Month: February 2012

With the price of gold hanging in the upper stratosphere, investors are falling back in love with bullion.

The U.S. Mint reports that it already sold 115,000 ounces of gold in the first few weeks of this year alone.

And while Investment U’s Chief Investment Strategist Alexander Green maintains that gold will continue to slump through 2012, he does acknowledge that investors should hold around 5% of their assets in precious metals.

But choosing the wrong gold bullion coins can be a costly mistake. So it’s vital to own the right coin for your own personal investment goals.

In general, most people buy gold coins for three reasons: for investment, as collectibles and as a safe-haven. For each of these reasons, there are some gold coin options that are better than others. And in today’s article, I’ve outlined some of the best coin options available today for each reason to own gold.

Best Gold Coins for Investment

The best gold coins for investment are government-minted bullion coins with low premiums and high liquidity. On this stage, the American Gold Eagle is the model.

The U.S. Gold Eagle is the most recognized gold bullion investment in the world, with its gold content and purity backed by the U.S. government.

American Gold Eagles are legal U.S. tender and acceptable for precious metal IRAs. Eagles are minted in an alloy of 91.6% gold, 3.0% silver and 5.3% copper.

New investors are sometimes curious as to why Eagles aren’t .999 fine. But this 22k alloy is actually an important protective element of the Gold Eagle.

Pure 24k gold is a very soft and malleable metal. It scratches and dents quite easily. The Eagle’s 91.6% gold alloy helps protect against wear and tear, and thus helps retain the coin’s numismatic value.

And despite being minted in 22k gold, new investors are comforted when they learn American Eagles have a gross weight of 1.09 troy ounces (33.93 grams) – so they still contain 1 full troy ounce (31.10 grams) of pure gold.

The U.S. Mint produces Gold Eagles in 1/10oz., 1/4oz., 1/2oz. and 1-troy ounce denominations. The difference in the premiums on the different Eagle denominations can widely vary, with the smallest denominations carrying the highest premiums. So the full 1-troy ounce Eagles are the best for investment.

The premium on a 1-ounce American Gold Eagle is currently about 4.5% to 6.0%, depending on how many coins you purchase at once.

In the table below, I’ve laid out some current asking premiums for Gold Eagles (and two other bullion coins) from five online bullion dealers for you to compare.

There are several other gold bullion coins that are great for investment, too. As you can see in my table above, gold coins like the Canadian Maple Leaf and South African Krugerrand have lower premiums than the U.S. Eagle, and are still very highly recognizable around the world.

Other great gold bullion investment options include Austrian Philharmonics, Chinese Pandas, British Sovereigns and Mexican Libertads.

As I mentioned, the key to the best investment-grade gold coins are low premiums and high liquidity.

Gold Coins for Collectors

Since a collection is based on individual preference, there’s no way for me to say which specific gold coins are the best for you to collect. However, there are some major differences between third-party numismatic graders that collectors pay to evaluate their gold coins.

Collectors often want coin specimens as close to their original mint or proof state as possible. Third-party graders evaluate coins to determine their state of preservation. Graders then encapsulate coins in a hard plastic slab to protect the coin from damage.

While a small handful of these third-party coin-grading companies are perfectly legitimate and qualified numismatic experts, most are completely bogus. And in my opinion, for collectors looking to buy graded gold coins, there are only three third-party graders to consider:

• PCGS is one of today’s premier third-party coin graders. The company is a division of Collectors Universe (Nasdaq: CLCT), a leading third-party grading firm for high-value collectibles, including sports memorabilia stamps and numismatics.
• NGC is another very well respected third-party coin grader, whose primary owners are among the nation’s largest coin dealers.
• The third most well-respected coin grader is ANACS. Third-party coin grading was actually pioneered by ANACS – founded by the American Numismatic Association in 1972.

There’s no doubt that ANACS has a great reputation. It’s not a perfect metric by any means, but it’s been my experience that there’s a larger market for PCGS and NGC graded coins today, and they resell much better.

There are also many other third-party coin-grading services – but, as I mentioned, most are considered to be flat-out scams.

Dubbed “self-slabbers” or “basement slabbers,” individuals often try to misrepresent themselves as legitimate graders, or try to mimic the look of a tier-one grader’s slab. In a general scheme to garner higher prices, these individuals will typically over-grade, clean, or alter coins.

