In the poorest parts of the world, gold is extracted in lawless and unclean ways: an earlier article on this site gives an example in the Peruvian Amazon Forest (The other side of Gold mines in Peru).

Open mine in Madre de Dios

The mines lack proper extraction tools and machinery; far from public gaze and legal regulation, they are hazardous, not only at their hidden locations, but to towns and villages exposed to toxic waste in the water supply. To protect their interests, the miners engage in arms smuggling. Those who work in these conditions are exposing themselves to extreme danger, with no certainty that they will reap the long-term benefits for which they hope.

So why do they do it?

The clue is the word “lawless”. Hernando de Soto’s remarkable book “The Mystery of Capital”, first published in 2000, was the result of him and his researchers from the Institute for Liberty and Democracy in Peru (www.ild.org.pe) asking: why has capitalism worked in the west, but not in the developing and ex-communist world?
The usual answer is that capitalism shouldn’t work in the west and shouldn’t be fostered in the developing world, but after the failure in the twentieth century of all variants of socialism and state direction of economic planning, capitalism is “the only game in town”.

Yet looking at the shocking conditions that prevail in these illegal mines the typical response is an anti-western moralism that regards “capitalism” and “rapacious greed” as synonymous: all one has to do to “understand” poverty is rail against the rich.

This attitude of campaigners of the traditional sort, fair-traders, charities and NGOs, churches and environmentalists is unhelpful: it is misleading to demonise the alleged capitalist forces behind the miners, misleading because the miners are themselves capitalists of a sort, and therefore should presumably also be demonised, unless one sees them as mere helpless puppets – but that is simply another way to dehumanize them.

The problem that de Soto identifies throughout the developing economies is that the overwhelming majority of the world’s poor work completely outside any legal system: the businesses and buildings they create therefore operate without title, which means that the assets they “own” are dead capital. In such an environment, unprotected by clear rules, poor people’s only guarantee of prosperity rests with themselves. Wherever there is potential value and a market for it, with gold just as with any other commodity, they will exploit and protect it without any legal roots to sustain them.
The problems of these unclean gold mines, the use of dangerous chemicals in unsupervised environments, the use of child labour in dangerous places, water tables filled with toxic waste, are the result of there being no clear title to the mines or their products and no legally defined responsibilities. Even the violence is explicable: in the absence of legal title, there is no other way to defend what might anyway turn out to be a temporary interest, rather than a clear and justiciable and therefore legally marketable property right.

In the light of these observations, it should be obvious that what needs to be done is to recognize the “illegal” gold miners as the entrepreneurs they are and co-opt them, bringing them into the legal fold.

In contrast, there is hope regarding the improvement of mining conditions and extraction methods.

The first commercial product exclusively made from “Clean Extraction” gold has been launched.  The Vera Valor is a 1 oz “Bullion” bar-coin, 999.9, Good Delivery and it is made from pure gold from “Clean Extraction”.

The “Clean Extraction” initiative encourages mining companies to behave properly towards their workers, the environment and the lasting aftermath of their activities.

Our friends at Cleanextraction.org have produced the “Clean Extraction” charter which you can consult from their website.

It just shows that “there’s nothing wrong with doing things right” and proves that it is possible for some Gold to have a conscience.

by Mark Rogers

We have already spoken about the 50 pesos coin on Goldcoin.org. This coin remains a very good choice for buyers looking to invest over the long term. But the 50 pesos coin is not the only Mexican gold coin to have in your money bag! In the following article you will discover the smaller family members of the 50 pesos coin and their characteristics.

20 PESOS OBVERSE

Description of the gold pesos coins.

The 2, 2.5, 5 and 10 pesos coins all bear the same inscriptions and engravings:
-  The obverse of the coin has the inscription “ESTADOS UNIDOS MEXICANOS” (United States of Mexico) which straddles an eagle that is standing and grasping a serpent in its mouth. The eagle is standing on a crown made from an oak branch and an olive branch. The eagle is the National symbol of Mexico: for Mexicans it is the representation of the duality between the earth and the sky. It also symbolises the conflict that delivers Good over Evil. There is a legend which surrounds this eagle: the old city of Tenochtitlan, today Mexico City, was built in the place where the Aztecs once saw an eagle flying off carrying a serpent in its beak.

20 PESOS REVERSE

- the reverse of the coin shows the value of the coin and the year in which it was minted. The coin is the effigy of Michel Hidalgo, a revolutionary and abolitionist. Michel Hidalgo is an emblematic figure of Mexico: a priest, a rebel and a revolutionary whose insurrection triggered the country’s process of independence. He first proclaimed independence on 16 September 1810 and then abolished slavery on 6 December. On 30 July 1811 the Inquisition had him shot for his crimes.

The 20 pesos coin

The obverse of the coin has a motif which represents the eagle striking down the serpent. The reverse of the coin shows a representation of the Aztec calendar from the Tiahuanaco Sun Gate. The Sun Gate is one of the vestiges of the Aztec civilization and is considered by several researchers as a astronomic sign.

Date on the gold pesos coins

• Note on the 10 pesos coin: From 1961 to 1972, 954,983 coins were re-minted with essentially the year 1959. In 1996 , matt remints were created.

What is the interest in Mexican gold pesos coins?

Above all the interest in these coins is numismatic. But there is only a small step from numismatic to profitable investment! Why? Because these coins are ever more rare and their value can never fall below that of gold itself under any circumstances. To be clear: buying Mexican pesos in an opportunity to combine asset protection with pleasure.

