risen an average of 19% per year since 2001. It is now facing an unprecedented demand.
Since the United States imposed the dollar as the world’s reserve currency and then subsequently flooded the market with it to increase consumption, the dollar has been heavily devalued. Their ability to stifle the price of gold has waned and globally investors have sought to ditch large reserves of weakening dollars for something safer. These investors initially thought the Euro may be the path to take but they got it wrong again and are now flooding into the only sure refuge which is physical gold. It is incredible how so many of these high flying know-it alls seemed oblivious to the obvious risks in the Dollar and then the Euro. Do they really research their options or just deal over expensive meals and golf holidays. Could they not see the blatant crisi of Sovereign debt affecting the major economies of the world? One has to ask what they have been doing for the last ten years and how apparently well-informed intellects make such poor judgments? (Must be the constant intoxication of self-appreciation, greed, drugs and alcohol)

A steadily increasing demand since 2003

Particular strength can be found in emerging nations where the demand for gold is rising to the detriment of the Green-back: 12% for India and 21% for China. Also, Mexico has filled its coffers of 93 tons of gold in the 1st quarter of 2011. Asia accounts for 62% of the demand, some of it cultural such as in India, but also other countries now active in the market are seeking to catch up for lost time (private investment now allowed in China) but also because “Governments wish to increasingly diversify their foreign exchange reserves and to disinvest from the US dollar or other currencies in trouble” (Option Finance Agency, France).

Other sectors such as jewellery are also in high demand (+ 55%) despite the rise in the price of gold (+ 3.1%). For this first half of 2011, the demand increased overall by 25%.
The paradox is that the demand for investment is still low, which proves that the course gold has nothing to do with any speculative flows. Indeed, it is also estimated that there is a mass of net flows out of “paper gold” (such as ETFs) equivalent to 55 tonnes. Overall, investments in gold are less and less by speculators, which is positive for the gold price trend. The attraction of a safe haven and sure value during these difficult and uncertain times is populating the gold investment market with serious investors, both private and institutional. This is hardly surprising when one calculates the increasing risks attached to most other forms of investments (which are largely based on owning bits of paper and have proved catastrophic to large funds in recent years).

Physical gold, a healthy investment

This study also shows that despite a growing demand, mining production did not increase accordingly and in fact was virtually stagnant. Recent fears have also surfaced that South African mines will be closed by strike action.

Another surprising finding is that gold sold by individuals to be recycled is steadily declining. This shows that the masses wish to hold on to something of value and also that they are fed up with being ripped off by those crooks who run incessant TV ads.
Even in Greece and despite the crisis, gold plays its role as a life insurance and safe haven since it is often kept in the home. Despite the attractive gold prices Greeks will not sell that they already have and they are still likely to buy more as a protection for their future survival.
Finally, another unexpected discovery, physical gold investment is disconnected from gold shares (the gold shares represent only 1% of world market capitalization). This disconnection is partly explained by the increase in the costs of production for mining companies and the difficulties encountered by countries which are politically unstable (Burkina Faso, Côte d’Ivoire).

“Khrysos (Gold) is the child of Zeus, neither moth nor rust devoureth it; but man is devoured by this supreme possession” (Pindar, c. 522-422 BC).

Gold companies should eventually be seen as worthwhile value but for the moment it is physical gold that is benefiting from investment because it is a real, tangible asset that you own and not just a promise.

On Goldcoin.org we have always preferred physical gold to “paper gold” for many reasons, but if one were to cite a single reason it is that the providers/suppliers of  ETFs (Exchange Traded Fund) can fail themselves as a Company which means you lose everything as you do not own a specific piece or pieces of gold, they do. On the other hand, if all ETF holders asked to recover in physical form their investment in gold, it would be impossible because they have sold more ETFs than they have Gold– sound familiar? It is the equivalent of Fractional Reserve Banking but applied to gold because these providers work and think like banks – and we know where that type of mentality led us to!!
Unbelievable Shallow Arrogance
Finally, as we approach the eve of the US debt deadline it is worth paying note to the despicable behaviour of so called elected democratic representatives who would be chastised in primary school for the same childish squabbling. Worse still is listening to them speak as they grandstand before the world’s media playing out their silly games. They sound like caricatures from the Simpsons with their phony accents and voices and yet we are to believe these are the best the “greatest nation in the free world “has to offer – I pity regular Americans who are governed by such an inconsiderate bunch of self-interested marionettes. Here at Goldcoin.org we have previously discussed the true nature of these politocrats in “Conspiracy, Collusion and Con-men – Why don’t they want you to buy Gold?”

