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[title] => What Should You Too When You Chose The Wrong Merchant And Gold Product
[link] => https://g-o-l-d-i-r-a.com/what-should-you-too-when-you-chose-the-wrong-merchant-and-gold-product/
[dc] => Array
(
[creator] => Scott Gabaldon
)
[pubdate] => Wed, 30 Nov 2022 12:30:32 +0000
[category] => Gold Prices
[guid] => https://g-o-l-d-i-r-a.com/?p=64
[description] =>
Once the objective of the client is known, it should be very easy to identify the most suitable product and form of custody for their needs.
However, this requires that the merchant is the right one and that he cares about the interests of the client. To verify that this is the case, here are some recommendations:
Go to a dealer who has been recommended to you by a trusted source .
Do your research beforehand to make sure they have a good reputation, years of experience, and care about customers.
Compare the price and conditions in at least three different establishments before deciding, just like you would with any other product.
Be wary if the merchant is urging you to make a purchase decision. It is he who must adapt to his rhythm, and not the other way around.
Insisting on the first recommendation, be wary if the merchant does not assure you that you will repurchase the product.
Buy Shares Of Mining Companies
As Dykewitz explains in his article, in his 25 years of experience he has frequently come across people who, when asked if they owned gold, responded that they owned shares in mining companies and gold funds.
“Keep in mind that these assets can be wonderful investments , but it does not mean, in any way, that you own gold , ” says the expert.
Although both options provide exposure to gold, the difference is important:
“When you buy gold, it becomes your possession. It is a raw material that belongs to you. If the price goes up or down, the value of your gold is immediately affected by that swing. However, when you buy shares in a gold mining company, you own a stake in a company that is in the business of making a profit mining gold and sharing those profits – to a certain extent – with investors. But just because the price of gold goes up doesn’t mean the company’s profits go up, ” Dykewitz explains.
Therefore, buying mining shares can be a good investment, but it is not gold.
Investing in ETFs believing that it is physical gold
In the same way that mining company stocks are not the same as physical gold, neither are ETFs. Physical gold is a raw material whose price fluctuations are immediately transferred to those who own it.
Instead , ETFs are nothing more than exchange-traded funds , run by a manager. The job of this manager is to reconcile investor demand with the products that the fund has. A task in which problems such as physical restrictions or logistical needs arise.
In addition, they work with a system of leverage, which means that not all the ounces of gold represented in the shares of the ETF are actually backed by gold . In fact, units that exceed the total gold that the fund owns are often sold, so participants would have problems if they request more gold than actually exists.
Being Afraid Of The Government Confiscating It
This is a concern that has been the subject of debate in the United States of late and requires a brief explanation. In 1933, US President Franklin D. Roosevelt made it illegal for citizens to possess physical gold . The metal was confiscated (in exchange for the payment of its price) and its possession was prohibited until 1975.
The only formula that allowed American citizens to keep some gold in their hands was the possession of collector coins with numismatic value. This argument has subsequently been used by numismatic dealers to ensure that their product was safer than coins or bullion , since it could not be confiscated.
But that hypothesis does not arise right now. What happened in 1933 is that the government needed to devalue the dollar, but since it was directly convertible into gold, and the metal had an officially set price, they needed to get hold of the gold in order to change its price.
This dollar/gold convertibility ended in 1971, so a confiscation of the metal in private hands would be unthinkable right now.
Once the objective of the client is known, it should be very easy to identify the most suitable product and form of custody for their needs.
However, this requires that the merchant is the right one and that he cares about the interests of the client. To verify that this is the case, here are some recommendations:
Go to a dealer who has been recommended to you by a trusted source .
Do your research beforehand to make sure they have a good reputation, years of experience, and care about customers.
Compare the price and conditions in at least three different establishments before deciding, just like you would with any other product.
Be wary if the merchant is urging you to make a purchase decision. It is he who must adapt to his rhythm, and not the other way around.
Insisting on the first recommendation, be wary if the merchant does not assure you that you will repurchase the product.
Buy Shares Of Mining Companies
As Dykewitz explains in his article, in his 25 years of experience he has frequently come across people who, when asked if they owned gold, responded that they owned shares in mining companies and gold funds.
“Keep in mind that these assets can be wonderful investments , but it does not mean, in any way, that you own gold , ” says the expert.
Although both options provide exposure to gold, the difference is important:
“When you buy gold, it becomes your possession. It is a raw material that belongs to you. If the price goes up or down, the value of your gold is immediately affected by that swing. However, when you buy shares in a gold mining company, you own a stake in a company that is in the business of making a profit mining gold and sharing those profits – to a certain extent – with investors. But just because the price of gold goes up doesn’t mean the company’s profits go up, ” Dykewitz explains.
Therefore, buying mining shares can be a good investment, but it is not gold.
Investing in ETFs believing that it is physical gold
In the same way that mining company stocks are not the same as physical gold, neither are ETFs. Physical gold is a raw material whose price fluctuations are immediately transferred to those who own it.
Instead , ETFs are nothing more than exchange-traded funds , run by a manager. The job of this manager is to reconcile investor demand with the products that the fund has. A task in which problems such as physical restrictions or logistical needs arise.
In addition, they work with a system of leverage, which means that not all the ounces of gold represented in the shares of the ETF are actually backed by gold . In fact, units that exceed the total gold that the fund owns are often sold, so participants would have problems if they request more gold than actually exists.
Being Afraid Of The Government Confiscating It
This is a concern that has been the subject of debate in the United States of late and requires a brief explanation. In 1933, US President Franklin D. Roosevelt made it illegal for citizens to possess physical gold . The metal was confiscated (in exchange for the payment of its price) and its possession was prohibited until 1975.
The only formula that allowed American citizens to keep some gold in their hands was the possession of collector coins with numismatic value. This argument has subsequently been used by numismatic dealers to ensure that their product was safer than coins or bullion , since it could not be confiscated.
But that hypothesis does not arise right now. What happened in 1933 is that the government needed to devalue the dollar, but since it was directly convertible into gold, and the metal had an officially set price, they needed to get hold of the gold in order to change its price.
This dollar/gold convertibility ended in 1971, so a confiscation of the metal in private hands would be unthinkable right now.
Once the objective of the client is known, it should be very easy to identify the most suitable product and form of custody for their needs.
However, this requires that the merchant is the right one and that he cares about the interests of the client. To verify that this is the case, here are some recommendations:
Go to a dealer who has been recommended to you by a trusted source .
Do your research beforehand to make sure they have a good reputation, years of experience, and care about customers.
Compare the price and conditions in at least three different establishments before deciding, just like you would with any other product.
Be wary if the merchant is urging you to make a purchase decision. It is he who must adapt to his rhythm, and not the other way around.
Insisting on the first recommendation, be wary if the merchant does not assure you that you will repurchase the product.
Buy Shares Of Mining Companies
As Dykewitz explains in his article, in his 25 years of experience he has frequently come across people who, when asked if they owned gold, responded that they owned shares in mining companies and gold funds.
“Keep in mind that these assets can be wonderful investments , but it does not mean, in any way, that you own gold , ” says the expert.
Although both options provide exposure to gold, the difference is important:
“When you buy gold, it becomes your possession. It is a raw material that belongs to you. If the price goes up or down, the value of your gold is immediately affected by that swing. However, when you buy shares in a gold mining company, you own a stake in a company that is in the business of making a profit mining gold and sharing those profits – to a certain extent – with investors. But just because the price of gold goes up doesn’t mean the company’s profits go up, ” Dykewitz explains.
Therefore, buying mining shares can be a good investment, but it is not gold.
Investing in ETFs believing that it is physical gold
In the same way that mining company stocks are not the same as physical gold, neither are ETFs. Physical gold is a raw material whose price fluctuations are immediately transferred to those who own it.
Instead , ETFs are nothing more than exchange-traded funds , run by a manager. The job of this manager is to reconcile investor demand with the products that the fund has. A task in which problems such as physical restrictions or logistical needs arise.
In addition, they work with a system of leverage, which means that not all the ounces of gold represented in the shares of the ETF are actually backed by gold . In fact, units that exceed the total gold that the fund owns are often sold, so participants would have problems if they request more gold than actually exists.
Being Afraid Of The Government Confiscating It
This is a concern that has been the subject of debate in the United States of late and requires a brief explanation. In 1933, US President Franklin D. Roosevelt made it illegal for citizens to possess physical gold . The metal was confiscated (in exchange for the payment of its price) and its possession was prohibited until 1975.
The only formula that allowed American citizens to keep some gold in their hands was the possession of collector coins with numismatic value. This argument has subsequently been used by numismatic dealers to ensure that their product was safer than coins or bullion , since it could not be confiscated.
But that hypothesis does not arise right now. What happened in 1933 is that the government needed to devalue the dollar, but since it was directly convertible into gold, and the metal had an officially set price, they needed to get hold of the gold in order to change its price.
This dollar/gold convertibility ended in 1971, so a confiscation of the metal in private hands would be unthinkable right now.
Once the objective of the client is known, it should be very easy to identify the most suitable product and form of custody for their needs.
However, this requires that the merchant is the right one and that he cares about the interests of the client. To verify that this is the case, here are some recommendations:
Go to a dealer who has been recommended to you by a trusted source .
Do your research beforehand to make sure they have a good reputation, years of experience, and care about customers.
Compare the price and conditions in at least three different establishments before deciding, just like you would with any other product.
Be wary if the merchant is urging you to make a purchase decision. It is he who must adapt to his rhythm, and not the other way around.
Insisting on the first recommendation, be wary if the merchant does not assure you that you will repurchase the product.
Buy Shares Of Mining Companies
As Dykewitz explains in his article, in his 25 years of experience he has frequently come across people who, when asked if they owned gold, responded that they owned shares in mining companies and gold funds.
“Keep in mind that these assets can be wonderful investments , but it does not mean, in any way, that you own gold , ” says the expert.
Although both options provide exposure to gold, the difference is important:
“When you buy gold, it becomes your possession. It is a raw material that belongs to you. If the price goes up or down, the value of your gold is immediately affected by that swing. However, when you buy shares in a gold mining company, you own a stake in a company that is in the business of making a profit mining gold and sharing those profits – to a certain extent – with investors. But just because the price of gold goes up doesn’t mean the company’s profits go up, ” Dykewitz explains.
Therefore, buying mining shares can be a good investment, but it is not gold.
