The Social Implications Of Gold Discoveries
No metal, in fact no substance of any kind has been so lusted after, so loved, caused so much happiness and has been responsible for so much death and sorrow as has gold.
Gold is one of the first metals known to man and the word comes from an “Olde English” word – geolo which means yellow. It is a soft malleable metal with a mesmerizing glow to it. It is easy to work with, and the ancient Egyptians were expert goldsmiths who were able to create intricate pieces of jewelry from this metal. It can be drawn into a fine wire or hammered out into thin leaf – the Egyptians were able to hammer it so thin that it took over 350,000 leaves to make a pile one inch high.
Gold is both, rust and corrosion resistant which gives it many commercial uses, besides the best known one for being the base of great jewelry. Everyone from economists to historians to poets have tried to explain the allure of the metal, but no one has succeeded. Perhaps is just the perception of the beauty of the metal that makes it so wanted. Gold is seen as the “ultimate”, as in an Olympic gold medal (which is actually not made of gold).
Its rarity makes gold one of the most valuable of all metals. The sources of gold are few and far between and the discovery of gold has always had huge political and social implications. The California gold rush of the 19th century is an example of this – it led to the opening up of the western part of the continent. In 1851 gold was discovered in Australia and by 1860 the population of that country had tripled. The same kind of thing happened in New Zealand when gold was discovered there a few years later. The city of Johannesburg was founded when gold was discovered in South Africa. As a matter of fact, gold was the bedrock of the country’s economy for many years. The Yukon was opened up only after gold was discovered there at the end of the 19th century. Wherever gold has been discovered or even rumored to have been discovered, the effects on the society of the country and on the population densities of the region have been major.
Platinum Coins
Platinum investments took a new turn in 1983 when the Isle of Man, a British Crown Possession which is entitled to use its own currency, issued one ounce Noble made of platinum. It opened the door to investing in platinum coins –something which wise investors had been waiting for. Legal tender made of bullion, be it gold silver or platinum is considered by most investors as the safest way to own the metal. The value of the coins in terms of weight and purity is backed by a government and so there is no need to assay them. They are also highly portable and the aesthetics usually only add to their appeal.
The huge success of the Isle of Man’s initiative in issuing platinum coins inspired other governments to also take the plunge. Within five years of the Noble coming into circulation Australia issued the Platinum Koala and Canada the Platinum Maple Leaf as legal tender. Although both coins made their appearance within a few months of each other, they were highly successful and were in great demand by investors.
For the next nine years Australian and Canadian coins were the leading platinum coins in the world. During the 1990s a number of limited edition high value platinum coins were issued but they were for numismatic purposes only and were collectors’ items and not legal tender.
In 1997 the US Mint finally joined the platinum bandwagon with the launch of the Platinum American Eagle. The arrival of this coin saw the investment levels double in the space of just one year. The Platinum Eagle soon became the preferred platinum investment option and the demand for these coins was so great that most denominations sold out almost immediately. In 1998 the US mint launched the Vistas of Liberty series of Platinum coins in a limited time program that ran till 2005.
While the modern investor in platinum has the options of investing in the form of exchange traded futures and options, bullion bars, and numismatic coins, legal tender coins remain extremely popular with those who prefer to have the purity of their investment backed by government guarantee as well as the ease of exchange and conversion that these coins offer. Another benefit that many investors like is their easy storage and transportability.
Investing In Platinum
The uses of platinum are expanding on a daily basis. Studies estimate that one in five of all goods manufactured either contain platinum or need platinum for their production. One of the biggest users of platinum is the automobile industry where platinum is used in catalytic converters to convert harmful engine emissions into carbon dioxide and water. This alone accounts for the consumption of nearly one third of all platinum produced in the world each year.
The problem lies in the fact that platinum is so difficult to come by. Between 5 and 6 million ounces of platinum are mined each year and that too under the most difficult of conditions. 5 million ounces is less that 5% of the world’s gold production. Obviously it is a rare and difficult metal to obtain.
Platinum’s scarcity and ever increasing applications make it a very attractive investment option. The history of its price performance is drawing the attention of investors who until recently never looked beyond gold and silver. Precious metals are known for the fact that they normally appreciate when other investment options like stocks and bank deposits are offering low or even negative returns. That is what makes gold and silver so popular as investment options.
What more and more people are coming to realize is that in the case of platinum, not only is the safety of hedging against the drop in the value of other investments available, but so is the opportunity for huge capital appreciation. The limited availability and increasing demand for the metal ensures this. Studies estimate that should platinum mining come to a halt for any reason, the above ground reserves of the metal will only suffice to meet one year’s demand. In the case of gold, should the same thing happen, the above ground reserves would be enough to last for 25 years.
There are two factors that determine the value of a metal – its availability and the demand for it. Clearly platinum is one of the rarest of metals. And it is one with the fastest expanding range of application, driving up its demand. Smart investors have kept both these factors in mind while investing in platinum.
American Buffalo 24 Karat Gold Coins – The Return Of The Indian Head
The Indian Head or Buffalo nickel was launched by the US Mint in 1913. It was designed to depict the spirit of the American West. The artistry of these old coins has been brought back to life by the production of the American Buffalo 24 karat gold coins. These were authorized in December 2005 by Public Law 109-145, or the Presidential One Dollar Coin Act as it is better known.
The images on the obverse and reverse of the coin are the same as those on the 1913 nickel. These were created by the noted sculptor James Earle Fraser. The obverse of the coin features the head of a Native American tribal chief and is modeled on three different individuals – Chief Two Moons of the Cheyenne and Chief Iron Tail of the Lakota Sioux. The third person remains unknown. The reverse of the coin shows the American Buffalo and is thought to be a depiction of a Buffalo in the New York zoo at that time.
