G’Day APMEX Mates! Announcing the Annual Australian Vacation Giveaway!

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APMEX has partnered with The Perth Mint of Australia to sponsor our annual vacation giveaway,“Escape to Australia.”  APMEX customers are automatically qualified to win a trip for two to Perth, Australia by purchasing $250 or more of 2012 Perth Mint coins from APMEX.com prior to October 15, 2011. The “Escape to Australia” giveaway includes round-trip airfare for two to Perth, Australia, hotel accommodations, $1,000 (AUD) in spending cash and a VIP tour of The Perth Mint. For details, go to Escape to Austrailia.  

The Perth Mint is one of the world’s premier mints and has a reputation for innovation and superb quality in its bullion and collectible coins including the 2012-dated Year of the Dragon Gold coins and Silver coins. The dragon is the only mythical creature on the Chinese lunar calendar; it will not be featured again on a coin until the year 2024. Don’t miss this opportunity to win a free trip down under.

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8.19.11 WEEKLY RECAP

Markets were still highly volatile this week and the lack of certainty has pushed Gold to new record highs.  Stocks are suffering from fears of a double-dip recession due to weak economic data in practically every sector. 

Early in the week, the markets were buoyed by the European Central Bank announcing that last week it began buying Italian and Spanish securities. According to Christoph Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt, “The market optimists will interpret this number as good news as it underscores the ECB’s resolve…Equally, the pessimists will point out that it is bad news as it shows how much money the ECB had to commit for the yield compression seen.” This came about primarily due to a failure of politicians to convince investors that the debt crisis could be contained.  Many experts are pushing for a new “Eurobond,” saying that such a common bond issuance would allow euro zone members to borrow at affordable rates, thereby solving the current debt crisis. However, the German government is strongly against the idea of issuing Eurobonds, fearing that such a move would increase borrowing costs for Germany while also reducing the incentive for troubled euro zone countries (such as Greece) to make necessary economic reforms.

All hopes of a common Eurobond went away on Tuesday; however, as the highly anticipated meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel yesterday did not satisfy world investors. The growing feeling is that plans for closer monitoring of fiscal policy in the euro zone are not enough to stop the debt problem from spreading to other countries.  This news, along with weak data about the overall health of the German economy caused jittery traders to lose the shred of confidence they had gained over the previous few days.

All of this culminated in a massive selloff late in the week, led by large losses in European financial sector.  World equity markets are plunging Thursday and Friday and the European banks are the cause for concern. Major Banks across the euro zone are sharply lower, as the news broke that the European Central Bank lent $500 million Euros to a euro zone bank, that had not requested a loan since last February. Although no details were offered, the market reads this as another sign of escalating difficulties in the European financial system, which could also affect U.S. banks.

Weekly Spot Prices

Gold:
Spot Gold prices opened this week at $1,744.40. The all-time record high was on Friday, Aug. 19th at $1,881.80, while the low for the week occurred on Monday, Aug. 8th at $1,730.80. Gold ended the week up $112.90 at $1,857.30. This week, the most popular Gold bullion products were 2011 Gold American Eagles, 1 oz. Pamp Suisse Gold Bars, and 2011 1 oz. Gold Maple Leafs.

Silver:
Spot Silver prices opened this week at $39.18. Silver reached a high of $43.04 on Friday, Aug. 19th, while this week’s low for Silver occurred on Monday, Aug. 15th at $38.69. Silver ended the week up $3.86 at $43.04. The most popular Silver products on APMEX.com this week were 2011 Silver American Eagles, 2011 Silver Maple Leafs, 1 oz. Silver Buffalo Rounds and 10 oz. APMEX Silver Bars.

Platinum:
Spot Platinum prices opened this week at $1,801.00 and ended the week up $79.10 at $1,880.10. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Palladium:
Spot Palladium prices opened this week at $749.00 and ended the week up $6.10 at $755.10. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week.

 GOLD BUFFALO COINS 

 In 2006, the United States Mint introduced its first 24-karat pure Gold coin: the Gold Buffalo Coin. The Gold Buffalo coin is designed after the famous 1913 Type 1 Buffalo Nickel created by James Earle Fraser. The obverse shows the well-known Indian Head design, and the reverse features the classic buffalo design.

The Native American depiction on the Gold coin’s obverse is believed to be based on three different American Indians.  Before his death, Fraser named two of the American Indians- Chief Iron Tail of the Lakota Sioux and Chief Two Moons of the Cheyenne.  Although many Indians have claimed to be the third Indian, Fraser could not recall the person’s name.  It is widely believed that the bison on the coin’s reverse was modeled after Black Diamond, a popular attraction at the New York Zoological Gardens.