In last nighs website update resistance in gold was listed at 1444-1452 and the high so far is 1442.60—-support was listed at 1425-1431 and the low so far is 1436.

London Gold Fix $1441.25 +$8.25 LME

After a fresh contract high yesterday, gold reached the 1442 area and sits roughly in the upper 1430’s in this mornings early trade. A warning from 10 former White House economic advisors, that Congress needs to address the US debt situation before the Bond market forces the US to ac is providing some support to the gold market.

The turmoil continues in the Middle East, but there wasn’t any major developments overnight for the market to digest. The situation remains precarious. Japan evacuated again as 3 workers were exposed, and the overall situation also remains far from a distinct resolution.

Adding uncertainty to the markets is the political/debt situation in Portugal. The market considers the size of the bailout for Portugal might be as much as $80 billion and that in turn casts some doubt on the capacity of the Euro zone stabilization fund to handle upcoming demands. The Prime Minister of Portugal resigned after that nation’s parliament rejected a series of new austerity measures. The meeting starts at 5 PM their time to see if they are going to ask for a bailout. There is still a debate as to whether the bailouts are stabilizing Ireland or Greece.

Going to today’s session, the options expiration in metals ends on the 28th — and if there is to be a pullback at all in the metals — the most likely time for it to begin would be today.

On the gold chart it comes down to the 1444 area and whether gold can climb above that area. This area has held since the February high and price is now on its third attempt to move above it. This is the area where the shorts have tried to “cap” price. Yesterday’s attempt around this time frame got to 1441 — and there have been two attempts so far today where price got to 1442 just before the New York open and then fell back to just above 1435. A second atttempt on the open was again rejected near the same area and a pullback.

Price has been in a very tight range since London — and gold is now attempting to get above 1440 again. So far it is still meeting with selling above 1440. It seems like desperation on the shorts —– and the bulls keep pushing it back to 1440 on every sell attempt by the bears.

In summmary — THE TREND REMAINS UP — and the bulls seem to have the advantage still. A break above 1444 should lead towards 1450-1460.

by Bill Downey

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In last nights website update resistance was listed at 1399-1409 and the high so far is 1403.60 — initial support was listed at 1376-1388 and the low so far is 1387.

London Gold Fix $1403.50 +$5.00 LME

While gold prices were somewhat weaker in early Asian trade, sentiment toward gold has improved in early US Thursday trade. Support from the aggressive rise in the Yen overnight and a much lower US Dollar across the board has firmed gold support near 1400.

News of a G7 conference call for a discussion in how to calm markets is sparking hope of more liquidity in the marketplace. While energy prices and other commodities are showing initial strength today, the gold market might be hesitating a bit until the G-7 meeting and for a sign that conditions are attempting to return to normal to get out from under the periodic selling pressure that has dominating gold this week.

Therefore, US data might be discounted in the face of the highly uncertain flow of events from Japan and the G-7 meeting. Weakness in the Dollar is providing some support to gold today, as very strong flows toward the Yen have seemingly prompted some move to quality buying interest in gold.

Workers at the Fukushima power plant are still attempting to contain leakage from reactors and are attempting to get power back to generators. Libyan government soldiers are preparing to engage the rebel stronghold of Benghazi.

Lets go to the chart

The the intersection of the dotted trend lines has price in between both lines for the second day running. This is adding to the potential that a short term low might be developing in gold. The Asian market pull back to 1387 supported right at the dotted line. Currently the market is testing the 1403 area — right where the top dotted line is at. A CLOSE above this area would be the first indication that favors price bottoming on the short term —and a bounce attempt into Friday’s close. Gold might remain subdued going into the G-7 meeting –and traders will have to decide on Friday if they want to be holding positions over the weekend.

Since the sell off to 1380 —gold has bounced back to the 1403-1406 area on three separate occaisions — and is testing that area again today. The current range of 1385-1405 is trying to carve out a bottom and a close above 1408 will add to the potential that the short term trend is about to turn up. From a timing perspective — prices are due to turn up near this time frame. Buttonwood has March 16th as a potential turn date and the seasonal calls for a mid month bounce. The short term trends we watch are also due to turn up beween now and next Tuesday. This tends to favor a low and bounce attempt soon. With oil higher on mid east unrest, it is putting a floor on commodities today.

With G-7 scheduled for after today’s market close, gold could remain its trade at the dotted lines for one more day. Any improvement in the Japan situation —ie; if power gets restored at the plants for the generators could also lend support to higher price trade today. In summary — the gold marke seems FIRMER at the moment and tends to favor a higher price going into the latter part of the day. The key is getting price to move above the 1408-1410 area.

Resistance for the remainder of the day is the 1406-1410 area and support a 1393-1398. In summary — prices seem firmer today — but traders are a bit cautious of the scheduled G-7 conference call later today. WATCH the 1406-1410 area —- If price can close above 1408 — it should increase the bounce potential in metals.

by Bill Downey

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In last nights website update — resistance for gold was listed at 1399-1409 and the high so far is 1406. Support was listed at 1375-1385 and the low so far is 1393.

London Gold Fix $1398.50 -$8.50

With events in Japan capturing the news, the gold market will soon be turning to the beginning of the Indian Wedding seasonal and the market focus on big picture geopolitical conditions in the middle east. The Indian seasonal usually spurs gold buying and forms a seasonal low near this timeframe.

So far gold prices this week seem to be tied to the action in global equity markets and the uncertainty in Japan. Gold overnight did gain some minor support from reports of fresh unrest in Bahrain and oil prices have managed to rebound. Gold and other commodity markets are likely to be watching the quickly changing macro economic cross currents. US Housing Starts and Permits data came out with terrible data this morning but the pullback in gold on the news lasted a short amount of time and gold continues to trade around the 1400 area. PPI data was up 1.6% —- as food and energy led the way. That seemed to have put a floor on gold so far this morning.

