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Posts Tagged ‘Demand’

The Krugerrand 1 once

Monday, December 9th, 2013

The Krugerrand is probably the original Gold bullion coin. It was introduced in 1967 as a vehicle for private ownership of Gold whilst also being circulated as currency, hence being minted in a durable alloy. From 1980, further sizes were introduced. See specification table overleaf.

Details

pict krugerrand 1 ONCE The history of the Krugerrand begins with the South African Chamber of Mines which had the inspired idea to market South African Gold by producing a one Troy ounce bullion coin to be sold at a very low premium over the intrinsic Gold value. It was intended to be circulated as currency, hence it was minted in a more durable alloy and contained 2.826g copper to resist scratching and thus giving the coin its golden hue. At the time of launch, the Krugerrand was the only accessible Gold investment opportunity for the everyday buyer and this thought came through from the inception. It was the fi rst coin to contain exactly 1 Troy ounce of Gold.
Despite the coin’s legal tender status, economic sanctions against South Africa made the
Krugerrand an illegal import in many Western countries during the 1970s and 1980s. These sanctions ended when South Africa abandoned apartheid in 1994 and the Krugerrand once again regained its status as one of the worlds’ leading bullion coins.
In 1967, only the one ounce coin was available. From 1980, the fractions were available, namely, one half ounce, one quarter ounce and one tenth ounce. The name is derived from a combination of Paul Kruger, a well-known Boer leader and later President of the Republic and the Rand, the monetary unit of South Africa. The obverse side features the Otto Schultz image of Kruger along with the name of the country “South Africa” in the two languages, English and Afrikaans. The reverse side, designed by Coert Steynberg features the image of a Springbok Antelope, one of the national symbols of South Africa.
By 1980, the
Krugerrand accounted for 90% of the Gold investment coin market. For example, it is estimated that between 1974 and 1985, some 22 million coins were imported into the United States alone. Although it is not a beautiful coin, many millions have been sold since its introduction due to the policy of selling with a very low premium. The success of the Krugerrand led to many other Gold-producing nations minting their own bullion coins, such as the Canadian Maple Leaf in 1979, the Australian Nugget in 1981, the Chinese Panda in 1982, the US Eagle in 1987 and the British Britannia in 1987.
The
Krugerrand is interesting in that the government of South Africa has classed the coin as legal tender although it has no face value. It therefore fulfills VAT-free criteria for investment coins.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

investment advice krug
Essentially, the bulk of
Krugerrands are produced in a non-proof form although the South African Mint produces limited edition Proof quality Krugerrands as collector’s items. These coins in particular attract a healthy premium and are priced well above the value of the bullion alone. However, non-Proof coins also have a premium above the value of the bullion.
The Proof and non-Proof coins can be distinguished by the reeding, that is, the number of serration on the edge of the coin. Proof coins have 220, non-Proof have 180.

key facts krugerrand

Krugerrands are made of an alloy of Gold and Copper – this effect also being known as Crown Gold as it has long been used for the British Sovereign coins. Due to the popularity of the Krugerrand, there are also many fakes in existence and the investor should be wary. Copper alloy gives a much more orange appearance than silver alloy. Likewise copper is very durable and coins should be in good condition always.
The best marker of authenticity is the weight and this should be checked carefully using the table below since the Gold weight and total weight are known. Check also the reeding.

Specs

specs krugerrand
All investment coins sold by LinGOLD.com are EF quality or above.

For further information: +44 (0)203 318 5612
info@lingold.com


The Panda 1 ounce

Wednesday, December 4th, 2013

The Chinese Gold Panda is a popular series of Gold bullion coins issued by the People’s Republic
of China in Proof-like, brilliant uncirculated quality. They are issued in a range of sizes between
1/20 Oz and 1 Oz with larger 2 and 5 Oz coins being additionally issued in some years.

Details
panda 1 onceChina issued its first Gold coins bearing the Panda design in 1982. These were limited
to sizes of 1/10 Troy ounce along with 1/4 Toz, 1/2 Toz and 1 Toz. From 1983, the 1/20 Toz size was added and additionally a 2 Toz and 5 Toz coin is sometimes issued.
These strikingly beautiful coins are always issued in Proof-like brilliant uncirculated quality and prove very popular.
A different design was issued each year until the 2000. When the 2001 edition was announced, so too was a freeze of the design and thus the 2002 Panda is identical to the 2001. Collectors spoke up on behalf of the annual change and China responded by reversing their policy so that from 2003 onwards, the designs again change each year.
However, on the reverse side, it always features the endangered Giant Panda. It also features the size, Gold fi newness and monetary value.
The main design on the obverse of the coin has hardly changed, save for minor detail changes in the image. It features Beijing’s famous Temple of Heaven (Tien Tien) in the centre with Chinese characters on the top saying “Zhonghua Renmin Gongheguo” meaning People’s Republic of China and at

the bottom the year of issue. If it is a commerative issue, the theme will also be marked here.
There was an adjustment of the face values of the coins in 2000/2001 – please see
the table overleaf for details.
The Chinese mints usually do not employ mintmarks. In certain years, there have
been minor variations in items like the size of the date, the style of the temple and
so on. These allow the numismatist to identify the originating mint. In some years,
but not all, other marks and Proof marks (signifi ed by a ‘P’) have been added. The
four mints involved in the production of the Panda are Beijing, Shanghai, Shengyang
and Shenzhen.

Investment Advice

INVESTMENT ADVICE

All Panda coins are issued as pure Gold fineness, 999.9‰ and in theory have a low premium just above the value of the Gold.
However, their intrinsic beauty makes them very collectable and they attract good premiums.
As with any coin, the best quality grades will attract the best premiums. The early years in particular will be those with the highest premium. Although the coins were issued in Proof form, many were unpacked and have thus been damaged and are at lower gradings. The mintage figures should be carefully examined – the number originally minted is quoted but it has been found that production continues for various years, hence the total mintage may be quite a bit higher some years after.

