Rand Review
Yesterday, my longest standing friend, from school days and investor in precious metals, Kurt Mälzer, asked me, Will the rand continue to strengthen? This was my reply. I don’t pretend to know what the rand can and will do. What I do know is that according to Dawie Roodt, the Efficient Group’s economist, who is on the RSG radio every weekday morning, (06h55) says the rand is 50% undervalued. He likes to use the Big Mac’s (hamburger) price as a way of comparing purchasing parity. A big Mac burger is very cheap in rand terms. He is optimistic about the rand. By the same token he will be quick to acknowledge there are many other structual factors in SA that keep it weak, such as Eskom’s lack of sufficient power provision. In addition, our incompetence in shipping (rail and shipment) of our commodities to the world. My best bench mark is against the Aussie dollar. We are both commodity based countries. The rand is strengthening against it of late. This tells me that other currencies may be experiencing weakness, but the rand is strengthening. The rand was almost R13 to AUSD now it is R 11,69. This is roughly 10% strengthening of the rand. Please see the one year chart. I do know we go through seasons when our exports exceed our imports, then the rand strengthens. We saw this when we had the commodity boom of late. Peter George, my dear economist friend, who is now decreased for 10 years, was a rand bull based on the rising price of gold. He said, “There is a high correlation between the rising price of gold and the rand’s value.” He has been corrrect many times in the past. I think he will be right again. As we begin to see a surge in the gold price, we can expect to see continued rand strength. I think we are getting closer there. Gold remains the world’s best currency. Therefore the purchase of Krugerrand’s is my best way of acquiring protection against ALL fiat currencies that are being debased and rapidly losing their value. Is a strong rand good for gold? No. But I am looking for a much higher gold price going forward. Not because gold is so good and rising in price, but rather because the fiat currencies are so weak. May you know much wisdom and understanding in determining your best way forward. Courtesy of David Melvill on 31 July
Oklahoma Woman’s Bag of “Junk Silver” Coins Worth More Than 17 Times Face Value
A bag of “junk silver” given to a woman by her father more than 50 years ago is now worth at least five figures. The Oklahoma woman received a bag of 2,000 silver half-dollar coins as a gift back in 1970. While the face value of the coins is just $1,000, the silver alone is worth over $17,800. And because the coins are still in the original mint-sealed bag, they could fetch up to over $100,000 at an auction. Rick Tomaska, co-founder of Rare Collectibles TV, said, “This is undoubtedly one of the last if not the very last known surviving, mint-sealed bag of 1963 Denver Mint Franklin half-dollars. The woman told me she kept it all these years because she loves silver.” This reveals the difference between real money and fiat currency issued by the US government today. The half-dollar coins in the bag were minted in Denver in 1963 when American coins were still made primarily out of silver. That changed when President Lyndon B. Johnson signed the Coinage Act of 1965, setting into motion five decades of currency debasement that continues today. Under the law, silver dimes and quarters, and half-dollars no longer contain silver. Instead, the Treasury mints coins made of “composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper.” Today, we call pre-1965 dimes and quarters “junk silver,” but we really should call modern coins junk. Johnson promised removing silver would have no impact on the value of US coinage. “[The] Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin,” he said. The reality turned out a lot different, as Seth Lipsky explained in a Wall Street Journal column. When LBJ signed the 1965 act, the value of a dollar was almost exactly the same as it had been in 1792—0.77 ounces of silver. Despite some downs and ups, on average it had been remarkably steady for the long span… “The value of the dollar started sinking after the 1965 coinage act, and by 1980 the dollar—so long valued at 0.77 ounces of silver—plunged to 0.02 ounces of silver. Today it is valued at 0.06 ounces of silver.” Johnson also claimed silver coins would “very definitely” not disappear or “even become rarities.” Wrong again. As the value of the silver in pre-1965 quarters and dimes increased, demand for the coins skyrocketed right along with it. People began holding on to them. Today, finding an old silver dime or quarter in circulation is a rare treat. In fact, they have become so rare in the “wild,” investors now buy bags of “junk silver” as a way to preserve wealth in the face of continuing debasement. Financial analyst Robert Prechter summed up the impact of the Coinage Act of 1965 beautifully. The year 1965, then, marked the official end of money usage in America. That’s when the Fed’s