There are hundreds of self-slabbers trying to peddle their coins on eBay and other online auctions. Some of these guys go even as far as trying to mimic the names of legitimate companies. Names of self-slabbers include PNGS, NNC, NGCS, SGS, ACG and ANA. I recommend staying away from buying all coins from self-slabbers.

Safe-Haven Gold Coins

Some are worried (perhaps with good reason) that the U.S. dollar, as well as other fiat currencies, will ultimately collapse – leaving gold as the ultimate wealth asset. In their view, gold and silver could become be the preferred medium of trade in a post-fiat world, and perhaps the only means of barter. In other words, gold would be used as money.

Gold coins may be very valuable in a post-fiat, bullion-bartering world. But a 1-ounce coin isn’t divisible, and you may need to make smaller purchases. For this hypothetical case, fractional gold coins may be the best bet.

Most major gold bullion coins, including Gold Eagles, Krugerrands, Gold Maple Leafs, Libertads and Philharmonics, are offered in smaller denominations including 1/2oz, 1/4oz, 1/10oz and 1/20oz.

These fractional gold coins divide your wealth into smaller denominations, which could be used in a crisis scenario to make purchases.

Gold Coins to Avoid Altogether

Some companies – especially those that advertise on TV – use clever marketing techniques to lure uninformed buyers into impulse gold coin purchases. These advertisements often try to mislead buyers into thinking they’re buying something they aren’t.

One such company is National Collector’s Mint. You may have seen their commercials on television marketing several different coins, including this one:

Image Source: National Collector's Mint

In their television commercials, the company shows a real U.S. Mint-made American Gold Buffalo bullion coin and starts out saying:

“Look closely at history in the making. This $50 buffalo gold piece is the purest gold coin ever stuck by the U.S. government. It’s the first U.S. coin ever struck using .9999 (that’s four nine’s)   pure 24-karat gold.”

The company goes on to talk about the design, production and rising prices of the U.S. Gold Buffalo. And excluding the “history in the making” part, everything NCM says is true.

But then the commercial switches to the replica coin they want to sell you – which, for all intent and purposes, looks exactly like the real one. NCM then says:

“Now you can reserve your copy of the $50 Gold Buffalo, clad in 31 milligrams of pure gold.”

It’s actually pretty clever. If you’re not listening closely, you might hear that the coin has 31 grams of pure gold. That makes a full troy ounce. But look again. The coin is “clad” – in other words, plated – in 31 milligrams of gold.

This coin is similar to something you’d buy at a cheap souvenir shop. Thirty-one milligrams is equal to 0.001 ounces – worth $1.70 with gold at $1,700 an ounce. So there’s no wonder this beauty “can be yours for only $19.95.” And that doesn’t including shipping, handling, processing, insurance, destocking fee, restocking fee and whatever else they’ll try to stick you with. No thanks…

These coins are certainly not for investment or safe-haven. And their collectable value isn’t even very high, in my opinion. So I’d recommend staying away from gold-plated tribute coins altogether.

Last Word…

Just make sure identify your own personal investment goals before laying any money out. Once you have your personal goals clarified, carefully review all your options and avoid impulse buys.

Good Investing,

Luke Burgess

Article by Investment U

Like a hungry predator, investors are on the prowl for yield. Many quality companies that were yielding 4% or 5% a year ago now have dividend yields below 4%, as prices have been bid up on nearly any stock with a respectable dividend.

As a result, investors are forced to look in some more exotic places. Real estate investment trusts (REITs), business development corporations (BDCs) and especially master limited partnerships (MLPs) have all gained popularity over the past year.

One area that has been a bit overlooked is foreign dividend payers.

There are quite a few American depositary receipts (ADRs) that pay a decent dividend – often more than their American contemporaries. However, you need to keep a few things in mind.

The dividend isn’t always paid quarterly. Most American companies that pay a dividend do so on a quarterly basis. However, foreign companies sometimes pay only twice a year or even just once annually.

Currency fluctuations may alter the amount of the dividend per ADR that you receive. The company usually pays its dividend in the local currency. If you’re invested in a Brazilian company, management will think about and pay its dividend in terms of Brazilian reals, not dollars. Any yield consideration will be based on its share price trading on the Bovespa (the Brazilian stock exchange). Holders of the ADR will also receive a dividend, but it will be dependent on how much was paid in the local currency and the exchange rate.