While equity markets in Asia and Europe are generally higher this morning, the US stock market opened with moderate losses bu is so far stable today. The Dollar is stronger against most of the major currencies during overnight trading but it does not seem to be affecting gold.

Workers are still attempting to bring nuclear reactors at the Fukushima power plant in Japan under control and continued aftershocks in Japan continue into today. Forces allied with Muammar Gaddafi have succeeded in retaking several towns that were under rebel control. A credit rating downgrade of the sovereign debt of Portugal by two levels. UK Unemployment during January was 8.0%, higher than market forecasts.

Gold seems to be taking more notice of the Bahrain situation as the unrest is escalating there and the people have yet to be quelled by the Saudi forces and the “martial law” that has been announced. The 1000 Saudi forces on the ground has escalated the UNREST and anger.

As soon as the Japan thing quells down — gold will return to focus on the middle east and the Indian wedding seasonal — both of which should lend to increased gold demand at a time when the seasonal weakness is nearing an end. The gold seasonal chart usually shows a mid March low —-and short term trends do favor a low to develop by weeks end.
Going to the chart — we’ve expanded the view today. Observe the two dotted trend lines that are meeting up at the 1395-1405 area. This is where most of the price action has taken place and was basically the focus we discussed on last nights website. THE KEY SEEMS TO BE IF GOLD CAN CLOSE BACK ABOVE THE downtrending dotted line near in the 1406-1412 area. A close above that area would neutralize the sell off and would leave yesterdays LOWS as a CLEARING OF THE STOPS below two key short term trendlines. Should the market close above the dotted line area, it will add to a bottoming potential and will have us looking for a potential trade set up.

In summary — gold is testing its key support area —trying to get back and close above the dotted lines. Resistance for the remainder of the day is the 1408-1412 area and support is the 1390-1396 zone. The day is turning out to be a consolidation day. Watch the action at the dotted trend lines. Favor most of the action and a close near that area today.

by Bill Downey

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In last nights website update resistance was listed at 1430-1437 and the high was 1429. Our initial support area was broken — but our 2nd tier support was listed at 1377-1392 and the low so far is 1380.

The gold market collapsed this morning all the way down to the 1380 area moving $50 dollars lower from its high at one point. We discussed on the website last night that only a move above 1435 would be a signal for higher prices. We also speculated on last nights update that a break below the 1415 area would be the first sign that the pullback was not complete and based on the HIGHS of Nov/Dec/Jan at the 1430 area —- that if we got a break down — it would favor a BIG down day.

The London market opened right at that 1415 area and by 4 am est -(one hour into the London session)— that level broke down and the drop made its way down to our second tier listed area circa 1377-1392 — with a 1380 low shortly after the New York open.

Resistance for the remainder of the day is 1403-1409 == and we’d look for gold to run into resistance there on a bounce. Support is the 1377-1385 area. Gold should find closing support there.

Let’s go to the chart. We can see the move back up on Monday was back to the lower red line — and that is where we were looking at 1436 as an important price point. The reversal lower accelerated on the break of the dotted trend line. The red arrow that is on the chart was one of the two on our chart last night on the website update. That area — 1377-1385 is key to watch on any pullbacks. AT THE MOMENT — Gold has bounced back to the 1398 area —-right where the dotted trend line is.

In summary — gold and silver have joined all the other markets in a hard move lower. The decision to exit our short term positions in gold last Thursday at 1417 on the website and to move to the sidelines coming into this week turned out to be a good move. From a short term perspective – It’s best to let things shake out rather than trying to pick a bottom. The 1377-1385 area is an important intra day price point — and the 1398-1403 area (the dotted line) on a closing basis. GOLD SHOULD ENCOUTER RESISTANCE at that dotted line —circa 1398-1409.

The longer term trends are still intact — we’ll have to assess that time frame at the end of the week depending on how things play out. For now —- its best to let things shake out on the short term. Watch 1377-1380 —–and the dotted trend line.

by Bill Downey

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In last nights website update resistance was listed at 1432-1438 and the high was 1431.50 — initial support levels at 1417-1425 were broken — and 2nd tier support was listed at 1403-1409 and the low so far is the 1410.50

Last nights website update discussed a break below the 1420 area would be suggestive that this weeks pullback would still be in play and that next support would be the 1398-1412 area.

Gold and other commodity prices were undermined by softer than expected Chinese economic data, increased jobless claims in USA and renewed concerns of Euro debt because of news of a Spanish debt downgrade. News that PIMCO was turning bearish toward US government securities has also provided the potential for higher interest rates.

News that South African gold output in January rose by more than 15% over last year may have added to today’s downdraft from a short term perspective.

Developments in the Middle East should continue to provide some measure of support for gold prices, especially with the day of protest directly ahead in Saudi Arabia and the situation in Libya in a continued state of flux.

While equity markets in Asia and Europe were lower during overnight trading and the US stock market down hard in early trading, there’s a lot of bearishness this morning.

Looking a today’s chart — we can see that once the lower channel line gave way —- a lot of stops were set off and are getting cleared out. We’ve discussed this potential since Tuesday evening on the website.

Support for the remainder of the day is the 1398-1409 area and resistance is the 1418-1425 zone. PRICE IS AT THE LOWS from the first week of March near 1410 and should bounce around that area plus or minus a few dollars. If that area gives way then a test of the dotted trend line at 1398-1405 will be in play.

