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

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

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

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

His gold coins were sold like hot cakes

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

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

It is the right time to buy!

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

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

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

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

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

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

The interaction of the world’s markets plays an important role in the fluctuations and evolution of the Gold Price. Politics, economic policies and strategies, world events and currency changes can all have an effect on the demand for Gold as investors, private and institutional look to protect their wealth resources. At Goldcoin.org we champion the safe haven that gold and gold coin investment can offer in these troubled ecomonic circumstances where we have rising inflation, instability across the world and are on the verge of a new period of severe financial crisis.
Here’s a snapshot update from our regular expert analyst Bill Downey who explains where the gold price is, where it might be going and some of the factors that are affecting it.

In Tuesday nights website update — initial resistance in gold was listed at 1464-1468 and the high so far is 1467. Second tier resistance for today was listed at 1474-1478 — and that would be the area to watch if we can continue to move higher today.

Initial support was listed at 1444-1455 and the low so far today is 1453.60

London Gold Fix $1461.25 -$8.25

While the June gold contract saw an initial downtrend overnight, gold prices have recovered above the prior session’s closing value in the early Tuesday US trade action. Gold appears to be partially undermined by declining oil prices and a dampening of overall inflationary fears.

News that a major commodity trading brokerage firm was recommending profit taking in commodities, may also be undermining the gold market slightly. However, another key brokerage firm suggested that gold would outperform most commodities directly ahead and that might help gold prices stand up to the partial liquidation wave in some commodity prices.
Indian gold prices were slightly weaker overnight and news of another quake in Japan applied some minor pressure to gold and other commodity prices overnight. While the trade balance report from the US can drive gold prices, expectations for a slight narrowing of the US trade deficit might be seen as a negative to gold prices, especially if that report lifts the greenback and adds pressure to the bond market. If that would be the case — we think it would be temporary. The US dollar is under pressure again today and the Euro has now traded at the 145 level — a very IMPORTANT price point.

While the gold market generally saw dovish comments from the Fed yesterday, dialogue from the Fed’s Hoenig today might be add to the downside tilt as they are trying to “TALK” their way into making the markets think that there is not going to be more stimulus. So that is the one thing that could return gold to testing the lower areas from last night.

Equity markets in Asia and Europe were weaker during overnight trading and early indications are for the US stock market to open today’s session with moderate losses as Alcoa reported lower than expected earnings and Japan raised the danger level of its on-going crisis. The Japanese Economics Minister said that last month’s earthquake and tsunami would likely have a larger negative impact on the Japanese economy than earlier projections. A proposal by the African Union to end the Libyan conflict was rejected by rebel forces. The German CPI during March was up 2.1% year-on-year, in line with forecasts. A survey of German economic sentiment during April was 7.1, lower than estimates. The UK CPI during March was 4.0% year-on-year, lower than projections. The UK Trade during February was 6.78 billion Pounds, a smaller deficit than forecasts. Major US economic numbers to be released this morning include the February International Trade Balance, as well as Export and Import Prices at 7:30 AM, and surveys of store sales will also be released during the session. In addition, Fed Regional President Dudley will give a speech during the session. The first leg of the Treasury’s monthly refunding, the 3-Year Note auction, will have results announced at 12:00 PM CENTRAL time.

Going to the gold charts:

Last nights low was right at the dotted trend line on 30 min chart we published on the website and as long as the 1444-1455 area holds the trend remains up. The market is NOT AS BULLISH as it looked when we entered the week — and even though gold has come back 13 dollars from the low — we’re not out of the woods just yet on this pullback. The 1468-1470 area is probably the most important price point to watch today. We want to see gold above 1468 on a closing basis to add more potential that the pullback is complete. Until then — we can’t rule out more downside pressure today.

It seems like the 9am-10:30AM EST period today might be where the rubber meets the road — and that time frame is when gold would be the most likely to try and pullback.

In summary — the trend is still up —but not as solid as last week– the 1468-1470 area is resistance. Support is the 1444-1455 area. We still favor the bulls —- but we might remain in the 1450-1470 area today in price.

by Bill Downey

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People often ask if it is the right time to buy gold?

Quite simply it is always the right time to buy gold if you are looking to protect and preserve your wealth.

Sure the price can vary but the real value in owning physical gold is that it is your outright property which cannot be wiped out during a crisis or financial collapse. So think of a stocks and shares investment (or any other “paper” investment) the day after a crash – now think of physical, tangible gold assets that you own the day after a crash. The difference is obvious – one is worthless and may even lead to debt, the other has inherent value that will still be sought and can therefore be traded or sold.

Buying gold nowadays is simple and accessible to everyone.

You do not need to physically possess gold at home to fully participate, indeed quite the contrary – keep it safe, keep it in a vault and keep it accessible to sell whenever you choose.