Investing in ETFs believing that it is physical gold
In the same way that mining company stocks are not the same as physical gold, neither are ETFs. Physical gold is a raw material whose price fluctuations are immediately transferred to those who own it.
Instead , ETFs are nothing more than exchange-traded funds , run by a manager. The job of this manager is to reconcile investor demand with the products that the fund has. A task in which problems such as physical restrictions or logistical needs arise.
In addition, they work with a system of leverage, which means that not all the ounces of gold represented in the shares of the ETF are actually backed by gold . In fact, units that exceed the total gold that the fund owns are often sold, so participants would have problems if they request more gold than actually exists.
Being Afraid Of The Government Confiscating It
This is a concern that has been the subject of debate in the United States of late and requires a brief explanation. In 1933, US President Franklin D. Roosevelt made it illegal for citizens to possess physical gold . The metal was confiscated (in exchange for the payment of its price) and its possession was prohibited until 1975.
The only formula that allowed American citizens to keep some gold in their hands was the possession of collector coins with numismatic value. This argument has subsequently been used by numismatic dealers to ensure that their product was safer than coins or bullion , since it could not be confiscated.
But that hypothesis does not arise right now. What happened in 1933 is that the government needed to devalue the dollar, but since it was directly convertible into gold, and the metal had an officially set price, they needed to get hold of the gold in order to change its price.
This dollar/gold convertibility ended in 1971, so a confiscation of the metal in private hands would be unthinkable right now.
)
[1] => Array
(
[title] => Better To Leave Emotions Aside When Investing In Gold
[link] => https://g-o-l-d-i-r-a.com/better-to-leave-emotions-aside-when-investing-in-gold/
[dc] => Array
(
[creator] => Scott Gabaldon
)
[pubdate] => Mon, 28 Nov 2022 07:09:27 +0000
[category] => Gold Investment
[guid] => https://g-o-l-d-i-r-a.com/?p=27
[description] =>
In investment matters, it is better to leave emotions aside. If you buy or sell gold, do it for reasons like you’ve decided to change your asset composition, your investment objectives have changed, or you simply need the money.
But avoid selling or buying because you are afraid or because you are optimistic and confident . As Paul Dykewicz points out:
“That is not investing; is to bet. Emotions have caused investors to lose huge amounts of money. So you better not fall prey to fear or greed when making your investment decisions . “
Frauds exist because there are greedy people. Instead of offering a valuable service and quality products that meet the legitimate needs of investors, they try to deceive investors and deprive them of the fruits of their labor.
So, when in doubt, it is better to give up a supposedly advantageous operation than to regret it later . All you need is a little common sense, prudence and knowing that if you are offered gold well below its price, surely there is something suspicious.
Store Your Gold Where You Bought It
Leaving the gold that has been purchased in the custody of the same merchant who sold it to you is a dangerous mistake that any customer should avoid.
As explained from Townhall Finance, when you buy precious metals from a dealer, it is preferable to take them and find another place of custody or leave it deposited in a specialized company with a good reputation and adequate facilities.
From Townhall Finance they remember the case of the International Bullion Exchange, a company founded in Florida in 1979, four years after the possession of gold in private hands in the US became legal again.
The founders were the Alderice brothers, who promised their customers significant discounts if they did not immediately take the gold purchased. The result was that in 1983 the company declared bankruptcy and when the offices were searched the company’s gold bars were found to be painted pieces of wood. The fraud rose to 75 million euros, from more than 23,000 customers.
Not Knowing What You Are Doing
If you buy gold for the right reasons, there is no bad price or bad time. However, you need to know what you are doing and why before you do it .
Not all dealers take the time to identify the needs and objectives of clients who want to acquire precious metals, in order to satisfy them. But they should.
For this reason, the client must be aware that it is about his money, his investment and his objectives: you have to worry about understanding what you are doing, resort to professionals who care about the client and not continue if there are doubts .…
In investment matters, it is better to leave emotions aside. If you buy or sell gold, do it for reasons like you’ve decided to change your asset composition, your investment objectives have changed, or you simply need the money.
But avoid selling or buying because you are afraid or because you are optimistic and confident . As Paul Dykewicz points out:
“That is not investing; is to bet. Emotions have caused investors to lose huge amounts of money. So you better not fall prey to fear or greed when making your investment decisions . “
Frauds exist because there are greedy people. Instead of offering a valuable service and quality products that meet the legitimate needs of investors, they try to deceive investors and deprive them of the fruits of their labor.
So, when in doubt, it is better to give up a supposedly advantageous operation than to regret it later . All you need is a little common sense, prudence and knowing that if you are offered gold well below its price, surely there is something suspicious.
Store Your Gold Where You Bought It
Leaving the gold that has been purchased in the custody of the same merchant who sold it to you is a dangerous mistake that any customer should avoid.
As explained from Townhall Finance, when you buy precious metals from a dealer, it is preferable to take them and find another place of custody or leave it deposited in a specialized company with a good reputation and adequate facilities.
From Townhall Finance they remember the case of the International Bullion Exchange, a company founded in Florida in 1979, four years after the possession of gold in private hands in the US became legal again.
The founders were the Alderice brothers, who promised their customers significant discounts if they did not immediately take the gold purchased. The result was that in 1983 the company declared bankruptcy and when the offices were searched the company’s gold bars were found to be painted pieces of wood. The fraud rose to 75 million euros, from more than 23,000 customers.
Not Knowing What You Are Doing
If you buy gold for the right reasons, there is no bad price or bad time. However, you need to know what you are doing and why before you do it .
Not all dealers take the time to identify the needs and objectives of clients who want to acquire precious metals, in order to satisfy them. But they should.
For this reason, the client must be aware that it is about his money, his investment and his objectives: you have to worry about understanding what you are doing, resort to professionals who care about the client and not continue if there are doubts .…
In investment matters, it is better to leave emotions aside. If you buy or sell gold, do it for reasons like you’ve decided to change your asset composition, your investment objectives have changed, or you simply need the money.
But avoid selling or buying because you are afraid or because you are optimistic and confident . As Paul Dykewicz points out:
“That is not investing; is to bet. Emotions have caused investors to lose huge amounts of money. So you better not fall prey to fear or greed when making your investment decisions . “
Frauds exist because there are greedy people. Instead of offering a valuable service and quality products that meet the legitimate needs of investors, they try to deceive investors and deprive them of the fruits of their labor.
So, when in doubt, it is better to give up a supposedly advantageous operation than to regret it later . All you need is a little common sense, prudence and knowing that if you are offered gold well below its price, surely there is something suspicious.
Store Your Gold Where You Bought It
Leaving the gold that has been purchased in the custody of the same merchant who sold it to you is a dangerous mistake that any customer should avoid.
As explained from Townhall Finance, when you buy precious metals from a dealer, it is preferable to take them and find another place of custody or leave it deposited in a specialized company with a good reputation and adequate facilities.
From Townhall Finance they remember the case of the International Bullion Exchange, a company founded in Florida in 1979, four years after the possession of gold in private hands in the US became legal again.
The founders were the Alderice brothers, who promised their customers significant discounts if they did not immediately take the gold purchased. The result was that in 1983 the company declared bankruptcy and when the offices were searched the company’s gold bars were found to be painted pieces of wood. The fraud rose to 75 million euros, from more than 23,000 customers.
Not Knowing What You Are Doing
If you buy gold for the right reasons, there is no bad price or bad time. However, you need to know what you are doing and why before you do it .
Not all dealers take the time to identify the needs and objectives of clients who want to acquire precious metals, in order to satisfy them. But they should.
For this reason, the client must be aware that it is about his money, his investment and his objectives: you have to worry about understanding what you are doing, resort to professionals who care about the client and not continue if there are doubts .…
In investment matters, it is better to leave emotions aside. If you buy or sell gold, do it for reasons like you’ve decided to change your asset composition, your investment objectives have changed, or you simply need the money.
But avoid selling or buying because you are afraid or because you are optimistic and confident . As Paul Dykewicz points out:
“That is not investing; is to bet. Emotions have caused investors to lose huge amounts of money. So you better not fall prey to fear or greed when making your investment decisions . “
Frauds exist because there are greedy people. Instead of offering a valuable service and quality products that meet the legitimate needs of investors, they try to deceive investors and deprive them of the fruits of their labor.
So, when in doubt, it is better to give up a supposedly advantageous operation than to regret it later . All you need is a little common sense, prudence and knowing that if you are offered gold well below its price, surely there is something suspicious.
Store Your Gold Where You Bought It
Leaving the gold that has been purchased in the custody of the same merchant who sold it to you is a dangerous mistake that any customer should avoid.
As explained from Townhall Finance, when you buy precious metals from a dealer, it is preferable to take them and find another place of custody or leave it deposited in a specialized company with a good reputation and adequate facilities.
From Townhall Finance they remember the case of the International Bullion Exchange, a company founded in Florida in 1979, four years after the possession of gold in private hands in the US became legal again.
The founders were the Alderice brothers, who promised their customers significant discounts if they did not immediately take the gold purchased. The result was that in 1983 the company declared bankruptcy and when the offices were searched the company’s gold bars were found to be painted pieces of wood. The fraud rose to 75 million euros, from more than 23,000 customers.
Not Knowing What You Are Doing
If you buy gold for the right reasons, there is no bad price or bad time. However, you need to know what you are doing and why before you do it .
Not all dealers take the time to identify the needs and objectives of clients who want to acquire precious metals, in order to satisfy them. But they should.
For this reason, the client must be aware that it is about his money, his investment and his objectives: you have to worry about understanding what you are doing, resort to professionals who care about the client and not continue if there are doubts .…
)
[2] => Array
(
[title] => The Relationship Between Gold And Interest Rates
[link] => https://g-o-l-d-i-r-a.com/the-relationship-between-gold-and-interest-rates/
[dc] => Array
(
[creator] => Scott Gabaldon
)
[pubdate] => Sun, 27 Nov 2022 07:09:23 +0000
[category] => Gold Prices
[guid] => https://g-o-l-d-i-r-a.com/?p=23
[description] =>
One of the factors that is most taken into account when forecasting the future behavior of the gold price is interest rates. For this reason, it is said that the metal market lives pending the decisions of the Federal Reserve, the body that determines the monetary policy of the United States. And gold, let’s not forget, is denominated in dollars, so it’s more influenced by that. In this post we are going to explain how this relationship works.