SPECS

SPECS

KEY FACTS

All investment coins sold by LinGOLD.com

are EF quality or above.

For further information: +44 (0)203 318 5612
info@lingold.com

The Maple Leaf 1 once

Sunday, December 1st, 2013

The Canadian Gold Maple Leaf is one of the oldest bullion coins alongside the Krugerrand. It is a classically beautiful coin, internationally recognised and provides investors with a secure, quality addition to a portfolio.

Details

The Royal Canadian Mint introduced the Maple Leaf in 1979. Along with the Krugerrand, it has been in continuous production ever since. It came about because of the Krugerrand – at the time, there was an economic boycott of South Africa so Krugerrands were not widely available – and thus the Maple Leaf fi lled a gap in the market. It contains virtually no base metals at all and uses Gold exclusively mined in Canada.

MAPLE LEAF 1 ONCE GOLD COIN

The earliest years between 1979 and 1981 had a Gold fineness of 999.0‰ but 1982 onwards is 999.9‰. For those same fi rst years, only a 1 Toz coin was produced. Between 1982 and 1985, the 1/4 Toz and 1/10 Toz sizes were added. Then in 1986 the 1/2 Toz was added and in 1993 a 1/20 Toz coin joined the group. It has remained thus to date except 1994 when a 1/15 Toz coin was produced for that year only. That year, a Platinum 1/15 Toz coin was also produced, possibly for jewellery, but both the Gold and Platinum 1/15 Toz coins were not a success and were dropped. The Maple Leaf is also available in Silver and Palladium.

Each coin features the image of Queen Elizabeth II by Ian Rank-Broadley on the obverse side. It also has the denomination and year of issue. On the reverse is an image of Canada’s national symbol, the maple leaf along with the word CANADA and the Gold fi neness in both English and French. Every coin is guaranteed to contain the stated amount in Troy ounces of fi ne Gold. The coins are identical in design except for the obvious items such as weight.

All Maple Leaf coins are legal tender in Canada although are categorised as “non-circulating bullion coins”. Their Gold fi neness easily puts them into the general category of being VAT-exempt.

On 3rd May 2007, the Royal Canadian Mint unveiled a 100 Kg Gold Maple Leaf with a face value of C$ 1 million although the Gold content makes it worth much more. The coin was produced as a promotional product to give the mint a higher international profi le. However, several interested buyers came forward so the mint announced it would manufacture to order. There are believed to be five confirmed orders and/or deliveries. It held the record for the largest coin until 2011 when an Australian coin superseded it.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows:

INVEST ADVICE

All Maple Leaf coins are issued as pure Gold finewness, 999.9‰ and in theory have a low premium just above the value of the Gold.

KEY FACTS 1

However, the reality is that a 5% premium should be achieved for a quantity of coins

with higher values for individual coins. As always, the smaller value coins will have higher premiums.
The coins were never really designed to be handled due to the softness of 24 carat Gold, the milled edge and clear fi eld around the image of the Queen. With some coins supplied in tubes, this makes them susceptible to handling marks and other damage. So careful examination of coins is highly recommended.

Specs

SPECS 2

The British Sovereign

Friday, November 29th, 2013

The Gold Sovereign is a highly collectable investment coin first introduced in Great Britain in 1489 at the request of King Henry VII. In 1816, there was a major reform of coins in Great Britain which resulted in The Coin Act. This laid down in law, amongst other things, the specifi cations and dimensions of Gold Sovereigns produced from 1817 onwards which have remained in place to this day. The Sovereign weighs 7.99g and is 22 carat Gold (or 916.667‰ fineness).

SOVEREIGN AVERSE AND OBVERSE

Details

The first Gold Sovereign was struck in 1489 for King Henry VII. Sovereigns continued to be issued by monarchs up until the end of the reign of Elizabeth I in 1603. As part of the coin reform of 1816/1817, the Sovereign was re-introduced. A young Italian engraver, Benedetto Pistrucci, was appointed to create the reverse design coming up with the beautiful image of St George slaying the dragon. This design saw many alterations over the years but is essentially the same. As a testament to the design, it still appears on the very latest 2013 edition. Other reverse designs have at times been used during the reigns of William IV, Victoria, George IV and Elizabeth II. The obverse of the Sovereign followed the trend established by the original and portrays an image of the reigning monarch, which remains the case up to the present.

Gold Sovereigns were withdrawn from circulation at the start of World War I in 1914 although production continued at the Royal Mint until 1917. They continued to be produced at other mints of the then British Empire but at lower quantities than before. Sovereigns which were not produced at the Royal Mint carry a mintmark showing their provenance, hence one finds coins referred to as Australian Sovereigns or South African Sovereigns. This “foreign” production stopped in 1932.

In 1957, the Royal Mint began again producing Sovereigns in order to meet world demand and to stop the booming counterfeit production which had become rife since the Royal Mint stopped producing in 1917. They were not however reintroduced into everyday circulation. Prior to 1979 only Gold bullion coins had been issued and it was this year that the fi rst Gold proof Sovereigns were issued. Between 1983 and 1999 the Royal Mint ceased producing Gold bullion Sovereigns and only minted proof Sovereigns. Gold bullion Sovereigns were re-introduced in 2000. There are several special designs but essentially, the George & Dragon design remains with the wheel turning full circle where Pistrucci’s design (which was on the Sovereign when the current monarch was crowned) has been re-introduced for the 2013 edition to mark the 60 years reign of Elizabeth II.