As they push ever closer to the deadline it seems that they actually want the US to default and let’s face it so should we all – it’s about time the Fed and the Financial giants got their come-uppance by losing everything so we could start again and hopefully with something better- honest would be a start. Their brinkmanship may just backfire as the markets decide to take them down anyway even if they agree!
We have previously referred to this in “Financial Meltdown and Black Swans – Myth or Reality?” .
Should the Dollar collapse, which is an increasing possibility even when they introduce QE3, Americans and the rest of us should prepare for hard times not yet witnessed by most of the generations alive.

To give you an insight we suggest  reading “The chaos of a currency collapse” and multiply the effects by millions!

The stage is set for the Chinese Yuan to take the place as the World’s Reserve currency and the American politicians are doing their best to make sure it happens!!

The strengthening demand for physical gold investment is no accident as more and more regular folk know they need to protect themselves before the chaos and crisis ahead.
Don’t miss the opportunity, buy some gold now as insurance against losing everything when the Wall St bell falls silent!

The worsening crisis in Greece has prompted savers to empty their bank accounts to exchange their Euros for Gold coins.
Concern is growing over the stability of the Greek banking system and of course the astronomic sovereign debt which is crushing Greece.
The Prime Minister George Papandreou may well have persuaded the parliamentarians to back further austerity measures and have won the vote from them but that will not change the resolve of the Greek people.
Greece would need 12% growth annually for at least 30 years to come anywhere near having the means to repay its debts.
How likely is that?
The Greek economy does not have the means to recover and the fact that they have secured the next gigantic loan from the EU and IMF changes little in real terms. This money will only payback the Banks’ debts and therefore not stay in Greece. Surely the only way to help the Greek economy is to inject some funding into it. The only winner in this situation is the Banks who’ll feed their greed for profits and the loan sharks of the IMF and EU who obviously take their cut of interest.
The losers are the Greek people who will still have an impossible sovereign debt blighting their future whilst falling below the poverty line from increased austerity.
On top of this the Government has agreed to prostitute the future of Greece to the lowest bidders who have the cash to buy whatever “good” state assets they have.

A decision that Greece will regret

Without a doubt this line of action will never save the Greek economy or start to rebuild some confidence for a decent future. Greece will stay in Debt for generations. The Greek people will never accept this and their strong protests are understandable. Headlines talk of a possible Greek default – Why? Greece has been bankrupt for over a year, since it first asked for a “bailout”.

The only route to recovery is to restructure the debts or simply declare the country bankrupt. This would be the best solution for the Greeks but of course they’re in a weak position and all recent decisions, including the political waffle and rhetoric, have been taken to secure the European banks that are hugely exposed to the Greek debt. Be under no illusion that the only reason for this action is to appease the power brokers that support the European Governments. The politicians including the Greek government don’t care one iota for the regular people of Greece and why would they because they are all sufficiently immune to the deepening crisis because their deep pockets are lined with personal wealth that removes them from harm’s way and any sense of reality or empathy with those suffering the effects.

The people’s retribution

The one way Greek people have of preserving and protecting their personal wealth is to opt out of the normal system and there is evidence that they have started to empty their bank accounts (maybe à la Cantona – see Eric Cantona’s French Revolution).
Firstly they are taking retribution on the Banks by weakening them and also showing their distrust for reckless, uncaring institutions.
Secondly they are storing their wealth in something tangible and much more reliable than invented currency which could devalue or collapse anytime – they are buying gold coins as they did during the Second World War because they know that this will maintain real value and purchasing power through the difficulties ahead.
Here is some evidence provided recently in the Financial Times by Kerin Hope

ATHENS — Greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of a sovereign default and a run on the banks.