The basic principle is that gold and interest rates are inversely related , such that when rates go up, the price of gold goes down, and when rates go down, gold goes up.
Why is this supposed to happen? When interest rates rise is when the economy is doing well , consumers want consumer loans, companies expand their business, more cash is available and more spending is undertaken.
In these situations, central banks and financial institutions increase their profits, since they get a higher return on the money they lend.
What Does Gold Do When Rates Rise?
The theory goes that in times of economic prosperity, the attraction of a safe haven asset like gold diminishes. In addition, interest rates drive the currency (the dollar, in this case), so in the short term the price of gold falls.
This is a commonly accepted theory, although it is necessary to be precise: in times of economic prosperity, in many countries (especially in Asia), the consumption of gold increases, either in bullion or in jewelry, since citizens have a greater economic surplus.
It is also often said that gold falls when rates rise, since the so-called opportunity cost of owning the metal increases : that is, the investor earns more with other assets that offer higher returns thanks to the rise in interest rates .
This is the case, for example, of bonds, whose remuneration increases when interest rates rise, making them more attractive to investors than gold.
And When Do They Go Down?
Conversely, when interest rates fall, they reflect a situation in which confidence in the economy is reduced and growth slows.
This slowdown affects the cost of living, wage growth, employment and the value of the currency.
Investors are flocking to gold as a safe haven these days, for a number of reasons:
It constitutes a protection of the patrimony against inflation, since it allows to maintain the purchasing power.
It is the safe haven asset par excellence, since it does not entail responsibility on the part of anyone and has immediate liquidity , at any time and place.
The opportunity cost of owning gold instead of other assets is reduced as bond yields fall even to zero due to lower interest rates, so gold gains comparatively.
What Happens Right Now With The Types?
The Federal Reserve has decided in its last meetings to keep rates close to zero, due to the deterioration of economic indicators in the United States, due to the impact of the Covid-19 pandemic.
In fact, in one of his last public interventions, the president of this body, Jerome Powell , assured that the rates would remain at 0% until at least 2022 , since an economic recovery of the country is not expected before that date.
According to analysts, this is one of the reasons why the price of gold remains well above $1,700 an ounce these days.
By the way, the Federal Reserve’s decisions regarding interest rates during 2018 were the reason why the current president of the United States, Donald Trump, has repeatedly attacked the independence of this institution and its president (who was appointed by him himself), in a movement that has no precedent since the time of Richard Nixon, in the early 1970s.
The rate hikes dictated by the Fed in 2018 (from 1.25% in December 2017 to 2.25% a year later) irritated the president, who accused the Fed of not knowing how to react and of torpedoing the economy American.
The explanation is that rate hikes cause a competitive disadvantage for the US compared to its trade rivals, which is why Trump wanted rates to be as low as possible, which he has finally achieved, with the ‘collaboration’ of the pandemic.
The Falsity Of The Gold-Rate Correlation
Although, as we said, there is a general consensus on the inverse correlation between gold and interest rates, at various points in the last few decades the data has shown that gold does not follow the pattern of going down when interest rates rise.
Thus, between 1970 and 1980 , the price of gold rose 2,350% and it did so faster at times when rates rose, in an environment of high inflation. And between 1974 and 1976, when rates fell, gold did too , losing almost 50%. That is, they had a direct relationship.
It was later re-emphasized that gold and rates were not inversely related at all times: between 2001 and 2004, gold rose while the Fed lowered rates.
However, from 2004 to 2007, both the price of gold and interest rates rose. Between 2007 and 2011, gold reached its maximum historical price , in an environment of falling interest rates. And between 2011 and 2015, gold went down again, at the same time that rates did .
In other words, that this inverse relationship between the two is true sometimes and sometimes not. In general, the short-term trend is for gold to react in the way it is expected to react to rate movements. But when viewed in the longer term, that trend may change.
In any case, there is no doubt that interest rates are an important factor that contributes, among others, to the formation of the metal price.…
One of the factors that is most taken into account when forecasting the future behavior of the gold price is interest rates. For this reason, it is said that the metal market lives pending the decisions of the Federal Reserve, the body that determines the monetary policy of the United States. And gold, let’s not forget, is denominated in dollars, so it’s more influenced by that. In this post we are going to explain how this relationship works.
The basic principle is that gold and interest rates are inversely related , such that when rates go up, the price of gold goes down, and when rates go down, gold goes up.
Why is this supposed to happen? When interest rates rise is when the economy is doing well , consumers want consumer loans, companies expand their business, more cash is available and more spending is undertaken.
In these situations, central banks and financial institutions increase their profits, since they get a higher return on the money they lend.
What Does Gold Do When Rates Rise?
The theory goes that in times of economic prosperity, the attraction of a safe haven asset like gold diminishes. In addition, interest rates drive the currency (the dollar, in this case), so in the short term the price of gold falls.
This is a commonly accepted theory, although it is necessary to be precise: in times of economic prosperity, in many countries (especially in Asia), the consumption of gold increases, either in bullion or in jewelry, since citizens have a greater economic surplus.
It is also often said that gold falls when rates rise, since the so-called opportunity cost of owning the metal increases : that is, the investor earns more with other assets that offer higher returns thanks to the rise in interest rates .
This is the case, for example, of bonds, whose remuneration increases when interest rates rise, making them more attractive to investors than gold.
And When Do They Go Down?
Conversely, when interest rates fall, they reflect a situation in which confidence in the economy is reduced and growth slows.
This slowdown affects the cost of living, wage growth, employment and the value of the currency.
Investors are flocking to gold as a safe haven these days, for a number of reasons:
It constitutes a protection of the patrimony against inflation, since it allows to maintain the purchasing power.
It is the safe haven asset par excellence, since it does not entail responsibility on the part of anyone and has immediate liquidity , at any time and place.
The opportunity cost of owning gold instead of other assets is reduced as bond yields fall even to zero due to lower interest rates, so gold gains comparatively.
What Happens Right Now With The Types?
The Federal Reserve has decided in its last meetings to keep rates close to zero, due to the deterioration of economic indicators in the United States, due to the impact of the Covid-19 pandemic.
In fact, in one of his last public interventions, the president of this body, Jerome Powell , assured that the rates would remain at 0% until at least 2022 , since an economic recovery of the country is not expected before that date.
According to analysts, this is one of the reasons why the price of gold remains well above $1,700 an ounce these days.
By the way, the Federal Reserve’s decisions regarding interest rates during 2018 were the reason why the current president of the United States, Donald Trump, has repeatedly attacked the independence of this institution and its president (who was appointed by him himself), in a movement that has no precedent since the time of Richard Nixon, in the early 1970s.
The rate hikes dictated by the Fed in 2018 (from 1.25% in December 2017 to 2.25% a year later) irritated the president, who accused the Fed of not knowing how to react and of torpedoing the economy American.
The explanation is that rate hikes cause a competitive disadvantage for the US compared to its trade rivals, which is why Trump wanted rates to be as low as possible, which he has finally achieved, with the ‘collaboration’ of the pandemic.
The Falsity Of The Gold-Rate Correlation
Although, as we said, there is a general consensus on the inverse correlation between gold and interest rates, at various points in the last few decades the data has shown that gold does not follow the pattern of going down when interest rates rise.
Thus, between 1970 and 1980 , the price of gold rose 2,350% and it did so faster at times when rates rose, in an environment of high inflation. And between 1974 and 1976, when rates fell, gold did too , losing almost 50%. That is, they had a direct relationship.
It was later re-emphasized that gold and rates were not inversely related at all times: between 2001 and 2004, gold rose while the Fed lowered rates.
However, from 2004 to 2007, both the price of gold and interest rates rose. Between 2007 and 2011, gold reached its maximum historical price , in an environment of falling interest rates. And between 2011 and 2015, gold went down again, at the same time that rates did .
In other words, that this inverse relationship between the two is true sometimes and sometimes not. In general, the short-term trend is for gold to react in the way it is expected to react to rate movements. But when viewed in the longer term, that trend may change.
In any case, there is no doubt that interest rates are an important factor that contributes, among others, to the formation of the metal price.…
One of the factors that is most taken into account when forecasting the future behavior of the gold price is interest rates. For this reason, it is said that the metal market lives pending the decisions of the Federal Reserve, the body that determines the monetary policy of the United States. And gold, let’s not forget, is denominated in dollars, so it’s more influenced by that. In this post we are going to explain how this relationship works.
The basic principle is that gold and interest rates are inversely related , such that when rates go up, the price of gold goes down, and when rates go down, gold goes up.
Why is this supposed to happen? When interest rates rise is when the economy is doing well , consumers want consumer loans, companies expand their business, more cash is available and more spending is undertaken.
In these situations, central banks and financial institutions increase their profits, since they get a higher return on the money they lend.
What Does Gold Do When Rates Rise?
The theory goes that in times of economic prosperity, the attraction of a safe haven asset like gold diminishes. In addition, interest rates drive the currency (the dollar, in this case), so in the short term the price of gold falls.
This is a commonly accepted theory, although it is necessary to be precise: in times of economic prosperity, in many countries (especially in Asia), the consumption of gold increases, either in bullion or in jewelry, since citizens have a greater economic surplus.
It is also often said that gold falls when rates rise, since the so-called opportunity cost of owning the metal increases : that is, the investor earns more with other assets that offer higher returns thanks to the rise in interest rates .
This is the case, for example, of bonds, whose remuneration increases when interest rates rise, making them more attractive to investors than gold.
And When Do They Go Down?
Conversely, when interest rates fall, they reflect a situation in which confidence in the economy is reduced and growth slows.
This slowdown affects the cost of living, wage growth, employment and the value of the currency.
Investors are flocking to gold as a safe haven these days, for a number of reasons:
It constitutes a protection of the patrimony against inflation, since it allows to maintain the purchasing power.
It is the safe haven asset par excellence, since it does not entail responsibility on the part of anyone and has immediate liquidity , at any time and place.
The opportunity cost of owning gold instead of other assets is reduced as bond yields fall even to zero due to lower interest rates, so gold gains comparatively.
What Happens Right Now With The Types?
The Federal Reserve has decided in its last meetings to keep rates close to zero, due to the deterioration of economic indicators in the United States, due to the impact of the Covid-19 pandemic.
