Jim Rogers – Is Gold In A Bubble?

Jim Rogers, legendary commodities investor and guru, spoke in Prague about 2 weeks ago to 300+ money managers.

They took a poll, by pressing buttons, not a raise of hands.

“How many of you have EVER owned gold?”

Answer? 24%

76% had NEVER OWNED GOLD!

So, is gold in a bubble? Give me a break. Look at that statistic again. These are people who manage enough money that collectively they could move the gold market significantly, in the short term at least.

Maybe, maybe, gold could be considered in a bubble if 76% now owned it. But would you say stocks are in a bubble if 76% owned stocks? Not likely.

The gold market is minuscule. If many individuals, percentage wise, all of a sudden decide to buy just 1 or 2 ounces a piece; you would see gold shoot to the moon.

If gold does go into bubble territory, though, you want to consider (do your own due diligence) being invested in Canadian junior mining stocks in addition to gold itself.

For expert specific stock recommendations on Canadian junior mining stocks, get a Risk Free Trial Subscription to the International Speculator.

How To Predict The Price Of Gold

by:

Jeff Clark, Editor, Casey’s Gold & Resource Report

Long-term readers know that gold moves inversely to the dollar, meaning if the dollar drops, gold tends to rise (and vice versa). This happens with about 80% regularity. But what many gold writers haven’t acknowledged is the leveraged movement our favorite metal has demonstrated this year to the world’s reserve currency.

The U.S. dollar index, a six-currency gauge of the greenback’s value, has dropped 7.8% so far this year (as of December 3). Meanwhile, gold is up 38.7% year-to-date. In other words, for every 1% drop in the dollar index, gold has risen 4.9%. If that approximate percentage holds over time, one can begin to estimate what the gold price might be if you know what the dollar might do.

While the dollar is likely to bounce at some point, making gold correct, the long-term fate of the dollar has already dried in cement. If the dollar were simply to return to its March 2008 low of 71.30 next year – a 4.6% drop from current levels – this would imply a rise in gold of 22.5% and a price of about $1,478 an ounce.

The long-term scenario is more dramatic. If you believe the dollar will lose half its value from current levels, this would imply a gold price around $4,164. If you believe it will lose 75% of its value, gold would reach about $5,642. Doug Casey has called for a $5,000 gold price; if he’s right, guess what that implies for the dollar?

And think about this: these calculations ignore what else might “show up,” such as when price inflation shows up in the economy, the greater public shows up to buy gold, or the Chinese don’t show up at an auction. Could $5,000 gold be too low?

Unless you think the dollar’s problems are solved, its eventual demise is gold’s eventual glory. Prepare, and invest, accordingly.

And keep up on the gold and precious metals markets in Casey’s Gold and Resource Report. Each month I’ll bring you the best research and investment recommendations in the business. And until December 18, you can get a subscription for 50% off the regular price and receive a free gift worth $79. Click here to learn more.

Sir, Can I Sell You a $1200 Canadian Maple 1 Ounce Gold Coin for $50?

That’s the question Mark Dice put to a fair number of absolute idiots somewhere near where he lives. The houses are $1 million a piece, a 1 bedroom dump rents for $1200 / month and these people do not know what a 1 ounce gold coin is worth; or whether it matters that it’s from Canada.

The other thing that marks these peoples I.Q. is that none have any cash on them. Ok, some probably just won’t admit it. And some of the folks undoubtedly question a guy with a microphone and a cameraman selling a gold coin.

Here is a real one, just so you know what to look for:

canadian-maple-leaf-gold-coin

If it had been me I would have wondered if it were a Chinese fake, which are supposed to be real good fakes. But come on, he couldn’t even give it away to one gal; another wouldn’t buy him a Starbucks for it.

It’s not worth $4 to risk that it might be real?

Watch for yourself as Mark Dice tries to sell a 1 ounce Canadian Maple Leaf gold coin first for $50, then $20, then Starbucks coffee, then tries to give it away.

Un-freakin-believable!

This is just like a Jay Leno “Jay-walking” episode.

Come over and try that in my neighborhood Mark; PLEASE!

Where Dennis Gartman Sees Gold Price Going Near Term

I haven’t written about Dennis Gartman of The Gartman Letter (TGL) much recently since he has been getting beat up quite a bit on his losing gold trades over the last year or so.

Dennis is a tough guy, though, and I think he can take it. Some speculate he is now using his very influential (and expensive) investment newsletter to “nudge” markets now that he has started a hedge fund as well. I won’t comment. In the past I always thought Mr. Gartman was of very high character and I know of nothing to change that opinion.

Recently, he has even been writing along the lines of a possible conspiracy in the price of gold, something I think he ridiculed in days past.

Currently, though, he is suggesting that the gold price will move back toward his (buy) target of $1000 per ounce in the next week or so. Naturally, Dennis uses more exotic language to state that simple point, but there it is.

