Gold ETF, How Safe is it NOW in Today’s Financial Climate

In September 2008, shareholders in EFT Securities were left high and dry and unable to trade popular commodity securities, due to concerns over the future of their backer, AIG.

In fact, banks and brokerages stopped making markets in the Exchange Traded Commodities (ETCs) backed by the troubled insurer and sold by ETF Securities (ETFS). The price of the stocks also plummeted over 50 percent due to the worries over AIG.

Gold ETFs are vastly different to holding real gold. Turbulence, such as the above in the market, can affect the value of those gold ETFs markedly.

Owning gold ETFs means that one owns a stock in the price of gold rather than gold itself even though corporations such as ETF Securities owns gold. How much gold they own is not clearly discernable by the average “Joe” who may own ETF stocks.


Even a downgrading by credit agencies S&P or Moodies can drastically affect the share price in ETF Securities, as it has done, In fact in September 2008 shares in ETF Securities products, which are backed by AIG, were down as much as 50% in one morning after US insurer was downgraded by credit agencies S&P and Moody’s.

The cold hard reality is that if the issuer of an exchange traded note goes bankrupt, investors holding exchange traded products backed by these notes will join the ranks of other creditors hoping to get their money back.

Streettracks gold etf, for example, could also be in the same boat. Streettrack gold shares, Streettrack gold trust, you name it. It can equally apply to Canadian gold etf, gold etf in India and Barclays gold. Any etf gold funds in fact could suffer the same fate. With any gold etf one does not own actual gold and cannot redeem gold from the fund.

Indeed, to buy gold etf is a venturous and courageous, and one might almost say dangerous activity, in today’s economic climate.

However, for those astute people who decide to buy gold and own actual physical gold, as distinct to ETFs, their stored value remains stable. As the value of the dollar decreases, it takes more dollars to buy an ounce of real gold. The "share price" or stock of actual solid gold does not deteriorate as a result of any financial meltdown. Indeed the value of their gold holdings are very likely to go up and the gold price will continue to increase with the addition of more and more people seeing it, quite rightly, as a safe haven in these stressful times.

The true value of gold, measured in dollars (US) is more like 1500 according to some sources and this means that, if you buy gold now and hold on to your gold, your holding is going to be very safe.

Shariah Compliant Gold and Silver ETF

In London recently, ETF Securities (ETFS) launched what is claimed to be, the world's first Shariah Compliant precious metal exchange-traded commodity, (ETC) based on physical platinum, palladium, silver, gold and a basket of the above metals.

According to Meralli, formerly with Goldman Sachs and Deutsche Bank, an Exchange Traded Commodity (ETC) is very similar to an ETF (exchange-traded fund). However, it is a security structure not a fund. "Conceptually, an ETC offers investors a simple, efficient and cost-effective way to access commodities via a priced security listed on a regulated exchange. ETCs trade and settle the same as equities. ETCs are open-ended and can be created and redeemed to demand. ETCs are simple to access as they are traded in three currencies (euros, US dollars and sterling)." he explained.

"In Shariah, the common issue of a commodity Murabaha contract is that it cannot feasibly be structured for gold and silver. With the ETFS physical precious metals ETCs, the nominate transaction is an entirely different structure. In purchasing the security, the investor obtains an allocated physical entitlement to the underlying bullion and his return is tied directly to the spot price of that precious metal less the management fee." he stated.

This appears to be ETFS answer to entering the multi billion dollar Islamic finance and Sameer Meralli, head of sales for Middle East and North Africa at ETF Securities, then stated, "... they are a purer form of Islamic commodity transactions, for instance compared with Murabaha (cost-plus financing). In an ETC, investors do not have to worry about margins, delivery or the underlying assets."

What makes the ETC Shariah complaint is that, according to ETF Securities, all of the physical precious metal ETCs are backed by allocated metal - uniquely identifiable bars and ingots which carry no bank credit risk. The bars and ingots are held in trust in London by custodian HSBC Bank NA (USA), the leading custodian for ETCs in the world. Unlike the usual gold Exchange Traded Fund (ETF) where one is betting on the value of the fund going up and the fund is not directly related to specific bars of precious metal, gold in this case.

The precious metals conform to the rules of good delivery of the London Bullion Market Association (LBMA) and the London Platinum Palladium Market (LPPM) and securities are only issued once the metal is confirmed as being deposited into the company's bullion account with the custodian. Also consistent with allocated gold, no precious metal is borrowed, loaned out and nor does it earn any income.

This then is an assurance for the Islamic investor that his or her holding is actually precious metal in the form of gold rather than an account reflecting the price of gold and interest is not earned on the precious metal but one is relying on the value of gold moving up in order to recoup ones investment is necessary to ensure that one is Shariah complaint and not violating the law with regard to usury or riba as it is called in Islamic law.

The five ETCs that are Shariah-approved are specifically the ETFS physical precious metals products - the ETFS physical gold, ETFS physical silver, ETFS physical palladium, ETFS physical platinum, and the ETFS physical precious metals basket (an aggregation of the four precious metals). Each of these securities, said Meralli, are backed by physical allocated metal held by the custodian. These are designed to track the spot price of the underlying physical bullion less the management fee.

Meralli also explained, "Three weeks ago, after an extensive approval process, the Shariah Advisory Board at Al-Qalam Group approved the product as being fully Shariah-compliant. Since the security is backed by physical allocated bullion, which is held in trust on behalf of the security holder, the underlying transaction enables investors to obtain a spot return on the basis of a precious metal that they actually hold (in a vault in London or Zurich to be exact). The logistics of this transaction are in pure concordance with Shariah financial tenets,"

Also Shariah Complaint and where stability and security is paramount and where one can monitor the existence of the precious metals such as gold and silver, one could be better off looking at buying gold and silver from such places as goldmoney.com rather than as an ETC.