In summary — the lower than expected weakness in China and USA woke up complacent equity bulls. With commodities overbought in most area’s — it has brought on a lot of weakness.

On the chart, the lower red channel line was finally broken — and now we have to see whether gold holds a few dollars above or below last weeks lows near 1410. If prices can’t hold there — then a test of 1398-1403 will be the next test area. With the Saudi demonstrations on Friday — there should be some support going into the close near these levels but the sell off is very hard in equities — and may keep pressure on all fronts.

Prices need to get back above the 1420-1425 area in gold to neutralize this pullback.

by Bill Downey

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In last nights website update initial resistance was listed at 1432-1438 and the high so far is 1437. Support was listed at 1417-1425 and the low so far is 1423.

London Gold Fix $1431.50

Prices drifted lower thru the Asian session and the 1423 low came about 2 hours before the London open. London once again took prices higher into the New York open where price peaked at the 1437 area as the COMEX was opening.

he Gold prices strength and firming this morning came from reports of an oil refinery called Ras Lanuf being bombed in Libya reversed a downtrend in both oil and the metals. The refinery has been shut down — and there a black cloud rising. The refinery has been shut down — but there are no reports if it has been damaged. About 1 mil barrels of oil has been reduced from output from a total of about 1.6 mil barrels.

Concerns that higher interest rates in the Euro zone might be too much for weaker EU members, but might require stronger scheduled data readings from the Euro zone or less hawkish ECB dialogue. Yields on Portugal debt moved higher again today at 7.7% after the auction. Resistance for the Euro is 140-141.

News of strong Indian derivative gold demand from the month of January was also supportive for gold, but the main focus of the gold trade will probably continue to be the direction of oil prices.

While equity markets in Asia and Europe were mixed during overnight trading, the US stock market on today’s session opened unchanged but has been drifting lower as players are coming to the realization that the middle east crisis is not going away soon. Today is the 2 year anniversary of the stock market bottom from Mar 9th 2009.

Meanwhile the Dollar is slightly higher against most of the major currencies during overnight trading after holding on to dear life yesterday near the 76 area before price bounced to near the 77 area. Price is currently in the middle of its bounce range. The 76 area is an important point for the dollar.

From a price chart perspective — the key for gold price today is the 1434-1438 area for resistance —-basically near the area of Tuesday’s high. This is the spot that the bears are trying to contain and the area the bulls must over come to keep the the uptrend going. IF we can move above the Tuesday highs —the potential to move towards 1450-1460 will come into play. As long as price is above the lower red line —- the trend is up but remain cautious. Support is the 1417-1422 area and resistance is 1436-1437.

In last nights website update initial resistance was listed at 1432-1438 and the high so far is 1437. Support was listed at 1417-1425 and the low so far is 1423.

London Gold Fix $1431.50

Prices drifted lower thru the Asian session and the 1423 low came about 2 hours before the London open. London once again took prices higher into the New York open where price peaked at the 1437 area as the COMEX was opening.

he Gold prices strength and firming this morning came from reports of an oil refinery called Ras Lanuf being bombed in Libya reversed a downtrend in both oil and the metals. The refinery has been shut down — and there a black cloud rising. The refinery has been shut down — but there are no reports if it has been damaged. About 1 mil barrels of oil has been reduced from output from a total of about 1.6 mil barrels.

Concerns that higher interest rates in the Euro zone might be too much for weaker EU members, but might require stronger scheduled data readings from the Euro zone or less hawkish ECB dialogue. Yields on Portugal debt moved higher again today at 7.7% after the auction. Resistance for the Euro is 140-141.

News of strong Indian derivative gold demand from the month of January was also supportive for gold, but the main focus of the gold trade will probably continue to be the direction of oil prices.

While equity markets in Asia and Europe were mixed during overnight trading, the US stock market on today’s session opened unchanged but has been drifting lower as players are coming to the realization that the middle east crisis is not going away soon. Today is the 2 year anniversary of the stock market bottom from Mar 9th 2009.

Meanwhile the Dollar is slightly higher against most of the major currencies during overnight trading after holding on to dear life yesterday near the 76 area before price bounced to near the 77 area. Price is currently in the middle of its bounce range. The 76 area is an important point for the dollar.

From a price chart perspective — the key for gold price today is the 1434-1438 area for resistance —-basically near the area of Tuesday’s high. This is the spot that the bears are trying to contain and the area the bulls must over come to keep the the uptrend going. IF we can move above the Tuesday highs —the potential to move towards 1450-1460 will come into play. As long as price is above the lower red line —- the trend is up but remain cautious. Support is the 1417-1422 area and resistance is 1436-1437.

by Bill Downey

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In last nights website update resistance was listed at 1438-1444 and the high so far is 1444.50 — support was listed at 1420-1427 and the low so far is 1430.50

London Gold Fix $1437.00

Oil prices are up this morning with conditions in Libya still very tense

With continued unrest in the Middle East and with protest day Saudi Arabia due later this week, the Middle East should remain in headlines this week.

The Commitments of Traders Futures and Options report as of March 1st for Gold showed Non-Commercial traders were net long 230,325 contracts, an increase of 17,075 contracts. The Commercial traders were net short 286,120 contracts, an increase of 19,329 contracts. The Non-reportable traders were net long 55,794 contracts, an increase of 2,253 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 286,119 contracts. This represents an increase of 19,328 contracts in the net long position held by these traders.

