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IS GOLD IN TROUBLE?

BUYING GOLD/SILVER, GOLD & SILVER, GOLD AND MONEY   No comments yet

Below is an article CNBC led with informing its many readers how gold could be in trouble compared to the dollar.  The problem with misinformation is the mainstream accepts this as fact willing to postpone self-preservation until needed.  In the meantime, gold increases and the dollars buying power declines. Here is how the article read.

CNBC: Dollar Rise Will Spell Trouble for Gold: Analysts

“The long-term price of gold could come under pressure from a rallying dollar as the risk from the sovereign debt crisis subsides, “Barclays Capital analysts said on Tuesday.  Read it here if you feel the need.

I’m sure CNBC is great reporting on most economic news but gold related issues may need a little more research.  Below is a chart showing how the US Dollar has declined.


Just to compare dollars to gold I want to show a gold chart so we all understand what is happening with the gold to dollars ratio.  If you would like to see the dollar’s decline in gold see it here.



Let me be clear as possible seeing how many are confused exactly how the value of gold is determined.  To gauge gold in dollars is inaccurate to say the least.  Dollars, while in decline, sometimes represents a false increase in value of assets but when we take the asset and divide it by ounces or grams of gold we usually see a different picture.  The website Priced In Gold does a great job breaking down real estate, Dow Jones, USD, oil, etc to see how historically they move up or down in gold not dollars.

For CNBC to run a story questioning possible declines in gold compared to dollars is like saying a pond is down.  It is unlikely a pond would be down but the water level within the pond certainly could be.  For this example a pond is gold and water is dollars.  One is stationary and one fluctuates.  Very important to understand how gold is a baseline of value and all else measures to it.

NEWS WORTHY:

THE DAILY CALLER: Carville: 2012 could be ‘very rough’ for Obama, says civil unrest ‘imminently possible’

“[L]ook, I don’t think anybody — if 54,000 new jobs is the new standard, it’s going to be a very, very rough 2012 for President Obama,  read it here.

NEWS WORTHY:

MONEYNEWS.COM  This Investment Will Grow in Any Economy

One of the most defensive and recession-resistant businesses is also a commodity – food. Agriculture stocks and commodities can perform well in times of slow growth or inflation. People tend to go on eating in any economy. Food and agricultural inputs (including seeds and fertilizer) also are tangible goods that should maintain value during times of inflation and falling dollar values.

This may well be just a temporary “soft patch” in the economy, like last year. The powerful forces of increasing global demand and a weakening dollar that drove commodity prices skyward during the past year may well resume in haste as the economy picks up. Inflation and rising interest rates will crush bond prices and investors on the sidelines could miss a huge opportunity.  Read more here.

NEWS WORTHY:

THE STREET:  Gold, Silver Prices Tiptoe Higher

Streible points out that gold has been moving with the dollar recently, disrupting their typical inverse correlation, but a weaker dollar makes gold cheaper in other currencies, which will only add to its appeal. Streible isn’t scared off by high prices and urges investors who aren’t exposed to gold or silver to dollar cost average each month, or buy a set amount of the metals regardless of price.  Read more here.

FAIR PRICES OF GOLD & SILVER (10:30 am MDT)

  • ONE OUNCE SILVER BULLION:                        $41.54

  • ONE OUNCE SILVER ROUND:                            $38.89

  • ONE OUNCE GOLD BULLION:                            $1616

  • ONE OUNCE GOLD BAR:                                      $1576



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GOLD UP, INCOME DOWN, REAL ESTATE DOWN

BUYING GOLD/SILVER, GOLD & REAL ESTATE   No comments yet

Robert Shiller with Case-Shiller knows a lot about real estate in America and his latest data shows nothing but concern for property values in nearly every region.  His recent interview on Fox Business Channel played over my right shoulder as nothing but background noise until I heard Mr. Shiller say something that caught my full attention.  “Housing in America could possible see a twenty year decline same as Japan…!”  See it hereThe Prospector Site is specific to gold and silver but we must factor historic trends in real estate and personal income at least as they relate to precious metal.  Today we look at gold trending up all while income and real estate decline.