In this case there is no interest or riba and it is a safe and secure way to hold assets and not lose value due to inflation and other reverse interest penalties.

Gold Medals at the Olympics

With all the attention right now on the Beijing Olympics some have asked what the Olympic gold medals are made of and who makes them.

The Olympic Medals are a symbol of the utmost achievement in sport and of course this is represented by none other than Olympic Gold Medals.

According to legend, the ancient Olympic Games were founded by Heracles, one of the sons of Zeus. And the first Olympic Games, for which we still have written records, were held in 776 BC. At this Olympic Games, a naked runner by the name of Coroebus, a cook from Elis, won the sole event at the Olympics. The stade (from which the word Stadium comes) - a run of 192 meters or 210 yards. This made Coroebus the very first Olympic champion in history.

Medals were first introduced in 1896. Winners received a silver medal, the second place received a bronze medal, the third none at all. Then, in 1900, most winners just received cups or trophies instead of medals.

The IOC has since retroactively assigned gold, silver and bronze medals to the three best placed athletes in each event to fit in with more recent traditions.

Most gold medals are actually gold-plated with notable exceptions, made of solid gold, being the Lorentz Medal, the United States Congressional Gold Medal of Honor and the Nobel Prize medal. The last Olympic gold medals that were made entirely out of gold were awarded in 1912.

The Olympic medals are designed especially for each individual Olympic Games by the host city's organizing committee. Each medal must be at least three millimeters thick and 60 millimeters in diameter. Also, the gold and silver Olympic medals must be made out of 92.5 percent silver, with the gold medal covered in six grams of gold.

The concept of the sequence of medals being gold, silver and bronze for the first three places dates from the 1904 games and has since been adopted by many other sporting events.

Minting of the medals is always the responsibility of the host city.

From 1928-1968 the design has always been the same. The obverse showed a generic design by Florentine artist Giuseppe Cassioli with text giving the host city and the reverse showed another generic design of an Olympic champion.

From 1972-2000, Cassioli's design, sometimes slightly changed remained on the obverse but now with a custom design by the host city on the reverse. Note that Cassioli's design showed a Roman amphitheater for what were originally Greek games and a new obverse design was commissioned for the Athens 2004 Games. Winter Olympics medals have been of more varied design. The silver and bronze medals have always borne the same designs.

So over the coming weeks we will watch with wonder as the athletics of the day perform their very best in order to obtain that most treasured of possessions, An Olympic Gold Medal.

Gold Bar Price

The gold bar price of course changes daily with the price of gold. Large gold bars are a useful safe haven for storing assets for the long term in economic uncertainty, while the smaller gold bars can be easily bought, stored, transported and sold for the short term.

Types of Gold Bars
There are basically two types of gold bars. Cast and minted.

Cast gold bars are produced by pouring molten gold into molds. These are usually called ingots. They are rough and the markings, such as the foundry or manufacturing mark, gold purity and registration number are pressed into the gold. Although gold is quite dense it is nevertheless quite soft and easy to manage.

Cast gold bars are manufactured by around twenty-seven accredited manufacturers around the world. They produce small cast bars in many gold bar weights including in kilos, grammes (usually 500g or less) and in twenty ounces or less sizes. The smallest cast gold bar known weighs 10 grams and is made in Brazil. More popular cast gold bars are manufactured in Brazil, Europe and Japan, The ounce bars are made in Australia, Europe, UK and the USA.

Minted bars are manufactured from gold that has already been poured into a mound and then drawn out into strips. The gold bullion bars are then stamped out to the required sizes and shapes and the markings, in this case, are applied during the minting process.

Gold coins are produced in the same way incidentally, although more care is applied during the stamping process to produce the finer finish of the coins.

There are four accredited manufacturers of the standard minted bars. These are:

Argor-Heraeus. A subsidiary of Union Bank of Switzerland
Metalor. A subsidiary of Swiss Bank Corporation
Valcambi. A subsidiary of Credit Suisse
Pamp SA

They produce around 35 percent of the worlds minted gold bars. The bank subsidiaries also issue their bars with the bank brand name so are easily recognisable.

Gold Bar Purities
All gold bars have a purity expressed in units per 100, 1000 or 10000. There is a universal trend now for bars to be 99.99%, however, there is still some variation in some countries. For example:

Dubai - 99.9%
Iran - 99.5%
Hong Kong - 99%
Thailand - 96.5%

A new product, called ChipGold, has also entered the market. This is a relatively new form of gold bar, consisting of a small ingot of one to twenty grams presented in a sealed and certified package, about the size of a credit card. Chip Gold is designed to be used as a liquid investment in gold and can be easily stored and transported. The typical weights available include, one through to twenty grams with a purity of .9999 fine gold.

The granddaddy of all gold bars is the larger 400 oz (12.5 kg) ‘London Good Delivery’ bars. These are held by central banks and used by banks, governments and large institutions to store value and to transfer value between banks, They almost always have a purity of 99.5 percent.

Gold Bar Weights
All gold bars are denominated in different units of weight to accommodate the various cultural preferences of different geographical regions:

Grammes. International
Ounces. Mostly English-speaking countries: USA, UK and Australia
Tolas. Mainly India, Pakistan, Middle East, Singapore
Taels. In the main, Chinese-speaking countries: Hong Kong, Taiwan, China
Bahts. Thailand
Chi. Vietnam
Dons. Korea

One troy ounce is equal to 31.1034768 grams. So if gold was 900 dollars an ounce then one gram would be worth about 28.935673 dollars.