For further information click here.

In last nights website update resistance was listed at 1437.50-1446 and the high so far is 1439. Support was listed at 1419-1425 and the low so far is 1430.

London Gold Fix $1434.50 +$2.00

There is a lot of cross current news this morning moving gold.

Gold prices were showing some positive action initially overnight despite minor strength in the Dollar versus the Euro and a few others. The gold market got marginal support from suggestions from the US Fed Chairman Monday night who labeled inflationary pressures as transitory, as that seemed to suggest that the Fed chief was a little less confident that inflation would indeed remain in check. In other words, the trade seemed to take the Fed comments overnight as a sign that inflation pressures were being acknowledged but were not fully entrenched yet. However, the Fed Chairman also suggested that recent price gains were probably temporary and that left the gold market somewhat confused. Indeed — he looked nervous during the discussion.

The gold market garnered some support from news of a credit downgrade of Portugal overnight, especially since the ratings suggested that the status of that debt remained under review.

Gold traded in the 1434 to 1439 area up until the London open. However, outside market action have limited gold prices early in the trade today, as some commodity markets like corn corn and soybeans started out on a softer footing–at least initially.

The gold market was also undermined by news of further Chinese tightening action overnight. The Chinese moved 25 basis points on lending and deposit rates and that event probably increased overhead resistance in the US gold market this morning near the 1440 area. Still — the last few rate increases from China had almost no effect — pretty much about what we’ve seen so far today. Over the last four hours — gold has tried to break below the 1430 area. Each hour has

The gold market will also be watching the GOP budget proposal release later this morning, as aggressive deficit reduction efforts could also be seen as a limiting development for gold prices. Paul Ryan has rolled out the plan and the big number is 6.2 TRILLION DEFICT REDUCTION OVER 10 YEARS —– The proposal was just released — so it will take a few days to see how the market absorbs this and how the debate unfolds.

Meanwhile the US BUDGET DEFICIT CEILING runs out FRIDAY — and the politicians are going back and forth in threats to not extend the ceiling on the Republican side.

While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally lower this morning. The Dollar was slightly higher against most of the major currencies during overnight trading, although posting a substantial loss versus the Pound.

A credit ratings downgrade of the sovereign debt of Portugal by one level this morning. Euro zone Retail Sales during February were down 0.1%, lower than expected. Major US economic numbers released this morning include a survey of US non-Manufacturing industries grew less than expected, but it wasn’t a barn burner.

GOING TO THE GOLD CHART — today we show the daily chart and the short term cycles we follow on the website. Orange circles are when the stronger trends usually peak — and the blue circles are when the weaker trend usually ends. While not all points work — take February for example — there is enough to at least keep an eye on developments. The trend is still up —- watch 1439-1444 as a key area.

On the downside — there has been a test every hour since 7AM EST of the 1430 area but so far it is holding— and that puts SUPPORT for the remainder of the day at 1425-1430. As long as price is above that area — its still up.

In summary —- the trend remains up —-We think that 1439-1444 is the PIVOT PRICE AREA TO WATCH — and closes above 1444 would increase the potential for the upside. PRICE ALWAYS RULES — but these short term trends need to be watched going into Wednesday. AS LONG AS PRICE HOLDS 1425-1430 support today — continue to favor higher.

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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Gold hasn’t reinvented itself as a currency yet. But it is getting closer.
J.P. Morgan Chase & Co. said it will allow clients to use the metal as collateral in some transactions. For example, a hedge fund wanting to borrow money for a short period can put up gold as collateral and use the borrowings to invest elsewhere, betting on making a better return. Typically, banks accept only Treasury bonds and stocks in such agreements.

By making the announcement, J.P. Morgan is effectively saying gold is as rock solid an investment as triple-A rated “Treasurys”, adding to a movement that places gold at the top tier of asset classes. It also is trying to capitalize on all the gold now owned by hedge funds and private investors that is sitting idle in warehouses.

“It’s solidifying a trend that gold is re-establishing its role as a monetary and financial asset,” said Carlos Sanchez, associate director of research with New York commodities consultancy CPM Group.

J.P. Morgan said it is responding to demand from clients, many of which also store gold in the bank’s vaults.

“Many clients are holding gold on their balance sheets as an inflation hedge and are looking to make these assets work for them as collateral,” said John Rivett, collateral-management executive at J.P. Morgan Worldwide Securities Services.

J.P. Morgan’s decision Monday reignited debate among gold’s fans and detractors. For decades, supporters have argued gold is a monetary asset and should be treated on an equal footing with cash. However, gold critics argued the market has been too volatile and too small for it to be considered a legitimate currency.

Recently, though, gold’s status has been rising.

