Could Gold Reach $5,000?

Here’s some important news for gold enthusiasts watching the current bull market; there are those who believe that it’s reasonably possible that the spot price of gold could soon top $5,000 an ounce.

“The potential level of a new peak can be estimated in several ways,” reports Reuters. “Based on consumer price inflation, the $875 per ounce high seen in 1980 is equivalent to around $2,400 today, almost twice the current gold price.” The same Reuters story further explains, “The world’s economic output has increased about six-fold since 1980. Scale up the peak 30 years ago by that multiple, and the gold price could top out at around $5,300.”

Another factor that can contribute to the increase in the price of gold is supply and demand. Right now, in Europe, the demand is extremely strong. The Austrian Mint has reported selling more gold in the two weeks following April 26 than it did in the entire first quarter of 2010 because of soaring demand in Europe. According to Kerry Tattersall, the Austrian Mint’s marketing director, “The mint sold 243,500 ounces of gold in coins and bars in that period, compared to 205,000 ounces in the entire first three months of the year.”

To put this kind of growth into proper perspective, this is a 663.85% increase in daily sales demand over the past two weeks compared to the average daily demand for the first quarter. “The mint has started working in three shifts again, minting coins and bars around the clock to keep pace with demand,” Tattersall said. “Currently we don’t have anything in stock. We sell our entire daily production immediately.” Even with this increased production, it is difficult to determine the exact level of current demand since we have not seen the excess inventory threshold. With the continued controversy of the bailout for Greece, Spain and Portugal, combined with mixed results in the U.S. markets, it seems that the gold bull may continue to run up new highs in the future. So whether the spot price of gold climbs moderately or exceeds the $5,000 mark, only time will tell. However, the general consensus of a number of analysts seems to be that gold will continue to go up for the foreseeable future because it is so effective at protecting the assets of hard-working individuals.

Disclaimer: The American Precious Metals Exchange, Inc. (APMEX) is not a registered investment advisor. This information is not a solicitation to buy or sell any precious metal products. Readers are advised that the material contained herein should be used solely for informational purposes and that they should contact their investment advisor to help them determine the proper course of action suited to their particular situation.

Market Recap 5/14/10

Gold set a new record high of $1,236.60 on Tuesday, May 11, 2010, shattering the previous record of $1,227.50 set on December 3, 2009. The yellow metal continued to climb upward  the following day to set another new all-time high of $1,250.20. The rise in gold comes amid a selloff in U.S. equities, the Euro, and  commodity futures including  crude oil,  according to The Wall Street Journal.

The Euro declined to an 18-month low against the U.S. Dollar on Friday on growing worries that deep government spending cuts in the Euro zone would stifle a fragile recovery, reported Reuters. The Euro has come under renewed pressure as focus shifted to the impact on growth from fiscal tightening in countries like Greece, Spain and Portugal. “There’s continued pessimism on the Euro,” said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston. “There are still a lot of doubts about how European policy makers will be able to successfully maintain the regional growth story.”

Worries that growth in Europe will become sluggish sent U.S. stocks sinking Friday, according to a story from MarketWatch. The Dow Jones Industrial Average fell nearly 2%, while the NASDAQ and the S&P 500 slid 2.6% and 2.4%, respectively.

There are many reports of Europeans purchasing gold, in particular, to protect their assets against the fragile economy. Many U.S. investors followed suit, buying gold in droves to offset the potential negative fallout from the European woes and the current financial crisis in America.

Gold:
Spot gold prices opened this week at $1,210.30. The high during the week was on Wednesday, May 12th, at $1,250.20, while the low for the week occurred on Monday, May 10th, at $1,184.40. Gold ended the week up $24.50 at $1,234.80. This week, Gold American Eagles, 2010 Gold Buffalos and Gold Canadian Maple Leafs led the bull run on gold.