Investment Advice

There are various grading systems in use around the world. However, the British system is as follows :

SOVEREIGN 1

Whilst older Sovereigns were produced in much larger quantities than those produced today, it is much more diffi cult to source a good quality Sovereign from those times. Sovereigns from the reigns of George III, George IV and William IV are extremely rare in good quality and thus command high premiums. EF quality can be found but are still quite rare. For example, a UNC George IV Sovereign from 1825 made £14,950 at a sale in March 2004! Early Victorian shield Sovereigns are highly sought and therefore an EF quality coin would fetch a high premium. Indeed anything UNC or FDC from the reign of Victoria is a high premium coin.

Edward VII and George V are fairly easy to obtain in EF quality as they were produced in very large numbers. As with Victoria Sovereigns, any UNC or FDC coins would attract a high premium.

The majority of coins on the market is from the reign of Elizabeth II and has lower premiums than earlier editions. However, the quality again affects the premium and the investor should look for the highest grades. Any coin will always fetch a higher premium anyway than the price of Gold and can only become more sought after in the future. There follows a list of certain rare Sovereigns to seek out if possible – finding one of these will command an excellent premium:

SOVEREIGN 2

– 1817, the first year of the modern Sovereign

– 1838, the first Victoria Sovereign

– 1841, the rarest Victoria Sovereign

– 1917, London-minted Sovereigns, not Australian or South African

– 1989, 500th anniversary of the Sovereign edition

– Anything from George II, George III and William IV – FDC, UNC and even EF grades

Specs

SOVEREIGN 3

Detailed reading: http://goldcoin.org/numismatics/the-british-gold-sovereign-the-world’s-most-sought-after-gold-coin/4103/All investment coins sold by LinGOLD.com are EF quality or above.

For further information:   +44 (0)203 318 5612     or email : info@lingold.com

How much does 1 gram of pure gold cost ?

Thursday, November 28th, 2013

Who said that only wealthy people could afford buying gold ?

  • Save from 1 gram of gold per month
  • Secure storage in Swiss vaults – FREE*
  • No administration or signup fee
Sign up for the LSP for free

Gradually build your wealth by simply buying each month a minimum of 1 gram of physical gold, for your LinGOLD Savings Plan (LSP) and benefit from freestorage in Swiss vaults outside the banking system.

How to save with the LSP?

  • Connect to your LinGOLD account or create a new account
  • Signup free to the LSP programme
  • Buy each month a minimum of 1 gram of pure gold
  • The gold you have bought is fully referenced : bar code, photograph, certificate of ownership
  • The gold is stored in a Swiss vault outside the banking system
  • You are free at any time to increase or reduce the amount of your savings, or you can unsubscribe from the LSP with no charge or prior notice.
Minimum Purchase 1g pure gold per month*
Maximum Threshold Unlimited
Storage Charges Free*
Signup Fee None
Availability Immediate Resale
Minimum Engagement None

*The storage charges levied on your gold stored in the LSP are FREE, on the condition that you buy a minimum of 1 gram of pure gold per calendar month, before the last day of each month. If the minimum monthly purchase is not made, storage charges will be applied, currently £4 per month per 200g total weight stored.

What are the products that fall within the LSP?

  • All the fractions of pure gold (1 g, 10 g, 100 g) issued from bars or gold investment coins (Britannia, Sovereign, Napoleon 20F, Napoleon 10F, Panda, Vera Valor, etc)
  • A whole coin : Vera Valor 1 ounce
  • A 1kg bar of pure gold

For further information on the LSP.

Manipulation of financial markets ?

Wednesday, November 27th, 2013

What’s happening with the London gold fixing ?

First, Bloomberg reported that the U.K.Financial Conduct Authority (FCA) was investigating over the way gold prices were set every day in London, as the main bullion-trading centre in the world based on information from the LBMA.

Now it is the BaFin, German’s financial supervisory authority, who is actually investigating into suspected price-fixing of benchmark gold and silver prices.

images-2

One should ask ?

The facts :
It would seem that the London fix, benchmark rate used by mining companies, central banks and other companies to buy, sell and value gold, may have been subject to manipulation over the past few months.  According to some traders interviewed by Bloomberg, it seems that ‘insider trading’ around the gold fixing is potentially possible as dealers and customers exchange information. That should lead to a wider investigation into how global rates are being set.
Remember last year when the London interbank offered rate – LIBOR – was being manipulated. Would other financial markets be manipulated ?
Similar investigations would be under way in the Uk and US, no sources

actually confirmed that point.
It wouldn’t be the first time prices are being manipulated.

Ext: Mining.com


Your savings in a safe place

Tuesday, November 26th, 2013

Traditional investments are at risk because they are inextricably linked to the world wide web of paper debt that exists in futures, bonds, hedges and spread bets.

Pension funds, banks, stock markets and even countries are using your investments to pay off their own debts rather than to seek a profit for you.

These paper investments are all at the mercy of the debt cycle and could be lost completely or become worthless at any time. What happens when these massive debts are called in and can’t be repaid ?  This will happen but nobody knows when. How bad will it be ? How long will it last ? Politicians publicly pretend it can’t happen because they couldn’t handle the panic and their main preoccupation is preserving power or surviving their ‘shift’.

Did you know?

– You can still buy a new car today with the same weight of gold as you needed to buy a new car 90 years ago.

– 300 years ago 2 oz of Gold could buy a cow, the same amount as you need today!

– Current devaluations are decreasing your ‘paper’ savings, investments and pension funds

– Since  2000 stock markets have slumped while the price of gold has increased more than 5 times

LinGOLD.com’s commitment to doing things differently is exemplified through its ‘Vera Valor’ gold coin.  The ‘Vera Valor’ is the first ethically produced coin made from “clean extraction” gold, which is 100% traceable from mine-to-mint.

