The Bitcoin is ‘as-good-as-gold’ myth is over
When you invest in gold or buy silver coins you are choosing to invest in an asset that has no counterparty risk. Sadly, those who have been holding their bitcoin on the crypto exchange FTX, have not experienced the same level of reassurance and service from the exchange’s management. This event is all part of a much wider lesson about which assets really are safe havens. Also, how to reduce the level of counterparty risk your investment portfolio is exposed to. This time last year, cryptocurrency enthusiasts were still touting “Crypto as the new gold”– crypto touted as having the same ‘safe’ attributes as gold. The main attribute is that it is a currency that government doesn’t control. Also, it is without counterparty risk. The latest debacle has once more proved this is not always the case for cryptocurrencies. The news that the crypto exchange FTX was filing for bankruptcy on November 5 sent Bitcoin plunging down a further 25%. This is on top of the more than 60% Bitcoin has already declined since its November 2021 peak. This brings the total decline to more than 75%. The extent of the collapse and its fallout is still unfolding as more details are uncovered. The main risk goes back to one we have discussed many times before counterparty risk. What Happens to your Bitcoin as FTX Collapses The FTX collapse has brought to light that the CEO, Sam Bankman-Fried, had authorized billions of dollars’ worth of customer assets to be lent to its affiliated trading firm Alameda Research to fund risky bets. According to news reports Alameda Research owes FTX upwards of US$10 billion. This is more than half of its US$16 billion in customer assets! The bankruptcy case is likely to take years to unravel. There could be more than one million creditors, and more than 100 other related corporate entities involved. Everyone who thought they owned Bitcoin held by FTX became an unsecured bankruptcy creditor. These are the ones who must now rely upon some Court to confirm just how much, or any Bitcoin they will receive. FTX is not the first crypto exchange to collapse – Mt. Gox, which accounted for over 75% of all Bitcoin transactions until it filed for bankruptcy in 2014 after being hacked. Hundreds of thousands of bitcoins were lost (removed from the network). Some of these coins later recovered but withdrawals from the exchange were already stopped. It wasn’t until seven and a half years later, in November 2021, creditors and the court reached an agreement. The FTX web of deceit and ‘poor judgment’ in Mr. Bankman-Fried’s words, goes much deeper and is far more convoluted than the Mt. Gox bankruptcy. Article courtesy from GoldCore
The Oldest Form of Money – Do You Own It?
Centuries before the first gold coins were struck…There was another form of money: pure gold jewellery. Gold jewellery was used as savings, currency, and even as a form of barter. In fact, the tradition is so tied to our idea of money that modern currencies like the Thai Baht are named for the jewellery that preceded it. In that case, one could even break off detachable gold links to pay for goods and services. Even today, in India, jewellery is the primary form of gold within the country. They buy pure gold necklaces and bracelets instead of coins and bars. For every ounce of gold in coin or bar form bought in India, roughly another three ounces are bought in jewellery form – it’s their preferred form of investment gold. Throughout much of history, individual wealth has been denominated in jewellery form. Because in the past, you couldn’t leave your wealth in your home – even if you had a coin or bar — it just wasn’t safe. People lived very close together, in community homes, huts, etc. Storing gold at home wasn’t as secure as it is today. As a result, most people wore their wealth for security reasons. Thus, gold jewellery quickly evolved into one’s “wallet.” People wore jewellery as a way of carrying their wealth. They kept their money draped around their neck or wrist, which amounted to a form of portable wealth. Wearable Wealth: Jewellery with as Much Pure Gold Content as American Eagle Coins This brings us to today… Most jewellery sold in stores doesn’t contain that much actual gold. The jewellery you find in malls, and even high-end places like Cartier or Tiffany’s is typically 14-karat gold or less. That means, almost 50% of the metal composition consists of alloys including brass and steel. But mall jewellery still costs a pretty penny — typically selling for 3x to 4x the amount that its gold content would warrant. Why the huge markup? People are buying the brand as a fashion statement. When it comes to gold, we believe only pure gold is gold. And when you buy it, you should pay reasonable premiums now and then be able to recoup its market value later. That’s why all our real gold jewellery has the