Silver:
Spot silver prices opened this week at $18.42. Silver reached a high of $19.85 on Thursday, May 13th, while the low for silver occurred on Monday, May 10th, at $18.22. Silver ended the week up $0.96 at $19.38. Silver American Eagles, Silver Canadian Maple Leafs and 1 oz. APMEX Silver Rounds were among the “quiet giants” that saw massive trading this week.

Platinum:
Spot platinum prices opened this week at $1,665.80 and ended the week up $59.40 at $1,725.20. This week, platinum investors concentrated their purchases on Platinum American Eagles, 1 oz. Pamp Suisse Platinum Bars and 1 oz. Platinum Koalas.

Palladium:
Spot palladium prices opened this week at $513.20 and ended the week up $16.20 at $529.40. The most popular palladium items this week were Palladium Canadian Maple Leafs and 1 oz. .999 Fine Pamp Suisse Palladium Bars.

Featured Bullion Product:
Each week, APMEX features a different bullion product for the benefit of our readers. This week, we are spotlighting Palladium Canadian Maple Leaf coins.

Introduced in 2005, the Palladium Maple Leaf is the first palladium product released by the Royal Canadian Mint. While palladium bullion coins are not new to the market, the $50 Palladium Canadian Maple Leaf is one of the world’s most popular  palladium bullion coins.

On the obverse, or front, of these coins is a depiction of Great Britain’s Queen Elizabeth the Second. The reverse, or back, of this coin depicts the national symbol of Canada – the Maple Leaf. These stunning coins are struck in .9995 fine palladium are backed by the Royal Canadian Mint for their purity, content and fineness.

APMEX offers a large selection of Palladium Canadian Maple Leaf coins in a variety of dates. These coins belong in every palladium enthusiast’s portfolio.

Share

Market Recap 4/16/10

The overall news from Wall Street was not very optimistic this week. General Electric said its first-quarter earnings fell 31% to $1.95 billion on a loss from discontinued operations. GE said its financial arm, GE Capital, saw its profit drop 41% to $607 million, according to The Wall Street Journal. Meanwhile, Bank of America’s first-quarter net income dropped 25% as credit-loss provisions fell. Revenue dropped 11% to $31.97 billion. Bank of America’s mortgage business also posted a loss.

More Americans filed for bankruptcy protection in March than during any month since the federal personal bankruptcy law was tightened in October 2005, reported The New York Times.  These bankruptcies are likely a result of high unemployment and the housing crash. Federal courts reported over 158,000 bankruptcy filings in March, or 6,900 a day, a rise of 35% from February.

Palladium spot prices on the New York Mercantile Exchange touched their two-year peak on Wednesday, as reported by TheStreet.com. Interestingly, the gold-to-palladium price ratio reached levels that have not been seen since before Lehman Brothers went out of business in 2008. The ratio has come down from its highest-ever level of 5.01 in February 2009 to the current 2.14. The rapid decline in the ratio indicates that prices of palladium have zoomed over the past year compared to the much-talked-about price appreciation of gold. Savvy precious metal investors are looking at palladium as a way to further diversify their precious metal investments.

Gold:
Spot gold prices opened this week at $1,167.50. The high during the week was on Monday, April 12th, at $1,167.70, while the low for the week occurred on Friday, April 16th, at $1,129.30. Gold ended the week down $27.70 at $1,139.80. This week, Canadian Gold Maple Leafs, Gold American Eagles and 1 gram APMEX Gold Bars were very popular with investors.

Silver:
Spot silver prices opened this week at $18.48. Silver reached a high of $18.60 on Monday, April 12th, while the low for silver occurred on Friday, April 16th, at $17.59. Silver ended the week down $0.73 at $17.75. This week, silver investors were purchasing  Silver American Eagles, 1 oz. APMEX .999 Fine Silver Rounds and Silver Canadian Maple Leafs.

Platinum:
Spot platinum prices opened this week at $1,730.60 and ended the week down $33.70 at $1,696.90. Platinum American Eagles, 1 oz. Pamp Suisse Platinum Bars and 1 oz. Scotiabank Platinum Bars were very much in favor with platinum investors this week.