Gold is measured in troy ounces as distinct to the more common avoirdupois ounce which is used for food and slightly lighter than a troy ounce. One avoirdupois ounce is equal to 28.349523125 grams.

One tonne = 1000 kilograms = 32,150.746 troy ounces.
One kilogram = 1000 grams = 32.15074656 troy ounces.
One tael = 50 grams. (the official rate of taels in mainland China since the country went metric. In Taiwan and Hong Kong today a tael is equivalent to 37.429g

Gold Bar Prices
Gold bar prices depend of course on the gold price at any given time. As the value of gold increases so the value of the gold bar increases. The premium, how much you pay over spot gold is made up of, the manufacturing costs, the gold bar dealers costs and profit. You also have to take into consideration the shipping and insurance costs. Their may, in some countries or US states, be a tax to take into account also.

You should buy the highest gold bar weight you can afford as you will pay less premium per ounce or kilo that way. As the gold bar price goes up, the premium per ounce decreases also. However, you may want to buy smaller one ounce gold bars if you think you may need to sell some of your gold bars from time to time to cover unexpected expenses. Often the premium for ounce gold bars is not that much higher than for the larger gold bars.

Unless you absolutely have to, I recommend you do not sell gold bars for national fiat currency as the value of fiat currency (paper money) is deteriorating rapidly and, although you might get more fiat currency than you paid for your gold, its value will dwindle from the moment you get it.

Why Buy Gold Bars
Gold bars are a safe haven for asset protection as well as a good future investment. Basically the value of gold does not change with regard to the goods and services you can get with its value. And ounce of gold still purchases the same value of goods and services as it did many years ago. But the amount of fiat currency which the gold value is assessed by does change and, as the economy goes through recessions and inflation, the apparency is that gold is worth more when actually it is the currency which is worth less.

A good reason to buy gold bars and not sell them.

But if you do have to sell some gold, bars are good as they are accepted anywhere in the world.

Where to Buy Gold Bars
You can buy gold bars from gold dealers, mints, foundries even, as well as from private individuals, auctions and the like.

The same basic principles for buying gold apply regardless of whether you buy gold bars in New York, Washington or anywhere on the planet.

Here are some basic principles you can use to ensure you get the best deal and the best gold for your buck.

1. Buy the biggest gold bar or bars you can afford. The bigger the bar the smaller the premium you will pay per ounce. This will reduce the gold bar price per ounce.

2. Pick established or accredited gold dealers and mints.

3. If you are going to take delivery, ensure you understand the cost of shipping and, importantly, insurance. Check with the gold bar dealer to find out the shipping costs and ensure that they provide insurance (which you will be expected to pay) this should be figured in the gold bar price.

4. Do due diligence on the gold bar dealer or person or company you are buying gold from. Who are they? Are they easily contacted? Are they accredited? Do you know friends or associates that have dealt with them before?

5. Lastly it is prudent to have a good understanding of gold and gold bars. How they are produced and in what form. The weights, fineness and all other aspects of gold bars. How much premium will you pay?

Taking some time to understand your gold bar investment will pay off in that you can ensure you get as much gold for you money as possible and that you do not pay a heavy gold bar price while doing it!

Buy Gold

Why buy gold I hear some people ask. Gold is transitory and the price will always go down again!

In fact gold is not transitory. It has been around and used by man for thousands of years as decoration, jewelry and also, importantly, as a medium of exchange and preserving assets. It may drop temporarily but it always goes up again and is now worth more dollars than ever before.

Why Buy Gold
Why buy gold indeed! Nations and governments come and go. Currencies come and go. Economic conditions come and go. Inflation and recessions all come and go. Various bartering systems come and go. Stocks and shares and the ancillaries to those, futures etc, all come and go. But gold lives on and persists throughout the centuries and continues to be a stable resource for man.

Additionally gold does not tarnish, gold is welcome anywhere in the world. You can buy gold and sell it. Keeping assets in the bank means one gets a paltry interest rate (if that) which is generally eaten up by bank charges and inflation as each year the dollar is worth less than the year before. But gold. Ah! Gold does not hit you with bank charges and is not subject to inflation. Gold does not wear out and is not subject (mostly) to taxes. No. Gold is a stable asset that keeps its purchasing power.

In fact, regardless of the current economic situation, gold remains ... as good as gold!

So the time to buy gold is always now, regardless of when now is. The time to sell gold is ... never! And as to how much gold to buy? Well, as much as you can possibly lay your hands on!

Gold Price
The gold price fluctuates daily, even hourly. The live gold price is dependent on market forces, upon the economic conditions and peoples perception of what is happening economically and how the economy affects them. When the economy is unstable, people look for alternatives such as precious metals like gold and silver. The price of gold moves up and down with these apprehensions. The current price of gold to day reflects peoples moods and expectations. Since the economy has been unstable for so long and there is no likely hood of stability any time soon, more and more people are turning to gold.

Gold is undervalued even now. It takes many more dollars to buy an ounce of gold now than it did 30 years ago although you can still by the same products now as you did years ago. Gold has not changed. Only the purchasing power of the dollar which has gone down over 95 percent since 1910. Yet an ounce of gold will still buy now what it did in 1910. That tells you that you have much more chance keeping your assets if you buy gold than by sticking your money in the bank.

In the short term gold prices may change by the minute. But in the long term the price of gold is on a steady uptrend and looks set to continue as more dollars are printed and the purchasing power of becomes less and less.

Gold, in short, is a safe haven for assets.

