By Neil Charnock, GoldSeek

We called it right again at GoldOz at the beginning of February when we called the XGD “Oversold” and it has since reversed and rallied.  Gold made its low a few days later too.  At the time many analysts were calling for a general market collapse and they have been wrong so far.   We had stepped aside warning Gold Members with support levels and charts as this the local gold stock index weakened.  This happened unexpectedly at first however we reacted quickly.

The lower supports we later pointed to for the XGD have held nicely so far and the recent. The test of lower supports for gold is also fairly typical after an initial breakout in this gold bull market to date.  Yet many local gold bugs have stayed away waiting for the “big fall” – fear was in the air and yet all signs to date point to this being a fairly minor correction at this point in time.

I will say it again; I do not think that this correction will turn out to be the early stages of a 2008 style stock collapse.  Many investors listened to the bears and offloaded at the wrong time and they joined the incorrect side of the trade in my opinion.  They did this because they do not understand how long it takes for money to work through the system.  The stimulus money is still out there and until the Fed in the US raises rates we will see muted growth.

In the meantime I have forged ahead and produced an upgraded Ratings Table product that really nails the producer valuation metrics into a user friendly format.  A mathematical charting trick has enabled me to produce this work and the feedback so far has been fantastic.

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Adrian Ash submits:

Owning gold is more often the aim of accumulation, not the means, in China today…

The collapse of Indian gold demand since the global financial crisis broke in 2007 might seem good reason to question the fundamental strength of gold buying worldwide today.

After all, if the world’s No.1 gold buyers can’t keep up with record-high Gold Prices, who can?

But the plain fact, as BullionVault first forecast in spring 2009, is that China has overtaken India as the number one private gold buyer this year. The typical Chinese New Year gold rush has already begun (thanks in part to 3% discounts at major retailers), and robust demand looks likely to continue through 2010 if not beyond.

Full-year 2009 private demand in mainland China could outstrip India, the former No.1 buyer, by one quarter if not one third. Short of a (very unlikely) collapse in Q4 demand, full-year private gold buying – including jewelry and retail investment – is set to have grown 10% from 2008’s record in volume terms, rising 26% by value to equal $13.5 billion or more.

On recent trends, that would equate to more than 2.0% of China’s famously massive household savings (up from 1.0% ten years ago) and account for almost one ounce in every eight sold worldwide.

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By Zhao Yanrong, China Daily, Beijing

Gold jewelry sales jumped more than 30 percent over the weekend in Beijing, as bargain shoppers swarmed the city’s major jewelry stores on year-end promotions.

In a collective sales campaign after international gold prices fell, stores including Caibai, Gongmei, and China Gold reduced the pure gold’s price by as much as 9 yuan per gram, with more Christmas-themed jewelry designs for shoppers to choose from.

According to the Beijing Morning Post, China National Gold has doubled its sales to 40 kilograms per day. Caibai, the largest gold store in China, reported 30 percent more business than last year over the weekend after it dropped the price from 278 yuan to 269 yuan per gram.

But pure gold’s price at Caibai is still 59 yuan per gram higher than last Christmas, when it was sold at 210 yuan per gram.

“The gold price kept rising in Beijing this year, so this decrease somehow influenced customers’ decisions,” the marketing department manager of Caibai, who preferred to be known as Niu, said yesterday.

Niu is also very optimistic about sales in the rest of the holiday season, which runs from Christmas to the Chinese New Year in February. She said Caibai extended trading from 8:30 to 9:30 p.m. on Christmas Eve, to serve the crowds of customers.

“I am looking for a gold pendant with a tiger on it,” said a 23-year-old woman customer surnamed Yang, who was born in the year of the tiger. “I have had this idea since October, but the price just kept rising. It is going to be the year of the tiger soon, and they dropped the price a little bit, so I want to buy it now,” she said Friday.

Beijing residents showed keen interest when the limited-edition gold bars for the Chinese tiger year went on sale this month.

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Heritage Auction Galleries
Oct. 19, 2009
Written by John Dale

I don’t buy too many stamps anymore. Most of my bill-paying happens online, and e-mail has largely replaced physical letters (emphasis on largely — greeting cards and thank-you notes are the main exceptions).

That said, I do need to buy at least one stamp a month, so I do have a degree of firsthand experience with the increases in price for first-class stamps that have been a yearly experience since 2006.

By contrast, the first major change in the price of a federally authorized first-class stamp was a step down, from the rate of five cents authorized in 1845 (two years before the first nationally distributed stamps were actually printed) to three cents in 1851. In the same year, the first U.S. three cent silver coin came out.

In the words of many ironic hipsters and assorted less pitiable people: “Coincidence? I think not!”