These coins are offered for sale to the general public through a chain of authorized outlets including precious metal dealers, brokerage houses and banks that have chosen to participate in the sale of these coins. They may also be purchased directly from the US Mint. This is the first time that the US Mint has ever struck a .9999 fine 24 karat gold coin. The $50 coins are a simple way for members of the public to invest in 24 karat gold. Owning these coins is safe because they are legal tender and their purity is guaranteed by the government. A Certificate of Authenticity is provided to the buyer of the coins.
These coins are a great investment for those who want their savings to be in the form of a tangible precious metal. While gold prices do continue to fluctuate, historically gold investments have always prospered in the long term.
While the coins have a face value of $50, the actual retail price is dependant on the price of gold at the time of purchase and will be fixed from time to time by the US government.
Platinum becomes less precious
Over the last few months, Platinum has lost its status as a metal extremely more precious than Gold. After much time at roughly double Gold’s price, Platinum has barely been able to stay above gold at all. As I write this, gold is at $883 per oz, and platinum at $941 – that’s less than a sixty dollar difference.
So what happened? Well, primarily the auto industry collapsed. The largest user of platinum group metals ( platinum, palladium, and even rhodium ) is the auto industry. All those cars need catalytic converters, and they all need platinum group metals. Once that demand falls through the floor, demand for PGM’s goes south in a big hurry. Couple that with a drop in all the metals’ prices, and you can see what happens.
All that being said, I think platinum has a bright long term future. Shorter term, gold and silver will fare better. But eventually, once we’re through this economic muck that we’re in, auto sales will pick back up, and PGM’s will be needed once again. When that happens, your platinum will begin to regain at least some of its former glory. If you can afford to hold, but cheap while you can.
Precious Metals Soar, Gold gains 9%
Gold gained 9%, while silver jumped an astounding 15% in a single day – these are the largest single day gains in literally decades. Gold closed at a solid $862.90, while silver skipped $11 to close at $12.06. That’s up a buck sixty one in one trading day. Take a look at the numbers:
Looks like all that bankruptcy / government bailout news finally hit the metals market. Yesterday was a pretty fantastic buying opportunity, after all. We may all be kicking ourselves soon, if tomorrow is anything like today.
Platinum Plummets Perilously
Tongue twisters aside, I’ve never been happier to *not* be a platinum owner. The white metal called PT lost an astounding $125 in value today, to close at $1039. It’s getting dangerously close to becoming a three-digit metal. The not so distant days of $2200-$2300 Platinum seem awfully far away indeed.
To round things up, gold lost a couple bucks, and silver dropped a nickel. Palladium gained a single buck.
One more tough day in metals could bring $900 PT, $9 AG, and $190 PD. Of course, it will be awfully hard to resist buying at those prices, if any physical metal can be found. No paper metals for me, please.
Gold, Silver, Platinum turn upward
Can we mark September 11, 2008 as the bottom for the big downturn in precious metals? It’s too soon to say that, but today all four of the precious metals closed higher today.
Gold gained $16 for the day – it’s first up day in awhile. Silver managed to eak out a quarter gain, while the "other" white metals stole the spotlight. Platinum managed to gain $59 on the day – and inched toward $1200. Palladium rounded up the good news with a $15 gain.
I don’t think it will be all roses and unicorns from here on out, but it’s nice to have a good day in the midst of a downturn. In fact, this may mark a turning point of sorts, with the major bad news behind us. That doesn’t mean that we won’t see rough days, but hopefully a slow upward trend from here. If you’re sitting on some cash, it might be time to part with some. Silver looks particularly attractive, if you can get ahold of some without absurd premiums. Don’t spend it all, mind you – silver is of course, extremely volatile. Further downside is possible, if not terribly likely. Only invest what you can afford to lose, as always.
As for me, I’ll be on the lookout for some reasonably priced Mexican Libertads. They’re gorgeous, and one troy ounce of fine silver. What more could an investor want?
Small drops for metals today
At the closing bell, 3 out of the four metals took another drive, though less pronounced than they have lately. Here’s the final numbers for today:
Only Palladium managed to come through the day unscathed. Gold did close under $750 for the first time in, well, a long time. Platinum inched ever so slowly closer to breaking below $1100. I don’t know where the bottom is in metals, but apparently we’re not quite there yet. The fundamentals say we should be going higher, and they haven’t changed. Long term I’m very bullish – all four metals will see new highs. When will they start tracking upward again? Your guess is as good as mine. I’d lay money ( or metal ) on the fact that it won’t happen before the US elections.
Another day, another dump
The bad news isn’t over yet – possibly far from it. The closing numbers today are absolutely stunning, and not in that "OMG I CAN’T BELIEVE THEY’RE SO HIGH" kind of way. Take a look for yourself:
- Gold: $751
- Silver: $10.65
- Platinum: $1161
- Palladium: $225
Wow, just wow. Silver is back in the $10′s – will it fall to the single digits again? Just when we thought $25 was almost set in stone, we’re facing the very real possibility of single digit silver.
Gold hasn’t done much better – losing $25 in a single day. Who would’ve thought we’d see $750 gold again?
The Platinum group metals have had a terrible time of it too… with Platinum itself dropping to $1161. It’s not so long again that PT sold for well over $2k per ounce. How the mighty have fallen.
Just two more days in this bloody week. Will the metals rally? Will they continue to falter? All we can do is watch, and try to time our buying / selling decisions as best we can.
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