Pledges by socialist Prime Minister George Papandreou that his government would “save the country” have been widely discounted by the public. However, parliament gave him a vote of confidence late on Tuesday night. The socialists have a six-seat majority in the 300-member house.

Sales of gold coins have soared as savers seek a safer and fungible source of value.

“When the global financial crisis started, our sales of coins to investors overtook bullion for the first time,” said Harry Krinakis, at Sepheriades, a Greek precious metals trader. “Now the sales ratio has reached five to one.”

Tomas, a computer technician, has exchanged his euro savings for gold coins: “I keep them at home just like my grandmother did in the Second World War.”
Monthly bank withdrawals were running at E1.5 billion-E2 billion in the first quarter. Last year, depositors withdrew E30 billion, equivalent to 12.3 per cent of total savings, according to the central bank. Greek deposits worth an estimated E8 billion were transferred to banks in Cyprus in 2010. But the flow has dried up this year amid fears that Cypriot banks could suffer contagion.

Andreas, a supermarket manager, transferred the family savings to Munich earlier this year. “The Swiss banks aren’t interested unless you’ve got several hundred thousand euros,” he said.

“We can’t trust the politicians to get us out of this mess [and] have to protect our families,” said Sakis, a garage owner, at an anti-austerity protest in Athens’ Syntagma Square. “A bank collapse has got to be in the cards.” He added he had withdrawn his savings and placed them in a bank safe deposit box “for security. Who cares about interest right now?”

Others put their savings into land when prices fell after Greece’s first European Union-led rescue last year. Angelos, a software specialist, bought a neighbour’s olive grove. “I grabbed the opportunity,” he said.
“A year ago I wouldn’t have considered making such an old-fashioned investment.”

It is no accident that other European countries, particularly Germany and France, have experienced dramatically increased investment in gold coins during the last three months. In France investors own more gold than the Bank of France and transactions in coins have increased by 35% (source AuCoffre.com) since January. These countries have aan historical reference to gold coin investments and their benefits so it is no surprise to witness such an increase during periods of crisis. In fact one can determine the “temperature” of concern from this rising activity and people are seriously concerned about an impending crash on the horizon that will have global significance.

Countries like the UK are rather slow on the uptake and the gold investment market tends to be reserved for the extremely well-off and well-connected. What a shame so many people are misled by false information to detract them from participating or they are just ignorant of the facts.

Anyway their loss is someone else’s gain and come the day they will be left holding bits of paper good for burning while their European neighbours use their gold coins to pay for provisions and ultimately survival!

Remember that the signs of crisis were ignored by myopian political rhetoric pre-2008 leaving millions of ordinary folk open to its consequences. The signs of crisis have been with us ever since and still they pretend all will be well and their policies are “working”.

2008 was just the prelude and the worst is yet to arrive.
Be warned and be prepared or once again you will be hung out to dry!

An investment in gold is a survival kit for your future.

Last month Belarus witnessed the effects of a collapsed currency when the Government cut the rouble’s value against the US dollar by almost half. Previously 3155 roubles would buy a dollar but in the blink of an eye they decided 4930 would be needed. This was not even the reality because perception of the collapsing currency meant the situation was even worse as people scrambled for foreign exchange on the black market where you needed at least 6000 roubles to buy a dollar.

So what sparked this crisis?

President Lukashenko had promised to raise public sector wages by a third during his election campaign, which he duly carried out. This was sustainable only because of the support Belarus received from Moscow in terms of loans. However, as fears grew about the country’s finances, support from Russia waned and even near neighbours from the EU didn’t fancy the risk thus sparking a sharp drop in confidence in the currency.
To exacerbate the problem there was a shortage of foreign exchange currencies, dollars or euros, in the country.

