Gold’s holding pattern is a gift to bargain hunters

Gold prices stood near the $1,350 range today on news that China’s central bank acted to slow inflation but fell short of raising interest rates outright. Gold’s holding pattern is a gift to bargain hunters because gold “should continue to remain well supported too, both by the growing debt crisis in the euro-zone peripherals, which could spill over to other countries at any time, and the expansion of liquidity on the back of renewed quantitative easing of U.S. monetary policy,” Commerzbank analysts said. Richcomm Global Services’ Pradeep Unni agreed, saying a weak dollar and a firmer euro “will continue to provide a bullish bias to the metal.”

The trend is “back up again”

Gold prices surged back Thursday as the euro rose against the dollar on optimism of a bailout for Ireland. “Having held $1,330, and with the dollar a bit weaker … we are just following the trend back up again,” the Bank of Nova Scotia’s Simon Weeks said. VTB Capital’s Andrey Kryuchenkov noted: “Should fear in the eurozone escalate, gold would draw fresh support from risk-averse buyers similar to what happened earlier this summer when investors scrambled for the safe-haven asset on fears of sovereign default.” Investors also are watching China for potential news of an interest-rate rise, which would only create a buying opportunity for bargain hunters.

Billionaire George Soros tips his hat to gold

With quantitative easing going full-steam ahead and U.S. interest rates low for the foreseeable future, billionaire investor George Soros said the precious metal still has plenty of kick to it. “The conditions for gold are pretty perfect,” he said Monday. Soros also said the present world order is on the brink of breaking down. “There is now a rapid decline of the United States and a rapid rise of China,” he said. “It is happening very quickly. … If they persist in their present course, it will lead to conflict,” he said, adding that China’s neighbors are already getting nervous about its rising global influence. Read more

Inflation surfaces at Walmart, not in feds’ data

Offering up its statistics Wednesday, the Labor Department said the core consumer price index, an inflation indicator that excludes food and energy prices, was unchanged in October. However, a new pricing survey of 86 products sold there – mostly everyday items like food and detergent – showed a “meaningful” 0.6 percent price increase in just the past two months, according to MKM Partners. At that rate, prices would be close to 4 percent higher a year from now, double the Federal Reserve’s mandate. “I suspect that when [Fed Chairman Ben Bernanke] thinks about reflation, he has a difficult time seeing any other asset besides real estate,” said Jim Iuorio of TJM Institutional Services. “Somehow the Fed thinks that if it’s not ‘wage-driven’ inflation then it is somehow unimportant. It’s not unimportant to people who see everything they own (homes) going down in value and everything they need (food and energy) going up in price.” Read more

The Fed sticks to its quantitative-easing guns

Ben Bernanke had to defend the Fed’s actions on Capitol Hill, where he briefed skeptical lawmakers on the QE plan’s merits on Wednesday, and some of his colleagues said the bank is likely to follow through on its entire $600 billion bond-buying program, citing weak economic data. “It looks like we’ll be purchasing at this pace through the end of the second quarter to add up to $600 billion,” St. Louis Federal Reserve Bank President James Bullard said.

The Fed’s QE plan came under fire this week from a group of prominent Republican-leaning economists and other experts. “The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment,” they said in an open letter published in The Wall Street Journal and The New York Times. Top Republican lawmakers also sent Bernanke a letter warning that QE “introduces significant uncertainty regarding the future strength of the dollar and could result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles that could cause further economic disruptions.” Read more

Chinese march toward gold continues

“China is considering raising its gold reserves, a move which would push up gold prices in the future, a person providing consulting services to the Chinese government said” in a Chinese daily-newspaper article. “The source told the 21st Century Business Herald [that] China may gradually increase gold holdings as it is not possible for the country to buy large amounts of the metal within a short time.” Two Chinese precious-metals experts also weighed in on gold’s prospects for the article: “Chen Beilei, director of metals and mining at BOC International Holdings, said China may increase its gold reserves to diversify its foreign exchange reserves. … Demand for gold may continue to rise due to inflationary risks brought by Washington’s recently announced quantitative easing program, high public debts and low economic growth in Europe, Chen said. … Feng Rui, president of Silvercorp Metals, said the decline [in gold prices] is an adjustment in the upward trend … and the metal may rise by as much as 20 percent in the future. Feng predicted the price of gold would peak at $1,600 per ounce in 2011.” Read more

“Bullish” Barclays Capital sees $1,485 gold this year

Gold could hit a record $1,485 by year’s end, Barclays Capital analysts say. “Strategically, we are bullish,” the bank said. “Medium-term trend followers are unlikely to have been panicked out of their positions given that important support between $1,314 and $1,331 is still holding. A bearish divergence signal on weekly charts, though, warns of downside risk throughout the month, and we still fear an important clearout below $1,314 to $1,250 before gold recovers. We would be bargain-hunting as the price approaches $1,250.” Read more

French banking giant raises its precious-metals forecasts

BNP Paribas said Wednesday it has raised its 2011 forecasts for gold and silver (as well as palladium and platinum).