A Brazilian company could keep its dividend payment constant from one year to the next, but if the real appreciates in price, you’ll get fewer dollars. If the real depreciates, you’ll receive more dollars.

Therefore, for investors who prefer companies with a steady history of dividend growth, foreign ADRs may not match those objectives perfectly.

But that doesn’t mean there aren’t interesting income opportunities in foreign markets. As long as you can handle the currency fluctuations and the irregular payments, the yields are attractive enough to make it worth your while to take a look at some.

For example, CSN (NYSE: SID) is the sixth-largest steelmaker in the world. Based in Brazil, it earned R$2.9 billion in the first three quarters of 2011 and paid R$1.9 billion in dividends. The company pays its dividend in May and is expected to yield about 6% based on the current price.

Another Brazilian company with a healthy dividend is CPFL Energy (NYSE: CPL), the country’s largest privately owned energy company, with 13% of the national market. Roughly 75% of CPFL’s revenue is regulated, which means the company’s cash flow is rather predictable. That should give shareholders confidence that their dividend is secure. As long as the Brazil’s economy continues to grow, so should its dividend.

CPFL generated R$2.3 billion in cash flow from operations over the last 12 months and paid R$1.3 billion in dividends. It’s expected to yield 5.5% on today’s price.

Don’t Forget to Pay Uncle Santos

Often, when you receive dividends from a foreign company, taxes will be automatically taken out of your dividend payment. Since you already paid taxes on those dividends to the foreign government, the IRS will not make you pay it again. In fact, they’ll give you a tax credit against your U.S. tax obligations.

So, if you earned $1,000 in foreign dividends and paid $250 in taxes to Brazil, for example, you would be entitled to a $250 tax credit on your U.S. taxes.

Of course, when it comes to taxes, be sure to consult a professional tax advisor with any questions.

There are plenty of other foreign companies with juicy yields. You have to do a little bit of work in order to understand the story. But to feast on yields that in some cases are double what their American counterparts are paying, it’s worth putting in a little elbow grease. Your portfolio will thank you.

Good Investing,

Marc Lichtenfeld

Article by Investment U

By TraderVox.com

The sterling pound has been sold off during the last hour and after breaking the 1.5900, the pair is now threatening the 1.5800 levels. The low for the day so far was formed at 1.5800. The support may be seen at 1.5800 and below at 1.5750/60. The resistance may be seen at 1.5830 and above at 1.5860. The pair is down half a percentage for the day at 1.5800.

The focus once again was back on the Greek deal. The delay on sealing the Greek deal continues to frustrate the markets. Euro got punished for the lack of development from Greece. It has erased all of the gains of the day and is currently down quarter a percentage at 1.3225. The low for the day till now is 1.3220. Market was expected to reach 1.3400 levels on the hopes of some action on the ground. The more delay will continue to hurt even more. The support now will be seen at 1.3230 and below at 3100. The resistance may be found at 1.3270/80.

US dollar is gaining the levels across the board. Although the USD/JPY pair has failed to hold on the 77 levels, it is still trading in green at 76.87, up about 0.15% for the day. The support may be found at 76.80 and resistance will be seen at 77 and above at 77.10 levels.

USD/CHF continues to trade in a tight range even in the US session. The pair formed a low of 2 months at 0.9105. It is now trading near the high at 0.9130, marginally up from yesterday’s close. The support will be found at 0.9115 and 0.9070. The resistance may be seen at 0.9150 and above at 0.9200.

The Australian dollar also followed the suite of US dollar strengthening. It lost an important 1.0800 levels and is currently trading at 1.0775, down about 0.37%. The pair has retraced back from a six month high of 1.0844. The support may now be found at 1.0750. The resistance now lies at 1.0800 levels.

The US dollar index has come off the lows and is now trading at 78.76. The high for the day so far is 78.82.

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Source: ForexYard

The US dollar spent much of the day today range trading against most of its main currency rivals, including the euro, British pound and Swiss franc. Traders were hesitant to bet against the greenback ahead of possible news on a Greek debt swap deal. The one exception was against the Japanese yen. The USD/JPY took moderate losses throughout much of the day before stabilizing around 76.80 during the evening session.

Turning to tomorrow, market sentiment will likely be determined by a combination of international indicators. First, traders will want to pay attention to interest rate decisions from both the UK and euro-zone. While no changes are forecasted for either rate, the press conferences that follow the indicators are likely to shed some light on the current state of the British and euro-zone economies. Any positive sentiment could result in risk taking, which will likely cause the dollar to drop.