In fact, in one of his last public interventions, the president of this body, Jerome Powell , assured that the rates would remain at 0% until at least 2022 , since an economic recovery of the country is not expected before that date.
According to analysts, this is one of the reasons why the price of gold remains well above $1,700 an ounce these days.
By the way, the Federal Reserve’s decisions regarding interest rates during 2018 were the reason why the current president of the United States, Donald Trump, has repeatedly attacked the independence of this institution and its president (who was appointed by him himself), in a movement that has no precedent since the time of Richard Nixon, in the early 1970s.
The rate hikes dictated by the Fed in 2018 (from 1.25% in December 2017 to 2.25% a year later) irritated the president, who accused the Fed of not knowing how to react and of torpedoing the economy American.
The explanation is that rate hikes cause a competitive disadvantage for the US compared to its trade rivals, which is why Trump wanted rates to be as low as possible, which he has finally achieved, with the ‘collaboration’ of the pandemic.
The Falsity Of The Gold-Rate Correlation
Although, as we said, there is a general consensus on the inverse correlation between gold and interest rates, at various points in the last few decades the data has shown that gold does not follow the pattern of going down when interest rates rise.
Thus, between 1970 and 1980 , the price of gold rose 2,350% and it did so faster at times when rates rose, in an environment of high inflation. And between 1974 and 1976, when rates fell, gold did too , losing almost 50%. That is, they had a direct relationship.
It was later re-emphasized that gold and rates were not inversely related at all times: between 2001 and 2004, gold rose while the Fed lowered rates.
However, from 2004 to 2007, both the price of gold and interest rates rose. Between 2007 and 2011, gold reached its maximum historical price , in an environment of falling interest rates. And between 2011 and 2015, gold went down again, at the same time that rates did .
In other words, that this inverse relationship between the two is true sometimes and sometimes not. In general, the short-term trend is for gold to react in the way it is expected to react to rate movements. But when viewed in the longer term, that trend may change.
In any case, there is no doubt that interest rates are an important factor that contributes, among others, to the formation of the metal price.…
One of the factors that is most taken into account when forecasting the future behavior of the gold price is interest rates. For this reason, it is said that the metal market lives pending the decisions of the Federal Reserve, the body that determines the monetary policy of the United States. And gold, let’s not forget, is denominated in dollars, so it’s more influenced by that. In this post we are going to explain how this relationship works.
The basic principle is that gold and interest rates are inversely related , such that when rates go up, the price of gold goes down, and when rates go down, gold goes up.
Why is this supposed to happen? When interest rates rise is when the economy is doing well , consumers want consumer loans, companies expand their business, more cash is available and more spending is undertaken.
In these situations, central banks and financial institutions increase their profits, since they get a higher return on the money they lend.
What Does Gold Do When Rates Rise?
The theory goes that in times of economic prosperity, the attraction of a safe haven asset like gold diminishes. In addition, interest rates drive the currency (the dollar, in this case), so in the short term the price of gold falls.
This is a commonly accepted theory, although it is necessary to be precise: in times of economic prosperity, in many countries (especially in Asia), the consumption of gold increases, either in bullion or in jewelry, since citizens have a greater economic surplus.
It is also often said that gold falls when rates rise, since the so-called opportunity cost of owning the metal increases : that is, the investor earns more with other assets that offer higher returns thanks to the rise in interest rates .
This is the case, for example, of bonds, whose remuneration increases when interest rates rise, making them more attractive to investors than gold.
And When Do They Go Down?
Conversely, when interest rates fall, they reflect a situation in which confidence in the economy is reduced and growth slows.
This slowdown affects the cost of living, wage growth, employment and the value of the currency.
Investors are flocking to gold as a safe haven these days, for a number of reasons:
It constitutes a protection of the patrimony against inflation, since it allows to maintain the purchasing power.
It is the safe haven asset par excellence, since it does not entail responsibility on the part of anyone and has immediate liquidity , at any time and place.
The opportunity cost of owning gold instead of other assets is reduced as bond yields fall even to zero due to lower interest rates, so gold gains comparatively.
What Happens Right Now With The Types?
The Federal Reserve has decided in its last meetings to keep rates close to zero, due to the deterioration of economic indicators in the United States, due to the impact of the Covid-19 pandemic.
In fact, in one of his last public interventions, the president of this body, Jerome Powell , assured that the rates would remain at 0% until at least 2022 , since an economic recovery of the country is not expected before that date.
According to analysts, this is one of the reasons why the price of gold remains well above $1,700 an ounce these days.
By the way, the Federal Reserve’s decisions regarding interest rates during 2018 were the reason why the current president of the United States, Donald Trump, has repeatedly attacked the independence of this institution and its president (who was appointed by him himself), in a movement that has no precedent since the time of Richard Nixon, in the early 1970s.
The rate hikes dictated by the Fed in 2018 (from 1.25% in December 2017 to 2.25% a year later) irritated the president, who accused the Fed of not knowing how to react and of torpedoing the economy American.
The explanation is that rate hikes cause a competitive disadvantage for the US compared to its trade rivals, which is why Trump wanted rates to be as low as possible, which he has finally achieved, with the ‘collaboration’ of the pandemic.
The Falsity Of The Gold-Rate Correlation
Although, as we said, there is a general consensus on the inverse correlation between gold and interest rates, at various points in the last few decades the data has shown that gold does not follow the pattern of going down when interest rates rise.
Thus, between 1970 and 1980 , the price of gold rose 2,350% and it did so faster at times when rates rose, in an environment of high inflation. And between 1974 and 1976, when rates fell, gold did too , losing almost 50%. That is, they had a direct relationship.
It was later re-emphasized that gold and rates were not inversely related at all times: between 2001 and 2004, gold rose while the Fed lowered rates.
However, from 2004 to 2007, both the price of gold and interest rates rose. Between 2007 and 2011, gold reached its maximum historical price , in an environment of falling interest rates. And between 2011 and 2015, gold went down again, at the same time that rates did .
In other words, that this inverse relationship between the two is true sometimes and sometimes not. In general, the short-term trend is for gold to react in the way it is expected to react to rate movements. But when viewed in the longer term, that trend may change.
In any case, there is no doubt that interest rates are an important factor that contributes, among others, to the formation of the metal price.…
)
[3] => Array
(
[title] => The Crisis Triggers Bullion Sales Of Gold And Silver
[link] => https://g-o-l-d-i-r-a.com/the-crisis-triggers-bullion-sales-of-gold-and-silver/
[dc] => Array
(
[creator] => Scott Gabaldon
)
[pubdate] => Sat, 26 Nov 2022 07:09:24 +0000
[category] => Gold Standard
[guid] => https://g-o-l-d-i-r-a.com/?p=24
[description] =>
The bullion or investment coins in gold and silver are a very appropriate formula to start investing in precious metals, with a moderate capital. We have already explained its advantages in several posts on this blog. Some advantages that have been taken into account by investors who, in view of the economic crisis derived from the Covid-19 pandemic, have exhausted the stocks of these currencies in recent months. The latest sales data from the main mints are revealing.
As we have explained in previous posts on this blog, bullions or investment coins in precious metals (mainly gold and silver, but also platinum and palladium) are pieces that are intended, as their name suggests, to serve as an investment object. In other words, what is important in them is the quantity and purity of the precious metal they contain, rather than their numismatic value.
The wide variety of sizes offered to investors, from 1/50 of an ounce to one, two or even five ounces , allow us to cover a wide range of potential clients, interested in keeping their money safe from the vicissitudes of the current economy.
Therefore, it is not surprising that since the confinement measures were issued to contain the Covid-19 pandemic and the tremendous setback that the world economy was going to suffer began to glimpse, these currencies became fashionable among investors.
Us Mint Sales
The sales data has been spectacular. For example, the United States Mint , which mints the well-known American Eagle bullion, broke its sales records last March.
Thus, American Eagles gold sales rose to 142,000 ounces, a figure that ridicules the 7,000 ounces sold in the month of February and which represents an increase of no less than 1,928.6%.
These 142,000 ounces of gold also represent an increase of 1,134.8% compared to the 11,500 that were sold in March 2019.
In total, during the first quarter of the year, the US Mint has sold 209,000 ounces of gold American Eagles, 132.2% more than in the first quarter of last year.
The silver American Eagles have not been far behind either. The US Mint sold 4,832,500 ounces in March, 643.5% more than the 650,000 sold in February, and 468.5% more than the 850,000 sold in March 2019.
The accumulated figure for the first quarter of the year rises to 9,328,500 ounces, 34.7% more than in the same period last year.
The US Mint also mints a version of the American Eagle in platinum , a metal that is becoming increasingly popular for bullion minting. The figures for platinum American Eagles have also been record: 6,200 ounces, compared to 4,000 in March last year (+55%).
Sales Perth Mint
For its part, the Perth Mint , the Australian mint that mints such popular bullions as the Kangaroo, the Koala or the Kookaburra, has also seen a huge increase in its sales during the first weeks of confinement.
Thus, its sales of gold products (including bars and investment coins) rose to 93,775 ounces in March, which is the highest amount since April 2013.
In silver, its sales reached the figure of 1,736,409 ounces, which practically triples the 605,634 ounces that were sold in the month of February.
The trend has continued in April, with sales of 120,504 ounces of gold and 2,123,121 of silver, which represents an increase of 134.3% compared to April 2019.
The analysis of Richard Hayes, CEO of the Perth Mint (in the image) , on this increase in bullion sales is illuminating:
“The specific factors that have contributed to this increase in demand in the midst of the Covid-19 epidemic have to do with theories of a lack of supply of precious metals due to the closure of refineries, which raised concerns about a possible restriction of the market. physical” .
Supply Restrictions
Indeed, several of the largest precious metals refineries in the world (such as the Swiss Valcambi, Argor-Heraeus and PAMP ) were forced to close their doors temporarily.
Added to this were the restrictions suffered by some mints such as West Point (USA), which reduced the production of investment coins in gold and silver.
This, together with a considerable increase in the demand for investment coins by private investors, meant that, since mid-March, specialized stores ran out of gold and silver bullion stock .
One of the main effects triggered by this shortage was the rise in the premiums paid for the coins that came onto the market.
It must be explained that the price of investment coins is given by the spot price of the precious metal in which it is minted at the time of sale, plus a small supplement (usually between 2.5 and 3% ), which covers the costs of minting, production and distribution.