A Short History of Gold
The historical gold price chart over the past few years shows that gold has been on a long term upward trend. There are peaks and troughs and, of course, who can forget the major spike in gold in 1980 when it hit the high 800s. But over the past 30 year gold price history, the trend has been essentially up and looks like continuing as the value of the currency it is set to continues to diminish in value..

The value of the gold, of course is not changing. One can still buy the same value of goods and services with one ounce of gold as one could 30 years ago. But the value of the dollar has plummeted and it takes a lot more dollars to by those same goods and services than it did 30 years ago. The gold has not changed. One ounce of gold is still one ounce of gold. But the dollar has changed and the price of gold reflects that.

Even the five year and one year gold history demonstrates that.

Buy Gold Coins
Some of the best places to buy gold coins are of course gold mints, gold dealers, gold shops and eBay. From these one buys gold retail and one can also buy gold wholesale. The main trick when buying gold is to keep the premium over the spot price of gold to a minimum. This is difficult with gold coins as the manufacturing costs are high and the mint and dealer want their profits.

The advantages with buying gold coins is that they are easy to buy, store and transport. Also to sell. You can sell gold coins anywhere in the world. Gold coins are easier to sell than bars. Dealers who buy bars will want to assay the bar fist and this may require sending the bar off, if the dealer is online, which can be a bit of a security risk.

The disadvantage, of course, is the price you pay for gold coins. The premium is higher than bars and can be up to double the price of gold for small coins such as the one tenth ounce for example. This means it is going to take a long time to recoup the value of the gold.

What you do will depend largely on the reason why you buy gold coins. It may be you enjoy just collecting certain types of gold coins, or for convenience if you travel a lot and need to be able to convert gold into money quickly.


Buy Gold Bullion
Out of all the ways to buy gold, the best buy is gold bullion. You can buy gold online either as gold coins or gold bars or even share in actual gold pooled by buying gold from GoldMoney.com, probably one of the cheapest and most secure ways to buy gold. You can also buy direct from Mints or dealers and all are equally valid ways of buying gold. Each method has its advantages and disadvantages..

To buy gold bullion in the form of coins and bars means you will have to pay a premium. How much this premium will be depends on the coins and bars you buy. The smaller the bar or coin in weight the higher the premium per ounce. The higher the bar or bigger the coin the less premium per ounce you pay. The premium itself is stable as the fabrication and other associated costs per coin or bar stay the same.

One way of not having to pay a heavy premium is to buy gold from goldmoney.com. Here the gold is stored in vaults and you can buy any amount of that gold. This system guarantees that you actually own gold, not shares in gold and your account details and balance will reflect that holding. One of the main advantages here is that the premium and fees are so incredibly low. Instead of paying vast sums over the spot price of gold you simply pay a small storage fee that amounts to less than one percent per year and a management fee of one quarter of one percent. This must make it the cheapest gold around. The system is fully transparent and you can see the bar count and audits on the website.

The only possible disadvantages are the costs associated with wire transfers in and out of the account in some cases. But that can be disadvantage with any online purchase of gold.

Buy Gold, Pure Gold
Bu gold, pure gold! That is the catch cry but which gold? Canadian Maple leaf, 24k American Gold Buffalo Coin, Krugerrands,, whatever gold coin you buy it should be 99.99 fine gold or 999.99 pure gold. Sometimes you will find coins that have a lesser quantity of gold in them. Some mints are now offering gold coins as 22 carat instead of the 24 carat. These may say they are 99.99 fine gold and of course the gold contained within the coin IS 99.99 fine gold. Any gold anywhere is 99.99 fine gold. But if it is alloyed or mixed with another or other metals then it is not a pure gold product. Look at the Karat. Is it 22 Karat gold? Or 24K gold? The 24K gold is pure gold. The 22k gold is not all gold. It may be advertised a pure fine gold and the gold itself would be but it is not all solid gold..

When you buy gold coins always, always check the karat and ensure it is 24 karat gold as well as being 99.99 percent gold.

Buy Gold Eagles
American Gold Eagle Coins are perhaps one of the most popular of the gold coins and are official legal tender in the USA.

They are considered a beautiful gold coin. the $20 Double-Eagle gold coins minted from 1907 to 1933 has the graceful Striding Liberty design inspired by the Augustus Saint-Gaudens on the obverse and the reverse of the coin displays a nest of American Eagles.

All American Eagles ere struck with 91.67% (22 Karat) fine gold and the total gold weight is stamped on the reverse of the coin.

One interesting aspect of American Eagle Gold Coins is that the weight, gold content and purity are all guaranteed by the US Government.

You can buy American Eagle gold coins from most coin dealers as well as on eBay and the American Gold Eagle and are likely one of the most traded of gold coins in the US.

Buy Gold Maples
The Canadian Gold Maple has been said to be the most beautiful gold coin in the world. It is certainly one of the best being a pure .9999 (24 karat) gold coin with no alloys added.

The Canadian Gold Maple Leaf Coins are among the purest gold coins available then.

All Canadian Maple Leaf Gold Coins have a bust of Queen Elizabeth II, on the obverse designed by Arnold Machin and on the reverse (tails or flip side) we have the famous Canadian Maple Leaf symbol.

Canadian Maple Leaf gold coins are official legal tender in Canada and can be bought from most of the major coin dealers.

Buy Gold Krugerrands
Everyone has heard of Krugerrand Gold Coins. They have been made famous in exciting and adventurous movies.

In fact the Krugerrand was named after Stephanus Johannes Paul Kruger, a former South African President and well known person involved in the formation of the South African Republic. His head is on the obverse, or "heads" side of the coin

The Krugerrand was the first gold coin to contain one ounce of fine gold. These days you can also get half ounce, quarter ounce and even one tenth ounce Krugerrands.