notes and the Treasury’s tokens became the official currency, unredeemable in anything. The dollar became merely an accounting unit. The government was now fully free to extract value from its citizens’ savings accounts through the process of issuing debt and having the Fed turn it into checking accounts.” “The change in 1965 shifted the basis of the nation’s accounting unit from money to the policies of politicians and central bankers. It set the government and the Fed completely free to create and spend new accounting units at their pleasure.” The government and the Fed have done just that, and that’s why a $1,000 bag of coins is now worth more than 17 times face value. The elderly Oklahoma woman will benefit from holding on to real money. The rest of us are paying the price for failing to do so. Article courtesy of SchiffGold
Millennials Lead the Charge in Gold Investments
In a surprising shift in investment trends, millennials are outpacing both baby boomers and Gen X-ers when it comes to investing in gold. A recent report from State Street, as cited by Business Insider, reveals some intriguing trends from a survey conducted by SPDR ETFs: Given that millennials have witnessed several major economic crises and experienced the ups and downs of several market manias, it’s understandable that this generation would lean towards investments that offer security and wealth preservation. Interestingly, 69% of millennials thought gold ETFs were the best way to invest, compared to Boomers at 55% and Gen X at 35%. However, if millennials are truly seeking the protective benefits of gold, they might be better served by owning physical gold bullion. Physical gold bullion is a tangible asset that’s been accepted as money around the world for thousands of years. Gold ETFs, also known as “paper gold”, offer exposure to the price movements of the metal, but don’t offer the advantages of owning the actual asset. In times of economic instability or a crisis, own what’s real: gold or silver bullion held in your name and available when you need it. Article courtesy of GoldSilver
Americans Rank Gold as Second-Best Long-Term Investment
Americans consider gold the second-best long-term investment option, according to a recent Gallup poll. Gold beat out stocks, bonds and savings accounts. The perception that gold is the best investment over the long term rose from 15% in 2022 to 26% in the 2023 poll, overtaking stocks at the number two spot. Real estate has held the top spot since 2013 with 35% of Americans rating it the best long-term investment in the most recent poll. That was down sharply from last year’s record high of 45%. Stocks held third place with 18%, followed by savings accounts/CDs (13%) and bonds (7%). When cryptocurrency was included in the options, it got 4% of the votes. That was down from 8% in 2022. World Gold Council senior markets analyst Louise Street noted that while higher interest rates seem to have dampened investors’ perception of real estate as the best long-term investment, it hasn’t damaged the perception of gold. On the contrary, the number of Americans naming gold as the best long-term investment almost doubled this year from last. This, despite interest rates climbing to a 16-year high in March.” The Gallup poll dovetails with gold demand data. Demand hit an 11-year high in 2022, driven primarily by central bank gold buying and physical gold investment. Gold bar and gold coin demand grew by 2% globally in 2022, building on strong demand in 2021. In total, global investors bought 1, 217 tons of gold bars and coins. The second half of the year was particularly strong for bar and coin buying, charting two successive quarters of demand of around 340 tons for the first time since 2013. Investors in the West had a particularly strong appetite for gold and broke an annual record. Combined US and European purchases of gold bars and coins hit 427 tons. That exceeded the previous record of 416 tons set in 2011. While institutional investors have sold gold on hot inflation news, thinking that means more rate hiking by the Federal Reserve, Street speculated that inflation pressure on US consumers may be driving demand as people seek an inflation hedge. According to the Gallup poll, conviction in savings accounts/cash deposits as a good long-term investment increased only slightly this year, even with cash deposit rates reaching 5%. But these rates are still quite poor in real terms and anyone expecting persistent inflation may be tempted more by the long-term investment proposition of gold than that of savings accounts. Our research shows that gold’s potential to ‘protect against inflation/currency fluctuations’ is well recognized among gold investors.” World Gold Council research shows Americans recognize gold’s “long-term value proposition and save haven attributes.” According to the WGC, around two-thirds of investors agree that “gold is a good safeguard against periods of political and economic uncertainty” and that “the price of gold increases over time.” Article courtesy of SchiffGold