Every month unemployment numbers are released to help gauge the status of our U.S. job market.  Being an employer, I realize these numbers don’t factor in wage decreases stemming from businesses scaling back and decreased demand for many services.  Lately we posted prime time news of a minimum wage employer adding over 50K jobs but the fact is few new jobs pay close to what jobs paid just a few short years ago.  For those fortunate to find even low pay jobs the prospect of protecting themselves with gold or silver are challenging at best.  The sadist part, basic necessities like food, housing, and energy are increasing just in time to turn lower to middle class into poverty.  The protection of gold slips away like an untethered life-preserver.

WARNING SIGNS:

Few took serious notice of the most prolific warning of our lifetime with the collapse of 2008 ( please check out the video below).  Some are willing to discuss how close massive debt took us to collapse but more are willing to spread false hope of government calm and control.  My question for you is this.  Are you relying on the same experts that didn’t see it coming to provide security for your future?  Many financial analysts ponder how gold and silver continue to rise but fail to understand these metals are simply reacting to the same disease that is causing declining incomes, declining real estate, and world-wide disruption.

TRADING SILVER FOR A HOME:

Yesterday we posted how a newer 3/2 home in Arizona can be purchased with 800 ounces of silver.  Just four years ago the same home would cost over 13,000 ounces of silver.  Please wrap your mind around this because while real estate continues to decline, and may for the next twenty years, silver and gold continue to rise.  The bottom line, our homes are no longer a safe place to save.  Realtors  across America will have to change presentations promoting equity to explaining long-term investment and income producing potential.  Quick flips are now tapped out and, according to Mr. Shiller, possible twenty years away from the positive side of the cycle.

GOLD & SILVER:

Let me be perfectly clear.  I’m not an advocate of gold and silver.  I’m an advocate of gold and silver right now!  The cycle of assets, real estate down & gold up, is in positive favor of precious metal ownership.  Someday, yet to be determined, the cycle will rotate by proof of money moving away from metal and back into other assets like real estate.  Huge profits are probable for those willing to understand this economic phenomena, a tougher road awaits those not so understanding.  If you are wondering when the metal cycle will end look no further than a change of direction back into other assets like real estate.  To me, $1600 gold and $50 silver doesn’t sound that expensive anymore, at least when it can buy homes 1/3 of replacement cost.

NEWS WORTHY:

FOX BUSINESS:  “Slowdown Fears Thrash Wall Street; Dow Dives 280″

Private payrolls increased by 38,000 jobs in May, far shy of Wall Street’s forecast of an increase of 175,000, according to payroll firm ADP. The number of private payrolls was the lowest since September 2010.  Read it here.

NEWS WORTHY:

THE TELEGRAPH:  “Businessman ordered to pay ex-wife £2.5 million after ‘hiding’ gold bullion”

A businessman whose ex-wife claimed he had hidden three bars of gold bullion smuggled out of Nazi Austria to conceal his wealth was ordered by a court to pay her £2.5 million on Friday.  Read all about the poor fool here.

NEWS WORTHY:

REUTERS:  ‘Sugar High That Has Buoyed US Economy Is Wearing Out’

“With the QE2 package due to expire at the end of the month, there’s no shortage of uncertainty as to what happens when the easy money disappears,” said Cameron Peacock, market analyst at IG Markets.

“And it’s not just about jobs. It’s about manufacturing, it’s about real estate, it’s about consumer confidence. This is one data point in a very broad picture, and it’s not encouraging.”  Read it here.

NEWS WORTHY:

AP: Rare-coin broker admits conning elderly NY woman

NEW YORK—A broker of rare coins has admitted to conning a New York octogenarian into investing her life savings in gold and silver coins and then stealing them from the woman’s home to resell them.  Read it here.