Later in the day, traders will want to pay attention to the weekly US Unemployment Claims, scheduled for 13:30 GMT. The figure will shed some additional light on the current employment situation in the US, following last week’s positive Non-Farm Payrolls report. A lower than expected unemployment figure may help the greenback during the evening session.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Feb. 8 (Bloomberg) — Laurence D. Fink, chief executive officer of BlackRock Inc., talks about the outlook for global stocks, the U.S. economy and his investment strategy. Fink also discusses the European sovereign debt crisis. He speaks in Hong Kong with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

By TraderVox.com

Ben Bernanke has restated his pledge to keep the interest rates low for the next three years till 2014 despite the impressive unemployment rate.

Ben Bernanke the Federal Reserve Chairman noted yesterday that the decline in jobless rate for the month of January has masked weaknesses in the US labor market. Bernanke told the Senate Budget Committee in Washington that the 8.3% rate was not expected until the fourth quarter and warned that this should not be taken as a show of full recovery of the US economy.

In his response to a question from one of the committee members, Bernanke said that it is important to look at other factors in the economy and not just concentrate on the unemployment rate which reflects the people who are actively seeking jobs. He added that there are other people who are out of the labor market since they do not consider themselves as qualified to get jobs.

A top US economist said that remarks by Bernanke indicate reluctance in altering the low interest rates announced last month. According to Bernanke, there has to be faster economic growth over a long period for the rates to be changed. He has also suggested that the rates would be changed if there were eminent risk of subdued inflation. According to Dean Maki, an economist at Barclays Capital Inc in US, there is indications that the Fed has not changed its stand on the economy despite the Friday’s unemployment report.

On the FED FOMC report released last month, the officials had estimated that the economy would grow to 2.7 percent this year and the unemployment rate was averaged at 8.2% and 8.5% in the 4^th quarter. Bernanke conceded that some job indicators are improving and the 8.3 percent rate reported on Friday understates the weaknesses in the labor market. However, Bernanke stated that it would take several such reports for the interest rates to change. Further, he noted that the estimates by the central bank indicate that the economic growth will enable the economy to absorb new workforce entrant.

Article provided TraderVox.com
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News and analysis are produced throughout the day by our in-house staff.
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London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 8 February 2012, 08:30 EST

WHOLESALE MARKET prices for gold bullion held steady just below $1750 per ounce Wednesday morning in London – a 2.2% gain on yesterday’s low – after rallying Tuesday following comments from US Federal Reserve chairman Ben Bernanke.

Silver bullion eased slightly this morning after hitting $34.55 per ounce – its highest level since November 16.

“Gold faces significant resistance at $1766, but above that look for $1778-1798,” says one gold bullion dealer here in London.

The S&P 500 hit its highest level in over six months Tuesday at 1349.24 – 25% up on last October’s low.

Gold bullion meantime is up 9.6% over the same period.

“I’m very bullish on the [stock] market,” says Laurence D. Fink, chief executive at world’s largest money manager BlackRock.

“I don’t have a view that the world is going to fall apart, so you need to take on more risk. You need to overcome all this noise and there are great values in equities.”

Despite official figures showing that the unemployment rate fell to 8.3% last month – down from 8.5% in December – the US still has “a long way to go before the labor market can be said to be operating normally,” Federal Reserve chairman Ben Bernanke told the Senate Budget Committee Tuesday.

“Bernanke did not give any indication that the Friday job market report is changing the fundamental way [Fed policymakers] are viewing the economy,” says Dean Maki, chief US economist at Barclays Capital.

“It is going to take a number of favorable reports before their view on monetary policy shifts.”
The US Dollar Index, which measures the US Dollar against a basket of other major currencies, hit a 2-month low Wednesday morning.

Elsewhere in Washington, talks on extending payroll tax cuts and unemployment benefits stalled in the Senate Tuesday. Around 160 million people will see their taxes rise if the cuts, which expire March 1, are not extended. Three million meantime could lose unemployment benefits from the same date if they too expire.

There was still no agreement Wednesday lunchtime among Greek leaders regarding austerity reforms required as part of Greece’s €130 billion second bailout. A meeting of senior Greek politicians was postponed for the second day running Tuesday, with some reports citing missing paperwork as the cause of the delay.