Obviously, it is an economic law: a product that has registered a notable increase in demand and restrictions in its production, ends up raising its price.…
The bullion or investment coins in gold and silver are a very appropriate formula to start investing in precious metals, with a moderate capital. We have already explained its advantages in several posts on this blog. Some advantages that have been taken into account by investors who, in view of the economic crisis derived from the Covid-19 pandemic, have exhausted the stocks of these currencies in recent months. The latest sales data from the main mints are revealing.
As we have explained in previous posts on this blog, bullions or investment coins in precious metals (mainly gold and silver, but also platinum and palladium) are pieces that are intended, as their name suggests, to serve as an investment object. In other words, what is important in them is the quantity and purity of the precious metal they contain, rather than their numismatic value.
The wide variety of sizes offered to investors, from 1/50 of an ounce to one, two or even five ounces , allow us to cover a wide range of potential clients, interested in keeping their money safe from the vicissitudes of the current economy.
Therefore, it is not surprising that since the confinement measures were issued to contain the Covid-19 pandemic and the tremendous setback that the world economy was going to suffer began to glimpse, these currencies became fashionable among investors.
Us Mint Sales
The sales data has been spectacular. For example, the United States Mint , which mints the well-known American Eagle bullion, broke its sales records last March.
Thus, American Eagles gold sales rose to 142,000 ounces, a figure that ridicules the 7,000 ounces sold in the month of February and which represents an increase of no less than 1,928.6%.
These 142,000 ounces of gold also represent an increase of 1,134.8% compared to the 11,500 that were sold in March 2019.
In total, during the first quarter of the year, the US Mint has sold 209,000 ounces of gold American Eagles, 132.2% more than in the first quarter of last year.
The silver American Eagles have not been far behind either. The US Mint sold 4,832,500 ounces in March, 643.5% more than the 650,000 sold in February, and 468.5% more than the 850,000 sold in March 2019.
The accumulated figure for the first quarter of the year rises to 9,328,500 ounces, 34.7% more than in the same period last year.
The US Mint also mints a version of the American Eagle in platinum , a metal that is becoming increasingly popular for bullion minting. The figures for platinum American Eagles have also been record: 6,200 ounces, compared to 4,000 in March last year (+55%).
Sales Perth Mint
For its part, the Perth Mint , the Australian mint that mints such popular bullions as the Kangaroo, the Koala or the Kookaburra, has also seen a huge increase in its sales during the first weeks of confinement.
Thus, its sales of gold products (including bars and investment coins) rose to 93,775 ounces in March, which is the highest amount since April 2013.
In silver, its sales reached the figure of 1,736,409 ounces, which practically triples the 605,634 ounces that were sold in the month of February.
The trend has continued in April, with sales of 120,504 ounces of gold and 2,123,121 of silver, which represents an increase of 134.3% compared to April 2019.
The analysis of Richard Hayes, CEO of the Perth Mint (in the image) , on this increase in bullion sales is illuminating:
“The specific factors that have contributed to this increase in demand in the midst of the Covid-19 epidemic have to do with theories of a lack of supply of precious metals due to the closure of refineries, which raised concerns about a possible restriction of the market. physical” .
Supply Restrictions
Indeed, several of the largest precious metals refineries in the world (such as the Swiss Valcambi, Argor-Heraeus and PAMP ) were forced to close their doors temporarily.
Added to this were the restrictions suffered by some mints such as West Point (USA), which reduced the production of investment coins in gold and silver.
This, together with a considerable increase in the demand for investment coins by private investors, meant that, since mid-March, specialized stores ran out of gold and silver bullion stock .
One of the main effects triggered by this shortage was the rise in the premiums paid for the coins that came onto the market.
It must be explained that the price of investment coins is given by the spot price of the precious metal in which it is minted at the time of sale, plus a small supplement (usually between 2.5 and 3% ), which covers the costs of minting, production and distribution.
Obviously, it is an economic law: a product that has registered a notable increase in demand and restrictions in its production, ends up raising its price.…
The bullion or investment coins in gold and silver are a very appropriate formula to start investing in precious metals, with a moderate capital. We have already explained its advantages in several posts on this blog. Some advantages that have been taken into account by investors who, in view of the economic crisis derived from the Covid-19 pandemic, have exhausted the stocks of these currencies in recent months. The latest sales data from the main mints are revealing.
As we have explained in previous posts on this blog, bullions or investment coins in precious metals (mainly gold and silver, but also platinum and palladium) are pieces that are intended, as their name suggests, to serve as an investment object. In other words, what is important in them is the quantity and purity of the precious metal they contain, rather than their numismatic value.
The wide variety of sizes offered to investors, from 1/50 of an ounce to one, two or even five ounces , allow us to cover a wide range of potential clients, interested in keeping their money safe from the vicissitudes of the current economy.
Therefore, it is not surprising that since the confinement measures were issued to contain the Covid-19 pandemic and the tremendous setback that the world economy was going to suffer began to glimpse, these currencies became fashionable among investors.
Us Mint Sales
The sales data has been spectacular. For example, the United States Mint , which mints the well-known American Eagle bullion, broke its sales records last March.
Thus, American Eagles gold sales rose to 142,000 ounces, a figure that ridicules the 7,000 ounces sold in the month of February and which represents an increase of no less than 1,928.6%.
These 142,000 ounces of gold also represent an increase of 1,134.8% compared to the 11,500 that were sold in March 2019.
In total, during the first quarter of the year, the US Mint has sold 209,000 ounces of gold American Eagles, 132.2% more than in the first quarter of last year.
The silver American Eagles have not been far behind either. The US Mint sold 4,832,500 ounces in March, 643.5% more than the 650,000 sold in February, and 468.5% more than the 850,000 sold in March 2019.
The accumulated figure for the first quarter of the year rises to 9,328,500 ounces, 34.7% more than in the same period last year.
The US Mint also mints a version of the American Eagle in platinum , a metal that is becoming increasingly popular for bullion minting. The figures for platinum American Eagles have also been record: 6,200 ounces, compared to 4,000 in March last year (+55%).
Sales Perth Mint
For its part, the Perth Mint , the Australian mint that mints such popular bullions as the Kangaroo, the Koala or the Kookaburra, has also seen a huge increase in its sales during the first weeks of confinement.
Thus, its sales of gold products (including bars and investment coins) rose to 93,775 ounces in March, which is the highest amount since April 2013.
In silver, its sales reached the figure of 1,736,409 ounces, which practically triples the 605,634 ounces that were sold in the month of February.
The trend has continued in April, with sales of 120,504 ounces of gold and 2,123,121 of silver, which represents an increase of 134.3% compared to April 2019.
The analysis of Richard Hayes, CEO of the Perth Mint (in the image) , on this increase in bullion sales is illuminating:
“The specific factors that have contributed to this increase in demand in the midst of the Covid-19 epidemic have to do with theories of a lack of supply of precious metals due to the closure of refineries, which raised concerns about a possible restriction of the market. physical” .
Supply Restrictions
Indeed, several of the largest precious metals refineries in the world (such as the Swiss Valcambi, Argor-Heraeus and PAMP ) were forced to close their doors temporarily.
Added to this were the restrictions suffered by some mints such as West Point (USA), which reduced the production of investment coins in gold and silver.
This, together with a considerable increase in the demand for investment coins by private investors, meant that, since mid-March, specialized stores ran out of gold and silver bullion stock .
One of the main effects triggered by this shortage was the rise in the premiums paid for the coins that came onto the market.
It must be explained that the price of investment coins is given by the spot price of the precious metal in which it is minted at the time of sale, plus a small supplement (usually between 2.5 and 3% ), which covers the costs of minting, production and distribution.
Obviously, it is an economic law: a product that has registered a notable increase in demand and restrictions in its production, ends up raising its price.…
The bullion or investment coins in gold and silver are a very appropriate formula to start investing in precious metals, with a moderate capital. We have already explained its advantages in several posts on this blog. Some advantages that have been taken into account by investors who, in view of the economic crisis derived from the Covid-19 pandemic, have exhausted the stocks of these currencies in recent months. The latest sales data from the main mints are revealing.
As we have explained in previous posts on this blog, bullions or investment coins in precious metals (mainly gold and silver, but also platinum and palladium) are pieces that are intended, as their name suggests, to serve as an investment object. In other words, what is important in them is the quantity and purity of the precious metal they contain, rather than their numismatic value.
The wide variety of sizes offered to investors, from 1/50 of an ounce to one, two or even five ounces , allow us to cover a wide range of potential clients, interested in keeping their money safe from the vicissitudes of the current economy.
Therefore, it is not surprising that since the confinement measures were issued to contain the Covid-19 pandemic and the tremendous setback that the world economy was going to suffer began to glimpse, these currencies became fashionable among investors.
Us Mint Sales
The sales data has been spectacular. For example, the United States Mint , which mints the well-known American Eagle bullion, broke its sales records last March.
Thus, American Eagles gold sales rose to 142,000 ounces, a figure that ridicules the 7,000 ounces sold in the month of February and which represents an increase of no less than 1,928.6%.
These 142,000 ounces of gold also represent an increase of 1,134.8% compared to the 11,500 that were sold in March 2019.
In total, during the first quarter of the year, the US Mint has sold 209,000 ounces of gold American Eagles, 132.2% more than in the first quarter of last year.
The silver American Eagles have not been far behind either. The US Mint sold 4,832,500 ounces in March, 643.5% more than the 650,000 sold in February, and 468.5% more than the 850,000 sold in March 2019.
The accumulated figure for the first quarter of the year rises to 9,328,500 ounces, 34.7% more than in the same period last year.
The US Mint also mints a version of the American Eagle in platinum , a metal that is becoming increasingly popular for bullion minting. The figures for platinum American Eagles have also been record: 6,200 ounces, compared to 4,000 in March last year (+55%).
Sales Perth Mint
For its part, the Perth Mint , the Australian mint that mints such popular bullions as the Kangaroo, the Koala or the Kookaburra, has also seen a huge increase in its sales during the first weeks of confinement.
Thus, its sales of gold products (including bars and investment coins) rose to 93,775 ounces in March, which is the highest amount since April 2013.
In silver, its sales reached the figure of 1,736,409 ounces, which practically triples the 605,634 ounces that were sold in the month of February.
The trend has continued in April, with sales of 120,504 ounces of gold and 2,123,121 of silver, which represents an increase of 134.3% compared to April 2019.