Palladium:
Spot palladium prices opened this week at $519.70 and ended the week up $13.60 at $533.30. The palladium products that demonstrated great interest this week were Palladium Canadian Maple Leafs and 1 oz. .999 Fine Pamp Suisse Palladium Bars.

Featured Bullion Product:
Each week, APMEX features a different bullion product for the benefit of our readers. This week’s featured product is the Gold Chinese Panda.

Gold Chinese Pandas are very popular coins worldwide. China introduced these gold bullion coins in 1982 and they are minted in sizes and denominations ranging from 1/20th of a Troy Ounce to 1 Troy Ounce.

The unique, aesthetic nature of the Gold Chinese Panda coin makes it a particular favorite. Extensively detailed designs are the main attractors to these lovely coins. Unsurprisingly, the Gold Panda continues to distinguish itself as one of the finest gold coins in the world.

The obverse designs of the standard Gold Chinese Panda coins depict the image of the Hall of Prayer for Good Harvest of the Temple of Heaven in Beijing, one of the most famous examples of Chinese architecture.

The reverse designs depict the Panda, China’s rare and most well-known animal, as the main motif. Each Gold Chinese Panda has a unique style with a design that changes every year.

These beautiful coins should be considered by investors and collectors alike!

Share

Fun Facts About Gold – Part 2

At APMEX, we’ve scoured the Internet looking for fun and interesting facts about gold for our readers.

This is the second in a two-part series to introduce 50 fun facts about gold. Some are common knowledge, some will be new to you. Enjoy!

  • Because of the softness of pure (24k) gold, it is usually alloyed with base metals for use in jewelry, altering its hardness and ductility, melting point, color and other properties.
  • Blue gold can be made by alloying with iron, and purple gold can be made by alloying with aluminum.
  • Fourteen and eighteen karat gold alloys with silver alone appear greenish-yellow and are referred to as green gold.
  • White gold alloys can be made with palladium or nickel.
  • White 18 carat gold containing 17.3% nickel, 5.5% zinc and 2.2% copper is silver in appearance.
  • High-karat white gold alloys are far more resistant to corrosion than are either pure silver or sterling silver.
  • The Japanese craft of Mokume-gane exploits the color contrasts between laminated colored gold alloys to produce decorative wood-grain effects.
  • In Medieval times, gold was often seen as beneficial for health in the belief that something that is rare and beautiful could not be anything but healthy.
  • Some gold salts, as well as injectable gold, have anti-inflammatory properties and are used as pharmaceuticals in the treatment of arthritis and other similar conditions. (Please note: APMEX does NOT recommend trying this!)
  • Colloidal gold is used in research applications in medicine, biology and materials science.
  • Gold leaf, flake or dust is used in some gourmet foods, notably sweets and drinks as a decorative ingredient.
  • Gold flake was used by the nobility in Medieval Europe as a decoration in food and drinks in the form of leaf, flakes or dust, either to demonstrate the host’s wealth or in the belief that something that valuable and rare must be beneficial for one’s health. (Please note: APMEX does NOT recommend trying this!)
  • Goldwasser is a traditional herbal liqueur produced in Poland and Germany, and contains flakes of gold leaf.
  • Gold can be made into thread and used in embroidery.
  • The world’s oceans hold a vast amount of gold, but in very low concentrations (perhaps 1–2 parts per 10 billion).
  • In photography, gold toners are used to shift the color of silver bromide black and white prints towards brown or blue tones, or to increase their stability.
  • Gold artifacts in the Balkans appear from the 4th millennium BC, such as that found in the Varna Necropolis; Egyptian hieroglyphs from as early as 2600 BC describe gold, which king Tushratta Mitanni claimed was “more plentiful than dirt” in Egypt.
  • Egypt and especially Nubia had the resources to make them major gold-producing areas for much of history.
  • The European exploration of the Americas was fueled in no small part by reports of the gold ornaments displayed in great profusion by Native American people.
  • Gold has long been considered the most desirable of precious metals and its value has been used as the standard for many currencies in history.
  • Gold has been used as a symbol for purity, value, royalty and particularly roles that combine these properties.
  • There is an age-old tradition of biting gold in order to test its authenticity. Although this is certainly not a professional way of examining gold, the bite test should score the gold because gold is a soft metal.
  • Gold in antiquity was relatively easy to obtain geologically; however, 75% of all gold ever produced has been extracted since 1910. Much of the gold mined throughout history is still in circulation in one form or another.
  • One main goal of the alchemists was to produce gold from other substances, such as lead— presumably by the interaction with a mythical substance called the philosopher’s stone.
  • During the 19th century, gold rushes occurred whenever large gold deposits were discovered. The first documented discovery of gold in the United States was at the Reed Gold Mine near Georgeville, North Carolina, in 1803.

