11 Precious Metals Investing Terms You Should be Familiar With

If you’ve ever spent time on APMEX’s website you may have come across a few terms that were deserving of a curious eyebrow raise.  Don’t worry; you don’t have to be a skilled numismatist to find out the meaning of all the hieroglyphic-like terms that your eyes are trying to decode. When you choose APMEX as your precious metals provider you’re not only picking the best bullion products available on the market, but you’re also investing in a skilled team of workers that can actually help answer your questions and lower your confused eyebrow. Check out this listing of some of the most commonly used terms. All terms have been taken directly from the APMEX Glossary.

Assay: A test to ascertain the fineness and weight of a precious metal.

Bid: The price at which a dealer is willing to buy.

BU: Brilliant uncirculated, is used to describe a coin in new condition. It is for a coin that has no wear, but it may have light handling marks or other imperfections.

Bullion: The term is used to describe: 1. Gold, silver, platinum or palladium coins which closely follow spot prices and have little or no numismatic value (such as restrikes) 2. The form in which metal is shaped such as bars, ingots or wafers. The most commonly traded gold bullion pieces among individual investors in the United States weigh 10 oz. or less.

Early Release: NGC designation for a coin received during its first month of release.

First Strike: These coins have been struck from a new set of dies within the first 30 days.

MS-60: The lowest grade of Mint State, or uncirculated, coins. Using the Sheldon Grading Scale, coins are grade from 1 to 70, with 70 representing a perfect coin. Coins grading MS60 or higher are uncirculated; coins grading below MS60, are circulated.

PCGS and NGC: Professional Coin Grading Service & Numismatic Guaranty Corporation, two major coin grading services in the United States.

Proof: Refers to the manner in which a coin was minted NOT to its condition. Highly polished dies and special planchet are used to produce coins with a mirror-like finish. A proof strike is very different from a business strike and proof coins are generally made for collectors not for normal use.

Spot: Term which describes one-time open market cash transaction price of a commodity, where it is purchased “on the spot” at current market rates. Spot transactions are in contrast to term sales, which specify a steady supply of product over a period of time. The price for the physical delivery of bullion bars, usually 100-oz bars of gold or platinum and 1,000-oz bars of silver.

Troy Ounce: One of the most common units of measure for precious metals. 480grains = 31.1035grams = 1.09711 avoirdupois ounces = 1 Troy Ounce.

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Greece and the fiscal cliff

U.S. stock futures look to start lower today. Negotiations will continue today between the President Obama and top congressional leaders as they try to come to terms on upcoming tax increases and spending cuts, otherwise know as the Fiscal Cliff. Greece is still in the news as the euro-area finance ministers are in discussion over the next round of aid for the country’s distressed economy. Henrik Drusebjerg, senior strategist at Nordea Bank said, “We could see U.S. markets start positively, but they’re a bit nervous about Greece.”

Today, if you weren’t already aware, is Cyber Monday, a term that was coined back in 2005. Economically, it is a boost to the retail sector as was Black Friday and Small Business Saturday. It’s estimated that today’s Cyber Monday will be the biggest online shopping day of the year for the third year in a row, up 20 percent from last year.

The Gold price stayed near its five week high in overnight trading even after the dollar strengthened. Edel Tully, an analyst at UBS AG in London said, “The uncertainties surrounding the euro group meeting on Greece have impacted the euro-dollar and in turn Gold.”

At 9 a.m. (EST), the APMEX Precious Metals spot prices were:

  • Gold, $1,753.40, Up $0.00.
  • Silver, $34.21, Up $0.03.
  • Platinum, $1,616.80, Down $1.30.
  • Palladium, $670.00, Up $1.40.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EST)! Or call us Fridays until 6 p.m. (EST)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

 

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Special Report: Fiscal Cliff is Only 1 of “4 Horsemen of the Economic Apocalypse” for 2013

English: Flag of the United States Federal Res...

English: Flag of the United States Federal Reserve Bank (Photo credit: Wikipedia)

The “Fiscal Cliff” is approaching on December 31, 2012, and by many reports, the issues may stretch into 2013 for months. However, according to an article published online by MarketWatch.com, a part of the Wall Street Journal Digital Network, the Fiscal Cliff is only 1 of the 4 Horsemen of the Economic Apocalypse facing the United States in 2013 and beyond. (Click here to read article.)