The analysis of Richard Hayes, CEO of the Perth Mint (in the image) , on this increase in bullion sales is illuminating:
“The specific factors that have contributed to this increase in demand in the midst of the Covid-19 epidemic have to do with theories of a lack of supply of precious metals due to the closure of refineries, which raised concerns about a possible restriction of the market. physical” .
Supply Restrictions
Indeed, several of the largest precious metals refineries in the world (such as the Swiss Valcambi, Argor-Heraeus and PAMP ) were forced to close their doors temporarily.
Added to this were the restrictions suffered by some mints such as West Point (USA), which reduced the production of investment coins in gold and silver.
This, together with a considerable increase in the demand for investment coins by private investors, meant that, since mid-March, specialized stores ran out of gold and silver bullion stock .
One of the main effects triggered by this shortage was the rise in the premiums paid for the coins that came onto the market.
It must be explained that the price of investment coins is given by the spot price of the precious metal in which it is minted at the time of sale, plus a small supplement (usually between 2.5 and 3% ), which covers the costs of minting, production and distribution.
Obviously, it is an economic law: a product that has registered a notable increase in demand and restrictions in its production, ends up raising its price.…
)
[4] => Array
(
[title] => Gold And The Creation Of Money
[link] => https://g-o-l-d-i-r-a.com/gold-and-the-creation-of-money/
[dc] => Array
(
[creator] => Scott Gabaldon
)
[pubdate] => Fri, 25 Nov 2022 07:09:25 +0000
[category] => Gold Prices
[guid] => https://g-o-l-d-i-r-a.com/?p=25
[description] =>
Gabriel Ruiz began the conference by observing a minute of silence in memory of the victims of Covid-19 and recalled the damage that the pandemic has inflicted on the international economy. Proof of this has been the recent announcements of the closure of the Nissan factory in Barcelona and other factories in our territory, which will cause the loss of thousands of jobs.
“Many of our clients approach gold because they are interested in what is considered the quintessential safe haven value, which has been with us for over 6,000 years. It is the money par excellence, since it maintains its value regardless of the time or the political situation. It has always represented a value” , affirmed Ruiz.
The Monetary Base
The conference has served to illustrate the way in which central banks create money: before printing the banknotes, it is necessary for the bank to have some assets that support it: it is the so-called monetary base .
Those assets have to be something of value, like the gold itself or currencies.
“The Basel III Accords considered gold as a type 1 (AAA) investment asset. That is the reason why central banks have launched to acquire gold for their reserves, with which to support the issuance of money” , explained Gabriel Ruiz.
Once the bank has this monetary base, it can issue the so-called fiat money, based on trust.
“A 50-euro bill, for example , ” Ruiz explained , “is nothing more than the invoice for a debt that the State agrees to pay, and that citizens use to purchase goods and services . “
For this reason, it costs us more and more monetary units to acquire the same goods and services, which are rising in price due to inflation.
Fractional Reserve
Another problem presented by the issuance of fiat money is given by the so-called fractional reserve : the banking system “creates money” out of thin air, which it grants in loans to its clients, backing it with only a small part, which is the money that other clients have deposited into their accounts.
According to Ruiz, “ for every real 100,000 euros, the banking system creates up to 5,000,000 euros, which do not really exist . Therefore, in the same proportion that money is created, money is destroyed, especially when credits are defaulted, which generates continuous cycles of economic expansion and contraction .
It has included a fragment of the film “El concursante”, from 2007 , in which the fictitious way of creating wealth by banks is explained, which ends up dispossessing citizens of their money.
The Gold Standard
In his conference, Gabriel Ruiz has also alluded to the gold standard , a system that was launched in 1819 with the approval by the British Parliament of the ‘Resumption Act’ , which legalized the exchange of paper money for gold, to a fixed price.
This system was adopted by numerous countries and remained in force until its annulment in 1971 by President Richard Nixon, who considered it an obstacle to issuing the paper money he needed to finance the Vietnam War.
To better observe the operation of gold, against fiat currencies, Gabriel Ruiz has shown a revealing graph, which shows the loss of purchasing power of the dollar with respect to the dollar in the last three centuries.…
Gabriel Ruiz began the conference by observing a minute of silence in memory of the victims of Covid-19 and recalled the damage that the pandemic has inflicted on the international economy. Proof of this has been the recent announcements of the closure of the Nissan factory in Barcelona and other factories in our territory, which will cause the loss of thousands of jobs.
“Many of our clients approach gold because they are interested in what is considered the quintessential safe haven value, which has been with us for over 6,000 years. It is the money par excellence, since it maintains its value regardless of the time or the political situation. It has always represented a value” , affirmed Ruiz.
The Monetary Base
The conference has served to illustrate the way in which central banks create money: before printing the banknotes, it is necessary for the bank to have some assets that support it: it is the so-called monetary base .
Those assets have to be something of value, like the gold itself or currencies.
“The Basel III Accords considered gold as a type 1 (AAA) investment asset. That is the reason why central banks have launched to acquire gold for their reserves, with which to support the issuance of money” , explained Gabriel Ruiz.
Once the bank has this monetary base, it can issue the so-called fiat money, based on trust.
“A 50-euro bill, for example , ” Ruiz explained , “is nothing more than the invoice for a debt that the State agrees to pay, and that citizens use to purchase goods and services . “
For this reason, it costs us more and more monetary units to acquire the same goods and services, which are rising in price due to inflation.
Fractional Reserve
Another problem presented by the issuance of fiat money is given by the so-called fractional reserve : the banking system “creates money” out of thin air, which it grants in loans to its clients, backing it with only a small part, which is the money that other clients have deposited into their accounts.
According to Ruiz, “ for every real 100,000 euros, the banking system creates up to 5,000,000 euros, which do not really exist . Therefore, in the same proportion that money is created, money is destroyed, especially when credits are defaulted, which generates continuous cycles of economic expansion and contraction .
It has included a fragment of the film “El concursante”, from 2007 , in which the fictitious way of creating wealth by banks is explained, which ends up dispossessing citizens of their money.
The Gold Standard
In his conference, Gabriel Ruiz has also alluded to the gold standard , a system that was launched in 1819 with the approval by the British Parliament of the ‘Resumption Act’ , which legalized the exchange of paper money for gold, to a fixed price.
This system was adopted by numerous countries and remained in force until its annulment in 1971 by President Richard Nixon, who considered it an obstacle to issuing the paper money he needed to finance the Vietnam War.
To better observe the operation of gold, against fiat currencies, Gabriel Ruiz has shown a revealing graph, which shows the loss of purchasing power of the dollar with respect to the dollar in the last three centuries.…
Gabriel Ruiz began the conference by observing a minute of silence in memory of the victims of Covid-19 and recalled the damage that the pandemic has inflicted on the international economy. Proof of this has been the recent announcements of the closure of the Nissan factory in Barcelona and other factories in our territory, which will cause the loss of thousands of jobs.
“Many of our clients approach gold because they are interested in what is considered the quintessential safe haven value, which has been with us for over 6,000 years. It is the money par excellence, since it maintains its value regardless of the time or the political situation. It has always represented a value” , affirmed Ruiz.
The Monetary Base
The conference has served to illustrate the way in which central banks create money: before printing the banknotes, it is necessary for the bank to have some assets that support it: it is the so-called monetary base .
Those assets have to be something of value, like the gold itself or currencies.
“The Basel III Accords considered gold as a type 1 (AAA) investment asset. That is the reason why central banks have launched to acquire gold for their reserves, with which to support the issuance of money” , explained Gabriel Ruiz.
Once the bank has this monetary base, it can issue the so-called fiat money, based on trust.
“A 50-euro bill, for example , ” Ruiz explained , “is nothing more than the invoice for a debt that the State agrees to pay, and that citizens use to purchase goods and services . “
For this reason, it costs us more and more monetary units to acquire the same goods and services, which are rising in price due to inflation.
Fractional Reserve
Another problem presented by the issuance of fiat money is given by the so-called fractional reserve : the banking system “creates money” out of thin air, which it grants in loans to its clients, backing it with only a small part, which is the money that other clients have deposited into their accounts.
According to Ruiz, “ for every real 100,000 euros, the banking system creates up to 5,000,000 euros, which do not really exist . Therefore, in the same proportion that money is created, money is destroyed, especially when credits are defaulted, which generates continuous cycles of economic expansion and contraction .
It has included a fragment of the film “El concursante”, from 2007 , in which the fictitious way of creating wealth by banks is explained, which ends up dispossessing citizens of their money.
The Gold Standard
In his conference, Gabriel Ruiz has also alluded to the gold standard , a system that was launched in 1819 with the approval by the British Parliament of the ‘Resumption Act’ , which legalized the exchange of paper money for gold, to a fixed price.
This system was adopted by numerous countries and remained in force until its annulment in 1971 by President Richard Nixon, who considered it an obstacle to issuing the paper money he needed to finance the Vietnam War.
To better observe the operation of gold, against fiat currencies, Gabriel Ruiz has shown a revealing graph, which shows the loss of purchasing power of the dollar with respect to the dollar in the last three centuries.…
Gabriel Ruiz began the conference by observing a minute of silence in memory of the victims of Covid-19 and recalled the damage that the pandemic has inflicted on the international economy. Proof of this has been the recent announcements of the closure of the Nissan factory in Barcelona and other factories in our territory, which will cause the loss of thousands of jobs.
“Many of our clients approach gold because they are interested in what is considered the quintessential safe haven value, which has been with us for over 6,000 years. It is the money par excellence, since it maintains its value regardless of the time or the political situation. It has always represented a value” , affirmed Ruiz.
The Monetary Base
The conference has served to illustrate the way in which central banks create money: before printing the banknotes, it is necessary for the bank to have some assets that support it: it is the so-called monetary base .
Those assets have to be something of value, like the gold itself or currencies.
“The Basel III Accords considered gold as a type 1 (AAA) investment asset. That is the reason why central banks have launched to acquire gold for their reserves, with which to support the issuance of money” , explained Gabriel Ruiz.
Once the bank has this monetary base, it can issue the so-called fiat money, based on trust.
“A 50-euro bill, for example , ” Ruiz explained , “is nothing more than the invoice for a debt that the State agrees to pay, and that citizens use to purchase goods and services . “
For this reason, it costs us more and more monetary units to acquire the same goods and services, which are rising in price due to inflation.
