Gold coin collections ‘are financial self defence’

Investing in gold coins could be seen as a self defence against any future financial downturns, it has been claimed. According to Burbank, purchasing pieces of currency formed from gold can act as a counterbalance to more risky investments.
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Did Cheryl get antique gold necklace for birthday?

Cheryl Cole may have been busy celebrating her 27th birthday yesterday (June 30th) and one reported gift could have put a smile on her face. According to Now magazine, the Girls Aloud's singer and Brit A-lister's rumoured boyfriend had been considering buying her an antique gold necklace.
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Arizona locals ‘cash in on gold’

Locals in Arizona saw high demand for their gold items at the Treasure Hunters Roadshow in Stafford recently. According to the East Arizona Courier, the event, which was held at the Quality Inn and Suites, saw attendees bringing along everything from gold coins and jewellery to fillings to sell.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Conservations project leads to Egyptian gold discovery

While the reports of archaeologists discovering new and priceless artefacts in Egypt are widely known, less so are the cases when conservation work has led to a new finding. However, just such cases are detailed in Egyptologist Lyla Pinch Brock's publication Preserving Egypt's Cultural Heritage, which investigates the work that is carried out to ensure that all of the paintings, golden death masks and gleaming sarcophagus pieces are kept looking as they were originally intended.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Smallest American Eagle gold bullion coins remain popular

New figures have suggested that the smallest version of the US Mint's American Eagle gold bullion coins remain popular among buyers. About 280,000 units of the one-tenth ounce coin have been sold since the fractional pieces went on sale on June 10th, significantly more than the half-ounce and quarter-ounce editions, according to mint statistics reported by Numismatic News.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Indian financial services firm to sell physical gold

An Indian financial services company has announced plans to begin selling gold coins and bars to customers. Religare Enterprises's Swarna Mudra range of physical gold products will be distributed by its Religare Bullion subsidiary.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Burkina Faso gold output to rise 60%

Gold output in Burkina Faso is expected to see a 60 per cent year-on-year increase by the end of 2010, according to the country's mining and energy minister. Abdoulaye Abdoulkader Cisse was speaking to bankers in London about the west African country's prospects in the gold sector and revealed that he expects production to reach 20 tonnes this year, Bloomberg reports.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Gold jewellery on show in Asia-Europe trade exhibition

An exhibition focusing on the history of trading between Asia and Europe has opened in Brussels, with gold jewellery among the artefacts on show. Entitled A Passage To Asia, the display at the Bozar Centre for Fine Arts is open until October 10th and features more than 300 objects spanning 2,500 years of history.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Flight to Crisis?

The US economic recovery is a fairy tale...

WE'RE NOT THE FIRST to say it, but we have said it repeatedly, writes Eric Fry in The Daily Reckoning.

The US economic recovery is a myth...a fairy tale.

The more enthusiastically the Wall Street rah-rahs proclaimed the start of a new growth phase, the more emphatically your editors pooh-poohed the idea. "The non-recovery seems to be gathering momentum," we observed from California in the March 2 edition of the Daily Reckoning. "Almost every day we receive fresh evidence of economic non-growth and non-vitality.

"The economy does manage to get out of bed every morning. Some folks applaud this fact and declare, 'Aha! A recovery!' Other folks...observe that the economy usually crawls right back into bed after brushing its teeth. We see no recovery. We see a coach potato with a very bright smile...an economy that still lacks essential qualities like jobs, corporate revenue growth and credit. The visible effects of this widespread malaise are...well...widespread."

Falling prices tell us that the private sector de-leveraging is continuing. These processes take time, dear reader. Rome wasn't built in a day, and neither did it burn to the ground overnight. Likewise, the vast American economy does not improve or degrade all at once. Even in the midst of difficult conditions, for example, some facets of the economy manage to flourish.

On the other hand, isolated instances of economic growth should not be confused with resurgent national prosperity. Sure, a few government agencies in Washington and a few financial firms in New York may have resumed hiring. But that doesn't mean General Motors can sell a car...or that home prices will rebound from their depressed levels.

In fact, General Motors can't sell a car...and home prices are not rebounding from their depressed levels.

"For US home and auto buyers it's 1983 again," observes Eric Janszen of iTulip.com. "New home sales fell to an annual pace of 300,000 units this May, the lowest yearly unit volume since 1983...An optimist might conclude that home sales are thus only as bad as in 1983, except that the economy was only one quarter the size of today's, [which means that] this post-recession housing market contraction is proportionally four times worse than the housing downturn that occurred at the end of the early 1980s recessions."

Slowly but surely, therefore, investors are beginning to realize that America's economy recovery may be less robust than advertised. This week, the Conference Board's disclosed that its Consumer Confidence Index for June tumbled to 52.9 from 62.7 in May.

The stock market did not greet this news warmly, as the Dow Jones Industrial Average dropped 268 points – falling below 10,000 to within a whisker of a new 9-month low. The Dow has fallen 428 points, or 4.2%, in the past four days. Most overseas markets also slumped Tuesday. The Shanghai Composite Index fell 4.3% to a 14-month low. Britain's FTSE 100 fell 3.1%, Germany's DAX index dropped 3.3%, and France's CAC-40 fell 4%.