FAIR PRICES IN GOLD & SILVER (8:45 am MDT)

  • ONE OUNCE SILVER BULLION:                  $41.64

  • ONE OUNCE SILVER ROUND:                      $38.98

  • ONE OUNCE GOLD BULLION:                      $1615

  • ONE OUNCE GOLD BAR:                                $1576


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BEST GOLD BARGAIN IN 2011?

BUYING GOLD/SILVER, GOLD & SILVER   No comments yet

Most physical gold buyers don’t expect to see the words “bargain gold” and “2011″ in the same sentence considering the last ten years has seen nothing but major gains for yellow metal.  We have said many times at The Prospector Site the name of trading dollars for gold is to pay as close to spot as possible, certainly if you are new to buying gold.  But the challenge today is premiums on physical gold, and silver too, are rising and to be honest I don’t see premiums reversing anytime soon.  Today we look at bargain gold in 2011.

I spent some time researching bargain gold and have to admit my findings are surprising and contradicting.  I, like many of you, always believed buying volume was the secret to buying closest to spot price but this is not always the case.  Below you’ll see how buying a large mass of metal doesn’t necessary translate into a savings .  Combine this with the difficulty when selling and it makes a gold holder rethink bargains. After all, how many gold buyers have $50k to plop down on a kilo gold bar?  Let’s break it down.

PHYSICAL GOLD: Currently spot gold price is $1536 per ounce.  Unfortunately, you can’t find physical gold at spot so below is spot plus premium prices of several physical gold types.

AMERICAN GOLD EAGLE : 1 OZ COIN:  5% over spot at $1612 per coin.

AMERICAN GOLD EAGLE:  1/2 OZ. COIN:  10% over spot at $845 per coin.

AMERICAN GOLD EAGLE:  1/4 OZ COIN:  12% over spot at $430 per coin.

AMERICAN GOLD EAGLE   1/10 OZ COIN: 15% over spot at $176 per coin.

GOLD BAR 1 OZ BAR:  2.5% over spot at $1575 per bar.

GOLD BAR 10 OZ BAR: 3.5% over spot at $15,898 per bar.

GOLD BAR 32.15 OZ KILO BAR: 3.3% over spot at $51,012 per bar.

What surprises me the most is the best bang for the buck is the 1 ounce gold bar with a premium of only 2.5% over spot price.  The larger bars charge around 1% more in return taking more dollars to buy and harder to liquidate down the road.  The fractional (less than one ounce coins) coins stayed true to expectations by gradually increasing in premium the smaller the coin.  Just for comparison most physical silver sells around 8% to 11% over spot but is increasing.

But the premium side of gold is always passed to new buyer, right?

Absolutely not and here is why.  Rethink everything that you believe as true pertaining to gold and silver.  Wipe the stereotype of a crusty old man collecting coins and replace with a mental picture of a teacher, butcher, nurse, mechanic, doctor, student, and letter carrier.  This new gold buyer cares nothing about rarity, design, or  collectible value but is all about trading dollars for a safe haven like gold and silver.  This new type buyer greatly affects metal premium because they are not willing to pay 40% over spot for something collectible if the same amount of gold can be bought for 5% over spot.  The fact is the number of collector type buyers are declining while the number of safe haven buyers are multiplying.  Don’t assume above normal premiums can be passed to new buyers.

NEWS WORTHY:

NEW YORK (CNNMoney) “Home prices: ‘Double-dip’ confirmed”

“Home prices continue on their downward spiral with no relief in sight,” said David Blitzer, spokesman for Standard and Poor’s.  Prices are now down 32.7% from their peak set five years ago.  Read it here.

NEWS WORTHY:

NEW YORK (MarketWatch) — Another fabulous Friday for gold has the bugs bugalooing.Gold signaling hyperinflation?

Commentary: Gold bugs cite lack of faith in paper money.