He feels that people expecting higher prices in the short term have that opinion based on a misconception of the physical gold market. I don’t know, they claim Indian, Vietnamese and Chinese buying is all rather strong.

Buying of gold and silver in the United States, I feel, is still pretty much limited to us in the lunatic fringe.

But then again, they said that about us when we were buying at $280 an ounce 7 or 8 years ago. Wouldn’t you have rather had your money in the stock market – S&P 500, Dow 30 or the financials? Oh, wait, maybe not.

It isn’t too late yet to profit handsomely on the precious metals and the related mining shares. Many of those, in fact, reside in Canada which happens to have a pretty strong currency currently.

Be careful, though, this is not for the amateur. I rely on professionals to research what stocks to buy and sell. You can too.

Click here for the basics on Gold and Resource stock information for less than the cost of a nice dinner out.

Click here if you understand that information capable of making you 100% or more on your money within one year is worth paying for.

(Not an offer to buy or sell any security, past results not indicate of future returns, your mileage may vary; blah, blah, blah)

A Silver Stock to Buy With a China Connection

When it comes to precious metals like gold and silver, I don’t think any country’s population is more excited than China; and they have a LOT of people. The government is not only encouraging individuals to buy gold and silver but they are making it easy to acquire.

With the exception of gold vending machines in Europe, where else can the common person buy gold and silver at their post office, bank, or mint shop down the street?

China is the #1 producer in gold and #3 in silver. They are fast becoming consumers as well, be it bullion jewelry or bullion coins.

How do you profit from this?

One way is to be a buyer of gold and silver coins yourself, and I have written about the pros and cons of that. But what if you want some leverage to expand your profits?

I don’t recommend futures and options for non-professionals, so what can you do? Gold and silver mining and exploration stocks are the answer for people who can afford the volatility and risk of these investments. (This is NOT a solicitation to buy or sell anything!)

With all of this action in China, it makes sense to want to participate with a precious metals mining stock with a serious connection to China. There are dangers there so you have to be careful which is why I rely on professionals to get the information for me. People who are well connected.

One of my sources has just tipped me off to a silver stock with a huge China connection; but no 43-101 compliant resources there. What? How can that be?

Simple. The mine they have in China is so rich that they were able to put it into production WITHOUT the expense of drilling it off to a banker’s satisfaction. And we all know how sharp the world’s bankers are, don’t we?

This company has 4 mines in China and has smelters located within 100 miles of the mines, which keeps costs down.

The company has the advantage of a clean financial structure and tight share structure. Management also is a large owner, a good sign.

As you might expect, this company has some volatility, volatility in share price that you and I can use to our advantage. When silver has a down day, this stock will likely drop by a larger percentage affording us a good buy opportunity.

Then when the silver price is strong, this company’s stock responds even more so on the upside. That is exactly how we can leverage our profits over simply buying silver itself.

If you want to know exactly which stock this is, more about it, and get the inside scoop on the next stock like it to be discovered, Click here to learn more.

Transporting Gold Across The Border to Canada

Gold Krugerrand Coin
Gold Krugerrand Coin

Much has been written about getting physical gold out of the United States. This article actually touches on the additional topic of how many people even know what a gold coin looks like, let alone own one (or more).

One of Casey Research’s readers sent this note to editor David Galland regarding his experience taking 20 gold Krugerrand from the U.S. to Canada.

Amusing, sad, and only mildly encouraging.

Last week I flew from Houston, Texas, to Calgary, Alberta, and I had 20 Krugerrands in my carry-on bag.

I have had “run-ins” with U.S. customs agents before and I didn’t want to repeat the experience. With this in mind, I called the customs office at the airport beforehand and told the agent that I would be carrying gold coins and asked him how to value them to conform to the ten thousand-dollar rule. He had no idea what I was talking about and told me to check with the airline when I got to the airport and they could help me.

Knowing that this was inaccurate but willing to play along, I presented my valuation question for declaring the coins to the airline check-in person. She, of course, had no idea what I was talking about and told me that nothing needed to be declared on the way out, but only on my arrival in Canada.

I next asked my question of the security person at the head of the security line. She at least had heard of the ten thousand-dollar rule but had no idea about valuation of gold. She told me to check with the security guy at the scanner. At this point, I’d had it. I just threw my bag on the scanner and picked it up on the other end and walked on the plane with no problem.

The situation went downhill at Canadian customs. I was still trying to do the right thing and asked the agent if I needed to declare. He had no idea and called his superior, who had no idea. I was then sent to the secondary agent to be checked. I told her I was just trying to determine if I needed to declare the coins dependent on value. She left for about five minutes to talk to a supervisor. She came back and asked me what they were worth. Trying to be honest, I told her it varied from day to day, but that they could probably bring between $900 to $1,000 each. She left again for five or ten minutes to check with her supervisor.