As you may know, the Fiscal Cliff is comprised of about $600 Billion in automatic spending cuts, a tax increase, including higher payroll taxes and other economic policy issues that all come to expire on December 31, 2012. (Click here to read white paper with more detail on the Fiscal Cliff.)

Although the MarketWatch.com article describes in reasonable detail the 4 Horsemen, what follows is a perspective from the view of an investor in Precious Metals. In order, here are the 4 Horsemen as described in the article:

1. Europe

2. Inflation

3. Export Weakness

4. Fiscal Cliff

After you review the article and these comments on the precious metals markets, it may be time for you to decide how you want to position your portfolio for the events described.

Here is a brief review of each of the 4 Horsemen and how the particular economic affect may impact investments in Gold and Silver and other Precious Metals.

1. Europe – Since Central Bankers will keep interest rates low in their respective countries so that interest payments do not kill their local economies, this environment provides an opportunity for increasing demand for low holding cost investments like Precious Metals, since income bearing investments will have very low yields. Even more interesting is how the Central Bankers themselves are positioning their own foreign exchange investment by buying Gold in 12 of the last 13 calendar quarters, increasing holdings of Gold by more than $40 Billion during this period, with over $27 Billion of this total in just the last 4 quarters. Although these are indicators of demand growth for Precious Metals, weaker Euro rates relative to the Dollar may offset the gains if the U.S. economy is judged to be better than the European economies.

2. Inflation– The same Central Banks that keep interest rates low in the United States and Europe are using their currency to flood markets in order to keep the borrowing rates low. Although price inflation of goods and services has not seen high inflation rates since the monetary easing has begun, prices of investments have been on the rise suggesting that some of the excess cash is flowing into investment capital. However, with China continuing to grow as a consuming nation and bidding for more resources and food and coupled with the significant increases in money supply in both the United States and Europe, a global bidding war for key assets like energy, food and building materials may intensify causing price inflation in these areas. These price increases could also fuel increased investor demand for inflation hedge assets like Gold, Silver and Precious Metals. However, it is possible that the excess cash in the market can be controlled by the United States Federal Reserve Bank by paying interest on reserve deposits and in so doing, capture any excess cash in the market that may have been used to bid on these key assets, keeping the monetary flows more under control.

3. Export Weakness –There is a balance between countries and the prices of goods in one country relative to another based on currency values. If the Euro is down relative to the Dollar, European goods look less expensive than U.S. goods since the U.S. goods are priced in Dollars and the Dollars have gone up in value. The opposite is also true: if the Euro is up relative to the Dollar, then U.S. goods appear to be lower in cost. If Europe has more problems with their economies than the U.S., then the Euro could fall relative to the U.S. Dollar making U.S. goods appear more expensive, causing weakness in U.S. exports. This, in turn, would cause U.S. businesses to slow down since sales are reduced given the lower exports. The cure for the slower U.S. economy would be more stimulus and increased money supply, driving the Dollar lower relative to the Euro and making U.S. exports more attractive. However, this strategy, given the current and excessive U.S. debt levels would foster even more danger of permanent fiscal damage. The result of all of these factors may cause an increase in demand for Gold, Silver and Precious Metals since these assets have historically held value when the Dollar weakens and U.S. debt increases. On the other hand, if Europe has continued economic problems and the Euro weakens, and if the U.S. could hold export activity at the same levels without resorting to stimulus, then the higher Dollar would most likely result in lower Gold and Precious Metals prices.

4. The Fiscal Cliff – The Fiscal Cliff is uniquely an American issue as no other country has this same set of circumstances of sudden and sharp tax increases matched with significant and immediate reductions in federal spending. Many economists have predicted that this combination of events could cause the U.S. Gross Domestic Product (GDP) to shrink by 2% or more. If such predictions are true, and with a U.S. GDP growth currently estimated of 1.5% – 2% for 2013, the entire growth of GDP could be wiped out and the net U.S. GDP change could potentially become negative and move the U.S. back into a recession. Unlike the situation as the U.S. entered the Great Recession in 2008, the U.S. Federal Reserve Bank has very few options to substantially increase money supply nor does the U.S. Congress have the political freedom to vote for significant stimulus given the U.S. debt, now at 100% or more of U.S. GDP. In this current situation with a self-inflicted recession from the Fiscal Cliff, should there be efforts by either the Federal Reserve Bank or Congress to stimulate the economy, the results could prove to be an even more rapid deterioration of U.S. debt and cause the U.S. Dollar to plunge, raising the value of global assets like Gold, Silver and Precious Metals. However, if other countries are experiencing their own economic issues and sovereign debt crises, then relative to the other countries, the recession in the U.S. would not appear as significant and asset prices like Gold could stabilize.

