Gold Investor

Earlier this year the government of Canada sold off most of its gold reserves, mainly in the sole form of selling their gold coins. The gold coins that were sold are iconic to Canada; the Royal Canadian Mint has produced pure maple Leaf gold coins in a variety of denominations for well over 40 years. Canada’s latest selling of gold reserves is very much part of a longer-term pattern. It takes time and skill to keep on top of quality investments like Canada’s move away from the precious metal. There are numerous factors to take into account when considering making an investment. It takes time and skill. Discretionary Investment Managers are specialists at doing this on your behalf.

The International Monetary Fund’s has stated according to their International Financial Statistics, Canada held three tonnes of gold reserves as of late 2015. Throughout most of 2015, the country’s gold reserves stood at more than $100 million. The Finance department figures show that Canada has sold 41,106 ounces of their gold coins in December alone, then a further 32,860 ounces of the gold coins in January. The decisions that led to sell the gold was not tied to a specific gold price, and the sales are being conducted over a long period of time so that it can be in a controlled in an effective method.

We try not to get too caught up in the post-apocalyptic-zombie apocalypse-Mad Max-SHTF type of scenarios when it comes to the question of money. Everyone should be prepared for unforeseen emergencies but it is not very healthy to be continuously living in a paranoid state. Some cash and precious metals should be good hedges against this type of scenario. One of the inherent values of gold, silver and many tangible assets is that people associate them with actually having an inherent value and this can be a good insurance policy against a financial collapse that makes fiat money worthless and / or sees a shutdown of the financial transaction system.



But what about bitcoin? Does it work in the financial collapse scenario or even worse, in a post apocalypse world? Consumer Affairs has created a cool little comic book / novel that explores just this type of gold vs. bitcoin scenario in their post apocalypse world.

Greg Hunter at USA Watchdog did this interview over the weekend with Bo Polny of Gold2020Forecast.com. Polny purports to use cycles and technical analysis to predict the value of stocks, bonds and of course gold (and silver). In his view, gold has bottomed and will be up to $2,500; silver will hit new all-time highs; stocks and bonds will get decimated - all by October of this year when some cataclysmic event is going to take place. For what its worth, October (28th) also happens to be a time period when Martin Armstrong's Economic Confidence model predicts a short term bottom for this current downturn. Coincidence?

Does a unit of gold still buy the same amount of bread today as it did 2000 years ago during the time of Jesus? This is a good interview from Bloomberg for a non-paper/financial instrument perspective on gold. In it, Petropavlovsk Chairman and Co-Founder Peter Hambro brings some much needed wisdom to the financial press by differentiating between the much speculated paper price of gold versus the demand, supply and price dynamics of the actual physical metal.

"To the illumined man or woman, a clod of dirt, a stone, and gold are the same."
Bhagavad Gita

This verse from the ancient Hindu holy text came to my attention when reading through Eknath Easwaran's excellent book, Words to Live By. We look at the prices of gold, silver, stocks, bonds, etc. on a daily basis but sometimes it is nice to put things into a higher perspective. Here is now Mr. Easwaran further elaborated on this quote from the Bhagavad Gita:

"Gold is not valuable in itself. It is valuable because there is so little of it. If sand were found only in small quantities, people would treasure it in their safe-deposit boxes, they would buy sand certificates, on important occasions they would exchange a little sand, and they would have the expression "as good as sand".

Things cannot give us status. We give status to things. When Tom gets into his BMW, he is giving status to the car. The car is not giving him status. The car says, "I feel good because Tom is at the wheel."

In what is at the very least a stunning move, the Peoples Bank of China (PBOC) has announced that the country's official gold reserves increase by 57% between May and June 2015. Any suggestion that this 604 metric ton increase in gold holdings took place in one month would be preposterous but the Chinese Central Bank had been keeping its monthly gold data fixed since 2009. The Chinese stock markets have been through a tumultuous time with a huge spike and fall within this calendar year. The fact that China would reveal these increased gold holdings could be a sign that they wish to stem some of the eroding confidence that has resulted from their (draconian) financial measures to counter the stock market bubble.



Many gold analysts believe that the Chinese gold holdings are much higher as (unofficially) they have been big buyers of physical gold since the last financial crisis. This updated number of 1,658 tons (53.32 million ounces) is still nothing compared to their $3.69 trillion foreign reserve holdings. When and how the Chinese decide to let the world know about their actual gold holdings, will depend on their own broader geopolitical plans.

The United States Justice Department granted UBS immunity after fining it a total of about $545 million dollars and getting a promise of co-operation. Other banks also agreed to settle for FOREX manipulation but UBS apparently agreed to "to help investigators examine whether there was “manipulation of, or fraud in” precious metals markets."

In this interview, Bill Murphy of GATA, who has been a long time vocal protestor of market manipulation of gold and silver, provides his take on what this means and how this situation could impact the gold and silver market (and its prices).

The prospect of inflation getting out of control in a zero interest rate, money printing, Central Bank heavy environment has long been a given amongst many commentators and experts. This has translated into increased values of bonds, the stock markets, real estate and art (as a Picaso fetched $160 million at auction yesterday).

Yesterday Greg Hunter interviewed John Williams of Shadowstats.com and Williams, is still of the view that all the economic numbers released by the US government are much worse than stated as the methodologies have been changed over the years to make them appear better. He is a big inflation / hyperinflation guy so in his view, hyperinflation is (again) just around the corner.

Over a century ago, the "American West" was flooded by gold prospectors and small mining companies as the prospect of striking it rich drove a boom in the search for gold, silver and other metals. As mining became a substantial industry and started applying large scale industrial technology, the prospectors continued their craft though with slowing popularity. Who wouldn't be enamored with the possibility of panning at their local mountain stream and coming across a nice nugget of gold? The increase in gold and silver prices in the 2000s may have re-ignited this American love affair and it still continues, as seen at this year's Gold and Treasure show held in Portland, Oregon. The outdoor aspect of panning for gold or running metal detectors over tracks of land are being used as an indirect benefit to get young people and families into the outdoors. The Oregonian reports:

"Prospectors young and old, new and seasoned, said they were enticed by the appeal of a wholesome activity that gets them into the great outdoors, even if just to get away from the routine of a sedentary life. "It's an opportunity to get off the couch and enjoy the beauty of the outdoors," said Gary Upton, 73, of Portland, "None of us is interested in doing anything destructive in nature. We just want to get away from doing nothing."

Barrick gold has been through an interesting few decades. Mergers and acquisitions aside, it has been the darling of the gold stock investor with its old hedging program; accused to manipulating the gold price through said hedges; and a loser when the price of gold started a long sustained move up from 2002-2012. And now it finds itself in another lower gold price environment with high debt, likely declining gold output, dividend cut and lower stock price. While most gold miners have suffered from this lower and stagnated price of the precious metal, Barrick seems to have been hit especially hard. Barrick believes that it can maintain a run rate of six million ounces a year for the next couple of years but some analysts see gold mining production falling to the 4 million ounces per year handle. The Toronto Star reports that the company is now shedding non-core mines and drastically cutting corporate staff in order to trim on its high debt load and start increasing margins.

"Barrick Gold Corp. chairman John Thornton’s message to Bay Street came through loud and clear: he wants to take the world’s largest gold producer back to its roots as a smaller company with fewer mines and micro-managers and hopefully return it to profitability."