In actuality, three cents was merely a denomination of convenience for a Congress that was trying to solve an entirely different problem. The ongoing California Gold Rush brought the United States vast quantities of wealth, but it also wreaked havoc on the relative prices of gold and silver. Briefly, the U.S. coinage at the time was set up to recognize a specific ratio in the value of silver to gold. When the supply of gold shot up, thanks to the California discoveries, gold’s relative worth went down, and that of silver went up. Suddenly, the silver content in coins like quarters and dimes was worth more than the face value.

With silver coins hoarded for their metal content and thus not circulating, commerce that involved making change became dicey. Stopgaps like fractional currency (paper money in denominations less than a dollar) were unsatisfactory. Congress had to come up with a way to get silver back in circulation, but doing so by reducing the silver content of existing denominations (thus making their face values greater than their worth as silver bullion) was politically unpopular. Creating a new denomination bypassed that sticking-point; while the earliest three cent coins were only 75% silver, as opposed to 90% silver for other denominations, the new denomination could not be called debased, because there was no prior higher standard for its composition.

In early 1851, Congress was also considering a bill to lower postage rates, as noted above. This provided the necessary cover, and the Post Office Act of March 3, 1851 included a section authorizing the three cent silver coin and specifying its weight and metal content.

Through the 1850s, one three cent silver coin, like lot 193 in the October Dallas U.S. Coin Auction, could buy one stamp, like this three cent stamp in an upcoming Internet Rare Stamp Auction.

The tiny three cent silver coins were not enough to alleviate the nation’s coin shortage, and in February 1853, all silver coins smaller than a dollar, including the three cent silver, had their weights reduced. At the same time, the three cent silver coins had their composition changed to 90% silver, in line with the other denominations. The three cent silver denomination lost its original role as the nation’s sole subsidiary silver coin, and its pretext — the purchase of postage stamps — became its sole reason for being.

Despite this, the three cent silver denomination was produced in quantity until the Civil War, which drove virtually all silver and gold coinage out of circulation and into personal hoards. From 1863 on, coinage of three cent silver pieces never exceeded token amounts, and the introduction of a three cent coin in copper-nickel was a further blow to the same denomination in silver. Still, production limped along until 1873.

Even in 1873, the cost of a stamp remained three cents; in fact, the price would not rise above three cents until 1958!

It’s hard to imagine a coin being made to pay for stamps these days, though, and I’m glad for it. I’m not sure I could handle having a 39-cent coin, a 41-cent coin, a 42-cent coin, and a 44-cent coin all jingling in my pocket at once!

To leave a comment please click on the title of this post.

-John Dale Beety

This week, Gold broke through its all time high and set a new benchmark at $1,061.10 per ounce. Concerns about the weakened U.S. Dollar and a second economic downturn, along with increased risk of higher inflation, were the leading causes for the commodities boost this week. Other factors had an impact as well, such as former Federal Reserve Chairman Alan Greenspan’s comments that unemployment will continue to rise in the United States for some time.

Rumors of Gulf Arab states along with Russia, China, Japan and France replacing the U.S. Dollar as the standard for trading oil surfaced in London this week. Though this report was later denied, the U.S. Dollar dropped even further, which in turn increased precious metals appeal to investors.

A Bank of America Merrill Lynch analyst has predicted that Gold prices will hit $1,500 an ounce in 2011 when oil prices move back above the $100 a barrel mark. Additionally, Francisco Blanch, head of Global Commodity Research, said that for the world economy to resume growth of 5%, commodity supplies will have to expand by a similar rate which will create shortages due to emerging market growth. Savvy investors will pay close attention to these events and use precious metals as a hedge against inflation.

This week, the United States Mint announced that it will offer for sale 2009 one-ounce American Buffalo Proof Gold Coins and one-ounce American Eagle Platinum Proof Coins. The tentative release dates for these products are October 29th and December 3rd, respectively. In addition, the mint will release one-ounce 2009 American Buffalo Gold Bullion Coins on October 15th and the fractional 2009 American Eagle Gold Bullion Coins in the one-half, one-quarter and one-tenth ounce weights on December 3rd.

This week, APMEX customers took advantage of low premiums on 2010 Silver Canadian Maple Leafs. They also had the opportunity to pre-order their 2009 American Buffalo Gold Bullion Coins. Both offers had a very high response due to recent economic events that make the flight to precious metals extremely attractive. To view a full list of bullion items, visit APMEX.com — the Gold Standard in Bullion Trading.

Gold:
Spot Gold prices opened this week at $1,001.20. The high during the week was on Thursday, October 8th at $1,061.10, while the low for the week was on Monday, October 5th at $1,001.20. Gold ended the week with a gain of $48.90 at $1,050.10. This week, 2009 1-oz. American Gold Buffalos Coins, 2009 1-oz. Gold American Eagles and Random Year 1-oz. Canadian Gold Maple Leafs saw tremendous demand in an upward market.