Gold: The bank increased its gold forecast for the first quarter of next year to an average $1,415 from its previous estimate of $1,280, with the price expected to rise to an average $1,565 by the end of next year, compared with a previous $1,310 forecast. “Gold is considered one of the best hedges against either of these risks,” BNP Paribas analysts wrote, referring to dollar weakness and rising inflation fueled by QE. “Add to inflation expectations a low nominal interest rate environment, and the decline in expectations for real returns makes alternative asset classes, such as commodities, appealing for investors.”

Silver: The bank expects silver to average $25.30 in the first three months of next year, up from its previous forecast of $19.75, rising to an average $27.45 by year’s end. The spot silver price has risen by more than 50 percent this year to 30-year highs well above $25. Read more

Any dip is a buying opportunity, experts concur

The trend is positive: “We may see some more consolidation in gold,” said INO.com chief and Market Club co-founder Adam Hewison in a Monday video chart analysis of gold. “Now please don’t misunderstand what I’m saying. We are not bearish on gold longer-term. The trend in fact is still very positive. … The longer-term trend in gold … is very clearly up, and it’s going to probably have some pullbacks, which is possible, and then I think we’re going to see the market go to new highs. I don’t think we’ve seen the highs yet in gold.” Watch video

Accumulate on weakness: “We don’t think that the U.S. dollar fundamentally should deliver any form of sustained strength, so we wouldn’t expect to see this serve as a game changer for the commodities,” Fat Prophets analyst Colin Whitehead told CNBC Monday. “The underlying fundamentals for gold – and that is strong and continued investment demand – remain in place over the longer term. So we don’t think that we’re in bubble territory yet. We’re really just in the foothills of the gold bubble. … Certainly as we look at gold, it’s not yet clear as to whether the correction has petered out. We’re certainly going to have some consolidation ahead of what we think is a further upface. So we’ll be looking to accumulate on weakness there.” Watch video

A healthy correction: “This [dip] is just healthy,” CIBC World Markets Vice Chairman Warren Gilman told CNBC Tuesday. “Metal prices probably got a little bit ahead of themselves during the September and October period. Prices got to pretty lofty levels, and I think this is a healthy correction. … I think gold is going to prove to be most resilient. People have been waiting for an opportunity for an entry point, and I think this is probably that opportunity.” Agreeing with CNBC anchor Bernard Lo that paper currencies are vulnerable, Gilman adds: “That’s one of many reasons, and obviously we have inflation on the horizon, and there are plenty of reasons to buy gold, and I think there are a lot more buyers than sellers in this environment. … I think we could get down to $1,250, or we could potentially break $1,300, but I wouldn’t expect it to go much further than that.” Asked what sort of gold to invest in, Gilman says: “I think I would probably shy away from the equities because the equities have had a good run in the last little while. I would go for physical. … Buy coins.” Lo interjects: “Krugerrands, Maple Leafs, and Pandas?” “Indeed,” Gilman answers. Watch video
Stay the course: In a Monday show, CNBC “Fast Money” analysts applauded billionaire hedge-fund magnate John Paulson’s decision to maintain his massive gold position. “You look at his holding, gold. He kept it; he left it alone,” Joe Terranova said. “I don’t know why you would be selling gold right now. You should hold onto it. He’s doing the right thing. There’s nothing in the price action that tells you to sell.” Analyst Carter Worth agreed: “The reason to sell something, right, is weakness that suggests further weakness, or hyper-strength that suggests it’s over. Gold has been deliberate and orderly and measured – a nice bounce over the last three months. … Stay the course.” Watch video