Fractional Reserve
Another problem presented by the issuance of fiat money is given by the so-called fractional reserve : the banking system “creates money” out of thin air, which it grants in loans to its clients, backing it with only a small part, which is the money that other clients have deposited into their accounts.
According to Ruiz, “ for every real 100,000 euros, the banking system creates up to 5,000,000 euros, which do not really exist . Therefore, in the same proportion that money is created, money is destroyed, especially when credits are defaulted, which generates continuous cycles of economic expansion and contraction .
It has included a fragment of the film “El concursante”, from 2007 , in which the fictitious way of creating wealth by banks is explained, which ends up dispossessing citizens of their money.
The Gold Standard
In his conference, Gabriel Ruiz has also alluded to the gold standard , a system that was launched in 1819 with the approval by the British Parliament of the ‘Resumption Act’ , which legalized the exchange of paper money for gold, to a fixed price.
This system was adopted by numerous countries and remained in force until its annulment in 1971 by President Richard Nixon, who considered it an obstacle to issuing the paper money he needed to finance the Vietnam War.
To better observe the operation of gold, against fiat currencies, Gabriel Ruiz has shown a revealing graph, which shows the loss of purchasing power of the dollar with respect to the dollar in the last three centuries.…
)
[5] => Array
(
[title] => Sustainable Gold, The New Goal Of The Mining Industry
[link] => https://g-o-l-d-i-r-a.com/sustainable-gold-the-new-goal-of-the-mining-industry/
[dc] => Array
(
[creator] => Scott Gabaldon
)
[pubdate] => Thu, 24 Nov 2022 07:09:27 +0000
[category] => Gold Mining
[guid] => https://g-o-l-d-i-r-a.com/?p=26
[description] =>
Sustainability and the reduction of environmental impact, in addition to good governance and respect for workers’ rights, are mandatory values for all industries. Gold is no exception: the implementation of these principles has required a long road and not a few headaches for companies.
Gold production is a very complex task that involves various industries, each with its own characteristics and needs: mining, processing, transport, refining, manufacturing of ingots… These are industries with enormous energy needs and processes in those that use chemical compounds that can be highly polluting .
On the other hand, physical gold , as an asset, has a series of advantages (intrinsic value at any time and place; enormous density, which allows concentrating a great weight in a small size; anonymity…) that can become disadvantages, since which is an instrument widely used to finance terrorist groups or to launder money from crimes such as drug trafficking or arms trafficking.
For this reason, the gold industry has spent years striving to make the precious metal a sustainable product and produced with the least possible environmental impact, and to guarantee end customers that their gold has a guaranteed origin and has not served to launder money or to finance armed groups.
Simplifying the matter, the problems that gold can generate are divided into three aspects: contamination in the mining and production phase; polluting emissions from the industry; doubtful origin of the metal (irregular mining).
We are going to explain these issues and what the industry has done about them in each of the three aspects.
Pollution
One of the main problems that the gold mining industry has faced is the separation of this metal from the rest of the elements with which it is mixed. The mining industry has long used a dangerous chemical, cyanide , to cause the chemical reaction that allows gold to be isolated.
The problem is that cyanide is a highly toxic chemical element and the way it is used has given rise to accidents that have caused the contamination of aquifers with this compound, causing serious ecological damage.
One of the most serious took place in Romania, in the year 2000, when the rupture of a tank caused the discharge of more than 100,000 cubic meters of cyanide into the waters of the Somesriver.
Industry awareness following that accident led to the signing, that same year, of the International Cyanide Management Code , a voluntary code governing the manufacture, transportation, and use of cyanide in the gold mining industry, signed by companies and organizations from 54 countries.
In addition, local laws approved various restrictions and prohibitions that remain in force in Argentina, Eastern Europe, Central America and the United States.
As of today, the industry is trying to eradicate the use of cyanide in the processing of gold ore, although the question is not easy, since the alternatives are more complex, expensive and recover less percentage of gold.
Even so, the Commonwealth Scientific and Industrial Research Organization (CSIRO) , an agency dependent on the Government of Australia, has developed, together with the mining company Barrick Gold , a thiosulfate-based leaching process that eliminates chemical risks and has already begun to be used industrial form.
Climate Change
Another problem generated by the gold industry is polluting emissions. It is an industry that makes very intensive use of energy, with a large amount of heavy machinery powered by diesel, which releases tons of CO 2 into the atmosphere.
According to the report ‘Gold and climate change: current and future impact’ , published by the World Gold Council in 2018, the total annual CO 2 emissions by the gold industry amount to 126 million tons.
The objective of the industry is to reduce these emissions to zero in the year 2050, for which various initiatives are being implemented.
One of the most advanced is the one that takes place in the Borden gold mine (Canada), exploited by the American mining company Newmont . It is the world’s first electric mine, with a fleet of underground machines powered by electricity and controlled remotely.
This sustainable mining model, with zero greenhouse effect emissions, is the one that the industry must adopt in order to opt for the goal of zero emissions by the year 2050. It remains to be seen if the rate of implementation is as desired.
Irregular Mining
Possibly one of the biggest problems facing the gold industry is how to stop the entry of gold from small-scale artisanal mining operations into the international market.
These farms are widespread mainly in African countries and in Central and South America, with very rudimentary means of work, without any control over polluting discharges or emissions, and prone to labor and human rights abuses.
On many occasions, these exploitations extract gold on behalf of terrorist, paramilitary or arms or drug trafficking organizations, which benefit from the sale of gold to launder their finances.
Governments in Africa and America have tried to legalize this situation by articulating formulas to acquire the production of these miners , process it in state refineries in order to have the guarantees that allow them to sell it in the international market.
The gold industry, for its part, has taken steps such as the publication, in 2019, by the World Gold Council, of the ‘Responsible Gold Mining Principles’ , which globally address the problems faced by production of gold.
In total, 10 principles are included , related to governance (ethical conduct, impact control, supply chain); social (health and safety, human rights, labor rights, involvement with local communities); and environmental (environmental responsibility, protection of biodiversity, energy, water and climate change).
Sustainability and the reduction of environmental impact, in addition to good governance and respect for workers’ rights, are mandatory values for all industries. Gold is no exception: the implementation of these principles has required a long road and not a few headaches for companies.
Gold production is a very complex task that involves various industries, each with its own characteristics and needs: mining, processing, transport, refining, manufacturing of ingots… These are industries with enormous energy needs and processes in those that use chemical compounds that can be highly polluting .
On the other hand, physical gold , as an asset, has a series of advantages (intrinsic value at any time and place; enormous density, which allows concentrating a great weight in a small size; anonymity…) that can become disadvantages, since which is an instrument widely used to finance terrorist groups or to launder money from crimes such as drug trafficking or arms trafficking.
For this reason, the gold industry has spent years striving to make the precious metal a sustainable product and produced with the least possible environmental impact, and to guarantee end customers that their gold has a guaranteed origin and has not served to launder money or to finance armed groups.
Simplifying the matter, the problems that gold can generate are divided into three aspects: contamination in the mining and production phase; polluting emissions from the industry; doubtful origin of the metal (irregular mining).
We are going to explain these issues and what the industry has done about them in each of the three aspects.
Pollution
One of the main problems that the gold mining industry has faced is the separation of this metal from the rest of the elements with which it is mixed. The mining industry has long used a dangerous chemical, cyanide , to cause the chemical reaction that allows gold to be isolated.
The problem is that cyanide is a highly toxic chemical element and the way it is used has given rise to accidents that have caused the contamination of aquifers with this compound, causing serious ecological damage.
One of the most serious took place in Romania, in the year 2000, when the rupture of a tank caused the discharge of more than 100,000 cubic meters of cyanide into the waters of the Somesriver.
Industry awareness following that accident led to the signing, that same year, of the International Cyanide Management Code , a voluntary code governing the manufacture, transportation, and use of cyanide in the gold mining industry, signed by companies and organizations from 54 countries.
In addition, local laws approved various restrictions and prohibitions that remain in force in Argentina, Eastern Europe, Central America and the United States.
As of today, the industry is trying to eradicate the use of cyanide in the processing of gold ore, although the question is not easy, since the alternatives are more complex, expensive and recover less percentage of gold.
Even so, the Commonwealth Scientific and Industrial Research Organization (CSIRO) , an agency dependent on the Government of Australia, has developed, together with the mining company Barrick Gold , a thiosulfate-based leaching process that eliminates chemical risks and has already begun to be used industrial form.
Climate Change
Another problem generated by the gold industry is polluting emissions. It is an industry that makes very intensive use of energy, with a large amount of heavy machinery powered by diesel, which releases tons of CO 2 into the atmosphere.
According to the report ‘Gold and climate change: current and future impact’ , published by the World Gold Council in 2018, the total annual CO 2 emissions by the gold industry amount to 126 million tons.
The objective of the industry is to reduce these emissions to zero in the year 2050, for which various initiatives are being implemented.
One of the most advanced is the one that takes place in the Borden gold mine (Canada), exploited by the American mining company Newmont . It is the world’s first electric mine, with a fleet of underground machines powered by electricity and controlled remotely.
This sustainable mining model, with zero greenhouse effect emissions, is the one that the industry must adopt in order to opt for the goal of zero emissions by the year 2050. It remains to be seen if the rate of implementation is as desired.
Irregular Mining
Possibly one of the biggest problems facing the gold industry is how to stop the entry of gold from small-scale artisanal mining operations into the international market.
These farms are widespread mainly in African countries and in Central and South America, with very rudimentary means of work, without any control over polluting discharges or emissions, and prone to labor and human rights abuses.
On many occasions, these exploitations extract gold on behalf of terrorist, paramilitary or arms or drug trafficking organizations, which benefit from the sale of gold to launder their finances.
Governments in Africa and America have tried to legalize this situation by articulating formulas to acquire the production of these miners , process it in state refineries in order to have the guarantees that allow them to sell it in the international market.
The gold industry, for its part, has taken steps such as the publication, in 2019, by the World Gold Council, of the ‘Responsible Gold Mining Principles’ , which globally address the problems faced by production of gold.
In total, 10 principles are included , related to governance (ethical conduct, impact control, supply chain); social (health and safety, human rights, labor rights, involvement with local communities); and environmental (environmental responsibility, protection of biodiversity, energy, water and climate change).