The consequences of a collapse

Wide spread panic broke out as the economy effectively became paralyzed and people suddenly realised their currency was of diminishing worth. Shops were quickly emptied of everything that could be bought. Everyday food was snapped up at “luxury” style prices as people thought of survival but also they also bought electric goods like toasters, microwaves, canned goods and virtually anything that was for sale as they rushed to convert their currency into “any tangible assets” that were not losing value as quickly as their roubles.
The empty shelves throughout the towns seemed eerily reminiscent of the Soviet controlled days.
Shoppers knew that anything they could purchase could be more useful as a form of barter than the diminishing currency in their purses and wallets.

The human cost was quickly evident from the stories of employees sent on unpaid leave as companies also struggled to cope and comprehend the impact. Andrei, a computer company employee explained how he queued for a week in Minsk trying to buy dollars but didn’t even get one. “In just one month, I have been made bankrupt, the entire country is bankrupt” he said, adding that “even during the Soviet collapse we never suffered such a nightmare”.

There are many more stories of hardship, families without food or the means to buy any, shops without stock for them to buy even if they had the means.

Dmitry who is a 48 year old factory worker explained how he closed his bank account to get out 5 Million roubles in cash so he “could buy something before my money turns to dust”.

Tensions are growing as many people blame the President for mismanaging the economy.
Staple food supplies are now hoarded but people feel anxious that unrest is starting that could spill over into conflict at any time.
Revolution is always more likely when the population are starving.

Which country is next?

This may all seem so far away from wherever you are reading this but the causes of currency collapse may be closer to your doorstep than you think.

How many countries are in deep debt and reliant on support loans and bailouts right now?
Greece, Ireland, Portugal, Spain, Italy, Japan, USA, Belarus and virtually all of Eastern Europe and the Euro zone (only they never put it in the headlines!)

What happens when the support cannot be maintained?
Currency Collapse.

It could be the US Dollar, the Euro, the Yen who knows?
But even if it isn’t your currency that collapses what will be the knock on effects in every developed country if one of these currencies collapses?
The same as in Belarus.

Globalisation has been the buzz word for expanding Capitalism but it also means that economies are now inextricably linked and inter-twined to such an extent that when one sneezes they all catch a cold!

Remember the level of Sovereign Debt is spiralling out of control in the US, Greece, Ireland, Portugal and others are close behind such as Spain and the UK. Austerity measures in all countries are hurting normal folk badly – they are losing their jobs, suffering pay freezes, inflation and pension erosion. Social unrest and industrial action looms large across Europe and this will itself impact the recovery and debt repayment. This has already started in Greece, Portugal, Ireland and large scale protests in the UK are gathering momentum with the Autumn likely to be the boiling point of anger.

The discontent and despair of regular folk is understandable as they are bearing the brunt of all the hardship and it just isn’t fair.
Politicians spout their practiced rhetoric about how to fix things but the reality is they just don’t care that much as they are not the ones affected. They have means to isolate them from the hardships and many of them are actually responsible for producing the mess. How can they care about regular people or preach what we need to give up when they don’t – ever met a poor politician? Enough said!

There is now even talk of a “sub-prime” type problem in China because of over-indulgence in property speculation, leaving huge swathes of developments empty or under-occupied and therefore leaking money and ready to default.

We need more than lip service!

Mainstream news outlets are all controlled by self-interest groups (private and Governments) and they never provide the whole story about global economic frailty as there would be worldwide panic if they told the truth. The situation right now is on a knife edge and the next Belarus is not far away. Politicians won’t admit it but then again they won’t suffer like the rest of us as they’re all rich enough and well connected to see out any storm. They care too much for their own popularity to be honest.
Posh boys and rich kids rule the world and their assets are well protected in advance.

Remember what happened when panic struck in Belarus, people bought any tangible asset they could because it would maintain value better than their currency.
This phenomenon is happening daily – your bank account is the best place to keep currency if you want it to devalue!