When she came back this time, she told me that they had decided that the coins must be rare collector items being brought into the country for resale. As such, they would not be classified as monetary instruments but as commercial merchandise, and they would need to collect GST on them. I did a quick calculation in my head and realized that they were getting ready to ask me for a thousand bucks to walk through customs with the coins.

I had also planned ahead for this problem and told her that I had called their central office before the trip and had been assured that no tax would be due on entry. She asked me if I had a name and number that I had called, which I provided to her. She still thought that they were collector items, so I just spilled several of them out on the desk to show that they were not protected in any way as I shuffled them together. She admitted that she had never seen a gold coin before.

She asked again about value, and I brought out another piece of paper that I carry with me. It is a downloaded page from the U.S. Treasury website that shows that the Federal Reserve and the Department of the Treasury value gold for inventory purposes at $42.22 per ounce. She thought this over for a minute and asked if I had any idea what they weighed. I told her that they each contained exactly one ounce of pure gold. She took this information and my downloaded page back in the back to her supervisor.

After another five or ten minutes, she came back and said that because they were worth $42.22 each and I only had 20 of them, I was well under the ten thousand-dollar declaration and I was free to go. She didn’t have to tell me twice.

This really is a “Damned if you do, damned if you don’t” situation. Both countries have the ten thousand-dollar rule and threaten you in writing with confiscation if you don’t declare. Yet when you try to do the right thing and ask the people on the ground what they want you to do, they are clueless. The temptation is great to just walk through without a word. This would work most of the time, of course, but I really don’t want to leave a couple of tubes of Krugerrands at the airport.

If this is the type of information that interests you then I highly advise taking a no risk spin with the investment newsletter the Casey Report.

Gold Buffaloes Return

us-mint-gold-buffaloAfter being absent for almost the entire year of 2009 US mint’s Gold Buffalo one ounce gold coins are coming back. Notice that while gold was relatively inexpensive you were not able to buy them, but now that gold is north of $1000 an ounce they will be available, probably for about a $100 premium!

Frustrating, similar to the way silver eagles were unavailable for purchase, at least a reasonable prices, when silver was trading around $10 an ounce during the heart of the financial crisis. Is something going on here?

Gold Buffaloes had the advantage of being .9999 fine 1 ounce coins. I have heard it said that Asian buyers prefer these over the less pure gold eagle coins.

Let’s hope that the bullion banks decide to crush the price of gold so they can cover their shorts around the same time that buffaloes are available so we might be able to pick them up at reasonable prices. Currently I know of only one company to place orders with shipment expected on or about October 25th, 2009.

At least you can lock in your price.

I have some concern however that we won’t have very long to pick anything up while gold is on sale. We could be going to the moon after that.

What if Everyone in the World Wanted a 1-ounce Gold Coin?

“If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around? “

Here is a question that very few people know the answer to. In fact, I was just discussing it with my kids the other day. How many people are there in world? How many ounces of gold are in the world. What if everybody wanted to own a gold coin?

gold bars and gold coinsWhenever there is buried treasure discovered, whether from a ship off the coast of Florida or an amateur with a metal detector in a field in England, you should wonder “how much gold is there in the world?”

Gold is tough to destroy, so most of it ever mined is still with us. But the easy stuff to mine has already been gotten.

It’s not just wealthy Americans who want to own gold. India has always been a big gold buyer and they have LOTS of people. The Vietnamese have gotten into the act of buying gold and now the Chinese government is encouraging their billion or so people to buy gold and silver – and making it easy to do.

In fact, it’s probably easier for a Chinese person to buy gold than an American. In Europe, they now have vending machines for gold!

Here is a great editorial from the folks at Casey Research on this very topic.

What If Everyone in the World Wanted a 1-ounce Gold Coin?

By Jeff Clark, Senior Editor, Casey’s Gold & Resource Report

If we’re right about where the price of gold is headed, the general public will someday clamor to buy all things gold. While gold stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: is there enough to go around?

According to the U.S. Census Bureau, there are 6.783 billion earthlings. Meanwhile, CPM Group, a highly respected industry organization, estimates there are 4.8 billion ounces of above-ground gold in the world. And this includes jewelry, electronics, and dental. So, even if everyone around the world volunteered to have their chain, cross, or tooth melted into a coin, we’re already short. Those towards the end of the line are out of luck.

However, it’s worse than that. Of all the physical metal ever mined…

  • 2.1 billion ounces, or 43%, is found in jewelry, decorative, and religious items.
  • Private stock – gold already held by various private parties – accounts for 1.1 billion ounces.
  • Official reserves (central banks, IMF, etc.) stand at 1 billion ounces.
  • Industrial use accounts for 530 million ounces.