The gold market opened strong in Asian trade on Monday and prices maintained a steady bid of 1435 to 1438 throughout the London session and into the 6 am EST period where price then moved up to the 1444 area going into the comex New York Open. Since then price has begun a pullback that has brought gold back to the 1432 area.

First support is the 1426-1430 area and resistance is the 1438-1444 area. Key Resistance is the upper red channel line near the 1455 area. As long as price is above the red channel line near the 1420 area, the short term trend remains up.

Thanks to Bill Downey of Goldtrends.net

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After all they have the exact same weight in Gold.

For a long time the buying and selling of gold has been outside the reach of the average citizen. The predominate banknote and the dominant currencies previously managed to position themselves very well in respect of the precious metal during stable periods. However, it is during difficult times that the true, safe value of gold really stands out. A lot of businesses which were deemed lucrative and reliable have been unmasked since 2008 thereby clearly exposing the reality of the situation. Similarly, quantitative easing and currency wars have highlighted the volatility and vulnerability of currencies during recent years. Countries like China with huge Forex reserves, institutional investors, pension funds and even personal saving accounts alike have lost significant value in the blink of an eye as currencies have weakened.

The reality to which we are referring is the stability and confidence of an investment in gold. Fortunately, nowadays it is easier for you to convert your savings into gold. Think for a moment of the real value of a banknote or currency. They are hopelessly vulnerable given that the price of coloured paper is not worth anything. Let’s not kid ourselves. Your savings are safe if they are converted into gold given that since it was first admired by human beings, it has been desired, sought after and treasured through the centuries.

The first step in buying Gold

If you have already decided to buy gold to transform your savings into something of value, perhaps you don’t know where to start. Since the US, UK and Canada, amongst others, entered this crisis in the spring of 2008, many business involved in the buying and selling of gold have sprung up in towns and cities everywhere. Many of these are actually looking to buy your gold, offering you cash in so called great deals, but most have been exposed as a rip-off because they are part of the recycling business. It is normal for you to be asking yourself whether these businesses are reliable. Do they sell 24 carat gold? Do they give you a good price? What do you do when you want to sell? The common denominator is that such businesses spring up because the demand for gold is so high and so lucrative. There is not an infinite quantity of gold on our planet so recycling surges like this indicate that demand is high, supplies dwindling and of course that the price of gold is rising. The prices paid for recycling your gold are far inferior to the headline spot price quoted because companies have to make their margins.

It is probable that your bank is not able to advise you either because it is not their speciality or they prefer you to invest in their own portfolio of investment products. If you decide to go to a dealer in Hatton Garden, Downtown New York, Sydney or Toronto, it is probable that they sell whole gold bars or smaller fractions as gold ingots. At first sight it seems very safe and easy but be careful what you pay. The price of a 1Kg bar shoul be near to the gold price plus a few percent. However, the smaller ingots do not compare so well. Often these are sold up to 50% higher than the spot price. You buy the gold over the counter and then what. Ideally you should store it in a vault for security but remember that your bar or ingot loses value immediately because it has left the professional circuit. When it comes to selling you will need to pay (and find) a professional to assay (verify) your gold Also, the issue is will you make a good return on your investment. In the case of expensive smaller ingots the gold price will have to increase drastically to recoup the 50% premium before any return is made.

We should also point out that a 1 Kg bar has certain disadvantages. To start with, if you wish to sell it in fractions, it is obviously difficult to cut up and so when you wish to sell it has to be the whole bar and you need to find a buyer who has the money for a whole bar and trusts you that it is what you say it is. It is also difficult to transport because at airports it is considered as a blunt instrument. It is impossible to send by post because it can only be insured for a maximum value of five thousand Euros (or equivalent) and there are also false ingots which are either plated or filled with tungsten. The list is long but most importantly the price of bullion bars only increases with the spot price. This is important to remember at resale. The most important moment for a gold investment is the moment at which you choose to sell it i.e. for a maximum return on investment.

There are some new innovations on the market that offer smaller ingots at prices similar to a 1Kg bar. These are good value as they allow investors to enter the market and pay a reasonable price plus they are easier to sell because they can be sold separately. The other important factor for any gold investment is where to keep it. There is only one safe place- in a Vault. This protects the integrity and value of your investment because it never leaves the professional circuit and there are no unnecessary transport costs to eat away at your investment. It also makes resale very simple because the gold does not have to move.

In summary, beware of over-priced small ingots, do not take possession of gold and when you buy a 1Kg bar ensure that it is from a reputable professional source and close to the spot price. However, bars and ingots do not maximise the benefits during periods when the price of gold is high, especially during the current crisis, although allocated physical gold is always preferable to “paper” gold as an investment.

If Gold bars are good but not the best physical gold investment then what is?
What should I do if I have about thirty six thousand Euros to invest?
Buy a 1Kg Gold Bar or Gold coins with 1Kg of pure gold content?
The answer is clear: buy thirty two Krugerrands (that contain 1Kg of pure gold).

Gold, the value of confidence

The word crisis means change and we do not doubt that on many occasions this is positive, but if it is about our savings, our confidence in the future, then the crisis shakes us and makes us anxious and uncertain. Many Europeans have always had confidence in gold and now, in these unstable times, they feel satisfied with their choice. For example, our French neighbours hold between three and five thousand tonnes of gold, almost double that held at the Bank of France. But are they Gold bars? No, they are coins and, specifically Kruggerands. How is it possible to feel confident saving if our confidence is based on paper? It is clear. There is nothing more reliable than gold. Has it not survived thousands of years up until now?

How can we measure its value?