Currency is not a means of preserving wealth because it has no inherent value especially when confidence is lost – then it is just a piece of paper.

The only real money available is a tangible asset that maintains its value whatever happens to printed bits of paper currency – and that is gold!

A lesson on Money and currency

We need to understand the difference between money and currency as one is real and the other a promise. Money can be defined as a medium of exchange and a store of value and until fairly recent times was in fact coins made out of precious metal with an intrinsic value or for ease of use, notes backed by precious metal.
Money, when considered as the fruit of many years’ industry, as the reward of labor, sweat and toil, as the widow’s dowry and children’s portion, and as the means of procuring the necessaries and alleviating the afflictions of life, and making old age a scene of rest, has something in it sacred that is not to be sported with, or trusted to the airy bubble of paper currency. Thomas Paine (1737 – 1809)
Currency is still a medium of exchange but is not a store of value as it only derives its value by government degree or “fiat”. It’s value is based on the issuing the authority’s guarantee to pay the stated (face) amount on demand, and not on any intrinsic worth or extrinsic backing. All national currencies in circulation, issued and managed by the respective central banks, are fiat currencies.

The problem is that fiat currency runs the risk of central bankers printing too much and causing large inflation or worse. The more that is printed the more the currency is debased just as the Fed is doing now with the dollar. This has been going on for decades with central banks indiscriminately creating money to cover expenditure and ever increasing debt. There are examples throughout history and in the 20th Century most of us are aware that in Germany in 1923 it would take a barrow load of Deutschmarks to buy a loaf of bread but an ounce of gold could buy a reasonable house and one dollar was worth 4 trillion marks.

This irresponsible printing of money has eaten away at the value of the world’s reserve currency the USD dollar and dollar based assets, to such an extent that they have lost 82% of value since 1971, the year the US cut links with the gold standard. The GBP has fared even worse that the USD losing around 85% of value since 1971. There are many illustrations of then and now and how owning gold with intrinsic value would have more purchasing pro rata than currency. E.g the latest model Cadillac Eldorado would have taken 180 ounces of gold at $42.02 to pay the showroom price of $7,546. This same 180 ounces is now worth over $200k and would buy two Cadillac convertibles with enough left over to fuel to first service. In the UK an average family car cost £1000 around 60 oz of gold and now the same would cost £17000 around 23 oz of gold. The 60 ounces would have bought the same family car for you a sports car for your wife and a hatchback for your son or daughter. Gold retains its purchasing power year after year.

Not long ago the gold standard imposed monetary discipline on countries as they had to hold enough gold to cover the money in circulation but this all changed with the Jamaica agreement in 1971 when the decision was taken by President Nixon on the 15th August 1971 to suspend the direct convertibility of dollars into gold, the keystone of the financial system created in July 1944 (the Bretton Woods Agreement). On the 1st October 1971 the general assembly of the IMF asked the board of trustees to study and propose a comprehensive reform. This would be adopted by member States during a meeting held in Kingston (Jamaica) on the 7th and 8th January 1976, and included a set of provisions which put an end to the reign of gold. The US money supply in 1971 was $776 billion and quickly became an upward curve which rose dramatically over the last decade where the US money supply doubled from below $7 trillion to $14.3 trillion indicating that spending is out of control.

The US National debt is now greater than this!

The US though still likes to play the rich kid on the block and bizarrely gives aid to those supporting its debt as a report in the Daily Mail of London illustrates:
The U.S. is providing hundreds of millions of dollars of foreign aid to some of the world’s richest countries – while at the same time borrowing billions back, according to report seen by Congress.

The Congressional Research Service released the report last month which shows that in 2010 the U.S. handed out a total of $1.4bn to 16 foreign countries that held at least $10bn in Treasury securities.

Four countries in the world’s top 10 richest received foreign aid last year with China receiving $27.2m, India $126.6m, Brazil $25m, and Russia $71.5m. Mexico also received $316.7m and Egypt $255.7m.