ETFs lose luster in the shadow of physical gold

Doubts continue to be raised about the reliability of certain exchange-traded funds, and Blanchard and Company, Inc. agrees the issue is a troublesome one.
Read the fine print: In a Nov. 10 broadcast, CNBC star Rick Santelli called into question the actual physical precious-metals backing behind the large exchange-traded funds like SLV and GLD. “If you’re looking for something to worry about, think about all the coverage we in house have been giving to ETFs. I like futures contracts because I know there’s silver there, and if I want it, I’ll get it. But ETFs I still have questions about. … It’s clear that you can’t get the physical gold if you want it – they can give you money (instead). Read the fine print – that’s all I’m saying. And I want to put somebody on who’s actually seen their inventory. You think we can find somebody who will actually go on and say, ‘I’ve seen it’? I don’t think so.” Watch video

Hosted by “hostile entities”: Seeking Alpha contributor Mark Anthony has articulated similar fears in a recent article: “I always encourage people to directly own physical precious metals. I do not trust the physical gold ETF, GLD, and the physical silver ETF, SLV. Like some other folks I expressed skepticism whether these funds actually hold the physical precious metals as they claimed. These ETF funds were hosted by entities known to be hostile to precious metal investors and known to have large short positions in silver, so why should people trust them?” Read more

Similar concerns surfaced in a Financial News article Monday titled “Bearish trustees dig deep for gold and diamonds”:

Iain Tait, partner at UK wealth adviser London & Capital, received requests from separate trustees in Jersey and Guernsey for physical diamonds and gold bars last week. He said: “There is the feeling that ETFs are the home of the speculator, while bars and real diamonds are the domain of wealthy families trying to protect themselves.”

Ned Naylor-Leyland, partner at Cheviot Asset Management, said a lack of trust in banks and the spectre of counterparty risk was a problem. “I hear Swiss banks are turning out their vaults for clients wanting to take home their gold. Trust is wearing thin.”

Some investors are put off by the idea that gold ETFs can contain other financial products, such as swaps or derivatives, even if just a small percentage of their weighting.

Angus Murray, chief executive of London-based Castlestone Management, said: “Physical gold is simply metal without any other financial product or structure. My clients want to own an unleveraged real asset.” He added: “If the ETF doesn’t have the ability to list additional shares there can be a pricing issue. Why complicate it?” Read more

Don’t lose sight of the big picture

Analyzing gold’s correction this week in a Seeking Alpha post, Gold in Mind blogger Marek Kuchta concludes:

The only thing that somewhat makes sense is the big picture and the general direction. The gold price has so far gained 20 percent in 2010, even after the current drop. All primary, long-term reasons for gold’s continuous rise such as exorbitant government debt and unfunded liabilities, quantitative easing, high volatility and uncertainty in all markets, fear of commodity inflation (to be followed by imported domestic inflation), and many more, remain in place. There is no obvious reason for a lasting trend reversal in the gold price. Unfortunately, very obvious are the reasons for a further decline of the value of the dollar and possibly also the pound and the euro.

So, strategic investors and savers, don’t lose your nerves. Wherever we are headed, it will be a bumpy ride that may end up in a complete off-road trip. Don’t forget where the north is, think about what you’ll need should we arrive in the wilderness. Nothing is safe there. Diversify, buy gradually, avoid paper promises. Keep your economic seat belt buckled, keep your eyes open, keep gold in mind.

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Critics Believe Second Round of Quantitative Easing By the Fed Will Further Devalue the Dollar and Create Inflation

Federal Reserve Chairman Ben Bernanke has been quoted as saying he would fly over the United States and drop dollars from a helicopter should it be necessary.

Sans helicopter, for the time being at any rate, the Federal Reserve has announced that it plans to breathe new life into the economy with additional quantitative easing, a series of Treasury purchases starting with $600,000,000 that may ultimately total $1 trillion or more according to some sources. With the U.S. economy expanding at just 2 percent annually in the third quarter of this year and the jobless rate apparently stalled at about 9.6 percent, the Fed was pressured to do something to stimulate the economy.

Bernanke explained to students at Jacksonville University that a second round of easing will enable the Fed to accomplish its two Congressional mandates, ensuring full employment and stable prices while preventing deflation and generating some “good” inflation.

Critics say the dollar will weaken and create inflation

Critics believe that the dollar will weaken as these purchases (accomplished by printing money) increase the Fed’s balance sheet. Inflation is fueled by a weaker dollar as the real price of goods and services becomes more expensive. Using past research and her own models, Goldman Sachs strategist Robin Brooks suggests the dollar will need to drop a great deal more than the Federal Reserve thinks in order to meet the central bank’s inflation target.