If you want to buy gold Krugerrands, they are generally available from most coin dealers, at a premium, and, although not the prettiest coin, perform the basic function of having gold cons available when you need them.

Buy Gold Bars
One of the best ways to buy gold is to buy gold bars. These can be from the simple one ounce gold bars up to the 400 ounce gold ingots. In practice most people buy the smaller gold bars as 400 ounce ingots are somewhat impractical.

1 ounce gold bars, 1 kilo gold bars, Swiss gold bars, all are popular and all can be obtained for a premium. All gold bars are .999 fine gold and 24 karat. Each is stamped with the weight, purity and manufacturer. The larger bars also have a specific number unique to that bar stamped on them.

The larger the bar you can afford, the less the premium. Bars are more difficult to sell than coins however so are more suitable to people who have no intention of selling their gold.

Best Gold to Buy
In truth the best gold to buy is solid gold as distinct to "paper gold". This means buying actual gold bullion and not stocks or shares in gold. Stocks and shares are subject to other influences and stock market fluctuations. Some people say that gold does not provide any interest. This is a good thing since if gold were to pay interest then the return on gold would be dependent upon other factors instead of it being just pure gold.

Some people say that gold stocks are better than gold itself. This is another fallacy as gold stocks are subject to other market forces, such as, for example, when there has been a stock market crash, gold stocks have suffered the same fate, which gold has actually moved up.

Gold could be considered just another commodity, such as sugar or pork bellies. This is clearly incorrect as sugar and pork bellies are consumed and have to be replaced. All the gold that ever was is still around either in circulation or stored somewhere. It does not decrease and alone is accumulated and saved and used as a currency back up.

In fact gold stands by itself. The best gold to buy is solid gold bullion. Either by purchasing and storing the gold yourself or in bank vaults or through a trusted custodian.

Yes gold bullion in the form of gold coins and bars is definitely the best gold to buy.

Best Way to Buy Gold
probably one of the best ways to buy gold is through GoldMoney.com. Here you can open an account, send the funds through and purchase a share of pooled gold, in the form of gold bars and coins, in either a bank vault in London or in Zürich. The gold you purchase is yours and belongs to you. You have a very small storage fee but can buy and sell and even use gold as a medium of exchange by simply exchanging it with another GoldMoney.com account holder for a product or service. You have no transport, security or storage issues to worry about and your gold can continue to improve in value against currency.

In addition it is fully secure and GoldMoney.com has audits and a bar count on a regular basis which can be seen on site.

Sell Gold
Sometimes people have a need to sell gold. If it can be avoided it is better not to sell your gold coins or bars but if it is a dire necessity then there are two basic ways to do so. One is simply selling back to a dealer, This way you will get just under spot, as the dealer wants to make a profit also.

Another way to sell gold coins or bars is through an auction, a little more hit and miss as you may or may not get the value of the gold in your coin or coins. Also selling privately, usually the best way, as you are selling to someone that particularly wants the gold coin or bar and is prepared to pay for it. Selling by newspaper ad is known to be the least effective way to sell gold.

Scrap Gold
The scrap gold price is usually just under the spot price of gold for the day. There are some variations depending on the type of gold you are selling as scrap. Selling scrap gold jewelry for example. Much gold jewelry is less than 24k, usually 14k gold, 18k gold and sometimes 22k gold. Obviously you will get different scrap gold prices for each. Gold scrap dealers have a system for working out what the value of gold is in a gold ring for example./

Also keep in mind that they may be other precious metals in that gold jewelry piece, such as silver, platinum etc so it is not just the gold value you should be paid for but the value of the other metals also.

Investing in Gold
What is the best way to invest in gold? Gold investment can be done through stocks and shares in gold exploration or gold mining companies, gold futures, gold shares in ETFs, buying and storing actual gold bullion and possibly many other varied ways.

The closer to actual gold you can get is the best way to invest in gold. The optimum is, of course, owning actual gold bullion.

Stock and shares in mining and exploration companies are subject to external influences, such as costs involved in extraction, takeovers, buyouts, financial market fluctuations and other variables.

The same principle applies in general to gold ETFs, the subject of the next section.

Gold ETFs
A gold ETF, also called etf or gold exchange traded fund, is basically a share in a company such as StreetTracks GLD for example and not dissimilar to owning shares in a gold company in some respects..

This is where you are betting that the price of gold will rise. You do not actually own the gold, although your investment is 'backed' by gold, and you cannot redeem the gold. If you sell you get cash only. This is very different to actually owning the gold yourself.

So, in a gold ETF you do not own gold. Your investment is back by gold instead. Some people might consider this the same but there are some important differences. You have no control over the ownership of the gold. Your investment is subject to external influences, whereas owning gold bullion yourself means you have gold come what may and regardless of the financial state of the economy.

Gold Futures
Gold futures are precarious things. Simplified, here an individual is betting on what the gold price will be at some time in the future. Not only that, it is done with a small deposit that represents a larger amount of money. If your bet is right you get the larger amount of money. If it is not you will end up paying someone else the larger amount of money possibly depending on the final result of the gold price on the date specified. Gold futures are more complicated than that of course and require a great deal of knowledge and experience if one is to play in that market. 75% of all people that play in the gold futures market lose.

Far safer and more profitable to stick to buying gold where you know what you have got.

Gold Stocks
Under gold stocks can be lumped, junior gold stocks, best gold stocks, gold mining.