Share

Physical Gold vs. Exchange-Traded Funds


A lot of investors are confused about the differences between owning physical gold and owning a gold Exchange-Traded Fund (ex: GLD ETF). Hopefully the following points from the traders here at APMEX will help to clear things up:

  • Universally traded: Gold and silver are highly recognized and can easily be traded for goods and services anywhere in the world.
  • Less credit risk: Actually owning the metals significantly minimizes investors’ exposure to credit risk.
  • Not the same: Investing in the GLD ETF is not the same as investing in physical gold. This is partly because the GLD ETF fails to accurately reflect the price of gold. The premiums on physical gold products have grown from 10% to 40% over the spot price of gold over the past five years. This is not reflected in the price of the GLD ETF.
  • Deviation from spot values: ETFs that track gold prices using futures contracts will track the spot price of bullion, but may deviate occasionally.
  • ETF can drop to zero: Like stocks, bonds and mutual funds, GLD allows for unsuspecting investors to potentially lose all of their money. Actual physical gold price has never gone down to zero.
  • No promise: The GLD ETF does not promise that any physical gold is actually held within the ETF Trust.
  • No physical possession: A Gold ETF shareholder can never take physical possession of any of the gold, unless the shareholder owns 100,000 or more shares.
  • No actual gold: Owning GLD is not an investment in actual gold; it is an investment in a paper security.
  • Counterfeit risk: 400-ounce gold bars are the only gold bars purchased by ETFs. Because they are rarely inspected by experts for authenticity, counterfeit bars can end up in the fund. If one or more are found to be counterfeit, the value is deducted from the fund, effectively decreasing the value of individual shares.

We hope this provides some insight into the major differences between physical and paper gold. If you have any other questions, please feel free to contact our trading department at (800) 375-9006 or visit www.APMEX.com.

Share

Market Recap 1/29/10

Home sales took another significant hit in December, raising worries about the housing market’s ability to recover once government support begins to wane. Single-family home sales fell 7.6%, following a 9.3% plunge in November, according to an article by Jeff Bader and Sara Murray in the Wall Street Journal. “The new-home market continued to wilt late in 2009,” said Mike Larson, an analyst at Weiss Research Inc. “The buyers who are willing and able to buy are flocking to cheaper, distressed, ‘used’ homes.”

This week, the Senate voted for a second four-year term for Ben Bernanke, as Chairman of the Federal Reserve. This vote came on the heels of weeks of continued criticism of the Fed Chairman by certain Members of Congress.

“The intense scrutiny of Mr. Bernanke’s record underscored risks to the Fed’s cherished independence to change interest rates without political interference,” according to the Wall Street Journal. The Federal Reserve insisted this week that the economy is starting to recover, but it is still fragile enough that the Fed decided to leave interest rates at record low levels. As a result, the dollar saw gains, causing the stock markets to rally. This activity in the stock market caused the consolidation in precious metals and other commodity prices. Many investors, not convinced that the recession is over, are taking advantage of this consolidation, buying gold at much lower prices compared to recent highs.