LinGOLD.com’s vault storage facility is based in the highly secured facility of Geneva Freeport and is independently audited to ensure total propriety and counterparty.

investment in lingold

investment in lingold

Britannia 1 ounce Gold Coin

Saturday, November 23rd, 2013

The Gold Britannia is a 1 Troy ounce investment coin. Whilst the figure of Britannia has graced coins since Roman times, it is only since 1987 that the modern Gold Britannia coin has been produced. The Gold Britannia is also available in fractions and the Silver Britannia is 1 Troy ounce of pure Silver.

It is probably Athena, the Greek goddess of wisdom and war who set the pattern for powerful maidens, like Britannia, to personify the characteristics of the nation they represent. It was the Romans who first portrayed Britannia on their coins. However, in the mists of time, it seems Britannia was depicted as resisting the invasion of the Roman Empire paying tribute to the fighting spirit of the island’s inhabitants, the Ancient Britons. In modern times, Britannia remains the universally recognised personification of Britain.

BRITANNIA 1 OUNCE

BRITANNIA 1 OUNCE

The coin history can be traced through Roman coins, those of Charles II and Elizabeth I through to today. Queen Elizabeth II came to the throne in 1952 and by that time, Britannia had been on coinage continuously for the previous 300 years. These coins were made from copper, and later bronze. In 1971, Britain adopted decimal currency and Britannia was chosen for the 50p copper/nickel alloy coin. In 1987, Britannia was finaly “promoted” to grace the Gold bullion coin which is known today as the modern Britannia. Ten years later in 1997, a Silver bullion Britannia was also issued.

In modern times, different aspects of Britannia’s history and character have been interpreted by different artists. The portrait by David Mach is the ninth to appear on both the 2011 Silver and Gold coins of Elizabeth II’s reign. The 2012 and 2013 coins were designed by Philip Nathan with the obverse continuing to show the acclaimed monarch effigy by Ian Rank-Broadley FRBS.The first Gold Britannia coins were produced in 22 carat form.

The 2013 edition is pure Gold, 24 carat. See full specifications below :

Although it is 1 Troy ounce of pure Gold, the Britannia is in fact the highest denomination coin in Britain. So as well as being free from VAT as it is investment-quality Gold, it is also free from Capital Gains Tax on any sale or transfer which is advantageous over other bullion coins and bars as an investment instrument.

There are various grading systems in use around the world. However, the British system is as follows:

BRIT 2

The Gold Britannia is issued in weights of 1 Troy ounce, half-ounce, quarter-ounce and tenth-ounce. The Silver Britannia is produced in a weight of 1 Troy ounce only and has a face value of £2.00. The large coins are those which attract the best premium. The reason for this is the costs of manufacture are approximately the same regardless of size and therefore Gold content.

The premium of Britannia coins is determined by the quality of the coin, design features, mintage and Gold content. From 1987to 1989, the coin was alloyed with Copper. From 1990 to 2012 it was alloyed with Silver. From 2013, it is pure Gold.

BRIT 3

The British Royal Mint has issued Proof editions every year and these should be sought where possible. Generally, the Britannia is not a high mintage coin. The years with the lowest numbers minted are 1990 to 2000. Coins minted in the years 1990, 1991 and 1997 are particularly sought after as their proof mintage was 262, 143 and 164 respectively. There are several design variations of the reverse, notably the year 2003 which featured Britannia’s head only as opposed to the usual full figure.

Silver Britannia tends to be sold in bulk because of the much lower value of Silver. Beware that Silver prices are much more volatile than Gold.

BRIT 4

China remains the world’s largest gold consumer in Q3’13.

Tuesday, November 19th, 2013

China bought 210 tons of gold during that third quarter as announced by the World Gold Council. It actually increased by 18% compared to Q3’12. This includes jewellery, gold bars and coins. China purchased even more gold than India. Traditionally, this latter is the largest consumer of gold but it does not seem so anymore. India bought 148.2 tons of gold which means that their consumption decreased by 32% year on year.
Demand for jewellery has been the most significant part of the global gold demand according to the World Gold Council since it registered a total of 487 tons (increasing by 5% compared to last year Q3). Global demand registered some 869 tons, decreasing by 21% over a year. However, demand remains strong in most countries and areas.

Guerre des monnaies
Does that mean that China is lacking confidence in the US dollar ? One thing for sure, China’s central bank keeps buying more and more gold for its reserves and particularly as a replacement for dollar assets. As we all know China is working on the yuan for it to be a rival to the US dollar on the long term on world markets.
Lack of confidence … should it be extended to banks ? In some countries, they are even talking about confiscating a quarter of their customers’ savings as part of a bail-in. Physical gold remains the best asset but should not be kept in banks vaults at all.

For best alternative, please visit Lingold.com.
Extr : Lingoro.com, World Gold Council & SwissAmerica.com

GOLD: SAVINGS AND PENSIONS

Thursday, June 13th, 2013

By Mark Rogers

“Save for a rainy day.” The old adage, but does anyone do so nowadays?

“Saving” is much more likely to mean pensions nowadays, the likelihood of ever having one, and the certainty, if one has been saving towards one, that the recent and continuing bouts of Quantitative Easing (QE) have eroded it. “As much as £30,000 could be wiped off a £100,000 pension pot.” (This is Money, November, 2012)

But QE is only inflation speeded up; paper money is inflationary in and of itself over the long term, and with high tax regimes thrown in, no savings are safe. Those who remember the late 1970s will recall the prudent people who realised that money sitting in the bank was money evaporating, so they reasoned: why not spend it? Slap up meals, theatre tickets, luxury holidays – use it now before it is gone. During the Weimar inflation, industrial wages were eventually paid on the hour, with workers rushing out to spend them before they lost such value as they had by the second.