All are concerning gold shares or stock in gold mining companies or gold exploration companies. Again here one is betting that the companies can:

1. find the gold
2. extract the gold with out too much expense
3. process and sell the gold at a satisfactory rate.

All are subject to the costs involved in getting the gold and the current price of gold. Many mining companies buy what is called forward gold to protect themselves an this can affect the their share price also since this can amount to many tonnes of gold and they are betting on the future price of gold in this wise.

Information on mining and exploration, as well as current market forces that affect the gold price can be found in the various gold news letters and gold stock picks on the internet. Although substantial profits can be made with gold stocks, it is an area that requires much study and due diligence before one invests one's funds in possibilities rather than actual gold,.

Buy Gold
Gold has been around for thousands of years. And it will be around for thousands more. All the gold that has ever been dug up is still around and the gold you have could have been in an Inca Temple or used on the banks of Egypt during the Pharaohs. Gold does not tarnish or deteriorate and little is used in industry compared to silver.

Owning gold is a security against the uncertainties of the economy, against the loss of assets, and as a safe haven for the future. Gold value does not change through the years, only that currency measured by it.

And when people say "As good as gold" everyone knows exactly what they mean.

Why Buy Gold and When to Sell Gold

Why buy gold and when to sell gold is not as difficult as it seems.

On the-privateer.com it states, " In any discussion of the future of Gold, or of the price of Gold, the first thing that must be realized is that Gold is a political metal. In the true meaning of the word, its price is "governed".

"This is so for the very simple reason that Gold in its historical role as a currency is fundamentally incompatible with the modern worldwide financial system."

Throughout history, up to August the 15th 1971, in fact, there has always been a link between paper money and gold. The history of money is littered with the connections. Either gold itself was used as a currency, or if paper was used it was backed by or represented a value of gold.

Since that fateful day in August 1971 however, the successful action of having a medium of exchange was dropped and paper itself was called upon to represent value. But paper currencies hinge on the concept that the debt on which they are based will be repaid. The only way this is being done currently is with more paper money.

Richard Russell, editor and publisher of the Dow Theory letters commented in a recent post on his website:

"Quotes are great if you own stock in a public company in a big bull market. But the great majority of amateur investors make more money holding their homes over the years than they ever make in the stock market. And the reason is that if they own a home over the years, and that home is sensibly financed, they aren’t scared out their home by those damnable quotes during bear markets.

Holders of gold might mull over the same concept. Sure gold is quoted every hour of the day around the world. Long-term holders of gold might do well to ignore the quotes. If gold doubles in price, so what? -- are you going to swap your gold for paper? If gold drops by a third, so what? – are you going to dump your gold for paper?

Why not just relax and hold your gold? Hold your gold – why? The reason is that gold is the only true money, it's the only money that remains wealth no matter what happens in the world. Gold is wealth during the biggest boom and gold remains wealth during the worst depression. So why dwell on the daily dollar price, even though gold is quoted everywhere every hour of the day? Forget the bloody quotes, just accumulate gold. It's a good thing to have in today's unstable world."

So in short, that answers the question, why buy gold and when to sell gold.

What Happened to the Gold Price in 1980?

In January 1980 gold hit a record 850 US dollars an ounce. After reaching those dizzy heights it then plummeted down and remained steady in the 300-400 dollar range for some years before starting to climb again to new levels.

Now gold has broken through the 900 dollars an ounce gold barrier and some investors and analysts are wondering, is this going to be a repeat of the 1980 gold spike?

In fact, there are many differences between the 1980 spike in the gold price and the current rise in gold value, not the least of which is the longer term trend currently occurring. In 1980 gold basically shot up like a bullet out of a gun and then, like a bullet, slowed down and returned to earth.

History
In January 1980 gold was fixed at a record 850 USD an ounce while high inflation, strong oil prices , Soviet intervention in Afghanistan as well as the impact of the Iranian revolution prompted investors to heavily buy the metal.

Adjusting for inflation, meant the 1980 record high price was actually $2,079 an ounce at 2006 prices, while, according to precious metals consultancy GFMS, the real average price in 1980 was calculated at $1,503.

As a result of the removal of the gold standard by Nixon in1971, what little life was left in the Bretton Woods, built during the devastation of World War II to help Europe recover its faith in credit and currencies agreement was killed off. The result?

"Inflation in most countries at the end of 1979 was running in double digits," writes Peter Bernstein in his classic The Power of Gold. Pointing to the OPEC-led spike in oil prices, he also notes that "political conditions were perhaps even more frightening."

"Iranian radicals in Nov. 1979 took over the US embassy in Tehran…At the same time, the Russians were building up their strength in southern Yemen near Saudi Arabia, near Afghanistan’s border with Iran, and near Bulgaria’s border with Yugoslavia."

Key Dates in Gold History
Here are some key dates in gold's trading history covering the period from the early 1970s through to January 2008 including that period when gold rose, fell and, like the phoenix, has risen again.

In August 1971, took the dollar off the gold standard. With some minor variations this had been in place since the Bretton Woods Agreement of 1944 and fixed the conversion rate for one Troy ounce of gold at $35.

In August 1972, United States devalued dollar to $38 per ounce of gold.

In March 1973, Most of the major countries adopted a floating exchange rate system.

Then in May 1973, the United States devalued dollar again, to $42.22 per ounce.

January 1980. Gold hits record high at $850 per ounce. High inflation because of strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution, which prompted investors to move into the metal.

In August 1999, gold fell to an all-time low at $251.70 on concerns about central banks reducing gold bullion reserves while, at the same time mining companies were selling gold in forward markets to protect against falling prices.

In October 1999, gold reached a two-year high at $338 after an agreement by 15 European central banks to limit the gold sales.