During these uncertain times in which we are living, selling gold coins is easier than buying them. We have now witnessed a period of high prices for gold. We are able to calculate the value of coins by a so-called premium. The premium can be zero or very low which is when coins are being sold at the price of the gold they contained.
To explain, the premium of a gold coin is the difference between its actual selling price and the price for the gold content it contains. This is expressed as a percentage.
As demand increases for coins so the premium increases. Please note that the premium of a Gold coin can rise dramatically even if the gold price doesn’t. This means buyers are seeking the coin as a store of wealth and safe haven.
The benefit of Gold coins is that they can rise in price with the gold price (reflecting the pure gold content they contain) and because demand is high (their premium increases).
The premium can be different depending on location representing a differential in demand.
This difference can be illustrated and calculated by taking the price difference between a one ounce Kruggerand in the UK, for example and the same in the USA or Australia. These two coins have the same weight and the same quantity of gold (Law of 900 °/oo) and yet the price can be different given that the Kruggerand is much more in demand in one country or in limited supply.
These differences in price for the same coins are known as the Premium differential and they can be used as a measure of supply and demand but also as a means for judging the value of a gold coin investment. Remember that 2 factors change the price of a coin, the gold price and the premium.

It’s a case of Heads you win, Tails you win!

We decided to use the example of the one ounce Kruggerand because this is a very well-known coin, but we could equally have chosen the Swiss Vreneli, the Sovereign or the American Gold Eagle, all which are recognised throughout the World.
Finally, physical gold investment is an excellent way to protect your wealth, especially during times of crisis and instability. Protecting your investment and maximising its return means keeping it safe and secure in a Vault. If you have the means to make the choice between a 1 Kilo Gold Bar and 32 Krugerrands, which one is the best investment?
32 Krugerrands everytime!

You may be despairing at the lack of returns from your savings account in the bank and their lack of imagination in offering something new, something different. Well you’d be right but now there is something innovative and a new way to save regularly every month.

It’s called the LinGold Savings Plan and is available exclusively to Members of LinGold.com.

It’s an account with a difference.

There’s no set up fee.
There’s no annual fee.
There’s no charge for storing your valuable asset in a state of the art vault.
There are no hidden charges.

And what’s more it’s an asset that is tangible, which you own and that can’t be lent out to anyone else.
It’s yours to keep or to sell later, whenever you want and it’s easy to sell from your online Members account 24/7.
You don’t have to look for dealers or risk auctioning it off on eBay.
In fact it couldn’t be simpler.

All you have to do is buy a minimum of 1g of gold per month and that’s it. If you want to save more then you buy more whenever you can and whenever you want.
It’s a plan to encourage people to save for the future in the best precious metal which has a history of being the safest haven for your wealth whenever crisis looms or economies and currencies are volatile and unstable.
To make things easier you can set up a direct debit if you wish to transfer funds each month allowing you to purchase freely on the LinGold.com website. You can even credit your account instantly using PayPal, from an existing PayPal account or with debit and credit cards aplenty.
It’s not often that an innovative investment idea gives such an opportunity to benefit from a previously considered elitist commodity.
This plan makes saving in a physical gold investment accessible to everyone and any budget.
How long will it take to see the banks trying to copy this?
It’s almost the Gold Standard in reverse, the people preferring to own gold rather than the currency they earn.
This will mark yet another chapter in the gold revolution taking place because ordinary folk everywhere have had enough of being duped by the big financial institutions.
This way of saving firmly puts the customer back in control of their savings and we applaud this initiative.
Well done LinGold.com and please let us know what’s next!

You heard it here first folks, the innovative new website for buying and selling gold in real time, 24/7 has arrived – LinGold.com.

The site offers free Membership and you join a worldwide community of fellow gold investors buying and selling gold to each other. There is “Good Delivery” gold bullion and a large variety of professionally sourced Gold Coins – Bullion Coins like the South African Krugerrand, The Australian Nugget, The American Eagle, The Canadian Maple Leaf, The Chinese Panda and The British Britannia. There are also many semi-numismatic coins like the British Sovereign and the French Napoleon.

There is also the exclusive LinGold Savings Plan (LSP) which is the First Personal Savings Account in Physical Gold in the World. An innovative idea to save regularly and monthly in pure gold (watch out for our article on the LSP).

Here at GoldCoin we appreciate new opportunities to invest in real, physical gold that are extended to a wide audience of investors as the benefits have too long been the reserve of an elite few.

This new venture, LinGold.com, has something for every budget and is very user friendly.

They have plenty of pertinent and interesting information (free to download) on why, how and what to invest such as their LinGold Brochure and of course our favourite the LinGold Gold Coin Guide which helps the novice and expert alike.

LinGold.com, we applaud your arrival and wish you every success for the future.
Ps. We’ve already signed up as Members (which is free and took less than 1 minute)

Gold has always fascinated with its attractive, brilliant and glistening appearance but also because of the intrinsic properties of this precious metal. No wonder that it has played an important role in history since its discovery. Thus, for many people, gold has been at the heart of their culture, such as the Inca civilization which referred to gold as the “perspiration of the Sun”. They bestowed gifts in gold, made statues of gold, wore gold and in fact gold was everywhere around them. But in addition to this cultural role, gold very quickly acquired another role: that of Money.
While currency wars and devaluations are very much a thing of today, we have taken a trip back into the past to look at the origins of one of the first real currencies… and who knows, one that may again take its place again in the near future as a trusted, true exchange of value.