Exchanges in New York, Chicago and Europe recently agreed to accept gold as collateral for certain trades. And the World Gold Council also is gaining traction in its push to have the Basel Committee on Banking Supervision accept the precious metal as a Tier-1 asset for banks, along with government bonds and currencies.

In India, many financial-services companies are offering personal loans against physical gold, a market that is expanding.

“Gold is increasingly being used as collateral around the world,” said Natalie Dempster, the gold council’s director of government affairs. “All these moves reflect a growing recognition of gold’s role as a high-quality, liquid asset.”

Gold futures for February delivery on Monday settled 70 cents lower, or 0.1%, at $1,347.60 a troy ounce on the Comex division of the New York Mercantile Exchange. It reached a nominal record close on Jan. 3 of $1,422.60.

In essence, J.P. Morgan is creating another role for gold, which has limited use now. One of the main laments of the metal’s critics is that, once bought, the metal doesn’t generate any income, compared with interest on bonds or dividends on stocks, and mainly just sits in vaults, rising and falling in value.

“It gives another use to gold as a cash instrument,” said Tom Pawlicki, an analyst at MF Global, a commodities brokerage. Investors who hold gold, he said, “might be less likely to sell it.”

Gold still is far from being the integral part of the monetary system it once was.

After World War II, under the Bretton Woods agreement, several countries pegged their currencies to the dollar, which in turn was fixed to the price of gold. President Richard Nixon ended the dollar-gold peg in 1971.

It is unclear whether customers need to hand over the physical bullion to J.P. Morgan or at what haircut the metal will be pledged with the bank.

There still is risk for financial institutions in taking gold as collateral.

If prices fall sharply, along with the value of the underlying trades, the collateral value could fall short of covering the trading positions, leaving banks scrambling for more margin to cover the losses.

In the past, worries about a lack of liquidity in the gold market have prevented banks from taking gold as collateral. But as investors piled into the market in recent years, the market has deepened.

The market is more liquid than many government-bond markets in Europe, with daily trading volumes normally exceeding $100 billion, according to the World Gold Council.

“When a bank, such as J.P. Morgan, is willing to extend collateral value against an asset such as physical bullion, it shows that they are not worried about the liquidity issue if they might take the collateral over or they have to liquidate the collateral,” said Frank McGhee, head precious metals trader at Integrated Brokerage Services, a Chicago broker.

Source Wall Street Journal: Carolyn Cui, Rhiannon Hoyle, Liam Pleven and Matt

A gold reserve is the gold held by a central bank or nation intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders (e.g., paper money), or trading peers, or to secure a currency. Today, gold reserves are almost exclusively, albeit rarely, used in the settlement of international transactions

The Chinese, Indian and Russian and other central banks are buying gold. The Indian Government recently bought 200 tonnes from the IMF to support international commitments. This new trend for buying gold by the Asian, Brazilian and Middle Eastern central banks (who still have very little gold compared to their reserves in dollars) is a supporting factor for gold prices.  As for Occidental central banks, they are less and less inclined to get rid of a metal which could become part of a new world reserve currency as desired by Russia and China.

The table below shows the proportion of gold in the foreign exchange reserves of central banks and not the gold reserves ratio of the currency.  As the FED has very little foreign currency in its reserves, its gold stock seems considerable, but this stock of gold is only 1.6% of  the quantity of dollars in the money supply.

National Reserves December 2009

Potential candidates for large gold purchases over the next few years are in the order they appear on the list: Japan, China, Russia, India  and Taiwan.

Astonishingly, in March, a European bank signed agreements with Washington II (with a sales quota of 500t per year) to buy gold! This is astonishing because since the beginning of the 1980’s, central European banks have not stopped liquidating their gold stocks which has had a heavy impact on the price of gold which dropped from $850 in 1980 to $256 in 2001.  Between 1999 and 2002 Gordon Brown then, Chancellor of the Exchequer, sold off 395 tonnes, 60% of the UK’s gold reserves, at rock bottom prices averaging $280 per ounce, about a quarter of its current value.

As for the USA, their gold reserves have remained virtually unchanged since 1980 and today are 8133 tonnes.  But doubts remain about the proportion of physical gold that would be available to control gold prices, as the gold may not longer physically exist in the reserves but is in paper form.

A year ago, the International Monetary Fund (IMF) announced that it would sell  off 403t from the 3217t that it had held for several years  in its reserves.  During the G20, the gold market was nervous due to speculation about possible additional sales by the IMF.  The IMF had simply stated that it would allocate the sale of these 403t of gold to help poor countries.  Subsequently the IMF sold 200 tonnes to India , 10 tonnes to Sri lank and 2 tonnes to Mauritius. That this announcement is part of a deliberate plan to curb the price of gold in these difficult times is clearly questionable.  But it will be impossible to counter market forces in the long term.  When the price of gold rose from $200 to $850 at the end of the 1970’s, the IMF sold 1600t of gold on the market without being able to stop the rise.  To these sales were added the sales of the USA who liquidated some of their gold stocks.