“Substantial additional monetary stimulus is needed for the Fed to meet its dual mandate on inflation and employment,” wrote Brooks after the Fed’s announcement. She has raised her estimate for the total size of this second round of quantitative easing from $1 trillion to $2 trillion. “If indeed the Fed sees the dollar as one of its key policy levers for preventing inflation from staying below its mandate for a prolonged period, the dollar needs to fall a lot further from here,” says Brooks.

The big question is when Bernanke discovers that the plan isn’t working, how much farther could the dollar fall? This controversial plan of additional quantitative easing takes the Fed into essentially uncharted waters and puts the dollar at risk of crashing. Frankly, these additional bond purchases could be more destructive than critics even think if inflation is ignited when the economy finally comes around.

A recipe for currency wars

“Our first objective, the first goal that we have, is to meet our mandate to get price stability and maximum employment in the United States,” Bernanke said in response to questions from college students in Jacksonville, Florida. “A strong U.S. economy, a recovering economy, is critical not just for Americans but it’s also critical for the global recovery.”

Overseas officials see it differently, however. Many believe the Fed’s plan may not only affect their economies negatively, but fail to accomplish the objective in the United States as well.

* “We are all under attack by the relaxed monetary policy of the United States,” Colombian Finance Minister Juan Carlos Echeverry told investors.

* Among other comments, China’s central bank chief said the Federal Reserve’s plan reinforced the need to reform the global financial system.

* German Finance Minister Wolfgang Schaeuble was quoted as saying: “I don’t think the Americans will solve their problems with this and I think they are creating extra problems for the world.”

* Brazil’s finance minister stated that the move would devalue the dollar, negatively affect Brazil and other exporters and be ineffective without other changes. In a reference to Bernanke’s aeronautical moniker, he also stated: “It’s no use throwing dollars out of a helicopter.”

* The Philippine central bank stated it would “remain vigilant” and a bank deputy governor warned the Fed’s move might exacerbate instability in emerging markets.

Four Reasons Why This “Gold” Bull Market Is Nowhere Near the Top

Reason #1. It is obvious that the trend for the dollar is down and “Helicopter” Ben Bernanke and the Federal Reserve are dead set on debasement. Bernanke wants a weaker dollar pure and simple. The current climate of low inflation in the United States has generated comparisons to Japan’s “lost decade” where deflation prevailed. Unlike Japan, however, the United States finances its deficits externally. Our destiny will be different and the dollar may crash in that process.

Reason #2. It is obvious that the Fed sees deflation as the death knell to the debt bubble and is willing to debase the dollar to prevent any chance of deflation. This, in my view, is a very wrong policy. We must brace ourselves for a much weaker dollar.

Reason #3. Add the massive new debt, involvement in conflicts around the globe, the possibility of terrorist threats, the potential debacle when the United States cannot meet its obligations, rising mortgage failures, out of control entitlements, outsourcing and the burgeoning economic power of Asia, a stagnating economy and ever increasing unemployment to the threat of inflation and the case for gold couldn’t be stronger. When the direction of the dollar is down, the direction of gold in its various forms, including coins, is up!

Reason #4. This bull market is nowhere near the top and the multi-year gold bull market is firmly intact. Commodity price cycles tend to last multiple decades and the current bull cycle only began in 2001. Gold’s recent run has been slow and steady due to the greater affluence in the developing countries where people have traditionally turned to gold as a store of wealth. All savvy investors should take note.

Make sure your portfolio is appropriately diversified

Historically, gold has performed well in times of political and financial turmoil. Gold hit an all-time high (adjusted for inflation) in 1980 during the Iran hostage crisis and when the Soviets invaded Afghanistan. The geopolitical climate today is also volatile. Consider the ongoing conflicts in Iraq and Afghanistan, the pursuit of nuclear arms by Iran and North Korea and the fact that the major economies of the world have assumed extensive amounts of debt. The economic instability of Greece and other nations hasn’t gone away. The United States is still battling ever-increasing unemployment and job losses even after it has spent hundreds of billions of dollars in stimulus money. All of these factors make a strong bullish case for gold. In fact, a recent Bloomberg survey of 29 analysts proved to be very bullish for 2011.