same purity as sovereign coins — 22 karat (91.6%), the same as an American Eagle or Krugerrand. Of course, there’s no substitute for owning gold bullion coins and bars. But for those seeking diversification, pure gold jewellery offers portability and discretion, all in wearable form so that you can enjoy it. Most ordinary people have no idea how much gold is in a single piece or what it’s really worth. And while an individual piece’s intrinsic value may be nearly impossible to guess at a glance, there’s no denying the beauty of real gold. Each piece is designed to be worn daily, with many timeless styles to choose from. This makes it easy to give the gift of gold to loved ones this holiday season. Article courtesy of Jeff Clark from GoldSilver
The Wealth of Nations
In studying monetary history to identify cycles, it is necessary to examine both sides of the coin so to speak. The temptation is for people to blame all their woes on their government. Certainly, governments are often at fault when it comes to inflation through fiat monetary policy, but one must never forget that in the end, we are ultimately the ones who consent to our government’s rule. History is full of examples of greed leading a populace to do incredibly stupid things. Indeed, we don’t need the government to ruin our economy. We can get by just fine by ourselves, thank you. John Law and Central Banking Another great example of a society replacing its money with an ever-inflating currency supply is the story of John Law. Johns Law’s life was a true roller-coaster ride of epic proportions. He got into a fight over a woman and his opponent challenged him to a duel. He shot his opponent dead, was arrested, tried, and sentenced to hang. Being the knave that he was Law escaped from prison and fled to France. Meanwhile, Louis XIV was running France deeply into debt due to warmongering and his lavish lifestyle. John Law, who was now living in Paris, became a gambling buddy with the Duke d’ Orleans, and it was at about this time that Law published an economic paper promoting the benefits of paper currency. When Louis XIV died, his successor, Louis XV was only eleven years old. The Duke d’Orleans was placed as regent (Temporary king), and to his horror he found out that France was so deep in debt that taxes didn’t even cover the interest payments on that debt. Law, sensing opportunity, showed up at the royal court with two papers for his friend blaming the problems of France on insufficient currency and expounding the virtues of paper currency. On May 15, 1716, John Law was given a bank (Banque Generale) and the right to issue paper currency, and there began Europe’s foray into paper currency. The slightly increased currency supply brought a new vitality to the economy; John Law was hailed as a financial genius. As a reward, the Duke d’Orleans granted Law the rights to all trade from France’s Louisiana Territory in America. John Law wasted no time capitalizing on the public’s confidence in his company’s prospects and issued 200,000 company shares. Shortly after that share priced exploded, rising by more than 30times in a period of months. Just imagine, in a few short years, Law went from a gambling addict and penniless murderer to one of the most powerful financial figures in Europe. Again, Law was rewarded. Law was now at the helm of France’s central bank. Now that his bank was the royal bank of France it meant that the government backed his new paper notes, just as our government backs the Federal Reverse’s paper notes. And since everything was going so well, the Duke asked John Law to issue even more notes, Law, agreeing that there is no such thing as too much of a good thing, obliged. The government spent foolishly and recklessly while Law was specified with gifts, honours, and titles. Paris was booming due to rampant stock speculation and the increased currency supply. All the shops were full; there was an abundance of new luxury goods, and the streets were bustling. As Charles Mackay puts it in his book Extraordinary Popular Delusions and The Madness of Crowd, “ New houses were built in every direction, and an illusory prosperity shone over the land, and so dazzled the eyes of the whole nation, that none could see the dark cloud on the horizon announcing the storm that was too rapidly approaching”. Soon, however, problems started to crop up. Due to the inflation of the currency supply, prices started to skyrocket. Real estate values and rents, for instance, increased 20-fold. The ‘smart money’ began to exit fast. People started converting their notes to coins and bought anything of transportable value. Jewellery, silverware, gemstones, and coins were bought and sent abroad or hoarded. In order to stop the bleeding, in February of 1720 the banks discontinued note redemption for gold and silver, and it was declared illegal to use gold and silver