We keep getting told by the likes of Alex Jones and “friend-of-the-site” Max Keiser (even if he doesn’t know it!) to go out and buy gold and silver. But if you want to buy gold how do you do it? Well depending on how rich you are there are a couple of ways. If you have a lot more money than me then you can deal directly with bullion banks. But for the small guy if we want to protect ourselves from the coming collapse of fiat currency then we must either invest in gold through gold ETFs (Exchange Traded Funds), such as GOLD on the ASX, or we buy small amounts of physical gold from the mint. In Australia the Perth Mint is the place to go. The price of neither of these is reflected by the “Gold Price” we see each day. Silver is much the same.
ETFs – these are NOT GOLD. They are a derivative of gold and are actually just bits of paper saying they are gold. In effect when Nixon in the 70s stated that the US would no longer redeem paper money in gold the banks simply rubbed their hands together and remonetised gold with their own bank bills or Gold ETFs. That is a story for another time. ETFs therefore are simply promissory notes written by banks which suggest that you have just bought gold. The fund behind the ETF provides a covenant that they have the gold if you want to go get it. The trick for them, as the history of money tells us, is that at any one time not everyone will want to access their gold so they can actually sell more bits of paper saying it represents gold than the actual gold stock they own and store. You have NOT bought gold. You have bought a claim on the balance sheet of the fund from which you bought the paper. Paper gold is usually priced at a slight premium to the spot price of gold to pay for the management of the fund and the cost of storing the gold that is most likely not there. With the price of gold increasing and more and more individuals and governments buying the physical stock we may well see a point in which the funds cannot actually buy gold in the market to fill the paper promises they have made. The paper will therefore be seen as risky and will trade below the price of gold ... which is only right as why would I pay the same price for a bit of paper as I would for a nice shiny bit of metal? Please note that I firmly believe that spending all your money on a shiny bit of metal is a staggering manifestation of disinformation ... it is just another financial investment, the value of which is held only by mutual agreement, in which you have to decide which way the price will go so that you can earn more fiat currency to spend on the goods you want to buy in the future. But the yellow metal in of itself holds only a small intrinsic value for its uses in electronics and other new technologies.
Physical Gold, better known as Gold – now we are talking, if you want gold for some reason then physical is the only way to go. Why not paper? Paper is NOT gold. As already stated it is a derivative and in part a bet on the credit worthiness of the Fund selling the ETF. But purchasing physical gold has its issues too. Where would you go to buy gold? Don’t say a jewellers!! Well, you might have to try the Perth Mint. Now try buying gold at the spot price ... can’t do it can you? Unless you have $68,741 (at current price) you will end up paying up to $1,615, or $246 too much, per ounce for your gold.
In fact even if you have a handy 68k to convert into 50 ounces of gold you will still pay the spread of $5 (current) per ounce or $250, you’ll pay that or more again when you sell it, not to mention the cost of delivery, or storage, and if you are taking personal delivery (which is the only way you can be sure it is there) then don’t tell a single person and ensure that you take out insurance ... more expense ...... so the price of gold, the POG, is not the price of gold ... DISINFO ... still, it’s fun to watch as the higher it goes the more fucked the paper gold issuers are and the more the price manipulators will suffer ...
BTW, don't even think about buying coins! Al least not if you want to make money. At the moment the Perth Mint offers 1 oz Silver Coins for $40 ... which is 33% higher than the price of silver ... earlier this year they were selling for $90 or more than 300% the $28 per oz price of Silver at the time ... don't fool yourself that you can sell at a premium price ... so the price of a coin went from $90 to $40 in the period the "price of silver" went from $28 to $30 ... seem a little strange to you? I hope so ... but this is another chapter ...
[WhiteyRound Eye says: Well actually some of us ARE advocating you go out and buy SILVER coins at least. As our "friend of the site" Max Keiser has suggested with his Crash JP Morgan Buy Silver campaign. However as Max himself points out do not buy these coins thinking that you are indeed making some kind of financial investment. Buying these coins is a Revolutionary act part of La Grande Intifada and once you have bought these coins you must sit on them and not try to onsell them AT ALL. That is the point to the campaign to drastically increase the supply shortage in order to damage the mega banks balance sheets hopefully terminally. How much money (or resources) of your own you choose to throw away on this endeavour really comes down to how much pent up rage you currently have against this whole Globalised Slave Planet paradigm that these evil bastards have pushed on us for the past 20 years. So DO buy silver coins!!! DONT sell them for profit (although as Ferretous points out you CANT anyway). Do bring Globalisation (in its current predatory Imperial format) to its freaking knees and once and for all wipe this beast out!!]
[Ferretous says: this post was not on the merits or otherwise of the Crash JP Morgan campaign which is emeritus in its own right ... just highlighting that while you may value the collapse of JP Morgan and may wish to buy silver for that purpose, that to invest in silver coins for the purposes of making a quick buck is misguided due to the premium. In fact one could argue that the reason that the premium was so high at the start of the year was due to the Keiser campaign ... shame it DIDN'T move the spot price as much as it moved the Premium to over 300% the spot price ... this is a dastardly little mechanism in the market ... as much as I want the campaign to work I am not convinced it will do much more than to drive the premiums ... I would love Keiser to explain exactly how we can drive the underlying spot price and how to avoid these premiums and spreads ...]
[SockRatEz says: so really what we need to do is to buy JP Morgan paper and then demand delivery ... right? No more wasting our efforts and money buying coins, trinkets or junk silver ... straight to JP Morgan paper and then demand delivery ... let THEM pay the premium. That's how we'll get them ...]
[Greg the Bunny says: okay so how do we do that?]
[SockRatEz says: dunno ... yet!]
[3/3/11 Ferretous says: checking back with the Perth Mint today the price of a 1 oz silver coin is an astronomical $105 ... basically a prohibitive price given the so called price of silver is about $34/oz ... The US Mint has come out and said that they will not be circulating any more of one of their 1 oz silver coins due to a shortage of the metal ... Canadian Mint is much the same ... but the spot price stays down near $30 ... strange? No ... MANIPULATED]
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