If you do nothing else, make sure your portfolio is appropriately diversified….and Monaco Rare Coins is here to provide you with any assistance you may need. Monaco is second to no company in the industry for availability and prices. Even in the rare event that you may find a better price elsewhere…we will meet any legitimate offer on any like coin. We look forward to assisting you in beginning your diversification into gold coins or the continued diversification of your portfolio.

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GDP meets expectations

Gold broke $1,350 today just before data showed the U.S. gross domestic product grew by 2 percent in the third quarter on high consumer spending, meeting economic forecasts. In a big meeting Tuesday – also Election Day – the Federal Reserve will discuss the prospect of further quantitative easing, or QE, which will have a major impact on the dollar, inflation expectations, and gold prices. “The Fed meeting next week has been dominating the markets,” said Standard Bank analyst Walter de Wet. “We think the gold market has priced in around a $500 billion QE exercise by the Fed,” he said. “If the Fed comes out with a higher figure, we think gold will move higher.”

The trillion-dollar question: How much money will the Fed print next?

All eyes are on the Fed and its next anticipated round of QE. Most experts agree that some form of QE will be launched at the conclusion of a two-day meeting of its policy-making committee next Wednesday. It’s now just a question of how many billions worth of assets it will purchase and how much the financial markets have already priced in that QE.

“Shock and awe”?: Goldman Sachs thinks the Fed ultimately might buy $2 trillion of assets – a figure close to its “shock and awe” purchase of $1.7 trillion in longer-term Treasury and mortgage-related bonds at the height of the financial crisis. “We expect an announcement of $500 billion or perhaps slightly more over a period of about six months,” said Goldman economist Jan Hatzius. “The key question, however, is not the size of the first step, but how far Fed officials will ultimately need to move to achieve their dual mandate of low inflation and maximum sustainable employment.” The Fed also might announce a monthly purchase rate of perhaps $100 billion that will remain in place until the outlook for jobs and inflation improve “significantly,” he wrote. Goldman thinks as much as $4 trillion of additional asset purchases might be needed to bring inflation and unemployment into line with the Fed’s targets.

Likewise, Bank of America-Merrill Lynch Global Research has forecast $1 trillion in QE, and a Reuters poll showed Wall Street analysts expect the Fed to buy between $80 billion to $100 billion in assets per month.
Or “a measured approach”?: However, on Tuesday, The Wall Street Journal downplayed expectations of a major round of QE: “The central bank is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, a measured approach in contrast to purchases of nearly $2 trillion it unveiled during the financial crisis. … Officials want to avoid the ‘shock and awe’ style used during the crisis in favor of an approach that allows them to adjust their policy, and possibly add to their purchases, over time as the recovery unfolds.”

Gold stands to gain: The launch of any significant QE should have an uplifting effect on gold prices. Gold could rise to $1,400 an ounce and the dollar could lose another 2 percent to 3 percent if the Fed buys $500 billion over the next six months, HSBC analysts said Monday. The Fed could eventually buy up to $2 trillion in bonds – way more than the government will issue this year, according to HSBC.

Unbottling the inflation genie

In leading the Fed into uncharted monetary territory, Chairman Ben Bernanke is risking unleashing 1970s-style inflation – against which gold is your best protection. “By reducing real interest rates and trying to break the psychology of ‘Why spend today when I can buy goods cheaper tomorrow,’ they are hoping to drive growth that would be more commensurate with a pickup in employment,” said Miller Tabak & Co. chief economic strategist Dan Greenhaus. “The risk is a late-1970s type of scenario where the inflation genie gets out of the bottle.”

Treasury sale anticipates inflation

Also agreeing is CNBC anchor Larry Kudlow, who commented this week on a major event in the world of U.S. Treasuries:

An extraordinary event for bond markets occurred [Monday] when the Treasury sold $10 billion of 5-year inflation-protected securities, or TIPS, at an auction with a yield of negative 0.55 percent. That’s right. Negative. Can’t remember when that’s happened before. In other words, investors were willing to pay the Treasury 105 cents in order to buy $1 of inflation protection. Now how does that square with the Fed’s new-found fear of deflation? Does the central bank ever listen to markets? Ever since Ben Bernanke announced his QE2 pump-priming monetary-stimulus idea late last August, inflation-sensitive markets have been going wild. The dollar is down. Gold is up. Commodities are up – big time. … You can’t print $1 trillion of new money without sinking the currency. The dollar is already overproduced. Just ask China and other Asian countries, or Brazil, each of which is fighting against the inflow of excess dollars. Again, judging by inflation-sensitive markets, rising prices are the fear, not falling prices.