And yet despite the massive outgoings in foreign aid, the receiving countries hold trillions of dollars in U.S. Treasury bonds.

China is the largest holder with $1.1trillion as of March, according to the Treasury Department.

Brazil held $193.5bn, Russia $127.8bn, India $39.8bn, Mexico $28.1bn and Egypt had $15.3bn.
Maybe it’s just additional interest on the debt to keep them sweet!

Greece figures predominantly in the spotlight and unrest is growing – will the Government have to mortgage the Acropolis and Parthenon or even sell them off to pay their debts?
Clearly they can never work their way out of this debt because they would have to increase GDP by 12% a year for 30 years in order to grow their way out of debt.
The Sovereign Debt crisis is well and truly out of control and the only solution will be to default on the debts and devalue currencies.

As discussed in the example of Belarus, chaos ensues when currencies collapse and regular folk suffer badly as they don’t see it coming or refuse to believe it could happen to them.

Be warned: A currency collapse is coming near you.
Be prepared: don’t put faith in bits of paper which have no inherent value.
Protect yourself: Invest in tangible assets that hold real value at all times, especially during a crisis.
Remember: Real money has inherent value, it is worth something because of what it is not because of what is written on it.
Now you know why people buy gold to protect themselves from crisis – it always holds value and is the only real money.

In summary:
• Currency is not money and its value can be changed by monetary policy makers
• Currency can be created and printed at will with no substance to support it
• Currency depreciation in value is accelerating with subsequent loss of purchasing power
• National debt is increasing to disastrous levels with threat of sovereign debt default
• Confidence in the USD is waning and its use as a reserve currency is under threat
• Countries and investors are shedding their dollar assets
• Central Banks are diversifying into gold and out of dollar assets
• Smart investors are diversifying their portfolios with a proportion of gold
• The value of gold has been consistent in retaining its purchasing power
• Gold is insurance for your wealth
• Gold is the only real money

I rest my case!

When it comes to gold for investment too many buyers pay little attention to the quality of coins at the time of purchase and all too often they realise the importance of this to their investment when it is too late, at the time of resale. In effect, at the moment you wish to sell your gold investment coins they briefly revert back to a numismatic object that will be evaluated and priced as such.

In other words “it’s a gold coin, a twenty franc Napoleon which I should be able to sell with a 20% premium during a period of crisis” quickly loses meaning if you haven’t taken the time before you bought it to verify the quality.

You see when trying to sell on gold coins to professional dealers they will be intractable about the coin quality. In fact they will know so much more than you that every little imperfection they can describe downgrades the value of your coin to them. They will use this to negotiate the price down by reducing or eliminating the premium you were expecting. Additionally they may only offer to buy your coin by its weight and relative gold content weight, minus their commission and a little extra because you have devalued the coin by “handling” it. Finally you will arrive at a price considerably less than you were expecting and certainly less than you’d worked out using the spot gold price or professional quotes for coins.

You may act surprised but then why would you be knowing that any investment in physical assets of such value requires or even demands that you do your homework on what you are buying and how it is assessed or valued. You would certainly need to consider the eventuality of resale and how that should be best done for the best price and at the profit for you – wouldn’t you?

Well gold is no different and you should familiarise yourself with the important factors to consider when procuring gold coins.

Obviously there are some coins that are so rare they demand an ever increasing price but this is solely based on its numismatic (collectible) value. That is to say an extremely rare coin is not as sensitive to a period of crisis or the ups and downs of the gold price but moreso its value is determined and measured by the availability (or lack of it) of other coins like it. An example we can use is the French 100 Franc Bazor which is highly sought after but very rare. Its price is very high (given its gold content alone) because there are very few left in the world. The price will rise in time for its “collectible” value but it is unlikely to double within 3 weeks which a 20 Franc Napoleon of good quality can because of its premium. Rare coins are also being looked at slightly differently in terms of taxation and whereas investment gold coins are exempt from VAT (Value Added Tax) throughout Europe, these rare coins are no longer automatically exempt.