Very little of this is likely to come available for purchase in coin form. After all, you’re not selling any of your gold, and neither are many banks or institutions. Most everyone is buying.

So for those who don’t yet have a gold coin (or you greedy investors who want more than one), this pretty much leaves us with mine production and scrap sources.

CPM forecasts that total new supply in 2009 will be around 122 million ounces. Only a small percentage of this is made into gold coins and bars, but if all of it were, it would amount to less than two one-hundredths of an ounce, or about half a gram, for every man, woman, and child on earth this year. A product of this dimension is about half the size of that small button on your shirt collar.

Since this supply is only available annually, it means 0.018% of the global population – one in every 55 people – could buy a one-ounce gold coin this year. Or, said differently, it would take 55 years before everybody had one, assuming the population never increased (it is) and supply never decreased (it is).

But it’s worse than that. Actual 2009 coin production will be around 5 million ounces (excluding medallions or “rounds”), leaving two one-hundredths of a gram of gold (or 0.3 of a grain) available this year for each of the planet’s inhabitants. This is about half the size of the sesame seed that fell off your hamburger bun at dinner last night. It means that only 0.0007% of earth’s citizens – or one in 1,356 – can buy a one-ounce gold coin this year, and it would take 1,356 years for everyone to get one.

How’s that for a supply squeeze?

But it’s worse than that. Demand continues rising. Gold is more frequently in the news, attracting more customers every day. Hedge funds, which never before considered gold, are now buying physical metal (Greenlight Capital actually sold $500 million of GLD and bought physical gold). Central banks are net buyers of gold for the first time in 22 years. China is running TV ads encouraging its citizens to buy gold and silver. Last month Russia bought more gold than they actually produced. In a recent survey, 20 out of 22 fund managers bought physical gold for their personal investments. In other words, some investors are already scrambling to get it… and in big quantities.

But it’s worse than that. Most of the ramifications of the money printing and dollar debasement haven’t even surfaced yet. How will the general public react when the dollar is crashing and standards of living are threatened? What will they do when milk and gas prices surge to twice what they are now? How will the greater collective respond when they lose faith in government interventions? Where will they invest when they see gold and silver prices screaming upward and don’t want to be left behind?

The panic into gold by the general public hasn’t begun yet. Available supply is scarce and will get smaller. There won’t be enough.

Better get your speck while you can.

[The current issue of Casey’s Gold & Resource Report has a few charts that should come with a warning. We examined just how small the gold and silver markets are, and “explosive” barely describes the potential. If you want to check it out for yourself, consider a trial subscription – 3 full months with 100% money-back guarantee. Click here for more.]

Why NOT to Store Gold in a Safe Deposit Box

The not so safe, safe deposit box.

If you have gold or silver stored in an ordinary safe deposit box in a U.S. bank, you may want to reconsider.

Governments desperate for funding for their boondoggles and pork will resort to anything they think they can get away with, from red light cameras and speed traps to trumping up racketeering charges if that will result in salable booty and cash confiscated.

Now, they seem to be going after safe deposit boxes that are “abandoned”, even though the owners pay the rent every year. Many states have been guilty of having a safe deposit box drilled and its contents seized and auctioned with very little attempt to find and contact the real owners.

While this video does not make it perfectly clear, I presume that bank negligence is part of the equation. The one bank mentioned by name was Bank of America.

Another reason to boycott Bank of America.

Watch this short video from ABC news:

To really know what is going on with gold & silver and the mining stocks that give you leverage on the price of gold and silver, consider a risk free trial subscription to Casey’s Gold and Resource Report.

(There are risks in owning and storing physical precious metals, as well as non-physical precious metals. I have written on this topic before, see previous posts for additional information. Please perform your own due diligence with all investment matters.)

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Chinese Buying Gold

Simon Black, former co-editor of Without Borders has some time and good connections in China and he has been checking out the gold buying in China.

You can buy gold in China at any bank– even tiny banks in tier-3 cities sell gold.  More importantly, however, the government is setting up official Chinese Mint stores all over the country.

He reports that Chinese are buying gold like crazy. And they pay with cash.

Offered in mint bars (5 grams to 1 kilogram), the bars are all serialized and 9999 purity, the same as you would get from Switzerland.  They are also certified by the gold exchange, which validates the quality. There is no tax, and the premium runs 10 Renminbi per gram, or roughly $30 (US) per ounce (that’s a very good deal, about 3%).

It’s no wonder the powers that be can’t keep gold under $1000 per ounce.

Buying gold is great, but storage is one issue and lack of leverage is another. There is a time and place for both.

For leverage, you need to be in gold mining stocks, including some Canadian junior resource stocks. My pick for getting information on was to profit in mining stocks is the ultra cheap Casey’s Gold and Resource Report.

If you really want to reach for the brass ring, also go with the International Speculator, but it is NOT cheap – just well WORTH it!