Silver:
Spot Silver prices opened this week at $16.20. Silver reached a high of $17.95 on Thursday, October 8th. The low for silver occurred on Monday, October 5th at $16.03. Silver ended the week up $1.55 at $17.75. This week 2009 1 oz. Silver American Eagles, 2010 1-oz. Canadian Silver Maple Leafs and 1 oz. APMEX .999 Fine Silver Bars held their own in the gold rush.

Platinum:
Spot Platinum prices opened this week at $1,284.00, and ended the week up $55.00 at $1,339.00. Popular platinum products for this week included 1 oz. Pamp Suisse Platinum Bars, 2009 1 oz. Platinum Canadian Maple Leafs and 2009 1-oz. Platinum American Eagles.

Palladium:
Spot Palladium prices opened this week at $300.50, and ended the week up $23.60 at $324.10. 2009 1 oz. Palladium Maple Leafs, 1 oz. Pamp Suisse Palladium Bars and 10-oz. Credit Suisse Palladium Bars continue to keep the eye of focused investors.

Numismatics:
It is of great interest this week to note that the spot price of Gold, and to a lesser degree that of Silver, has been soaring. Collectors and investors alike have been clamoring for both metals. APMEX has a wide variety of choices which have been selling very quickly as many financial advisers and analysts believe this is only the beginning of a historic rise in the metals market.

APMEX’S best seller this week in terms of numismatic silver has been Cull Silver Dollars which are a mixture of both the Morgan and Peace series. These coins contain 90% silver and are selling as low as $1.69 over melt. This is an excellent investment if you are looking to create a position in silver. As the spot price of silver continues to rise, so does the value of dollars in Almost Uncirculated and Brilliant Uncirculated conditions. These coins can be purchased for their collector value, but they are also purchased quite steadily for their bullion value as well.

This week APMEX will highlight the 1921 Peace Silver Dollar. This year was a transitional year for the US Mint. It had struck Morgan Silver Dollars for the first time in 16 years, but it was also the last time. Between December 28th to the 31st 1,006,473 1921 Peace Silver Dollars were minted.

The coin, designed by Anthony de Francisci, was struck in high relief, which means that the design was even with or above that of the rim. This caused an extremely weak strike on the examples that were struck later, as the pressure to strike each coin was lessened. The evidence is most noticeable on the Obverse around the ear and on the Reverse where it lacks feather detail on the eagle’s breast. Many Uncirculated 1921 Peace Dollars are graded as Extra Fine or Almost Uncirculated incorrectly, because of this weak strike. A large number of the 1921 Peace Dollars do not have blazing luster as one would expect to see on uncirculated specimens, while others, exhibit overwhelming luster. This is one of the few key dates in the Peace Silver Dollar series and there has always been a high demand for these coins as it was struck in high relief and it is the first year of issue. This is a highly collectible series as it is America’s last 90% silver dollar!

Heritage Auction Galleries
Sept. 14, 2009
Written by John Dale

It’s as good a day to have a song stuck in my head, and this time, it’s “The Virginia Company” from the turn-off-your-mental-fact-checker-and-enjoy-the-ride Disney film Pocahontas. The Jamestown expedition never found any gold, either in the film or reality, but while eastern Virginia was not the promised land of gold, there was gold in the southeastern United States, most of it found in western North Carolina and northern Georgia, in areas corresponding with the southern part of the Piedmont region.

The twin gold rushes in the southeastern United States were the first in the still-young nation’s territory, beginning at least two decades before the much more famous discovery of gold in the then-California Territory. In fact, a number of the earliest California miners to arrive from outside the territory came from the gold fields of Georgia and North Carolina. The start of the private coinage associated with gold fields (commonly called “Territorial gold” collecting, though this term is less inclusive than “private gold issues” collecting) is also a Southeastern native, as Christopher Bechtler (or C. Bechtler, as his name appeared on the coins) opened his private mint in Rutherford County in western North Carolina in the early 1830s.

His gold dollars, such as the Kagin-1 30-grain piece coming up in our October 2009 Dallas Signature Auction, date from a period between 1831 and 1834. It’s well worth noting, as the cataloger does, that Mr. Bechtler’s gold dollars, which proudly state they are made from Carolina gold, were first struck a full 18 years before Congress, reacting to the news of California gold, authorized the gold dollar as an official U.S. coinage denomination.