What is the minimum quality of condition for coins still considered to have a premium?

Generally speaking a quality of “very fine (VF)” upwards, “extremely fine (EF)” and “mint state (MS)”  are considered as coin conditions that still enjoy the benefit of a premium. These are the types of coins you should consider for gold investment. Apart from some rarities, the qualities of condition “fine (F) and “very good (VG)” will be bought and sold for their gold content weight and often finish up in the smelting pot for recycling.

Coins declared as “uncirculated (UNC)” are basically new coins that have never been in circulation or were never meant to be circulated. These will have an elevated basic premium due to them being issued direct from the Mint or in some cases may be very rare. In both cases the elevated premium makes them less attractive as an investment because their premium differential is weak. The premium differential is the % difference between the premium associated with the coin during normal economic conditions and the premium it may rise to during a period of crisis. A high starting premium as with UNC coins means there is less room for growth. Many of these UNC coins will be of interest to pure numismatists ie. Collectible.

Things to avoid

Even once you have seen the table below you may not feel sure of what to look out for or feel capable to accurately judge a coins condition. It is exactly for this reason that we advise you to avoid buying coins from small ads, individuals or maybe through bid sites like eBay. It is hard enough to know which coins are in which condition but the photos you see are not necessarily going to help and who knows what a seller really knows about their product if you know even less! The trick is to buy from professional sources where you will find fully certificated, verified and referenced coins that are what they say they are. Coins which are professionally inspected and sealed in their packaging maintain their quality so they will still be as valuable when you come to selling them. If you were to keep your coins in a box , unpackaged, taking them out occasionally to admire them you are effectively damaging your own investment by downgrading their quality through handling. Of course that is the difference with gold coin investment and gold coin collecting. An investment produces maximum yield when its integrity is protected and the physical asset is in no way altered to undermine its value.

Please also note that it is the most worn side that determines the condition quality so be sure to look at both sides of any coin.

Be aware of over-shiny coins: these will have been cleaned using polish, chemicals or abrasion to buff up the look and hide imperfections. It is recommended to use a magnifying instrument to inspect any coin as the naked eye cannot always detect the craftsmanship of the precision engraving. These are a great indicator of condition as wear & tear erodes precious detail of the design. Naturally one should always check for the obvious dents and scratches caused by rough handling or shocks. Do not be swayed – these will affect the value of your coin because they affect its condition quality.

It’s also worth noting that some damage inflicted like scratches and dents may have removed gold from your coin. A simple test for this is to weigh your coin accurately on an electronic balance. A French 20 Franc Napoleon should weigh between 6.44 and 6.46g to be considered as valuable. Anything from 6.43g down should be left alone.

You will find some useful information in our glossary as well as some photos that may help you choose wisely.

Similarly we would suggest you browse through the Gold Coin buying guide from our friends at LinGold.com who have kindly let us provide this for you.

Below is a summary of the basic qualities associated with the gradings of  coin condition and some useful translations for those looking internationally.

Gold Coin Gradings

Brilliant Uncirculated (UNC) or “Fleur de Coin”(FDC) – A perfect coin ( no traces of use, handling, shocks, scratches) which has 100% of its design remaining and still has a full mint sheen. These coins as the name indicates have never been in circulation and are exactly as the moment they were struck. They are indeed rare because even uncirculated coins may have been transported together from the mint to a vault and therefore have tiny abrasions or scratches from the journey. A coin in this condition must be flawless. Their rarity means they are of more interest to Numismatists and their elevated basic premium means they are not considered as a logical investment.

In other countries this is referred to as

• USA: MS65
• France: Fleur de Coin (FDC)
• Germany : Stempelglanz (STG)
• Italy : Fior di Conio (FDC)
• Spain: Flor de Cuño (FDC)

Uncirculated (UNC) or Mint state (MS) – as implied these coins have never been in circulation and therefore have no visible traces of use, design erosion or scratching. However , they do not have the full mint sheen all over the coin which is usually due to transportation.  Some countries still consider these coins as FDC.