Converting your savings into gold sounds good, but – those ingots?? Is gold for the ordinary person?

Connect to LinGold.com (either click here, or on the box below this article) and find out. Signing up as a Member of the LinGold Savings Plan at a minimum purchase of 1gm of gold per month gives you a foot on the gold savings ladder: the cost of 1gm of gold compares favourably with the cost of, say, travel passes on London transport. Figures for 2012 on average household expenditure give the highest weekly cost as transport at £65.70, with half of that going on running a car; weekly expenditure on groceries averaged £44.20, with 80% being spent at supermarkets – doubtless because of the loyalty schemes and loss leaders that help keep prices down, as well as all the other prices wars that the supermarkets are more or less permanently engaged in.

Gold therefore, if saved for nothing other than the rainy day of retirement, compares very well with other necessary expenditures. After saving money on the weekly shop at the supermarket, it would be well to consider putting the balance into gold – and thanks to the unique LinGold.com Savings Plan, you too can do it! The democratization of gold is here to stay.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD STANDARDS III

Wednesday, June 5th, 2013

By Mark Rogers

I have discussed in Gold is Money, and the previous Gold Standards I and II the advantages of understanding that gold is not a commodity, that it is money that serves the usual purposes of money, as a store of value and a means of exchange, but with the vital difference that it also serves as a standard unit of measurement. The latter function is owed to its intrinsic qualities.

However, in Paper Money Collapse, Detlev Schlichter expounds Carl Menger’s view that gold, like all other things that people have found a use-value for, can indeed be considered a commodity, at least in historical terms. (I have looked at this book twice before in Gold Money A Currency of the Past and What Are Banks For?)

How does this argument work? Menger, says Schlichter, that “money could only have come into existence as a commodity”. It was not the creation of the State, there were no issuing authorities; money arose from mutual trading activities in which all commodities had a use-value. Without that use-value, no commodity was worth anything. Schlichter explains:

“For something to be used, for the very first time, as a medium of exchange, a point of reference is needed as to what its value in exchange for other goods and services is at that moment. It must have already acquired some value before it is used as money for the first time. That value can only be its use-value as a commodity, as a useful good in its own right. But once a commodity has become an established medium of exchange, its value will no longer be determined by its use-value as a commodity alone but also, and ultimately predominantly, by the demand for its services as money. But only something that has already established a market value as a commodity can make the transition to being a medium of exchange.”

Gold the Supreme Embodiment of Value

This anthropological-historical understanding of the emergence of money puts the market, trading, at the heart of the valuation process. Which, in turn, reminds us that the ultimate source of value, what something is worth, is its value to the parties, few or numerous, who engage in the transaction. So what in turn is required of a monetary medium, a currency, is a value that as far as possible stands outside that arbitrary subjectivity. Money itself, whatever its currency embodiment, is an attempt to render value objective in that the currency can be used in any exchanges, unlike bartering.

So in turn, the more objective the currency can become, the more it can become a standard (and this is where it is easy to see why it therefore becomes a unit of measurement), the more reliable, the more valuable that currency unit becomes.

And again, in turn, it is easy to see why gold quickly established itself as the supreme embodiment of exchange value: “it is no surprise that throughout the ages and through all cultures, whenever people were left to their own devices and free to choose which good should be used as money, they most always came to use precious metals.”

Gold is Money

Historically then we can enlarge Turk’s and Rubino’s contention that gold is not a commodity, not at least a commodity like oil or eggs, by allowing that the currency standard will have had a life as an object with use-value until other properties lead people to realise that it may have a value above its use-value. People have become familiar with these properties until it is singled out in use as being dominated by these properties and becomes money.

And the dominant characteristic of gold is its stability: soon all other characteristics were subordinated to this one, thereby changing not its nature but its purpose.

Of course, gold can be re-commodified as jewellery or ornament, as Jocelyn Burton, gold– and silversmith, demonstrates in her extraordinary work. People will always have these uses for gold, which are not intrinsically opposed to its properties as money: jewellery after all carries a premium and can, somewhat philistinely perhaps, be regarded as a form of storage, but then this form of storage shares with gold coins the property of portability.

And money can be re-subjectivised, in the past by mutilating it, clipping and shaving gold and silver coinage; and in the present of course the rolling of the printing presses with paper money has made money supremely subjective, its value becoming volatile and it storage properties destroyed.

It may be objected that we have little ancient anthropological evidence for this process, but we do not need to rely upon this as merely an explanation of what “must have happened”, we need only look at how those living in a territory with a devalued currency deal with the depredations of their government: in the twentieth century they have singled out dollars. When I asked an acquaintance from Zimbabwe how Zimbabweans coped with all those noughts, he laughed and said: “We just use dollars.”

The idea that money, and gold as money, emerged from the free trades of people going about their ordinary business also helps explain the deep disdain for gold in today’s political establishment: the idea that people are incapable of looking after themselves has become rooted in modern political thinking.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

GOLD IS MONEY: DOES IT HAVE A PRICE?

Sunday, May 26th, 2013

By Mark Rogers

I recently looked at the question of why there has been no price rise in gold commensurate with Central Banks’ buying? This was raised at this year’s Money Week conference and caused some puzzlement. But perhaps there is another way of looking at the issue, one found in James Turk’s and John Rubino’s The Coming Collapse of the Dollar (see an earlier mention Gold and Permanent Value).

At the very beginning of their book, they insist that gold is money. “Generally, when gold is mentioned in the financial media, people refer to its ‘price’. This is incorrect, because gold is not a commodity like oil or eggs. […] And since we don’t talk about the ‘price’ of euros or yen, but instead discuss their exchange rate, in this book we treat gold in the same way, as in ‘gold’s exchange rate was $410 per ounce on December 31.’”