Also this week, APMEX featured an unheard of “Gold at Spot” sale. Perth Mint colorized fractional gold coins were offered at spot through an email to APMEX customers. “People really responded to the rare opportunity to buy gold coins at spot. No other precious metals company is in the position to successfully do this kind of sale. We sold out of a huge supply of fractional gold coins in about 6 hours,” remarked Mike Garofalo, Vice President of APMEX.

Gold:
Spot gold prices opened this week at $1,093.50. The high during the week was on Monday, January 25th, at $1,104.00, while the low for the week was $1,072.90 and it occurred on Friday, January 29th. Gold ended the week down $10.70 at $1,082.80. This week, the most popular gold items included Australian Gold Lunar Coins, Gold American Eagles and 1 oz. .9999 Pamp Suisse Gold Bars.

Silver:
Spot silver prices opened this week at $17.06. Silver reached a high of $17.23 on Monday, January 25th, while the low for silver occurred on Thursday, January 28th, at $16.01. Silver ended the week down $0.80 at $16.26. 2010 Silver American Eagles, 1 oz. APMEX .999 Fine Silver Rounds and 2010 1 oz. Silver Maple Leafs were the most popular silver items for sale at www. APMEX.com.

Platinum:
Spot platinum prices opened this week at $1,543.40 and ended the week down $40.40 at $1,503.00. Popular platinum products this week included 1 oz. Scotia Bank .999 Fine Platinum Bars, 1 oz. Pamp Suisse .999 Fine Platinum Bars and Platinum American Eagles.

Palladium:
Spot palladium prices opened this week at $430.00 and ended the week down $14.40 at $415.60. 1 oz. .999 Fine Pamp Suisse Palladium Bars, 2009 Palladium Canadian Maple Leafs MS-69 NGC and Random Year 1 oz. Palladium Canadian Maple Leafs remain popular with palladium investors.

Featured Bullion Product:
Each week, APMEX will review a different bullion product for the benefit of our readers. This week, we will examine the American Gold Buffalo coin.

The United States Mint introduced the American Gold Buffalo coin in 2006. The coin’s design is borrowed from the famous Buffalo Nickel created by famed American sculptor, James Earle Fraser. The obverse depicts the iconic Native American Indian Head design, while the reverse features the classic buffalo design with inscriptions of the weight, denomination and gold content.

American Gold Buffalo Coins are the first .9999 fine, 24-karat gold coins ever struck by the United States Mint. They are available to investors seeking to invest in a 24-karat gold coin that has its fineness and purity guaranteed by the United States Government.

APMEX offers a great selection of American Gold Buffalo coins dated during the current year and in several prior years in brilliant uncirculated and proof condition. Coins purchased in quantities of 20 or more will be delivered in mint sealed protective plastic sheets.

Share

Market Recap 12/11/09

The U.S. Dollar showed some improvement early in the week as the Dollar Index was up by 0.07%. That was the major catalyst that pushed both oil and precious metal prices down for the first time in recent weeks.

Federal Reserve Chairman Ben Bernanke spoke at the Economic Club of Washington late Monday, stating that we will see modest economic growth next year but at a pace slower than we would like. Giving few concrete details, he went on to discuss the careful thought going into the Fed’s exit strategy for withdrawing the unprecedented monetary stimulus dollars from the economy. Well-informed investors will keep a close watch for developments on this topic, as it will help shape market trends in 2010.

In telling remarks this week, Treasury Secretary Timothy Geithner extended the government’s $700 Billion bailout fund to October 2010, saying the economy still faces “significant challenges.” “This extension is necessary to assist American families and stabilize financial markets because it will, among other things, enable us to continue to implement programs that address housing markets, the needs of small businesses, and to maintain the capacity to respond to unforeseen threats,” Geithner said. He also warned that withdrawing programs too early could prolong the economic downturn. These statements concerning the “continued programs” and “unforeseen threats” have many investors quite nervous, anticipating the inevitable inflation that comes with such government spending.