Meanwhile, a "flight to safety" pushed the yield on 10-year Treasury notes below 3 percent for the first time in since April 2009, when the financial markets were still in crisis mode.

Bond yields and share prices do not usually tank when economic conditions are improving. Maybe this time is different...Probably it is not.

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About Those Sub-3.0% Bond Yields…

US Treasury holders have nothing to fear today. Just look how low yields are!

"BOY, the bond vigilantes are really on the warpath," jokes Paul Krugman, noting in his blog at the New York Times that 10-year Treasury yields ended Tuesday below 3.0%.

Never mind that the S&P slumped to 1040 meantime, dropping to a level first crossed (on the way up) in spring 1998 and leaving institutional funds with few places to hide. Never mind that 10-year Treasury yields only fell through 3.0% once before...amid the cataclysm that followed Lehman Bros.' collapse and thus hardly cause for good cheer. And never mind either that Gold Prices reversed a 0.9% drop on Tuesday, extending their run of higher highs and higher lows to seven consecutive quarters, also starting with the collapse of Lehmans.

"Clearly, we must slash spending immediately to satisfy the market's demands," mocks the Princeton professor. Which looks a fair satire at first. Because yields only fall when bond buyers bid up prices. And US debt has rarely been more highly priced than today.

But to think that means the market is crying out for more debt – and imagining that it would only be right to meet that cry, as well – is one hell of a leap. Because whatever power Robert Rubin spied in the bond market, it really isn't that bright.

Despite averaging just 0.40% real interest, for instance, through the 1970s, buyers of 10-year US Treasuries took until Dec. 1980 to see their yield move decisively above the pace of inflation. By then, of course, short-term rates had shot up to 19%, first destroying the capital value of those 10-year bonds as prices fell and yields rose towards that strongly positive post-inflation return, but also destroying the easy returns to be made by borrowing short-term money and lending it long.

Even below 3.0% today, ten-year US Treasuries still offer an easy profit – quite literally money for nothing – in maturity transformation. Those big institutions able to borrow Fed Funds at the current near-zero rate can park those funds in government debt, picking up 2.75% returns from the annualized gap between overnight and 10-year interest. This no-brainer gets brained, of course, when short rates rise above longer-term yields. But what fear of that with Krugman's one-time colleague, fellow bearded wonk Ben Bernanke, running the Fed?

Still, if there were a genuine problem with Uncle Sam's outstanding debt today – a debt currently pegged at $13.1 trillion, and equivalent to borrowing $2.82 each and every day since the Big Bang – then the bond market would be first to know and show it. Right? Because as Krugman's joking implies, the market-price of government debt must be correct in one sense or another. He's clearly a big fan of the efficient market hypothesis, no?

"There is nothing like deflation to bring on hyperinflation," as our friend, Merryn Somerset Webb, recently reminded readers of the Financial Times and MoneyWeek.

"Governments desperate to prop up prices and economies, despite being broke, print reams of money – money that eventually enters the market in a rush, flipping deflation to inflation. If you can get a copy of Adam Ferguson's 1975 book When Money Dies (soon to be republished), you will find an excellent account of how this happened in the Weimar Republic. It might not happen again but, at this point, it would surely be foolhardy to discount it entirely."

Zimbabwe's more recent collapse into hyperinflation might not strike the rich West either, but it also bears notice. It began gently enough, with a mere collapse of economic production and wages. Between 2001 and 2002, as "reflation" began, the exchange rate of Zimbabwe Dollars to US$1 then held static around 55 (according to the CIA Factbook at least). Domestic Zimbabwean inflation, in contrast, was galloping ahead at 134% per year, on course for doubling shop prices every 24 hours by mid-2007, as the money-printing shown above only accelerated the pace of catastrophe.

Put another way, "Most financial market indicators in the years leading up to July 1914 implied a decline in the risks to investors," as Niall Ferguson wrote in his 2006 tome, The War of the World. No, mounting political concerns, saber-rattling and national armament didn't specifically forecast the Archduke Francis Ferdinand's assassination on 28 June 1914 in Sarajevo, and "bond prices did fall sharply once investors realized that a great-power war was a real possibility. "But the striking thing is that this did not happen until the last week of July 1914 – to be precise, in the week after the publication of the Austrian ultimatum to Serbia, which demanded cooperation with an Austrian enquiry."

One month after Austria lost its heir presumptive to an anarchist's bullet, its bonds finally got round to dumping almost 10% of their value, says Ferguson's data. The guns of August were already being loaded, in other words, by the time the sovereign bond market took fright. Austrian debt would stand more than 23% lower by Christmas, and the Hapsburg Empire wouldn't exist five years from there.

Still, US Treasury buyers have nothing to fear today, of course. Like Paul Krugman says, just look how low yields are for proof.

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