The 2006 and 2007 Gold Buffalo coins were a huge success; they provided pure-gold competition for the Canadian Gold Maple Leafs. The 2008-W Gold Buffalo is the prize of the Buffalo collection.  2008 is the only year fractional Gold American Buffalos were minted and they are scarce. The 2006, 2007, 2008, 2009, 2010, and 2011 Gold Buffalo coins are .9999 fine and are only available in a 1 oz coin.

To add the stunning 24-karat Gold Buffalo coins to your Gold coin collection or Gold portfolio, shop APMEX’s wide selection of Gold Buffalo coins. APMEX makes it easy to buy Gold by offering competitive Gold prices on all Gold coins.

 

Balance your portfolio with Gold today.

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The U.S. Dollar is the World’s Reserve Currency -Does it Really Matter?

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The short answer is yes.  America has advantages with the U.S. dollar as the world’s reserve currency that other nations, such as China, would love to enjoy. Since the U.S. dollar is the medium of exchange in worldwide transactions, the U.S. pays for transactions in its own currency.  Other countries are required to exchange their currency into the U.S. dollar which results in additional transaction fees with each exchange. This means they will pay slightly more for the same commodity than the U.S. would pay. This reserve currency status also allows Americans to borrow at advantageous rates because our dollar is in a higher demand.  Last but not least, the U.S. can always print more dollars to pay its global bills.

We hear on occasion of appeals that America must go back to the Gold standard. Although I am not opposed to this idea; I do not see this happening. If we went back to the Gold standard monetary system, the participating nations would lose their ability to print more money to pay their bills.  I do see the possibility that the world reserve currency may actually become a basket of different currencies which would include Gold.  If you do not understand by now that Gold is a currency and not a commodity, you should. Central banks around the world began exchanging U.S. dollars for Gold back in late 2009; in 2011, they have only picked up the pace. I think the direction is that reserves for currency will be a possible basket of U.S. dollars, Gold, perhaps euros and maybe remnibi. You cannot count the Chinese out; they intend to be a global financial power.

As we watched the price of Gold break $1800 per ounce recently, many people directly attribute this to the loss of faith in government-backed paper money – more accurately, it is a loss of faith in paper money by their own central banks! What do they know that perhaps we should know?   

 By Peter LaTona, Vice President of Sales at APMEX

Balance your portfolio with Gold today.

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8.5.11 WEEKLY RECAP

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Gold has moved opposite of the S&P 500 since February. The chart above gives a graphic example of the negative correlation between Gold and one of the other asset classes, stocks. Since February, economic stress in Europe and the U.S. has pulled the S&P 500 down while Gold moved higher.

After the Democrats and the Republicans came to an agreement and prevented a default on our nation’s debt, conventional wisdom says the market would boost as business and investor confidence increased. However, today’s reality is that the stocks ended low in the face of uncertainty over the debt deal. The terms include a $400 billion increase in the debt limit immediately, a $500 billion increase this fall, immediate spending cuts of $900 billion, and the creation of a Congressional commission to identify another $1.2 trillion in spending cuts.  Former Under Secretary of Commerce Robert Shapiro described these terms as “a mindless way to run a government.” J.J. Kinahan, managing director with TD Ameritrade, was quoted as saying, “Debt deal or no debt deal, we have some fundamental problems in the economy that we’re not dealing with.”

Monday’s extremely disappointing manufacturing report and last week’s revision of first-quarter growth estimates caused this change in focus. More bad news for the economy was released Tuesday; even though incomes rose in June, consumer spending fell (along with consumer prices). With most economists’ expectations of a credit rating downgrade from the top-notch AAA rating, stock futures were down and investors flocked to safe havens including Gold, which hit new record highs this week before falling victim to the massive selloff affecting all markets.

The stock markets are viewing a recession as likely as prices have continued to decline; stock prices hit their lowest points in almost two years. The concern has driven a number of investors to Treasuries, which is causing inflation concerns with the Swiss Franc and Japanese Yen. Mike Ryan, Chief Investment Strategist at UBS Wealth Management Americas, said Thursday, “The mood right now is gloomy…The burden of proof is for better data that show the economy is not falling into recession. Tomorrow’s payroll report is crucial. If we see another disappointment, the stock market will have significant downside from here.”