The recent pullback in precious metal prices provides a great opportunity to add to your precious metal positions. APMEX announced this week that 2009 Fractional American Gold Eagles are now in stock and ready to ship. Visit www.APMEX.com today and stock up on gold and silver before the next rally!

Gold:
Spot Gold prices opened this week at $1,159.70. The high during the week was on Tuesday, December 8th, at $1,169.30, while the low for the week was on Friday, December 11th, at $1,108.30. Gold ended the week down $44.10 to $1,115.60. This week, 2009 1/10 oz. American Gold Eagles, 2009 1 oz. BU Gold American Eagles and 2009 ¼ oz. Gold Australian Kangaroos saw significant traffic on the APMEX.com website.

Silver:

Spot Silver prices opened this week at $18.47. Silver reached a high of $18.50 on Monday, December 7th. The low for Silver occurred on Friday, December 11th, at $16.87. Silver ended the week down $1.28 to $17.19. This week, 2009 1 oz. Silver American Eagles, 2010 1 oz. Canadian Silver Maple Leafs, 1 oz. .999 Fine Silver Sunshine Mint Rounds, and 2010 1 oz. Silver Vancouver Canadian Maple Leafs were very popular due to APMEX’s Annual 12 Days of Christmas Sales Event.

Platinum:

Spot Platinum prices opened this week at $1,458.90 and ended the week down $22.00 to $1,436.90. Investors continue to snap up 1 oz. Pamp Suisse Platinum Bars, 1 oz. Platinum American Eagles and 1/10 oz. Platinum American Eagles.

Palladium:

Spot Palladium prices opened this week at $372.05 and ended the week down $8.05 to $364.00. Popular Palladium products this week included 1 oz. Random Year Palladium Canadian Maple Leafs, 1 oz. Pamp Suisse Palladium Bars and 10 oz. Pamp Suisse Palladium Bars.

Numismatics:
Since our last post, the spot price of gold has been ever-changing – driven by various world news and the strength of the U.S. Dollar. But even with all the interest from customers, APMEX continues to have a good supply of products available. But, these products are moving quickly in spite of the recent market fluctuations.

APMEX is proud to be one of the first precious metals dealers to deliver 2009 Fractional American Gold Eagle coins to our customers, as we just received them this week! In addition, the herd of Gold American Buffalo coins is currently plentiful, but the numbers are dwindling as the spot price of gold has dropped. As always, Pre-1933 U.S. Gold is very popular, especially $2.50 Quarter Eagle coins and $20 Saint-Gaudens gold coins.

The spot price of Silver has also readjusted, though not as dramatically as gold. Opportunists are taking full advantage by stocking up on their favorite bullion and numismatic items, such as the Silver American Eagles, Very Good to Very Fine Morgan Silver Dollars and Peace Silver Dollars. Holiday Silver Rounds and Bars are also very popular as gift items.

This week, as APMEX continues its series on Silver Dollars, we will be highlighting the 1895-S. This particular year and San Francisco mintmarked issue is notorious for being extensively bag-marked. As a result, high-grade examples are always in high demand, carry a premium, and are almost always found in the lower mint state range. Circulated specimens are equally hard to find, as the mintage is very low with only 400,000 pieces struck. Sometimes, lower grade examples such as an AU-55 or AU-58, may be more attractive than even an MS-60 or MS-61. If you are lucky enough to find a high-end example, be sure that it carries tremendous eye appeal and is well struck, as most mint state 1895-S’s bear these qualities. The large majority of 1895-S coins were paid out within years of their production, yet there were a few bags that were held back as late as the 1950’s. On the other hand, many higher-grade 1895-S’s are either Proof-Like or Semi-Proof-Like. Often these coins are found without toning. There are no major VAM varieties to be found for this particular year, however, the few varieties that can be located carry a small additional premium.