Today the central banks’ gold stocks are a lot lower and the state of the economy is in a lot more trouble than during the stagflation of the 1970’s.  The price of gold no longer has formidable adversaries who can curb its rise.  Instead it now has formidable allies in countries such as China and Russia!

Adapted from an article  by Léonard Sartoni first published in Q1 2009

There are no Swiss banks in Goldfinger although “Goldfinger, in ready money, is the richest man in England. In Zürich, in Naussau, in Panama, in New York, he has twenty million pounds’ worth of gold bars on safe deposit.” But Goldfinger uses Switzerland as the hub of his gold trafficking (which was illegal at the time in some European countries). There he has a discreet plant where he melts down car parts made of solid gold to then discreetly bank them or ship them on. Switzerland never had capital controls that prevented the free flow of gold or other precious metals, and this makes it even today the world’s first market for gold. In the movie, Goldfinger uses this Swiss freedoom to his advantage.

…
Colonel Smithers explains the British secret service’s interest for Mr Goldfinger operations during the dinner at the Bank of England:

‘The great thing to remember about gold is that it’s the most valuable and most easily marketable commodity in the world. You can go to any town in the world, almost to any village, and hand over a piece of gold and get goods or services in exchange. Right?’ Colonel Smithers’s voice had taken on a new briskness. His eyes were alight. He had his lecture pat. Bond sat back. He was prepared to listen to anyone who was master of his subject, any subject. ‘And the next thing to remember,’ Colonel Smithers held up his pipe in warning, ‘is that gold is virtually untraceable. Sovereigns have no serial numbers. If gold bars have Mint marks stamped on them the marks can be shaved off or the bar can be melted down and made into a new bar. That makes it almost impossible to check on the whereabouts of gold, or its origins, or its movements round the world. In England, for instance, we at the Bank can only count the gold in our own vaults, in the vaults of others banks and at the Mint, and make a rough guess at the amounts held by the jewellery trade and the pawn-roking fraternity.’

‘Why are you so anxious to know how much gold there is in England?’ [How much gold is there in England today?]

‘Because gold and currencies backed by gold are the foundation of our international credit. We can only tell what the true strength of the pound is, and other countries can only tell it, by knowing the amount of valuta we have behind our currency [valuta = the value of a currency expressed in terms of its rate of exchange with gold (or some other currency)]. And my main job, Mr Bond-’Colonel Smithers’s bland eyes had become unexpectedly sharp – ‘is to watch for any leakage of gold out of England – out of anywhere in the sterling area. And when I spot a leakage, an escape of gold towards some country where it can be exchanged more profitably than at our official buying price, it is my job to put the CID Gold Squad on to the fugitive gold and try get it back into our vaults, plug the leak and arrest the people responsible. And the trouble is, Mr Bond-’Colonel Smithers gave a forlorn shrug of the shoulders-’that gold attracts the biggest, the most ingenious criminals. They are very hard, very hard indeed, to catch.’

‘Isn’t all this only a temporary phase? Why should this shortage of gold go on? They seem to be digging it out of Africa fast enough. Isn’t there enough to go round? Isn’t it just like any other black market that disappears when the supplies are stepped up, like the penicillin traffic after the war?’

‘I’m afraid not, Mr Bond. It isn’t quite as easy as that. The population of the world is increasing at the rate of five thousand four hundred every hour of the day. A small percentage of those people become gold hoarders, people who are frightened of currencies, who like to bury some sovereigns in the garden or under the bed. Another percentage needs gold fillings for their teeth. Others need gold-rimmed spectacles, jewellery, engagement rings. All these new people will be taking tons of gold off the market every year. New industries need gold wire, gold plating, amalgams of gold. Gold has extraordinary properties which are being put to new uses every day. It is brilliant, malleable, ductile, almost unalterable and more dense than any of the common metals except platinum. There’s no end to its uses. But it has two defects. It isn’t hard enough. It wears out quickly, leaves itself on the linings of our pockets and in the sweat of our skins. Every year, the world’s stock is invisibly reduced by friction. I said that gold has two defects.’ Colonel Smithers looked sad. ‘The other and by far the major defect is that it is the talisman of fear. Fear, Mr Bond, takes gold out of circulation and hoards it against the evil day. In a period of history when every tomorrow may be the evil day, it is fair enough to say that a fat proportion of the gold that is dug out of one corner of the earth is at once buried again in another corner.’

Ian Fleming – “Goldfinger”