The highly anticipated payrolls report was released this morning; it indicated an increase of 117,000 jobs in July. The unemployment rate fell .1% down to 9.1%. These numbers were better than expected which finally brought some relief to Wall Street after two days of tension. Gold gave up early gains amid the news but one analyst says that South Korea’s recent purchase of Gold signals that it’s still not too late to buy Gold. An executive of one company stated that South Korea’s purchase is “significant, as it represents the first purchase of Gold by the East Asian country in over a decade. It would seem South Korea has joined the ranks of those countries that have lost faith in the U.S. dollar … it is no coincidence that many of these central banks are from emerging-market economies. Many of these countries have experienced the grim reality of enduring a currency crisis first-hand.”

WEEKLY SPOT PRICES

Gold:
Spot Gold prices opened this week at $1,628.00. The high was on Thursday, Aug. 4th at $1,684.90, while the low for the week occurred on Monday, Aug. 1st at $1,608.20. Gold ended the week up $22.30 at $1,650.30. This week, the most popular Gold bullion products were 2011 Gold American Eagles, 1 oz. Pamp Suisse Gold Bars, and 2011 1 oz. Gold Maple Leafs.

Silver:
Spot Silver prices opened this week at $39.95. Silver reached a high of $42.30 on Thursday, Aug. 4th, while this week’s low for Silver occurred on Friday, Aug. 5th at $37.56. Silver ended the week down $1.93 at $38.02. The most popular Silver products on APMEX.com this week were 2011 Silver American Eagles, 2011 Silver Maple Leafs, 1 oz. Silver Buffalo Rounds and 10 oz. APMEX Silver Bars.

Platinum:
Spot Platinum prices opened this week at $1,781.90 and ended the week down $66.90 at $1,715.00. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Palladium:
Spot Palladium prices opened this week at $832.30 and ended the week down $90.30 at $742.00. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week.

 

Platinum American Eagle Coins

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Released in 1997, the Platinum American Eagle coin is the only investment-grade platinum coin from the U.S. Mint. Since its introduction, the Platinum Eagle has become one of the world’s most widely-traded platinum bullion coins because of the patriotic design and platinum value. The obverse design celebrates freedom and opportunity with a portrait of the Statue of Liberty.  The reverse design is unique in that it changes each year; strength and security are portrayed in the theme of the American eagle. 
  
APMEX features the Platinum American Eagle coins in 1 oz., 1/2 oz., 1/4 oz., and 1/10 oz. denominations as well as uncirculated, certified, and proof conditions. Offering a wide selection of platinum products, APMEX can help you establish a platinum portfolio. Eligible for placement in precious metals IRAs, Platinum American Eagles can act as building blocks for investment portfolios. Start building your Platinum investment today!

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Should the Governments Buy GOLD?

 

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The World Gold Council reports that the world’s central banks hold roughly 29,000 tons of Gold. Photo by Richard Perry/ New York Times.

 (Article reprinted from The New York Times,  Aug. 2, 2011.)

 

 Introduction

Private investors and central banks have scrambled in recent years to stock up on gold. This summer, they drove the price over $1,600 an ounce for the first time ever.

For millennia, people have killed and died in pursuit of gold. In the recent downturn, so many investors have been eager to buy gold that it is sold in vending machines. Governments are as captivated by it as individuals are: for nearly a century, many nations’ central banks have stashed hoards of gold bullion in a vault at the New York Federal Reserve.

When asked recently why central banks hold gold rather than, for instance, diamonds, Ben Bernanke said “tradition.” Given the long history of humans considering gold valuable, does it make sense to continue this tradition, or should central banks focus on other assets with more intrinsic value?

Debater 1:   It Had to Be Gold

By Sanat K. Kumar, who spoke to “Planet Money” about gold in February,  is chairman of the Department of Chemical Engineering at Columbia University.

Anyone trying to think of some other element or compound to take the role of gold should consider why it has been used as a currency since time immemorial. If we are looking for something to be useful as currency, we need a commodity that meets a few requirements: First, its composition must be easy to define. It should also be relatively immutable, but not so inert that it cannot be purified into the form that is acceptable as an asset. It should be rare but not so rare that it is impossible to find. It is easy to see how ancient civilizations came to consider gold a magical, mythical material: it satisfied all these demands.