During February 2003, gold reached 4-1/2-year high on safe-haven buying in the run-up to conflict with Iraq.

Then in December 2003 to January 2004, gold broke above $400, reaching levels last traded in 1988. Investors started to increasingly buy gold as risk insurance for portfolios.

In November 2005, the spot gold rises above $500 for the first time since December 1987, when the spot hit $502.97.

April 11, 2006, and gold prices then surpass the next big level of 600 US dollars an ounce, the highest since December 1980, with funds and investors pouring money into commodities on a weak dollar, firm oil prices and geopolitical worries.

May 12, 2006, saw gold prices peak at 730 US dollars an ounce This was the highest level since January 1980, with funds and investors pouring money into commodities on a weak dollar, firm oil prices and political tensions over Iran's nuclear ambitions.

June 14, 2006 gold falls 26 percent to $543 from its 26-year peak after investors and speculators went on a flurry of profit taking.

Nov 7, 2007, spot gold peaks at a 28-year high of $845.40 an ounce.

Jan 2, 2008, gold breaks above $850 for the first time since 1980.

Jan 8, 2008, gold hits record $875.80. (Sources: GFMS, World Gold Council, Commodity Research Bureau and Reuters database).

Jan 12, 2008, Now gold has breached 900 dollars an ounce and looks set to reach the magical 1000 US dollars per ounce.

Why Gold
Some similarities can be found between the two highest evers but there is a marked difference between the two that show this latest high is not a spike but a continuing trend.

In James Turk's "2008 Gold Should Glitter", he comments

"Although gold’s previous record high of $850 reached in January 1980 gets attention, rarely do people consider that a 1980-dollar had substantially more purchasing power than a 2007-dollar. Adjusting for 27 years of inflation, it takes $2,208 today to equal the purchasing power of $850 in January 1980. So by this measure, gold is still far from a true record high."

He follows this on with:

"Another useful measure to determine gold’s relative value can be made by comparing gold to the Dow Jones Industrial Average. Gold is overvalued when it takes only one ounce to buy the DJIA. For example in the 1930s, one ounce of gold at $35 bought the DJIA, and it did so again in 1980 when an ounce of gold was $850 and the DJIA was 800. Though this ratio has fallen from more than 40 ounces in 2000, it still takes 16 ounces of gold to buy the DJIA, meaning that gold continues to be a relatively good value while the DJIA is relatively expensive …."

So gold is still relatively, undervalued, or "cheap" as it were, and there is still a long way to go for it to catch up to inflation.

The current rise is being helped of course by the current situation in the US and the increased level in oil price but these are really contributory rather than causative.

What is causative is the general trend of investors having less faith in fiscal currency. Two component parts of the current economy is the passion by governments for printing more money to handle debt and debt crisis. And the other is the banking fractional system which allows banks to 'creatively create money for the purposes of debt. Both these forces oppose each other creating, in their wake, a rising tide of inflation and recession.

This is perhaps, unconsciously, understood by most people as not a good thing. They see this in their pockets with prices rising, less money available, and more restrictive practices surrounding their control of finances.

All this despite hot mint printing presses actively at work printing more money while banks offering more debt yet at the same time struggling with the debt they have.
This is likely to be the biggest cause of the investors, and even the man in the street's attention being turned to gold. And this is not something that is going to go away anytime soon.

Golds Future
Many analysis are predicting further increases in gold. Of course there will always be the inevitable "correction" as it is called. This is where those investors, in for the short term, decide to take a profit and the price then drops for a while. But with gold currently undervalued and with the prime economies on what could be called a long term unsteady footing, there is plenty of room for gold to continue its steady rise to, some say, over the 2000 dollars an ounce mark.

So it seems the value of gold has a lot of catching up to do

Dollar Backed by Gold

When people buy gold, many seem to have the misconception that the US dollar is backed by gold. Well ... it used to be. The US currency, like many other currencies at the time, was backed by physical gold kept in Fort Knox and other places.

In 1933 the US abandoned the Gold standard along with many other nations, such as Italy in '34, Belgium in '35 and others during the 1930s. Switzerland was one of the last countries to drop the gold standard and this was done in 1999 by the approval of a new constitution that eliminated the traditional requirement for the country's currency to be backed by gold.

The gold standard monetary system in which the standard economic unit of account is a fixed weight of gold. Under such a gold standard, currency issuers guarantee to redeem notes, upon demand, for that amount of gold. Also governments that employed such a fixed unit of account, were able to redeem their notes to other governments in gold and share a fixed-currency relationship.

However, these days, the gold standard is not currently used by any government or central bank, having been replaced completely by fiat currency. Money is NOT, therefore backed by gold, or any other precious metal therefore but, instead, is backed by faith. The money is, in other words, as good as people believe it is good. People are generally educated to regard money as a precious commodity in it self by virtue of the amount needed to purchase desirable and needed items.

This then, together with the use of a tax monitoring system, makes it easier to control the economy by controlling the interest rate, the amount of money in circulation and the

Since the abandonment of the gold standard, economies around the globe have shown the apparency of a healthy economy but in reality what has happened is that there has been little or no check on inflation resulting in a decreasing value of the currency, such as the US dollar and it now requiring many more dollars to purchase the same items as one could many years ago.

The value of gold has remain the same however and once ounce of gold will still purchase the same as it did 20 or 50 years ago.

What we use to day, including the USA is a system of fiat money. One glossary defines money as "money that is intrinsically useless; and suitable only as a medium of exchange. A more accurate definition perhaps is that money is, "an idea backed by confidence."