Regardless of the outcome of the issues related to the 4 Horsemen, the U.S. and the major world governments seem mired in a long term economic challenge with very few “quick fix” options available. As a savvy investor, your portfolio may need some form of economic hedge or counterbalance to the effects these governments will experience in their respective economies. Perhaps now is the time to consider an increase in your portfolio allocation to Gold, Silver and other precious metals.

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Gold pulled on both sides; eurozone disappoints again

U.S. stock futures are trading higher this morning, while the Gold price is relatively flat again. The yellow metal’s price continues to be pulled in different directions due to the looming fiscal cliff dilemma. On one hand, investors see Gold as a safe haven, and the uncertainty facing the U.S. in the coming months has those investors concerned. On the other hand, there could be a “liquidity-driven risk event,” according to Daniel Brebner of Deutsche Bank, which would cause investors to cash out of Gold to hold the U.S. dollar.

Disappointing news in the eurozone continues, as a report showed that factory output in the region fell by the most since January 2009. Germany, normally a strong point for factory output, fell by a substantial amount. Expectations that the eurozone will see another recession (the second in three years) are rampant, and this report only makes it worse.

At 9 a.m. (EST), the APMEX Precious Metals spot prices were:

  • Gold, $1,729.80, Up $3.00.
  • Silver, $32.64, Up $0.09.
  • Platinum, $1,585.20, Down $1.40.
  • Palladium, $644.00, Up $6.40.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 8 p.m. (EST)! Or call us Fridays until 6 p.m. (EST)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.

 

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Precious metals moved by the U.S. election: Weekly Gold and Silver Market Recap for Nov 9, 2012

Precious metals moved by the U.S. election:

After months of speculation and questions about the political scene in the United States, this week brought forth closure to the subject. Before the votes were counted, many people believed each choice for president would shape the market for gold and other metals. The speculation on which candidate will be elected and what they will bring to the table has been strong today as many have shared their outlook for what it could mean for Gold. Phil Streible, senior commodities broker at RJO Futures offered his comments. To the possibility of President Obama being re-elected, he said we would continue to see, “fiscal irresponsibility, (Federal Reserve Chairman) Ben Bernanke going all the way through [his term], quantitative easing full throttle, weaker dollar.” Streible then speculated on a Mitt Romney victory, saying, “You get Romney and he’s planning on shrinking the government, cutting spending, becoming more fiscally responsible … so you’re probably going to see a stronger dollar, weaker metal on him.” After the votes were counted Wednesday morning gave light to the near future. The Gold price is giving up some early gains it enjoyed after President Barack Obama won a second term in the White House last night. Though the election is over, important issues are far from ending. Next up on the docket is the fiscal cliff at the end of the year. The President is now tasked with reaching a deal with a Republican-held House of Representatives, which is exactly the scenario that proved nearly impossible to solve over the past year or so. One analyst said, “I personally believe this will get sorted, but not after a lot of haggling and negotiating and this will create a lot of uncertainty and volatility in the markets.” By the end of the hectic week, the gold price rose and hit a three week high. There is an expectation that U.S. monetary policy will continue to favor Gold investors. Gold’s safe haven appeal grows when money flows easily into the economy as it does with the quantitative easing programs. Nic Brown, head of commodities research at Natixis said, “An Obama victory enhances the likely longevity of ongoing quantitative easing.” Outside of the U.S., China’s Gold demand is expected to grow 1 percent this year. This would be a record of 860 tons of Gold.

Europe’s financial problems grow:

While the world watched as the United States had an election, Europe continued losing ground in their economic crisis. One of the countries in the spotlight is Greece and this week was no different.  In Greece, the parliament is set to vote on budget cuts to help secure loans from lenders. However, the people of Greece are far from pleased with these proposed cuts. Today started a massive walk-out by two of the largest labor unions in the country. The estimated number of protesters was about 16,000, but could grow. The Greek people are not at a loss for words regarding the situation. “The measures are wrong, the politicians and the rich aren’t paying their taxes and the only ones paying are those on 300 and 500 euros a month,” said Dimitris Karavelas 42, who has been forced to shut down his small construction company. The bad news is not just in Greece but, in the entire region. In Europe, the outlook for the next year is far from optimistic. “Europe is going through a difficult process of macroeconomic rebalancing and adjustment which will last for some time still,” European Union Economic and Monetary Commissioner Olli Rehn told reporters in Brussels. The eurozone economy is forecasted to almost completely stop expanding within the next six months. Even Germany, who is the largest economic force in the eurozone, has had their economic forecast cut by more than half in 2013. All of these factors will make it even more difficult to bring the region back to a stable economic situation. While this is bad news for the Europeans, it is not for the precious metal investors. The Gold price has risen today, following the euro’s rise after the European Central Bank (ECB) reaffirmed its intentions to pursue recently adopted monetary policy. Europe is in the spotlight today “with the ECB keeping accommodative policy in place and rates steady,” Jeffrey Wright, a managing director at Global Hunter Securities, said. “ECB policies, much like our own, eventually lead to inflation, which support Gold.” ECB President Mario Draghi announced plans to keep the central bank’s key lending rate at 0.75 percent. “Economic activity in the euro area is expected to remain weak,” Draghi stated as he pronounced a continuance of economic stimulus for the region.

Precious Metals Rising Today, Greece in Protest Mode

The precious metals market has shown positive gains today for a couple of reasons. The big reason is the presidential election in the United States. Many experts believe President Obama will repeat as president and that has given the markets a boost. “The prime driver for gold and silver has been the prospect for monetary inflation and quantitative easing. So an Obama victory would support [the view] that these policies would continue unabated,” says Brien Lundin, editor of Gold Newsletter. The second factor in today’s rising prices comes from Europe. The recovery efforts in the region have almost come to a standstill and patience is wearing thin. “We are seeing investors getting disillusioned about the euro zone, the positive factor from the ECB’s plan to buy bonds is fading and that is fundamentally weighing on the euro,” said Neil Mellor, currency strategist at Bank of New York Mellon in London.

In Greece the parliament is set to vote on budget cuts to help secure loans from lenders. However, the people of Greece are far from pleased with these proposed cuts. Today started a massive walk-out by two of the largest labor unions in the country. The estimated number of protesters could be in the hundreds of thousands. The Greek people are not at a loss for words regarding the situation. “The measures are wrong, the politicians and the rich aren’t paying their taxes and the only ones paying are those on 300 and 500 euros a month,” said Dimitris Karavelas 42, who has been forced to shut down his small construction company.

At 5:00 pm (EST), the APMEX precious metals spot prices were:

  • Gold, $1717.50, Up $32.80.
  • Silver, $32.03, Up $0.86.
  • Platinum, $1554.40, Up $13.20.
  • Palladium, $618.60, Up $14.70.

APMEX’s Account Managers now have extended hours Mondays through Thursdays and are here to serve you until 7 p.m. (CST)! Or call us Fridays until 5 p.m. (CST)! If you have any questions about investing in precious metals or simply would prefer to place your order by telephone, we are here to help.

Metals on the move ahead of U.S. Presidential Elections

Precious metals prices are quickly rising as the market awaits the final decision in the U.S. Presidential elections today.  Analysts have predicted if President Barack Obama is re-elected it would be positive for Gold due to the probability of additional Federal Reserve stimulus being needed.  If Mitt Romney is elected it is thought by many that Fed Chairman Ben Bernanke who pushed the well-known quantitative easing programs over the years would not make it to another term in 2014.  “An Obama win is potentially supportive to Gold because of the possibility of a much more difficult (policy) negotiation,” said David Wilson, analyst with Citigroup.

The housing market is providing reassurance to the U.S. economy as the number of new homes Americans purchased in September was more rapid than it has been in the past two years.  Robert Shiller, a professor at Yale University and co-creator of the S&P/Case-Shiller index of property values said, “We have to get back to a private-sector mortgage market, without government dominance.  We have to think about alternative mortgages that don’t invite the same sort of crisis where we have 10 million homeowners under water. We don’t want to put Americans in such leveraged positions.”

At 1 p.m. (EST), the APMEX Precious Metals spot prices were:

  • Gold, $1,719.30, Up $34.90.
  • Silver, $32.18, Up $1.01.
  • Platinum, $1,559.70, Up $18.50.
  • Palladium, $621.50, Up $17.60.

APMEX’s Account Managers now have extended hours and are here to serve you until 8 p.m. (EST) Mondays through Thursdays! Or call us Fridays until 6 p.m. (EST)! If you have any questions about investing in Precious Metals or simply would prefer to place your order by telephone, we are here to help.