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- Created on Tuesday, 10 June 2014 09:30
August 2014, Week 4 Edition
Gold fell to $1280 last Thursday because some traders thought that positive economic indicators would allow the Federal Reserve to raise interest rates sooner than expected. However, the leading Federal Reserve officials, meeting at their annual late-August Jackson Hole convention, stated fairly clearly (for them!) that interest rates would remain low for considerably longer, well into mid-2015, giving gold (which offers no interest) an even playing field with cash for the foreseeable future. Also, the dollar has been strong lately, which means that gold has tended to rise or hold firm in many other global currencies.
Indian Gold Smuggling is Exploding
Some gold demand statistics will never be known, because they occur in the underground economy, off the books. India may be catching more gold smugglers, but they’re probably only catching about 10%, the tip of the iceberg. For every smuggler they catch, there may be at least five to 10 smugglers that succeed, otherwise they wouldn’t be taking such a huge risk to avoid a 10% import duty, plus export requirements.
In the second quarter of 2014, the Indian government captured $44 million in gold at their major national airports – more than twice the average seizure in the previous four quarters ($20.5 million). In one big airport (Mumbai, formerly Bombay), second quarter seizures totaled 403.5 kilograms (in 497 separate seizures) vs. just 61.5 kilograms (in 79 seizures) during the second quarter of 2013 – a 556% increase.
Meanwhile, China is freeing up its gold market, allowing more banks (now 15) to import gold in advance of launching a new international bullion exchange in Shanghai on September 29. By creating this new center for international gold buying and selling, China wants to challenge London and New York to become the world’s #1 gold exchange market over time – so India had better wake up to this challenge!
Rare Gold Coin Performance Charts
For decades, I have liked better-date rare gold coins. I even wrote multiple NLG award-winning books about them. Currently I believe it is a historically opportune time to acquire select better-date gold coins in better grades. This week's graphs show how a portfolio of multiple or fractions of coins totaling $10,000 in different rare gold coins would have increased in value over the time indicated that I have purchased them. These graphs reflect the price gains of actual coins I have been fortunate to buy, showing an increase from $10,000 to as much as $53,000. Some series are trending upward and others seem to be at bargain levels to many experts. Segments of this market now remind me of the old oil filter commercial that said "You can pay me now or pay me a lot more later.”
I recommend at least a 5-10 year hold period on rare coin purchases as these graphs show impressive gains and volatility can occur during a shorter time span. We all know that past performance of some coins does not guarantee future performance for all coins. Many experts recommend buying better-dates and grades because of often better long-term performance for much of the past 100 years. Read my books to learn about famous successful long-term gold coin set builders like Louis Eliasberg. His set building provided him long-term benefits of diversification and significant premiums were later realized.
In the opinion of the Publisher, all statements made herein are believed to be reliable, truthful and accurate to the best knowledge of the Publisher. However, the Publisher disclaims and is not liable for any liability or losses, which may be incurred by anyone relying on information published herein. You are encouraged and advised to independently verify all representations made herein before making investment or collecting decisions. The collectible coin market is speculative and unregulated and recommendations are meant for those who are financially suited for the risks and holding times involved. Past performance is not a guarantee of future results. The Publisher, its principals and representatives do not guarantee a profit, nor do they guarantee that losses may not be incurred as a result of following any recommendations in this report. Readers should not look at this report as giving legal or investment advice. Reproduction of quotation of this report is prohibited without written permission of the Publisher.