Sinclair predicts hyperinflation — in language that I won’t even try to get past MarketWatch’s editors!  Read it here.

NEWS WORTHY:

BULLION VAULT: CASEY RESEARCH. Why Today’s Gold Bull Market Dwarfs The Last One – 27 May 2011

“Today, few countries prohibit gold ownership, and a far higher percentage of the world’s population has transitioned out of poverty.   Read it here.

FAIR PRICES IN GOLD & SILVER (10:00 am MDT)

  • ONE OUNCE SILVER BULLION:                 $43.21

  • ONE OUNCE SILVER ROUND:                     $40.56

  • ONE OUNCE GOLD BULLION:                     $1613

  • ONE OUNCE GOLD BAR:                               $1574


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THE DANGEROUS SIDE OF COIN OWNERSHIP

SECURING GOLD & SILVER   No comments yet

There is a dark side of gold ownership and my gut tells me it will cost more than one person their life.  The same thing that makes gold desirable to own is what makes it a target for thieves and unfortunately the sagging economy will only bring more risk. I’m attaching an article I dug up and it is a must read for everyone in the process of buying physical gold or silver in person.  As discrete as precious metals can be to hold they can be obvious to thieves when being bought.  Today we look at the dangerous side of coin ownership.

In 2006, with gold at $530 an ounce, a Florida coin show went horribly wrong as a group of thieves followed sellers and buyers as they drove away.  By the end of the night over $450k in gold coins changed hands but not by mutual consent.  Some thieves followed coin sellers until they stopped to eat and then simply broke into vehicles stealing collectible coins all while dealers inside made plans for the next show.  You maybe one that believes a quick gun finger will always stand between you and a wannabe thief but the truth is many of these crimes happen while gold holders find themselves distracted.

Please don’t underestimate the risk of buying metal in public even if your buying from a coin shop in some small town you grew up in.  As your gold coins increase in value so will the urge for scum bags to capitalize on naive buyers, and sellers, unwilling to use discretion when trading precious metals.  Ninety-nine percent of thieves are not smart, brave, or creative, but they are quick to sum up easy prey with they see it.  A few simple adjustments on your end will severely decrease the odds of your name showing up on the victim list of your local newspaper.

If you are not now a fan of the 2nd Amendment you need to change your view before your next visit to a coin show or shop. A passive demeanor will only put a target on your back so from this day on a proactive, even defensive, mindset is recommended.  I hope this post does come off a little extreme because your best protection is awareness from before you enter your place of purchase until you finally sell years later.  Let’s look over a few aggressive proactive acts that will greatly reduce your odds of crime.

Buy in teams of two or more:

Pick someone well trusted and make it noticeable the two of you arrived and are leaving together.  Most vandals will pass on pairs especially when easier prey is all around.  If your partner is negotiating a purchase have your “head up” looking for who is watching or listening.  Don’t fall for distractions as you walk in route to your vehicle since criminals love to create a sense of chaos and realize success is easiest when eyes are looking away.

Be aware  of everything around you.

The worst way to enter a coin shop or show is to walk straight in with your head down unaware of who is “hanging around”.  Ninety-nine percent of security officers are legit but the cold truth is on site security has been known to be on the wrong side of the law so don’t assume a “secure” place is always safe.  Your best source of protection is awareness so make eye contact with anyone that seems to be doing more watching than shopping.

Check your car.

Most victims assume once they are safe inside their car the risk of theft is over but this is far from the truth.  Lately jackpot winners leaving from local casinos were followed until a sabotaged car breaks down and then robbed or worse.  Park your car in a spot that makes it nearly impossible for a thief to tamper with tires or engine.  Once in your car watch who pulls out at the same time and if something isn’t right go back to where you came from or straight to the local police department.  Don’t pull into your carport or garage, back in so you have visibility until the garage door is safely closed.

Read all about the fiasco at a Florida coin show right here.