In other countries this is referred to as

• USA: MS63
• France: Splendide (SPL)
• Germany: Fast Stempelglanz
• Italy -
• Spain – SC

Extremely Fine (EF) – This is a condition of a coin that is almost perfect but which has had a little circulation and therefore will possess some small faults although often difficult to detect with the naked eye. Using a magnifying glass one can see some light scratches and some erosion of certain raised details such as hair, beards, moustaches, feathers that form the design. The mint sheen is missing and there may also be evidence of some little dents from transportation of coins.

In other countries this is referred to as

• USA: AU 65
• France: SUPERBE (SUP)
• Germany: Vorzüglich (VZ)
• Italy: Splendido (SPL)
• Spain: Extraordinariamente bien conservada (EBC)

Very Fine (VF) – A coin in this condition shows obvious signs that it has been in circulation but it still has a good appearance. The coin rim can be slightly worn but still apparent and the relief features of the design can appear “tired” but not worn away. The signs of use are visible but the coin srtill has an agreeable appearance. This type of condition is considered as an average “plus” state of conservation which still allows the coin to attract a premium to its value.

In other countries this is referred to as

• USA: XF 40
• France: Très Très Beau (TTB)
• Germany : Sehr Schön (SS)
• Italy Bellissimo (BB)
• Spain : Muy bien conservada (MBC)

Fine (F) - This condition indicates a coin that has been well circulated. Some of the engraving detail has started to flatten (ribbons, hair, inscriptions etc). The metal surface is dull or in some cases much too shiny because of polishing. Deep scratches are clearly visible as well as dents from impacts with some deformation of the engraving being apparent. This condition of coin can still be of interest to a numismatist but it no longer supports a premium and is therefore not recommended for investment which is better served by coins in the conditions above.

In other countries this is referred to as

• USA: F 15
• France: Très Beau (TB)
• Germany : Schön (S)
• Italy Molto bello (MB)
• Spain : Bien conservada+ (BC+)

Very Good (VG) – Even though these coins are considered “very good” they are nevertheless traded purely by weight. They are very worn coins which have a mediocre appearance and have been circulated a lot. We can still just about distinguish their designation but some details are completely worn away or missing. The rim detail, engraved relief features are all but indistinguishable and any images are no longer sharp. These coins inevitably find their way to the foundry for melting unless they happen to have numismatic significance. However, in the light of being investment coins they are to be avoided. One doesn’t know how much gold has been eroded, the weights can vary greatly and there is absolutely no premium attached to these coins.

In other countries this is referred to as

• USA: G6
• France: Beau (B)
• Germany : Sehr Gut Erhalten (SGE)
• Italy Bello (B)
• Spain : Bien conservada (BC)

This covers the principal gradings of coin conditions applicable to gold although one may also hear certain other terms used for « intermediate » grades such as ;

About Uncirculated (XF/UNC) which falls between Uncirculated and Extra Fine. It does not have an equivalence in every country and is therefore less used.

One may find various numbers attached to certain conditions particularly in France which allows grading within any given condition eg; SUP 55-62 which grades the “Superbe” from 55 to 66. However this should not be a concern for coin investors as the grading is a purely numismatic tool for specialists. The gold investment quality of all “Superbe” is the same as is their premium.

Finally there are even lower conditions such as “Good” and “Poor” but these are frankly of little interest to us because their condition is well below those required for investment and they are only good for the smelting pot!

Remember:

Gold Coins are an investment that you own!

They are not linked to Sovereign Debt like other investments.

You can buy them when you like.

You can sell them when you like.

Gold Coins have a better potential than Bullion because they have a dual leverage – Gold price and Premium.

Gold coins are transportable, great for liquidity and easy to resell.

Related articles include:

Half-Napoleon 10 Francs Gold Coins

The Premium on Gold Coins

Should I Buy 32 Krugerrands or a 1 Kg Gold Bar?

Krugerrand – The original Bullion Coin

Investment Gold Coins

Latest Gold Coin Prices

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