Wall Street strategist Peter Boockvar writes about the CRB index rising to its highest level in two years, including booming cotton and copper. He also notes companies like Starbucks, McDonald’s, General Mills, Goodyear, and Kimberly-Clark, which have all reported higher cost inflation. And then comes this priceless sentence: ‘Ahead of next week’s FOMC meeting, where the Fed wants higher inflation, all will be okay as long as you don’t drive, eat, drink, wear cotton-based clothes, use copper wire for any type of construction, blow your nose, diaper a kid, or wipe your arse.’ Boockvar is right. The Fed is wrong. Investors will even take negative real yields to protect against inflation. What does that tell you?

Inflation evident in soaring commodity prices

Research analyst Jake Weber of Casey Research highlights the discrepancy between skyrocketing commodity prices versus the U.S. government’s official, anemic inflation statistics in his article “Chart of the Week: Inflation in the Real World”:

The Real Cost of Living

As is often the case, there is a big difference between what the government statistics are reporting and what’s going on in the real world. According to the most recent inflation reading published by the Bureau of Labor Statistics (BLS), consumer prices grew at an annual rate of just 1.1 percent in August. The government has an incentive to distort CPI numbers, for reasons such as keeping the cost-of-living adjustment for Social Security payments low.

While there’s no question that you may be able to get a good deal on a new car or a flat-screen TV today, how often are you really buying these things? When you look at the real costs of everyday life, prices have risen sharply over the last year. For simplicity’s sake, consider the cash market prices on some basic commodities. On average, our basic food costs have increased by an incredible 48 percent over the last year (measured by wheat, corn, oats, and canola prices). From the price at the pump to heating your stove, energy costs are up 23 percent on average (heating oil, gasoline, natural gas). A little protein at dinner is now 39 percent higher (beef and pork), and your morning cup of coffee with a little sugar has risen by 36 percent since last October.

You probably aren’t buying new linens or shopping for copper piping at the hardware store every day, but I included these items to show the inflationary pressures on some other basic materials that will likely affect consumer prices down the road. The jump in gold and silver prices illustrates that it’s not just supply and demand issues driving the precious metals higher – the decline in purchasing power of the dollar is also showing up in the price of physical goods. It is because stashing wheat and cotton in the garage is an impractical way to protect purchasing power that investors are increasingly looking to protect themselves with the monetary metals – a trend that is now very much in motion.

China blasts the dollar

Money printing by the United States is “out of control,” China’s commerce minister said Tuesday. “Because the United States’ issuance of dollars is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation,” Chen Deming said. “The uncertainties of this are causing firms big problems.” Chinese officials have criticized U.S. monetary policy as being too loose before, but rarely in such explicit language. At the G20 meeting in South Korea that ended Saturday, Chinese Finance Minister Xie Xuren said issuers of major reserve currencies – code for the United States – must follow responsible economic policies. Along with posing an inflationary risk, a weak dollar also places appreciation pressure on China’s yuan since its value is so closely tied to the U.S. currency.

China eyes more gold

China should boost the amount of gold held in state reserves to a level equal with the U.S. holdings, a newspaper run by China’s Ministry of Commerce said Wednesday, citing local researcher Meng Qingfa. U.S. reserves stand at 8,133 tons versus China’s 1,054 tons. “Doubtlessly, if the yuan is set to become an international currency like the dollar or the euro, China has to get a huge gold reserve to support it, and a reserve of 1,054 tons is far from being enough,” Meng said. He added that China could build up a gold reserve as large as the U.S. stash by using only 10 percent of its $2.65 trillion stockpile of foreign-exchange reserves. Meng’s view does not represent China’s official stance, but the domestic appeals for China’s foreign-exchange reserve regulator to buy bullion has been intensifying in recent years. According to UBS analyst Edel Tully: “This … supports the general market consensus that China will add to its gold reserves. While the implications of potential QE and its size have monopolized market attention, the China report reminds us that the current mood amongst central banks, particularly in Asia, is to increase exposures to gold.”