Leaders have agreed in principle to spending cuts equivalent to 1.5% of GDP, Greek prime minister Lucas Papdemos has said, but a formal reform deal remains elusive.

“[Even] if Greece were to agree on everything right away,” says Societe Generale commodity strategist Jeremy Friesen, “I don’t think it would solve everything because they will still have to implement the measures…there are plenty of land mines left.”

“No to medieval labor conditions!” chanted protesters outside the Greek parliament during Tuesday’s 24 hour strike.

“It is in our interest for Greece to remain [in the single currency],” Dutch prime minister Mark Rutte said Tuesday.

“But if that does no work out, then [the other Euro members] are stronger now than a year-and-a-half ago.”

Rutte’s comments echo those of his compatriot Neelie Kroes, a European Commissioner, who told a Dutch newspaper this week that it is “simply not true” that the “entire edifice” of the single currency would collapse were Greece to leave.

German chancellor Angela Merkel however warned yesterday that a Greek exit would have “unforeseeable consequences”.

“I will have no part in forcing Greece out of the Euro,” she told some young people in a Berlin museum.

The European Central Bank meantime has agreed to exchange its Greek bonds, bought on the secondary market as part of the ongoing Securities Market Program, at below face value, according to a Wall Street Journal report.

The plan would reportedly involve the ECB swapping its Greek debt for bonds issued by the Eurozone’s current bailout fund, the European Financial Stability Facility.

The EFSF, whose debt was downgraded by Standard & Poor’s last month from AAA to AA+, would then redeem the bonds with Greece at less than par value – though the ECB, which itself paid less than par for the bonds, says it does not intend to take a loss.

The ECB Governing Council is due to deliver its latest policy decision tomorrow.

Here in London, the Bank of England, which also announces its latest monetary policy decisions tomorrow, is widely expected to press ahead with further quantitative easing despite recent positive economic data.

“On a risk/reward basis, I still think the Bank will do more QE,” says Alan Clarke, UK economist at Scotiabank.

“The market’s disappointment at the BoE not delivering would be too unwelcome. But if we continue to get reasonable growth numbers, then February’s QE may be the last.”

The Bank of England’s Monetary Policy Committee voted to increase the size of its QE program from £200 billion to £275 billion last October.

“We believe the debate on the MPC will now be between [additional QE of] £25 billion and £50 billion this month, with our official call being for £50 billion,” reckons George Buckley, chief UK economist at Deutsche Bank, who also feels “this may be the last round of asset buying” should economic data continue to be strong.

The world’s second-largest gold bullion consumer China is set to see a 13% rise in the official annual minimum wage as part of a government jobs plan published Wednesday. The plan is part of China’s 12th Five Year Plan, which runs from 2010 to 2015.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Feb. 8 (Bloomberg) — Keagan York, the Sydney-based head of foreign-exchange strategy at Compass Global Markets, talks about the euro and the Australian dollar. Keagan also discusses the U.S. dollar. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

By TraderVox.com

Investors with a high hopes of a Greek deal have been dealt with a definite boost as reports that the European central bank is willing to exchange its Greek Bond investments with a possible loss of some significant profit in order to ease the burden on the Greek government and see a swift and fast end to the Greek debt crisis. Combine this with the renewed fears expressed by the Fed and you have got a strengthening euro and weakening dollar.

History tells us when risk appetite increases for the euro and at the same fearful remarks about the future of US economy occur on the same day, there is only one winner: the euro.

The dollar consequently lost against almost all its major rivals both yesterday and at the start of today. Though we are seeing some general range effect now with investors waiting to see if there will be further news from Greece.EUR/USD ended the day with a 122 pip( yes you heard right!) gap away from its opening price of 1.3253. GBP/USD closed the day at a 3 month high of 1.59. Definitely a bad day for Dollar long traders!

Fed chairman.ben Bernanke did not do the Dollar too much good on his part yesterday albeit innocently. He appeared extremely dovish in his much awaited testimony to the senate budget committee.

Recall that the recent NFP report for the month of January was good as it beat expectations. Despite that the FED chairman told the senate that the labor market was still a long way from what it should be and what they want it to be. Combine this with his other statements about a very slow recovery (lower than anticipated) and poor inflation reports; we can see that QE3 is not very far off the radar. A dollar sell off was inevitable.

The FED reserve bank of San Francisco president is expected to give a speech later today at 3.40 pm GMT and if his speech gives any hint of further QE then the dollar is in for a fall once more.

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