Gold is not a commodity?

It is often assumed that money has three basic functions: it serves as a store of value, a means of exchange and can itself be exchanged. If this latter function is a true function of money, then this means that money is a commodity along with its other two functions.

Now, it is not true, as Messrs Turk and Rubino claim, that “we don’t talk about the ‘price’ of euros or yen”, because we do. The Money Changers not far from me advertise their wares on electronic price boards, and against the currencies on offer are ranged two columns: “We Buy” and “We Sell”. It is very common to talk of the prices of currencies and to treat them as commodities: it is possible to make money by watching the exchange rates and converting into favorable currencies and back again, making a profit on the way. (It is probably safest to do this in a Swiss bank, as a friend of mine used to do.)

We also speak of cheap money and dear money: what do we mean? Cheap money is when monetary policy is loose, people are exhorted to borrow and encouraged to do so by low interest rates; dear money is when policy is tight and lenders aren’t lending or only cautiously, and interest rates are concomitantly high. Is interest not, therefore, the “price” we pay for the money we have borrowed? While Turk and Rubino assert that we talk of exchange rates rather than prices, it would seem odd, would it not, if we were to talk of the exchange rate of pounds for pounds that we pay for bank loans? And if “the price of money” in terms of interest makes better sense when dealing in and with a domestic currency, and “exchange rate” makes better sense when we are swapping unlike for unlike, even if it is still currency rather than oil or eggs, then where does that leave gold: as a commodity or as not a commodity?

Assets and Exchange

However, this is not to be pedantic; sometimes it pays to split a hair, and in the case of the puzzle referred to in the first paragraph, it may be highly instructive to do so.

For Turk and Rubino point out two other incontestable matters, which throw a lot of light on this vexed problem of what money actually is and therefore how it behaves and we must speak of it. In the first place, if money is not to be considered a commodity, it is indubitably a standard of value – “a generally agreed-upon measurement used to express the price of goods and services.” And this measurement is of the same order as other standard units of measurement: feet and inches, pints and gallons, ells and yards, perches, furlongs and chains. Some of these units have been abolished or fallen into disuse, but as standard units of measurement – and here is the rub – they do not change over time. An ell has ever been an ell, even if no longer used; nor do we change our feet daily.

Now it follows from this that, when it comes to a unit of measurement that is a medium of exchange, that is money, “only money can extinguish an exchange for some good and service. That is, an exchange is extinguished when assets are exchanged for assets. If you accept a money substitute (for instance dollars) when you sell a product, the exchange is not extinguished until you use those money substitutes (those dollars) to purchase some other good or service.”

We begin to get to the heart of the matter: money substitutes. These are what cause the confusion, because by definition they are not money itself only its token or emblem. We take for granted that money takes the form of currency, and are liable in our paper age to therefore confuse “money as currency” with money itself. But currency as such is merely the instrument of exchange unless it also happens to be specie: that is, if gold (and/or silver) is the standard unit of value and gold passes in the form of gold coins, then there is no distinction between the standard of value (gold) and how it is represented (gold coins): the currency IS the money.

Furthermore, if the most important function of money is as a standard of value then it is possible to say that money is not a commodity, though it is still a store of value and a medium of exchange. To illustrate the point about units of measurement (standard of value) Turk and Rubino point out the unchanging nature of gold: “A gram of gold has bought roughly the same amount of wheat since the Middle Ages.” (A similar point is made about ounces of gold, Pharaonic oxen and contemporary oxen in “Gold, A Different Point of View”.)

Gold Is Money

We can begin to see how the question that puzzled the Money Week conference might be viewed, and in particular what gave rise to it, the observation that since the “price” collapse, central banks had been buying gold hand over fist and yet the price hadn’t moved. If gold is not a commodity, but is rather money, is the unit of measurement for value, then to look at gold as having an exchange rate is very fruitful: what it now tells us is just how bad the dollar is. If the unit of measurement doesn’t change, and the number of dollars or pounds that are measured against it is greater or smaller than it was, say, yesterday, or an hour ago, we are being told something about the currency, in this case a money substitute, and not the gold.

It is easy to grasp what is going on when gold goes through the roof, but we need to change our metaphor: gold has stayed where it was, it just takes more dollars or pounds (which, remember, today are money substitutes) to exchange for an ounce. Now, adopting Turk’s and Rubino’s vocabulary, the exchange rate of the dollar against gold fell in April, though it was still high compared to four or eight years ago. In the following weeks, notwithstanding the boom in the purchase of gold coins (away from ETFs) and the purchases of central banks, that exchange rate remained stable: commodities don’t behave like that, especially not scarce ones. So we were instead being told something about the dollar. The unit of measurement wasn’t behaving obdurately. Therefore, was what happened in April, not a calamity for gold, but a respite for the dollar?

Prices versus Exchange Rates

In considering how we speak about value and prices and fiat money and borrowing and cheap and dear money, it might concentrate the mind if we did indeed speak of the “cost” of a loan, the “price” the bank charges us for lending, or perhaps selling, to us. My bank lends me (sells me) £5,000 pounds over three years, with total interest of £760, and everybody commends me on my bank – what a reasonable rate of interest! But if instead I was to boast that I had bought £5,000 for £5,760, well, that wouldn’t seem such a good deal. It is because it is repayable over a term (over which of course, thanks to inflation, the inevitable accompaniment of money substitutes, it will in fact be costing more) that one doesn’t quite realize what has been “exchanged” or “bought”.

This of course raises the intriguing possibility that in getting our nomenclature as much as our metaphors backwards in speaking of money, we are indulging in loose talk, and that this in turn may be a result and feature of fiat money systems.