The Bechtler coinages span across two decades, from 1831 to 1852, and the Bechtler mint was a family operation, with Christopher Bechtler’s son August, and a nephew also named Christopher, producing coins in $1, $2-1/2 and $5. They eventually struck both Carolina and Georgia gold, even after the opening of official U.S. Mints in Charlotte, North Carolina and Dahlonega, Georgia in 1838.

The Mulkin Collection, an upcoming featured collection for our October 2009 Dallas Signature Auction, contains the Kagin-1 C. Bechtler gold dollar as well as a whole host of other private gold and U.S. Mint issues. Keep watching the previews to see what’s been added to this exciting coin auction event… cataloging the Mulkin Collection alone has been quite the adventure!

(Postscript: I spend much of my time thinking about coins, but this past week, they weren’t much on my mind. I’ve been taking a vacation, visiting family and friends in northern Indiana and southern Michigan. Northern Indiana is where I grew up, in a fairly small town called Logansport surrounded by farms and fields. It used to have a railroad-themed fair each summer. They called it the Iron Horse Festival. Then most of the trains left town, and one year the Iron Horse disappeared from the Iron Horse Festival. Eventually, the festival left, and so did I.

Anymore, the trains pass through Logansport more often than I do, except in my memories. One weekend summer night, I was nodding off as I stared out the window of my mother’s minivan, watching passing headlights land on the tall corn along one side of the highway. The last song I remember on the radio, Jo Dee Messina was singing “Heads Carolina, Tails California.” That sounds just about right, doesn’t it?)

More "significant" gold intercepts have been encountered by East Asia Minerals at its Miwah Gold Project, the company announced.
The samples were taken during rock sawn channel sampling at the project, which is located in Aceh Province, North Sumatra in Indonesia.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

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Seattle’s Gold Rush era will be commemorated in a series of events throughout the city.
As part of the Alaska-Yukon-Pacific Exposition centennial celebrations, one venue in particular will be re-living the golden days, the Seattle Events Examiner informs.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

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Heritage Auction Galleries
June 22, 2009
Posted by John Dale

Often a numismatic item requires a good deal of explanation to pin down why it is costly, rare, or just plain awesome. This was expressed well by David Redden of Sotheby’s, who shared an anecdote with Andrew Slayman for the article “Change is Good,” published in the November 2008 edition of Art + Auction. Mr. Redden, whom Mr. Slayman notes was auctioneer for the single-lot sale that made the 1933 double eagle the most expensive coin in the world, related: “I carry with me in my pocket a 1923 gold Double Eagle identical in every way to the 1933, with the exception of one digit in the date. It’s hard to distinguish between the two coins, but the difference is all the difference in the world.”

Other times, the appeal of an item is far more straightforward, as is the case for this nearly 15-pound ingot of shipwreck gold to be offered in our August 2008 Los Angeles U.S. Coin Auction.

Step one: gold and lots of it! The 179.50 troy ounce ingot—nearly 15 pounds!—was assayed at .886 fine, and though more than a century at the bottom of the ocean may have changed the numbers a little, this hefty ingot easily packs more than 150 troy ounces of pure gold.

Step two: incredible history! I did mention the “shipwreck” part, didn’t I? This ingot is California gold, created by the assay firm of Justh & Hunter in the mid-1850s, and it was packed away in the cargo of a ship named the S.S. Central America, which sailed from Panama on a course for New York City, where it would have gone into the financial markets. A hurricane sank the Central America and its gold, however, leaving ingots like this one and thousands of freshly minted double eagles from San Francisco at the bottom of the Atlantic. The golden treasure was lost for more than a century, until its rediscovery in 1987.

This ingot shows the effects of more than a century underwater; while parts of it still gleam like new, other areas show deep red or dull green color, the result of reactions between chemicals dissolved in seawater and the non-gold metal, particularly copper, contained in the ingot. This patina only adds to the ingot’s aura of history, while still leaving plenty of fresh gold surface area to satisfy anyone’s “ooooooh, shiiiiiny!” cravings.

If you want a little less golden treasure than the mammoth 15-pound ingot but a little more than a single coin, there are a few other possibilities in our August Los Angeles U.S. Coin Auction. When bidding, think of it as your own personal gold rush – without the backbreaking work, frustration, and overpriced mining equipment.

Click on the title of this post to leave a comment.

-John Dale

Vitaliy Katsenelson had a bearish article on Friday about gold, which I own as an inflation hedge. Vitaliy and I used to write at Street Insight, and it is great to see him again.

With all due respect to Vitaliy, I only agree with two of his five reasons to avoid the gold rush (#3 and #5).

I believe that gold remains a valuable inflation hedge, especially due to its low correlation with traditional assets.

Overall, the long-term outlook for inflation is a good reason to have precious metals in your portfolio.

I hope Vitaliy enjoys my rejoinder to the five reasons he is skeptical about today’s gold rush.

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