Beware mass insider stock selling

Is now the time to buy gold for safety’s sake? This worrisome report from CNBC suggests yes:

“The overwhelming volume of sell transactions relative to buy transactions by company insiders over the last six months in key leading sectors of the market is the worst Alan Newman, editor of the Crosscurrents newsletter, has ever seen since he began tracking the data. … ‘Clearly, insiders are seeing great value only in cash. Their actions speak volumes for the veracity for the current rally.’ … Newman isn’t alone in warning about insider selling. The latest report from Vickers Weekly Insider, a publication that makes investments based upon these transactions, shows that total insider sell transactions relative to purchases on the New York Stock Exchange are running at a ratio of more than four to one over the last eight weeks. … Newman … sees the insider selling as just the latest reason, along with the mortgage foreclosure mess and fully invested mutual fund managers with no fresh powder to put to work, to be cautious on the market. ‘At the risk of sounding like a broken record, we expect a significant correction,’ said the newsletter editor.”

Gold vs. silver is a win-win

Gold vs. silver: Which is the better investment? To find out, CNBC put two precious-metals experts in a boxing ring, in the form of Goldmoney chief James Turk and Charlie Morris of HSBC Global Asset Management. In this Oct. 26 interview, Morris argues that gold will outperform silver. “We’re in a massive bull market for all precious metals,” but silver is more volatile, he says. In the long term, gold will triumph because gold is “a more precious precious metal, so I think over the long term you’re going to get a better return at a lower volatility.” Turk argues that silver will outperform gold – though he endorses both metals because both avoid counter-party risk: “I’m a long-term accumulator. I see buying gold or silver as a form of savings – you’re saving sound money and you’ve done very, very well this decade, and I think that’s going to continue regardless whether you buy gold or silver. … My recommendation is generally to have two-thirds of your bullion portfolio in physical gold and one-third in physical silver, and if silver does outperform, it will become increasingly part of your portfolio.”

Watch CNBC Video Here

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As usual our latest Treasure Auction is full of surprises, but this time we feel it is also very well balanced across many fields, with more general world coins than ever before. Here are some highlights:

In great deference to the Sedwick patriarch, for the first time ever we are offering selections from the Frank Sedwick study collection of 1715-Fleet gold cobs, including plate coins from past editions of the Practical Book of Cobs and other pieces never seen or offered for sale, coins that the pioneering “Dr. Cobs” kept as the best examples among thousands that passed through his hands.

The unique opportunity to own a “Frank Sedwick” specimen will start in this auction with just two 1715-Fleet masterpieces: The finest-known Lima 4 escudos 1711 and one of the best Lima 8 escudos 1712 ever offered.

In the same category of quality as Frank Sedwick’s 1715-Fleet gold cobs is a choice Cuzco cob 2 escudos 1698, a plate coin in Marty Meylach’s classic book Diving to a Flash of Gold.

But perhaps most intriguing in the gold cobs this time is a 1715-Fleet Mexican 1 escudo that was flown aboard Apollo 14 in 1971, the only one of its kind. Before this specially engraved coin came to us, we had no idea that the Apollo astronauts included genuine shipwreck treasure in their “flown” souvenirs on their trips to the moon, but apparently the link between NASA and the Real Eight Co. was more than just geographic. We have come to understand that medallions made of 1715-Fleet silver flown to the moon are very hot with space collectors, who will no doubt go crazy for this genuine coin as well, but perhaps the treasure collectors will win out in the end.

Highlights in shipwreck silver coins include large offerings of lion daalders from the Campen (1627), Potosí cobs from the Consolación (1681) and the Boticaria site of the 1681 Fleet off Panama (first-ever offering, also with some artifacts, with updated history), and hundreds of choice (and some interestingly shaped) 1715-Fleet Mexican cobs from the estate of Karl H. Goodpaster (Real Eight Co. conservator), as well as hundreds of Mexican cobs from the Rooswijk (1739). The Goodpaster collection in particular will be fun to watch, as nothing is hotter today than Fleet silver cobs!

In the non-wreck cobs sections we feature the John Pullin collection of over 150 choice, dated Mexican silver cobs, in addition to Part II of the Mark Bir collection of cobs from Mexico, Lima and Potosi. Also highlighted are the mints of Panama and Santo Domingo, as we feature several Santo Domingo SILVER and copper coins of Charles-Joanna AND Philip II (yes, you read that right) in addition to THREE Panamanian silver cobs (half, 1 and 2 reales), following the record-setting prices for such coins in our last sale. Our Spain-cobs section has an abundance of Ferdinand-Isabel coins in all denominations, including a set once featured in the PLVS VLTRA newsletter. One last surprise: the Louis Hudson collection of zoomorphic cobs. You won’t want to miss it!