The main benefit of a gold standard is that it insures a relatively low level of inflation. In articles such as "What is the Demand for Money?" , we see that inflation is caused by a combination of four factors:

1. The supply of money goes up.
2. The supply of goods goes down.
3. Demand for money goes down.
4. Demand for goods goes up.

So long as the supply of gold does not change too quickly, then the supply of money will stay relatively stable. The gold standard prevents a country from printing too much money. If the supply of money rises too fast, then people will exchange money (which has become less scarce) for gold (which has not). If this goes on too long, then the treasury will eventually run out of gold.

A gold standard restricts the Federal Reserve from enacting policies which significantly alter the growth of the money supply which in turn limits the inflation rate of a country. This may give an inkling of the reasoning behind the removal of the gold standard.

So it would appear that the major benefit to the gold standard is that it can prevent long-term inflation in a country. However, as Brad DeLong points out, "if you do not trust a central bank to keep inflation low, why should you trust it to remain on the gold standard for generations?" It does not look like the gold standard will make a return to the United States anytime in the foreseeable future and the dollar being back by gold.

None of this should make any difference when it comes to buying gold of course. In fact, to buy gold is probably a better idea than to buy currency!


References:
http://economics.about.com/cs/money/a/money_demand.htm
http://www.j-bradford-delong.net/Politics/whynotthegoldstandard.html
http://eh.net/encyclopedia/article/officer.gold.standard
http://www.j-bradford-delong.net/Politics/whynotthegoldstandard.html
http://en.wikipedia.org/wiki/Gold_standard

An Ounce of Gold

When you search around looking to buy gold, you might wonder, why there can be a different price for the same coin or gold bullion from one dealer to the next.

Firstly the spot price of gold is the value of gold per ounce at any given time. This is generally fixed by the market and you can see the current spot price of gold in the charts show at the top of this page.

Yet there is not only a variation in the price of gold from one dealer to another but the price always seems to be somewhat above the spot price. How can this be?

Lets say, for example, that the spot price for gold today is $787.50 per ounce. Various dealers will give you a selling price of around $830.80 for a one-ounce American Gold Eagle, $819.00 for the one-ounce South African Gold Krugerrand or even $826.90 for a one-ounce Canadian Gold Maple Leaf.

Since each contains exactly one ounce of fine gold, why should there be such a variation?

Well there are other factors to take into account when a dealer sells gold coins regardless of what they are.

Dealers will traditionally mark up what is called the "coin premium." If a dealer bought and sold gold coins at spot price there would be no covering the cost of the manufacture, the shipping the insurance, not to mention the dealers expenses and profit margin. All these need to be taken into account also. And they can vary too!

The mint will have marked up an additional price to the price of the spot gold to cover their costs and profit and this will be further increased by dealers as they acquire the coins and then resell them on. This is, in reality, no different to any other industry from food to car parts etc. Each person or company in the chain has to cover their costs and a profit margin.

Happily for us, the margins can be different between dealers depending on their costs, how much they acquired the coins for originally, as well as other factors such as the available supply of the coins, the rarity as well as market interest in particular types of coins. All this makes it well worth while shopping around.

So when you are scouting around to buy gold coins, do remember to do a little browsing before shopping, you never know what bargains you might pick up buying gold!

Gold Price Dropping

Sometimes you will see the gold price dropping. There has been a substantial rise and then, suddenly,it turns around and drops. Many people then frantically sell gold but in fact it is those that buy gold (from those selling of course) who benefit the most. They get the gold at a reduced price because, sure as eggs are eggs, the gold price will rise again.

Gold price has traditionally risen, in the long term, and with small dips occasionally, has enabled the astute to make a tidy profit here and there. Anyone who has purchased gold over the past 10 years and not sold it, will be sitting back congratulating themselves with a proverbial pat on the back and a somewhat healthier asset balance.

More importantly perhaps, the value of gold has not changed over the past 50 -100 years. How could this be? You ask. It is simple. The value of gold does not change. But the value of the currency you use to buy and sell gold does. An ounce of gold will still purchase the same goods now as it did fifty or one hundred years ago. But you need an awful lot more dollars to make the same purchase with currency.

Keeping one ounce of gold for 10 years say and the cost of one ounce of gold in dollars at the time of purchase will quickly show the disparity in the value. One ounce of gold 10 years ago was around 300 dollars per ounce. These days it is running at around 750 to 850 dollars an ounce. but whereas the purchasing power of 300dollars has reduced over 10 years, the purchasing power of an ounce of gold has remained stable, in fact increased slightly.

Examples of inflation and the drop in the US dollar over the years are demonstrated below:

A postage stamp in the 1950s cost 3 cents; today's cost is 41 cents - 1,266% inflation;
A gallon of 90 Octane full-service gasoline cost 18 cents before; today it is $3.05 for self-service - 1,870 % inflation;
A house in 1959 cost $14,100; today's median price is $213,000 - 1,400% inflation;
A dental crown used to cost $40; today it's $1,100 - 2,750% inflation;
An ice cream cone in 1950 cost 5 cents; today its $2.50 - 4,900% inflation;
Monthly government Medicare insurance premiums paid by seniors was $5.30 in 1970; its now $93.50 - 1,664% inflation; (and up 70% past 5 years)

However one ounce of gold continues to purchase the same regardless of inflation since it is not the cost if living that has risen but the value of the dollar than has dropped.

In this way it can be seen that it pays to retain at least some assets in gold, regardless of any day to day or week to week fluctuations. In fact when the price of gold drops slightly, that is a good time to increase ones holdings in gold by taking advantage of a temporary lower price.

So, even with the gold price dropping, to buy gold can still be seen as an astute and successful action!