Money, a concept born of necessity

Before money existed, goods were traded in a form of exchanges and bartering. Livestock such as oxen, horses and sheep, commodities like wheat, fruit & vegetables, wood, silver and of course gold were all traded against each other depending on needs (demand) and availability (supply). However, there was an obvious difficulty that would arise which was how to equate the value of items to each other. There needed to be a reference value so that prices could be agreed upon and defined as quantities of this “stable” known value. There was also the problem of giving change or what to do if you only had enough to buy half a sheep and we’re hungry!

A popular and plausible hypothesis by Hauser* was that as gold was also being traded against various goods, its weight was used to agree an exchange. Soon people realised that gold could easily be divided into different weights which equated to multiples of its value and therefore the value of other commodities. This led to the concept that of weights of gold were indeed useful “units of value” and quickly prices for oxen, sacks of wheat etc became equivalent to a certain weight of Gold.
Naturally gold started to become a reference point for the exchange of all goods particularly because it was easily divisible and impossible to fake.

The birth of gold coins

In Egypt, gold was exchanged against goods in the form of rings which had fixed weights and therefore different multiples of value could be used for pricing goods. Elsewhere however, gold stayed in the form of ingots for a long time but their weights were often variable and trading was tedious because of these discrepancies. Weight variations meant that trades were seldom a direct equivalent to the goods being traded and so much haggling ensued.
In search of something more convenient, reliable and safe, small gold discs of a fixed weight were made and each one had a value struck on it. They were easier to carry around and allowed trade to be more flexible, retail as well as wholesale.
Thus the first gold coins were born and indeed the first recognisable currency. This took place around 700 BC according to Erik Chanel.

Whilst gold was not the only metal used for coins – silver has been widely used as well- gold, however, was the ideal metal because of its unique combination of properties such as: it is stainless, rustproof, divisible, malleable, ductile and of course rare, which made it from the outset a symbol of riches.

Is Money as good as Gold

We have previously mentioned the Gold Standard on Goldcoin.org which has several meanings depending on the era.
The Gold Specie Standard was a system that associated units of money to gold coins in circulation or when lesser metal coins drew their reference of monetary value from a circulating gold coin.

The Gold Exchange Standard was when circulating coins made of various metals such as silver and copper drew their reference monetary value from a fixed value of gold independent of their own metal value.
Finally, there was the Gold Bullion Standard which did not involve circulating coins. This was when governments had agreed to sell gold bullion at a fixed price in exchange for a quantity of circulating currency. In other words, each unit of currency effectively had a value related to gold. This allowed the mass introduction of paper currency, which was easily transportable and practical for payments.
It was also the mechanism which allowed banks to not only look after your gold deposits as they had previously but led to the credit creation system, fractional reserve banking, loans and mortgages. The problem here was that greed got the better of bankers who realised they could lend more than they had in Gold reserves and print paper money whenever they wanted as long as nobody caught them out. Sound familiar.
If you are interested in the story of money, banking and the credit crisis have a look at this video when you have a chance. It’s very relevant to our current problems.

Without Gold, Money as Debt

Anyway, the Gold Bullion Standard ended in 1971 when Nixon felt the strain of expenditures from the Vietnam War and he effectively untied the value of the dollar to gold. This also effectively untied all the other currencies which had been part of the Bretton Woods Agreement to form the IMF (International Monetary Fund) in 1944.

Paper is worth as much as Paper!

So nowadays currencies are not “covered” by a relationship to gold or a fixed unit of reference so they can be extremely volatile, easily devalued and printed at infinitum. The problem is that today’s money is based on pieces of paper that are printed with a value but there only real value is the piece of paper they are printed on. Currency value comes from economic confidence. When there is none the currency becomes worthless and it is not because the central bank has printed a number on a piece of paper that it becomes meaningful.
What actually counts is whether anybody will accept the paper in return for goods or services or dare I say it an oxen or two. We’re back where we started. The value of currency has to be real and cannot be created otherwise it will not be accepted.
Much of the problems we face today are because an excess of credit has led to an excess of debt. Pressure on currencies causes devaluation which in turn decreases the value of assets, investments and therefore wealth.
This is causing people to look for ways of protecting their wealth outside of paper money. This brings us full circle to gold which has proved through the ages to be the best safe haven for value.
The choices today are to own a physical asset that will always maintain its value i.e. Gold or to invest in the labyrinth of debt ridden, financial institutions whose products are heavily advertised but rarely realised for the poor customer. They spend more on marketing their wares than they do in paying out customers at term. Remember HSBC charging 80% over the 32 year term of a pension fund leaving some poor old retired guy broke. He’s in no position to fight back especially with the expensive legal eagles they can afford with his hard earned money!

Should we return to a Gold Standard?

Unfortunately, that is virtually impossible because there isn’t enough gold to go around. There are only 20m3 in the world and about another 100,000 tonnes in the ground. There would have to be a huge devaluation of currencies to restart the Gold Standard and of course it’s unpopular with Central banks as they would have to behave properly.
We referred recently to the state of Utah and how people are taking the matter into their own hands because they require more certainty about the money they earn and spend. The dollar has failed them and so they are now looking at creating their own Gold currency which will maintain value better than the greenback.
It would seem we have turned full circle and more and more people are turning to Gold because it offers a safe haven for their savings and is an insurance against instability.
Gold coins are an excellent investment vehicle and more and more people are turning to the value of gold. Gold coins are actually worth more than their weight in gold because they have a dual leverage. The gold content of the coin increases in value with the spot price and the premium (added value) of a coin increases with demand. During a crisis or unstable economic conditions the premium of certain coins can rise more than 40% irrespective of the spot price.

Gold as a future currency?