Gold is relatively unreactive, but it has a low enough melting point that it could be processed easily by past civilizations. In contrast, something like platinum, which is also relatively inert chemically, has a melting point of 3,000 degrees Celsius. This made platinum almost impossible to process until relatively recently. Similarly, gold is rare in the earth’s crust, but there is enough of it to go around.

Still, times have changed. Let us consider the issue today: Processing is no longer a problem. We can readily purify elements like platinum, rhodium and others, or we can synthesize any desired compound to practically any degree of purity. The issue of contamination is also no longer germane.

Thus the only modern requirements for an asset are rarity and immutability — and a suite of compounds and elements would qualify. So gold is no longer the one and only thing that could be used as an asset. Indeed, Ben Bernanke is correct — the argument for it is simply tradition. The value placed on gold comes from an emotional attachment handed down to us from our ancestors.

Debater 2:  A Proven Asset

By Ron Paul, a United States representative from Texas who is running for president for the third time, is the founder of Campaign for Liberty. He is the author of “The Revolution: A Manifesto” and “End the Fed.”

No asset has intrinsic value. An object is only valuable insofar as it is able to satisfy the wants and needs of individuals, and its value is determined by the subjective judgments of individuals. No other commodity has been as universally valued over time and across as many societies as gold.

Gold satisfies all the properties of money. It is durable, portable and easily divisible into bars and coins that share uniform properties. It is easily recognizable through visual, tactile, chemical and other means. Gold’s value and purchasing power are stable over time, as its supply grows slowly and it cannot be created ad infinitum as paper or digital currency can be.

Because of these properties, gold has always been considered an ideal store of value and medium of exchange, and central banks have always sought to hold it because it is the ultimate monetary backstop. When society and the monetary system break down, even if nothing else is accepted as a medium of exchange, gold still will be.

The Federal Reserve does not actually own gold; it only holds gold certificates as an asset. It is the Treasury Department that claims ownership of United States gold reserves. Historically, gold itself circulated as money, in the form of coins. Paper currency began to circulate for the sake of convenience, but these were only promissory notes that could be redeemed in “lawful money,” i.e. gold, on demand. Once the use of paper currency was established and most gold was held in bank vaults, the government seized the gold and left the people holding paper that could no longer be redeemed for gold. The paper currency was immediately devalued by 40 percent, reducing Americans’ purchasing power by an equal amount.

I would prefer to see the government not hold the gold it does. It should be returned to the people from whom it was taken. There is no need for the government to hoard gold or to keep gold in vaults as backing for currency; gold itself should be the currency that circulates.

 

Debater 3:  Gold Fever Is a Symptom of Inflation Fears

By Allan H. Meltzer, a visiting scholar at the American Enterprise Institute and the Allan H. Meltzer University Professor of Political Economy at the Tepper School of Business at Carnegie Mellon University, is the author of “History of the Federal Reserve, Volume I: 1913-1951″ and “Volume II: 1951-1986.”

Gold was money through most of our history, although after 1934 it was restricted to settlements between central banks. Its role in international payment settlements was further restricted in 1968, and it ended in 1971 when President Richard M. Nixon embargoed gold sales and floated the dollar exchange rate. After 1971, several central banks sold some of their gold stocks because the only revenue from holding gold is the speculative return if the gold price rises. After all, gold is no longer money, and holding it earns no interest.

Gold is a commodity with a unique history. It allows individuals to readily transport large monetary values, so it has long been favored by refugees. People who fear inflation or confiscation of wealth buy gold, expecting it will be stable or rise enough to protect the holder. That was true for European refugees in the 1930s, and French and Indian citizens have long been famous for holding gold.

Today, uncertainty about the future financing of large U.S. budget deficits and inflationary Federal Reserve policy are increasing the demand for gold. People in China and other nations with inflationary policies are also stocking up on it. Saudi Arabian sheiks protect part of their wealth by holding gold.

The modern frenzy for gold is a symptom of a fundamental concern: inflation. The world would benefit from an agreement by major central banks in Europe, Japan and the United States to maintain zero inflation. China could join after it removed its exchange controls. That agreement would allow other countries to fix their exchange rates and “import” low inflation. The world would have both more stable prices and more stable exchange rates.

The unrestrained U.S. monetary policy since we abandoned gold has not provided stability.

(End of reprint)

Follow the example of the central banks around the world; add Gold to your investment portfolio. APMEX is one of the most trusted and largest dealers of Gold and precious metals. APMEX maintains one of the world’s largest selections of precious metal products, including the popular Gold American Eagle Coins and the Gold Canadian Maple Leaf Coins.   

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