In What is Money? I raised the issue of the relation between money, value and property:

“The idea that money is a realisation of value inherent in property means currency is the result of a property holding system which, to be realisable, must have clear title. Then, on the basis of that title, the value of the asset can be ascertained and then realised as capital which then has a representational form as currency. That is, money as a representation of value, as a means of realising that value and being a store of that value is the result of a legal system that can render property fungible – that is, that the asset can be more than one thing.

“This, of course, means that property is a form of savings, and that savings are therefore at the root of money. […] The failure to realise the necessity of savings and their wider functions in a workable economy is at the root of the financial crisis.”

And the hostility to savings translates into hostility to gold and the failure to understand it as a unit of measurement. Turk and Rubino are right: gold is not a commodity and in realising this we may start to understand the dense fogs of the currency wars.

For the raison d’être of these articles on goldcoin.org read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

For background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

For a series of articles on the pernicious effects of progressive tax regimes: THE MORAL DILEMMA AT THE HEART OF TAXATION

For a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

MONEY AND CASH

Monday, January 14th, 2013

By Mark Rogers

If cash is properly regarded as (precious metal) specie – historically speaking, a recent innovation – then, when the Americans abandoned the gold standard in the early seventies, the entire world reverted to a non-cash culture. Given that the dollar was the reserve currency, relied on by other currencies because it was the sole remaining currency tied to gold, it is an important historical consequence of the abandonment of the gold standard that for the first time in history every currency in the world was no longer supported by tangible wealth.

By saying that we are now in a non-cash culture I mean that what is in circulation is merely promissory notes with the distinguishing feature that they cannot be redeemed, merely exchanged….

The worthlessness of such a system (if “system” adequately denotes the present lunacy) is of course underlined by quantitative easing. Q.E. is usually defended on the grounds that it buys time, that it keeps those ATMs whirring. Yet it is well known that Q.E. merely stores up trouble for the future, that it plays havoc with savings and pensions – so for some the future is already here. And indeed, insofar as it plays havoc with savings, it therefore plays havoc with investment.

Given these features of Q.E., far from it being a rational response to financial crisis, one of the causes of any present crisis is in fact the solution to the previous crisis; that is, crises multiply. Is the true Keynesian multiplier effect?

The Anthropology of Money

David Graeber, in Debt: The First 5,000 Years (Melville House, New York 2011) suggests that credit/debt systems are the ancient and persistent form of “money”. But is this really the case? In the absence of money as we now are beginning to understand it [link what is money], is what Graeber describes merely a primitive “pricing system”? But in the absence of money, how does a pricing system work, and does one maintained along the lines suggested eventually collapse? And any form of credit/debt system has to cope with the problem of trust, which matters less in a cash culture, but only one which involves specie and therefore genuine promissory notes.

The questions raised here will be some of the major ones to be explored on this site over the course of the coming year.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

And for a review of one of the most important books on the financial crisis published last year: THE MESS WE’RE IN: WHY POLITICIANS CAN’T FIX FINANCIAL CRISES

PAUL SAMUELSON ON SELF-INTEREST

Friday, December 14th, 2012

By Mark Rogers

In Paul Samuelson on the Trouble with Economies, I suggested that Samuelson’s understanding of self-interest was bizarre; this is what he said:

“The self-interest that the early economists counted on as a balance leads, in a modern economy, to collusion among the self-interested groups.”

It is a little difficult to fathom quite what Samuelson understands either by self-interest or what he thought the “early economists” meant by it on the basis of this assertion. After all, Adam Smith’s description is unambiguous – that it is not from any eleemosynary impulse that the baker and the butcher put bread and meat on our tables, but the pursuit of their self-interest. That self-interest is coterminous with providing customers with what they want, just as the self-interest in appeasing our and our families’ hunger leads us to pay the baker’s and the butcher’s prices: mutual benefit naturally flows from the self-interest on both sides.

And nor was Smith blind to the fact that those in business enter into collusions that may not be in the public interest; he was quite clear that whenever two or three are met together, they conspire, for example, to force prices up. This was the basis of his criticism of the medieval guild system. But such conspiracies in a free economy are by their nature limited; in such an unchecked economy they may cancel each other out. It is precisely in an economic system based on Keynesian arrangements, with the government being a central and distorting player in and above the market, that “collusion among the self-interested groups” becomes more widespread and entrenched, and therefore morally and economically damaging.

The extremes of this entrenchment are discussed in Hunter Lewis’s Where Keynes Went Wrong (discussed here and here), where he points out that when an industry or service is top-heavy with regulation, those who are regulated gradually subsume the regulators and co-opt the regulations to suit their own purposes, which is what happened with the banking crisis, and in an earlier epoch with the Trade Unions – indeed, in the latter case, the politicians simply threw in the towel. In The Mess We’re In this problem of banking regulation is dealt with in an illuminating way, as discussed in my review. It is almost inevitable that this should happen as businessmen actually understand economic realities in ways that most academics and civil servants are incapable of, an elementary point that ought to have sounded the alarm over regulation.

Calvin Coolidge in his Autobiography affirmed that nine-tenths of those who called on the President at the White House “want something they ought not to have. If you keep dead still they will run out in three or four minutes.” (Quoted in Paul Johnson, A History of the Modern World from 1917 to the 1980s.) Would that the political classes on both sides of the Atlantic study the Coolidge presidential style, to our profit…

Perhaps Samuelson’s puzzlement is that a Keynesian system was meant to sweep away the habits of the period in which the early economists wrote, self-interest, collusion and all. But how on earth is it possible to believe that, with the government being courted on all sides, collusion should somehow fade away? This is just one of the many ways in which a Keynesian lens distorts the observation of what is actually taking place, in both an unregulated economy as well as a Keynesian one; the latter distorts information in such a manner that even the Keynesians themselves cannot read it!