Gold as a currency of the future may seem far-fetched but given the state of paper money and the interest in Gold who knows, it is already being planned as an alternative stable money in certain places. Even if gold coins do not re-enter circulation they are being used as a more certain tangible investment.
Some of the most popular coins for investment are those commonly sought the world over such as the Krugerrand, The British Sovereign, The American Eagle and the French Napoleon.
These are a way of preserving your wealth and savings in something of real, timeless value.

* H. Hauser, Gold, Vuibert & Nony publishers, Paris, p.307.

Regular readers may remember our recent article on “Gold, an alternative Currency of Confidence?”
We discussed that alternative currencies are not a new phenomenon and have taken various forms in countries such as Canada, Australia, USA and the UK.

A common theme for their introduction was that they were local currencies introduced to stimulate local economies by encouraging customers to shop close to home and support local businesses. They were also the product of peoples’ dissatisfaction with Globalisation and its’ impact or even control of National economics and policies.

Alternative currencies reflect the frustration of being “controlled” by Goliath and is”David” saying “I’m taking back control because I don’t trust you, your policies, your strategies, your empty promises, your ability to manage the economy, your concern for regular citizens or your failing, devalued, paper money”.

This is exactly the case in the state of Utah where a proposal in the Legislature has been submitted that would require government agencies to accept gold in transactions. This would effectively create a parallel monetary policy that would fix “currency” values directly to the price of gold for business carried out within the state. It would equate to the introduction of a state-wide Gold Standard.

In fact if the current draft legislation succeeds it would mean that residents of Utah could mint their own gold coins. The logistics required to secure these would include the governor arming and calling on the Utah Defence Force to police stock movements and storage vaults.

The proposal was brought to the attention of Republican John Dougall who opened the bill and he commented “I think it has merit”. He added “Fundamentally, what it comes down to is people’s concern about the fundamentally reckless policies at the federal reserve and what it does long-term to the financial standing of the country and giving folks another choice of monetary tools for their financial transactions”.

Will US Debt and Quantitative Easing see the Dollar fail?

People are genuinely concerned that the soaring National debt, now over $14 Trillion, and the printing of more dollars to buy up the debt, will eventually devalue the dollar too far. Therefore they would like to have an option if things do go pear-shaped.

There is no intention of making this compulsory but at least it provides citizens with a choice to pay their taxes in gold. It seems rather strange that a country whose Government forcibly confiscated gold back in the thirties may now be forced to accept it as payment for taxes. It is also curious that regular people like Larry Hilton, an attorney and insurance salesman who drafted the proposal “Utah Sound Money Act”, are taking the lead in looking to the benefits of gold. Surely Governments should take a lead in restoring confidence for their own currency?

It would appear that “Goliath” is behest of ideas and resigned to fail whereas “David” has an eye on the future and wants to preserve and protect his personal wealth.

It proves that you don’t have to be a financial expert or big city hot-shot to understand the value of gold. Gold’s value has transcended the ages and it always keeps its purchasing power and better than any currency ever created. You can buy a cow today for the same 2 ounces of Gold you needed 300 years ago! No fiat currency can compete with that.

There are of course certain practicalities to address before any new coins are introduced, such as an agreed exchange rate, denominations and how change would be given. Any private minting of coins would be governed by regulatory standards.

However, if the legislation is passed it does mean that one day soon folk could pop down to McDonalds and pay for their hamburger with their own gold coins – then that would bring a whole new meaning to the “Golden Arches” and “McNuggets”!!!

There are two camps of how to return the UK economy to growth and reduces our heavy debt, spend and cut or simply cut. What ever your personal view the new coalition government has decided that we will swallow the austerity pill with drastic cuts.  This has gone down well and the pound is at its strongest against the euro since November 2008 and the euro itself strengthened after the European central Bank has tightened monetary conditions.

We have seen a pull back in the gold price, but is this down to austerity which is the new buzz word in the UK and Europe. So as we start to live within our means does that mean that the need for gold as an insurance is weakened ?. We are rightly entangled in European economics as this is what affects our daily lives, but we found in 2008 that greed and subsequent collapse in America created an economic crisis in Europe, the worse since 1929 and the great depression. We are still feeling the affects and the steps taken to pump the economy lead to unprecedented sovereign debts and the collapse of economies in southern Europe. However, gold is intrinsically linked to the dollar so nothing has changed as the US try and spend there way out of the downturn, print more money to devalue the currency and have huge sovereign debt.

In the UK with CPI above 3% and more significantly the RPI above 5% it is virtually impossible after taxation  to get a ROI that does not lose money over the year. So that combined with economic fragility that could still lead to contagion means the case for gold is still strong.

What we are seeing is the seasonal adjustment that has been running for the last 40 years.  Gold has followed both seasonal and super cycles for decades and we are in the summer adjustment as predicted by my article on this blog in March (When is a good time to buy gold ?). However, gold has been stronger than my prediction by more than $100 per ounce, driven by more exposure to the fragility of world economies and unprecedented demand.  In fact we reached the end of year high I predicted before going into the summer recess so I would expect the price to now rise in Q4 to beyond $1300.  Traditionally investors who bought in summer made money by selling in Q4 a simple short term gain that has been repeated time and again.  Look also to the supercycle where the cycle and the seasonality meet in Q4 2011 and expect at least $1500 per ounce for the longer term investment.

The case for gold has not weakened and now is the time to buy gold the bull has a long way to run. Think also about ROI as gold and particularly legal tender gold coins (sovereigns and Britannias) stand out as a way to beat inflation and taxation. We have the best conditions in the UK for investing in gold coins no VAT or TAX applied.

Maurice Hall