Gold Investor

Sudan has been through a tumultuous (recent) past with the country being split up, based largely on the lines of religion and an ongoing problem with alleged support of terrorism. But the country is the third largest producer of gold in Africa and hopes to leap ahead of Ghana and South Africa before the end of this decade, to become the largest gold producer in Africa.

The Sudanese government, including its minister of mining, Ahmed Mohamed Sadiq al-Karuri, have been pitching the gold industry to visiting mining companies and governments. Any success in increasing mining of gold, and iron, chromium, and copper, would help the country make up for the loss of oil production, which is now located in South Sudan.

What better way to jazz up that $160 sandwich than to top it off with some (edible) gold leaf? That's what chef Luke Venner has done at his NY based restaurant, BLT Fish. The request only lobster roll features lobster (of course), caviar and is topped with gold leaf. And people say "you can't eat gold".

Gold monetization has made trading, investing and in a sense manipulating of the precious metal a whole lot easier. But eventually investors won't be satisfied with a piece of paper and will want to hold the physical metal to negate any counter party risk. So says investor, commentator and author Jim Rickards. Jim has written a couple of very successful books; the most recent being The Death of Money and its predecessor, Currency Wars, which was published a couple of years ago. In this interview with Greg Hunter, Rickards lays out his views on some upcoming drastic changes to the current financial system which would affect the lives of billions of people. This is a must watch interview regardless of your views on gold.

Many gold watchers have been looking towards the newly elected Indian Prime Minister, Narendra Modi and his BJP government, to clarify their stand on legal gold imports into India. Now the Indian central bank (RBI), has already started easing some of the gold import restrictions by allowing an additional seven companies/entities to import gold. Reuters reports:

"The RBI eased tough gold import rules on Wednesday by allowing seven more private agencies to ship the precious metal, a move that industry officials say could augment supplies and reduce premiums in the peak wedding season."

"As a result, more than 20 entities, including state-run banks, private banks and agencies will now be allowed to import the metal. "This is a welcome step as it is some sort of relaxation. Supplies will increase in another 8-10 days and premiums will certainly come down," said Bachhraj Bamalwa, director with All India Gems and Jewellery Trade Federation."Some gold that was routed through illegal channels will now be routed legally."

A lot of the physical gold that moves around needs to be refined to reach the desired purity and size of the new buyers - either after the initial refining at the mine, transfer from central banks or as part of the general recycling of gold. The London Bullion Market Association (LBMA) accredited refining industry is highly concentrated in Switzerland with over 3,000 tonnes per year passing through the tiny European country. Johnson Matthey, Valcambi, Metalor, Argor Heraeus and PAMP are the Swiss gold refining behemoths - some of which even retail gold buyers would recognize.

The burgeoning Middle Eastern market for gold has seen Dubai emerge as a hub for precious metal trading, both to meet the (wealthy) local demand as well the Indian and Chinese demand for gold bullion and jewelry. Kaloti Precious Metals already operates a 450 tonne per year gold refinery in Dubai but now has concrete plans to significantly increase its local refining capacity as it also sets up as an accredited refinery on the "Good Delivery List" of LBMA.

Pension plans in the United Kingdom are awaiting a ruling from their financial services industry regulator, the Financial Conduct Authority (FCA), on whether gold bullion will be added to its list of “standard assets”. The FCA defines standard assets as:

“...capable of being accurately and fairly valued on an ongoing basis, readily realized whenever required, up to a maximum of 30 days, and for an amount that can be reconciled with the previous valuation”...

Logically speaking, this should make the approval of gold a no brainer but the final FCA decision is expected later this year. Investment grade gold has been an allowed holding in self-invested personal pensions since 2006 but a positive ruling by the FCA should increase the awareness of available gold bullion investment, with the British investors.

The meteoric advances in computers, cell phones and electronics in general have resulted in a lot of outdated gadgets either ending up in landfills, expensive recycling operations or third world countries where components are burned off or treated with harsh chemicals, to extract the minute amount of gold, silver, copper and other metals that are used in the printed circuit boards. This also releases many other hazardous materials that are used in the electronics and is not good for the people working on extracting the metals and the environment. The EE Times reports that a company in Finland has come up with a biological solution to extract some of these metals. VTT Technical Research Centre has found that mushrooms can extract 80% of the gold from electronic scrap.

"Further crushing, sieving, and flotation (a separation method that separates hydrophobic particles from hydrophilic particles by blowing air into the sludge) resulted in a fraction with high concentration of valuable metals for solution extraction experiments. The researchers say their flotation technique raised the copper content of the circuit board fraction from 25% to 45%, while gold content increased by a factor of 1.5.

That may not be universally applicable but if you go by the media coverege it may well be the case in India; gold > drugs. Not to mention the special skillset required to sneak in this metallic substance in the age of metal detectors and heightened vigilance against gold transportation across national borders; again at least in India. You can't swallow a kilo or two of gold nuggets wrapped in a condom and then crap them out at your destination. Or can you? Skimming through some news reports, this headline instantly caught my eye and resulted in a chuckle or two:

"Woman flyer wears 6 undies to hide 2kg gold"

No crapping out gold but oh what lengths will smugglers go to find desperate mules and come up wtih inventive schemes - all in the name of meeting the gold demand of 1.3 billion people whose government insists it knows what is best for them.

Yes, you read that right - a half gram gold coin. I like the Royal Canadian Mint, even with its many overly priced "numismatic / non-circulating legal tender coins", but I am a bit taken back by why anyone would want to buy a half gram coin. I have seen one of the 1/25 ounce, or 1.24 gram, gold coins that RCM makes and it was tiny and barely legible while ensconced in its protective plastic capsule. Its hard to appreciate the art, that makes these 1/25 ounce coins "collectables" so I now only imagine how small, and frail the even smaller half gram, or 0.016 ounce gold coins would be.

In real life the coin will have a diameter of just 11 mm but thankfully we have a nice big picture of this coin, which is denominated at 25 cents and features the cute, cuddly and hardworking Canadian chipmunk designed by artist Tony Bianco. The mint will produce 10,000 of these half gram 99.99% pure gold coins and sell them for C$79.95 ($72.30). I won't bother calculating the premium being paid over the price of gold, because it will be insane.

After failing to break through a key $1,400 per ounce mark, the price of gold has been on the downswing, almost giving up all its gains for 2014 (currently quoted at $1,292 / oz). This comes on the heels of a few reports of several central banks having been buyers of gold in February and with increased geopolitical tensions in Ukraine and Eastern Europe. China’s gold imports from Hong Kong rose amid increasing demand, to 109.2 metric tons in February, compared with 83.6 tons in January and 60.9 tons in February of last year.