Artistic Integrity?

A useful way of looking at Keynesian economics is as a branch of aesthetics, a subject to which I shall return. It was aesthetic distaste, after all, that inspired Keynes against the “early economists”, as I pointed out here. He inveighed against them thus: “When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years.”

During the Thatcher years this disapproval of “self-interest” induced a very peculiar species of posturing amongst the aesthetes. In his book The Strange Death of Tory England (Penguin Books, London, 2005), Geoffrey Wheatcroft dissects this disdain.

“The novelist John Fowles complained about ‘the self-centred notions of the new conservatism’. He was shocked by ‘this rightward and selfward tendency in most of the electorate since the 1950s’, a cult of personal advantage made worse now by ‘the ethos of the grocer’s daughter’.” These sentiments were generally echoed and endorsed by the artistic elite throughout the 1980s; for the novelist and playwright Michael Frayn the free trade Tories were “barbarians”; the philosopher A. J. Ayer voted for the SDP on the grounds that they were not “philistines”, and the novelist Julian Barnes echoed Fowles in thinking that Thatcher’s achievement had been “the legitimization of self-interest as a public and private virtue”.

How amiable, then, of these people to claim to have political motives loftier than “the ethos of the grocer’s daughter”. Wheatcroft quotes the composer Sir Michael Tippett on his voting intentions: “As an artist I’m impelled to vote Labour, since it’s the only party committed to doubling the arts budget.” And actor Antony Sher: “As a member of the arts [sic] I am heartened by [Labour’s] pledge to double the arts budget.”

Perhaps artistic self-interest takes place on a more exalted plane than the base motives of those who merely wish to feed their children.

What these variously fatuous “members of the arts” fail to see, or perhaps wilfully ignore, is that state subsidy of the arts inevitably means a very obviously self-interested transfer of wealth from the poor to the rich, another of those moral grotesqueries of the Keynesian and welfare state.  (It should be remembered that Keynes was Chairman of the Arts Council, overseeing such transfers.) Not only are they driven by self-indulgence but also by self-interest – but then, as the “early economists” and the Austrian School understood, we are all driven by self-interest, it cannot be otherwise.

The plea is often made that human life is more than just survival, that we are cultural and intellectual beings with other than literal hungers to assuage. I agree – it is hardly difficult to do so, the facts being what they are – but not by taking the bread out of the mouths of our children.

Readers curious as to why articles of this nature should be appearing on a gold investment website should read: GOLDCOIN.ORG: MIXING POLITICS AND NUMISMATICS

And for background on the writer: CONFESSIONS OF A LAW AND ORDER ANARCHIST

GOLD AND THE KEYNESIAN GROUPIES

Wednesday, October 31st, 2012

By Mark Rogers

A discussion of Gold: Adjusting for Zero by Daniel Brebner and Xiao Fu, Deutsche Bank, London, 18 September 2012

2008 did not just happen. The financial squalor of recent years is the culmination of several long-standing factors, the most important being cultural, the “group think” of the Keynesian consensus. To begin with the analysts’ conclusions: while their report explains that a return to the gold standard is feasible, they are not sanguine that it will happen:

“The world economy has, over the past century, morphed into a highly integrated, government dominated system guided by conventional wisdom (group think). The self-reliant individualism of the free market has been left behind in favour of a ‘new age’ of coddled consumerism. Culturally this represents a very powerful force … one which minimises creative options/solutions to economic impasses.” (p. 16)

“Many economists shudder at the notion of a gold standard; this is understandable given the school of thought to which most adhere: Keynesian or Keynesian derivative.” (p. 14)

High on the list of Keynes groupies who are in powerful positions is Ben Bernanke, Chairman of the Federal Reserve: it would take a conversion of Damascene proportions to get him to change his view of gold, and where he leads, many other central bankers and finance ministers willingly follow.

The authors of the report are therefore to be congratulated for their sombre realism in discussing this issue.

Zeroing in

As we approach Keynes’s ideal of 0% interest rates, “[m]oral hazard continues to be encouraged … The financial system in fact remains oriented to encourage further leverage and risk-taking.” This has an important consequence that goes a long way to explaining the crises that engulf us: investment is made simpler “in the sense that one only needs to look to what is ‘easiest’ rather than what is ‘right’.” If probity is at a discount, and an extravagant one at that, then why should politicians and policy makers even care about the consequences of their decisions? The Libor scandal (here and here), for instance, is an almost inevitable consequence of such moral insouciance.

A pertinent consequence for investors of quantitative easing is, as the report points out, the increasing price of gold. This is in fact simply another version of Gresham’s Law: as bad “eased” money increases so true value is driven into gold, forcing its price upwards given its relative scarcity. This is not to say that quantitative easing is good for gold, that is, easing does not contradict their assertion that a return to the gold standard is desirable given that this would prevent any such easing. It is simply a recognition of the fact that bad money always has this consequence: a return to the gold standard would be a restraint, allowing money to have a secure measure of value and preventing the arbitrary manufacture of money that destroys value.

Human Effort

The most remarkable aspect of this report is not the advocacy of a return to the gold standard – after all others are making the same case. What is interesting is the space the authors devote to the fons et origo of value: human effort. They devote two and a half pages (9-11) of what is after all a very short analysis to this concept and make this extremely important point: “if capital is stored effort, then debt is borrowed effort: either someone else’s or your own estimated future output.” The effect of exceptionally low interest rates is therefore to devalue your future effort by selling it to yourself, if you borrow, at a discount.

It is in this context that a return to the gold standard must be judged as essential: the moral hazard that the authors identify as being at the heart of the crisis cannot be allowed to continue.

The full report is available here.

FRANCAIS ESPANOL ITALIANO CHINESE

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Thoughts
"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."