The world silver coins section this time is massive, featuring the John Pullin collection of Mexican War for Independence silver coins (just in time for this year’s Bicentennial of Mexican Independence), Mark Bir’s milled Spanish colonial coins (various mints) and a HUGE section on all periods of Venezuelan coins (over 100 coins), in addition to many other Latin American countries.

Before we get to the artifacts, let’s just say there is a wealth of gold and silver (and even copper) shipwreck ingots too, both Spanish and Dutch (VOC), including the world’s ONLY gold-bar clump! This museum-piece features twin, complete bars (each over 1 kilogram and 10+” long) fused in near parallel by white coral, just the way they were found on the “Golden Fleece wreck” of ca. 1550.

And then our trademark and exclusive, shipwreck artifacts: This time we will have a genuine bronze astrolabe, the most complete and intact one we have ever handled, fully dated 1656 and well detailed, solid and stable, alidade intact, one of fewer than 80 pieces known and among the best from any wreck. We are also showcasing the famous gold box from the ca.-1810 “Coconut wreck,” the single most important item found in this deep-water salvage venture, as it contained 13 gold coins (a Spanish dowry known as an arras) wrapped in an 1809 newspaper talking about sales of slaves… and yes, the intact newspaper comes with it! There is also a genuine gold chain and massive silver candlestick from the Atocha, emeralds from many different wrecks, swords, flintlocks, and much, much more.

It’s over a million dollars’ worth of treasure all in one place, and any part of it can be yours for the high bid – we wish everyone good luck and happy hunting!

Session I (Wednesday, April 7, 2010, 2:00 pm EDT)Gold coins, shipwreck ingots and coins.

Session II (Thursday, April 8, 2010, 2:00 pm EDT) Silver cobs, world silver up to Mexico.

Session III (Friday, April 9, 2010, 2:00 pm EDT) World silver starting with Mexico, medals and tokens, paper money, stamps, artifacts and books.

Daniel Frank Sedwick LLC
Phone Number 407-975-3325
Website http://www.sedwickcoins.com
Email questions@sedwickcoins.com

Related posts:

1. Daniel Frank Sedwick, LLC announces the release of their Treasure Auction #6, October 15-16, 2009
2. Daniel Frank Sedwick Treasure Auction #4
3. Sedwick Auction To Feature Shipwreck Treasure, Gold Cobs and World Coins

“As soon as the news broke that HSBC was kicking out individual investors and even some commercial accounts to accommodate storage for large institutional accounts at its facility in Manhattan, I started getting phone calls from worried investors and even executives of some commercial firms who suddenly need a safe place for their gold and silver coins and ingots,” said Robert L. Higgins, CEO of First State Depository Company LLC that opened in Wilmington in June 2004.

The door to the 5,000 square foot vault weighs over 5,600 pounds. The depository has up to $400 million capacity insurance with Lloyd’s of London for the gold and other valuables shipped in from investors and companies nationwide, but Higgins says that insurance coverage may have to be increased with the anticipated additional requests for secure storage.

“It was surprising to see how many people who never owned gold before started buying it this past year. We’ve had many first-timers contact us to store their coins and precious metals purchases. Many people have put gold bullion coins in their IRAs.”

Higgins advises investors facing eviction from the HSBC depository to transfer their valuables prior to January first, whether to his depository or somewhere else, as long as it’s by year’s end.

“That way, you won’t have to pay HSBC’s annual storage fee that is payable in January,” he explained. “There’s another advantage for investors to move their valuables to Delaware. Unlike New York, there is no tax imposed on the payment of depository storage fees in Delaware.”

First State Depository provides secure custody services to institutional, commercial and individual investors. Precious metals are accepted in various forms; from small ingots to bars weighing 100 kilos (220 pounds) as well as gold, silver, platinum and palladium bullion coins like the popular American Eagle, South African Krugerrand and Canadian Maple Leaf.

Rare coins, those with a premium over their intrinsic bullion content because of their historic value and appeal to collectors, are accepted only if they’ve been certified by one of the major authentication firms such as Numismatic Guaranty Corporation or Professional Coin Grading Service.

For additional information, contact First State Depository at (302) 765-3352, or visit online at www.FSDepository.com.

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Related posts:

1. First State Depository Offers Exclusive Precious Metals Anti-Counterfeiting Services
2. Gold rush makes a mint
3. Investors Rush to Gold