Sustainability and the reduction of environmental impact, in addition to good governance and respect for workers’ rights, are mandatory values for all industries. Gold is no exception: the implementation of these principles has required a long road and not a few headaches for companies.
Gold production is a very complex task that involves various industries, each with its own characteristics and needs: mining, processing, transport, refining, manufacturing of ingots… These are industries with enormous energy needs and processes in those that use chemical compounds that can be highly polluting .
On the other hand, physical gold , as an asset, has a series of advantages (intrinsic value at any time and place; enormous density, which allows concentrating a great weight in a small size; anonymity…) that can become disadvantages, since which is an instrument widely used to finance terrorist groups or to launder money from crimes such as drug trafficking or arms trafficking.
For this reason, the gold industry has spent years striving to make the precious metal a sustainable product and produced with the least possible environmental impact, and to guarantee end customers that their gold has a guaranteed origin and has not served to launder money or to finance armed groups.
Simplifying the matter, the problems that gold can generate are divided into three aspects: contamination in the mining and production phase; polluting emissions from the industry; doubtful origin of the metal (irregular mining).
We are going to explain these issues and what the industry has done about them in each of the three aspects.
Pollution
One of the main problems that the gold mining industry has faced is the separation of this metal from the rest of the elements with which it is mixed. The mining industry has long used a dangerous chemical, cyanide , to cause the chemical reaction that allows gold to be isolated.
The problem is that cyanide is a highly toxic chemical element and the way it is used has given rise to accidents that have caused the contamination of aquifers with this compound, causing serious ecological damage.
One of the most serious took place in Romania, in the year 2000, when the rupture of a tank caused the discharge of more than 100,000 cubic meters of cyanide into the waters of the Somesriver.
Industry awareness following that accident led to the signing, that same year, of the International Cyanide Management Code , a voluntary code governing the manufacture, transportation, and use of cyanide in the gold mining industry, signed by companies and organizations from 54 countries.
In addition, local laws approved various restrictions and prohibitions that remain in force in Argentina, Eastern Europe, Central America and the United States.
As of today, the industry is trying to eradicate the use of cyanide in the processing of gold ore, although the question is not easy, since the alternatives are more complex, expensive and recover less percentage of gold.
Even so, the Commonwealth Scientific and Industrial Research Organization (CSIRO) , an agency dependent on the Government of Australia, has developed, together with the mining company Barrick Gold , a thiosulfate-based leaching process that eliminates chemical risks and has already begun to be used industrial form.
Climate Change
Another problem generated by the gold industry is polluting emissions. It is an industry that makes very intensive use of energy, with a large amount of heavy machinery powered by diesel, which releases tons of CO 2 into the atmosphere.
According to the report ‘Gold and climate change: current and future impact’ , published by the World Gold Council in 2018, the total annual CO 2 emissions by the gold industry amount to 126 million tons.
The objective of the industry is to reduce these emissions to zero in the year 2050, for which various initiatives are being implemented.
One of the most advanced is the one that takes place in the Borden gold mine (Canada), exploited by the American mining company Newmont . It is the world’s first electric mine, with a fleet of underground machines powered by electricity and controlled remotely.
This sustainable mining model, with zero greenhouse effect emissions, is the one that the industry must adopt in order to opt for the goal of zero emissions by the year 2050. It remains to be seen if the rate of implementation is as desired.
Irregular Mining
Possibly one of the biggest problems facing the gold industry is how to stop the entry of gold from small-scale artisanal mining operations into the international market.
These farms are widespread mainly in African countries and in Central and South America, with very rudimentary means of work, without any control over polluting discharges or emissions, and prone to labor and human rights abuses.
On many occasions, these exploitations extract gold on behalf of terrorist, paramilitary or arms or drug trafficking organizations, which benefit from the sale of gold to launder their finances.
Governments in Africa and America have tried to legalize this situation by articulating formulas to acquire the production of these miners , process it in state refineries in order to have the guarantees that allow them to sell it in the international market.
The gold industry, for its part, has taken steps such as the publication, in 2019, by the World Gold Council, of the ‘Responsible Gold Mining Principles’ , which globally address the problems faced by production of gold.
In total, 10 principles are included , related to governance (ethical conduct, impact control, supply chain); social (health and safety, human rights, labor rights, involvement with local communities); and environmental (environmental responsibility, protection of biodiversity, energy, water and climate change).
Sustainability and the reduction of environmental impact, in addition to good governance and respect for workers’ rights, are mandatory values for all industries. Gold is no exception: the implementation of these principles has required a long road and not a few headaches for companies.
Gold production is a very complex task that involves various industries, each with its own characteristics and needs: mining, processing, transport, refining, manufacturing of ingots… These are industries with enormous energy needs and processes in those that use chemical compounds that can be highly polluting .
On the other hand, physical gold , as an asset, has a series of advantages (intrinsic value at any time and place; enormous density, which allows concentrating a great weight in a small size; anonymity…) that can become disadvantages, since which is an instrument widely used to finance terrorist groups or to launder money from crimes such as drug trafficking or arms trafficking.
For this reason, the gold industry has spent years striving to make the precious metal a sustainable product and produced with the least possible environmental impact, and to guarantee end customers that their gold has a guaranteed origin and has not served to launder money or to finance armed groups.
Simplifying the matter, the problems that gold can generate are divided into three aspects: contamination in the mining and production phase; polluting emissions from the industry; doubtful origin of the metal (irregular mining).
We are going to explain these issues and what the industry has done about them in each of the three aspects.
Pollution
One of the main problems that the gold mining industry has faced is the separation of this metal from the rest of the elements with which it is mixed. The mining industry has long used a dangerous chemical, cyanide , to cause the chemical reaction that allows gold to be isolated.
The problem is that cyanide is a highly toxic chemical element and the way it is used has given rise to accidents that have caused the contamination of aquifers with this compound, causing serious ecological damage.
One of the most serious took place in Romania, in the year 2000, when the rupture of a tank caused the discharge of more than 100,000 cubic meters of cyanide into the waters of the Somesriver.
Industry awareness following that accident led to the signing, that same year, of the International Cyanide Management Code , a voluntary code governing the manufacture, transportation, and use of cyanide in the gold mining industry, signed by companies and organizations from 54 countries.
In addition, local laws approved various restrictions and prohibitions that remain in force in Argentina, Eastern Europe, Central America and the United States.
As of today, the industry is trying to eradicate the use of cyanide in the processing of gold ore, although the question is not easy, since the alternatives are more complex, expensive and recover less percentage of gold.
Even so, the Commonwealth Scientific and Industrial Research Organization (CSIRO) , an agency dependent on the Government of Australia, has developed, together with the mining company Barrick Gold , a thiosulfate-based leaching process that eliminates chemical risks and has already begun to be used industrial form.
Climate Change
Another problem generated by the gold industry is polluting emissions. It is an industry that makes very intensive use of energy, with a large amount of heavy machinery powered by diesel, which releases tons of CO 2 into the atmosphere.
According to the report ‘Gold and climate change: current and future impact’ , published by the World Gold Council in 2018, the total annual CO 2 emissions by the gold industry amount to 126 million tons.
The objective of the industry is to reduce these emissions to zero in the year 2050, for which various initiatives are being implemented.
One of the most advanced is the one that takes place in the Borden gold mine (Canada), exploited by the American mining company Newmont . It is the world’s first electric mine, with a fleet of underground machines powered by electricity and controlled remotely.
This sustainable mining model, with zero greenhouse effect emissions, is the one that the industry must adopt in order to opt for the goal of zero emissions by the year 2050. It remains to be seen if the rate of implementation is as desired.
Irregular Mining
Possibly one of the biggest problems facing the gold industry is how to stop the entry of gold from small-scale artisanal mining operations into the international market.
These farms are widespread mainly in African countries and in Central and South America, with very rudimentary means of work, without any control over polluting discharges or emissions, and prone to labor and human rights abuses.
On many occasions, these exploitations extract gold on behalf of terrorist, paramilitary or arms or drug trafficking organizations, which benefit from the sale of gold to launder their finances.
Governments in Africa and America have tried to legalize this situation by articulating formulas to acquire the production of these miners , process it in state refineries in order to have the guarantees that allow them to sell it in the international market.
The gold industry, for its part, has taken steps such as the publication, in 2019, by the World Gold Council, of the ‘Responsible Gold Mining Principles’ , which globally address the problems faced by production of gold.
In total, 10 principles are included , related to governance (ethical conduct, impact control, supply chain); social (health and safety, human rights, labor rights, involvement with local communities); and environmental (environmental responsibility, protection of biodiversity, energy, water and climate change).
So, when in doubt, it is better to give up a supposedly advantageous operation than to regret it later . All you need is a little common sense, prudence and knowing that if you are offered gold well below its price, surely there is something suspicious.
One of the factors that is most taken into account when forecasting the future behavior of the gold price is interest rates. For this reason, it is said that the metal market lives pending the decisions of the Federal Reserve, the body that determines the monetary policy of the United States. And gold, let’s not forget, is denominated in dollars, so it’s more influenced by that. In this post we are going to explain how this relationship works.
The rate hikes dictated by the Fed in 2018 (from 1.25% in December 2017 to 2.25% a year later) irritated the president, who accused the Fed of not knowing how to react and of torpedoing the economy American.
The bullion or investment coins in gold and silver are a very appropriate formula to start investing in precious metals, with a moderate capital. We have already explained its advantages in several posts on this blog. Some advantages that have been taken into account by investors who, in view of the economic crisis derived from the Covid-19 pandemic, have exhausted the stocks of these currencies in recent months. The latest sales data from the main mints are revealing.
Supply Restrictions
Gabriel Ruiz began the conference by observing a minute of silence in memory of the victims of Covid-19 and recalled the damage that the pandemic has inflicted on the international economy. Proof of this has been the recent announcements of the closure of the Nissan factory in Barcelona and other factories in our territory, which will cause the loss of thousands of jobs.
According to Ruiz, “ for every real 100,000 euros, the banking system creates up to 5,000,000 euros, which do not really exist . Therefore, in the same proportion that money is created, money is destroyed, especially when credits are defaulted, which generates continuous cycles of economic expansion and contraction .
Sustainability and the reduction of environmental impact, in addition to good governance and respect for workers’ rights, are mandatory values for all industries. Gold is no exception: the implementation of these principles has required a long road and not a few headaches for companies.
Climate Change