NOTE WORTHY:

We have mentioned many times that soon physical silver prices will pay little attention to price dips of paper silver.  I checked on EBay to see what the cheapest “Buy Now” American Silver Eagle coin can be bought and it surprised me that prices of physical silver didn’t correct anything close to what paper silver or silver brokers sell.  The cheapest Silver Eagle I could find was nearly $8 over what I could buy from my online broker ( I would have to wait a month if buying from my broker).  Check it out here.

FAIR PRICES FOR PHYSICAL GOLD & SILVER (9:15 am MST)

  • ONE OUNCE SILVER BULLION:                      $41.73

  • ONE OUNCE SILVER ROUND:                          $39.39

  • ONE OUNCE GOLD BULLION:                          $1582

  • ONE OUNCE GOLD BAR:                                    $1544

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ARE YOU FAST ENOUGH FOR SILVER BARGAINS?

BUYING GOLD/SILVER   No comments yet

The words bargain and silver are rarely used in the same sentence anymore.  It seems like only months ago a physical silver buyer could put adding more silver at the bottom of the “to do” list and still find a bargain at least compared to today.  These bargain days are becoming few and far between but there are ways to get a deal if you’re willing to act fast.  As I prepare to post silver has dipped over nearly 10% from its recent high yet many stand and watch unsure if they should buy or not.  My bet is these same folks will look back at this day as a bargain opportunity missed. Today we look at how silver bargains are only for the quick.

We have posted the way we buy silver, and gold, is changing before our very eyes and soon those  with inventoried metal will pay little attention to temporary dips.  This change begs me to ask why would anyone discount physical metal when paper metal makes a temporary dip?  It comes down to more buyers than sellers but where does this leave you if adding metal to your arsenal is the goal?  My only advice is to act quickly my friend.

I watched silver start to dip Sunday night during closed markets and was on the phone with one of my silver brokers first thing Monday morning.  Even though I was told the wait time for physical silver is a month it still makes sense to capitalize on temporary dips at least with online precious metal brokers.  I’m starting to question if this common practice of paying slightly over spot will continue much longer as demand starts to exceed mint output.  It is possible precious metal will evolve into what the concert industry has experienced with brokers buying the best seats and forcing the masses to pay a second  premium for a show ticket.

THE PROSPECTOR SITE is in the process of helping buyers find reasonable priced metal even as gold and silver becomes more valuable.  Please watch for future posts on exactly how we will be doing this.  If you are asking what can be done in the meantime I will suggest something that has worked well for me.  You will need a smart phone to pull this off but in this age most of you either have one or are considering one.  Once you get your smart phone download KITCO’s App, for free, that allows you to watch current prices of gold and silver at will.  Dips are short and fast and could be the difference in hundreds maybe thousands of dollars in savings.  The fact is you are now competing against many more buyers than sellers so the quick reactions to dips are your best chance for a bargain.

QUESTION:  I sent in a personal check to pay for a recent online purchase but it has been weeks and I haven’t seen anything.  Is this common?

ANSWER:  Here is what is happening.  Online brokers will lock in a price before your check arrives but will not process a shipment until your check clears.  This can take a couple of weeks.  The bad thing is wire transfers are starting to take precedent over personal checks and this could delay orders longer considering tight inventories especially with silver orders.  The best news is your price is “locked”.

TIP OF THE DAY:  Many folks are not comfortable with bank wires but they are very common, secure, and discrete.  My bank charges around $20 bucks for a wire but check with yours to see what the fee is.  The wire process is quick and easy and your online broker will walk you through from A to Z.

FAIR PRICES OF PHYSICAL GOLD & SILVER (9:00 am MST)

  • ONE OUNCE SILVER BULLION:                     $48.26

  • ONE OUNCE SILVER ROUND:                         $45.92

  • ONE OUNCE GOLD BULLION:                         $1614

  • ONE OUNCE GOLD BAR:                                   $1574

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