coins in payment. Buying jewellery, precious stones, or silverware was sold outlawed. Rewards were offered of 50 percent of any gold and silver confiscated from those found in possession of such goods (payable in banknotes of course). The borders were closed and carriages were searched. The prisons filled and heads rolled, literally. Finally, the financial crisis came ahead. On May 27, the banks were closed and Law was dismissed from the ministry. Banknotes were devalued by 50 percent, and on June 10 banks reopened and resumed redemption of the notes for gold at the new value. When the gold ran out, people were paid in silver. When the silver ran out, people were paid in copper. As you can imagine, the frenzy to convert paper back to coin was so intense that near riot conditions ensued. Gold and silver had delivered a knockout blow. By then John Law was now the most reviled man in France. In a matter of months, he went from arguably the most powerful and influential force in society back to the nobody he was before. Law fled to Venice where he resumed his life as a gambler, lamenting, “Last year I was the richest individual who ever lived. Today I have nothing, not even enough to keep alive, “he died broke, in Venice, in 1729. The collapse of the Mississippi Company and Law’s fiat currency system plunged France and most of Europe into a horrible depression, which lasted for decades. But what astounds me most is that this all transpired in just four short years. From the book “Guide to Investing in Gold & Silver” by Michael Maloney
The Battle of the Ages – Part 2
It’s all Greek to Me Winston Churchill once said, “The farther backwards you can look, the farther forward you are likely to see.” So in the spirit of Churchill, we are going to look back…..way back to the time of the Greeks. Gold and Silver have been the predominant currency for 4,500 years, but they became money in Lydia, in about 680 B.C when they were minted into coins of equal weight to make trade easier and smoother. But when coinage first made its appearance in Athens that it truly flourished. Athens was the world’s first democracy. They had the world’s first free-market system and working tax systems. This made possible those amazing architectural public works like the Parthenon. Indeed, for many years, the Athens star shone brightly. If you’ve studied your history, then you are considered one of the great civilizations of all time. You’ll also know that their civilization fell a long time ago. So what happened? Why did such a great and powerful civilization like Athens fall? The answer lies in the same pattern we can see time and time again throughout history: too much greed leads to too much war. Athens flourished under their new monetary system. Then they became involved in a war that turned out to be much longer and far more costly than they anticipated (sound familiar). After twenty-two years of war, their resource waning and most of their money spent, the Athenians came up with a very clever way to continue funding the war. They began to debase their money in an attempt to soldier on. In a stroke of genius, the Athenians discovered that if you take in 1,000 coins in taxes and mix 50 percent copper in with your gold and silver you can then spend 2,000 coins! Does this sound familiar to you? It should . . . it’s called deficit spending, and our government does it every second of every day. This was the first time in history that gold or silver had a price outside itself. Before the Athenian’s bright idea, everything that you could buy was priced in the weight of gold or silver. Now, for the first time, there was an official government currency that was not gold and silver, but rather a mixture of gold or silver and copper. You could buy gold and silver with it, but the currency supply was no longer gold and silver in any of them. Over the next two years, their beautiful money became nothing more than currency, and as a consequence, it became practically worthless. But obviously, once the public woke up to the debasement, anyone who had held on to the old pure gold & silver coins saw their crowned increase dramatically. Rome is Burning Rome supplanted the Greek empire as the dominant power of its day, and during its centuries of dominance, the Romans had ample time to perfect the art of currency debasement. Just as with every empire in history, Rome never learned from the mistakes of past empires, and therefore they were doomed to repeat them. Over 750 years, various leaders inflated the Roman currency supply by debasing the coinage to pay for the war, which would lead to staggering price inflation. Coins were made smaller, or a small portion of the edge of gold coins would be clipped off as tax when entering a government building. These clippings would then be melted down to make more coins. And of course, just as the Greeks did, they too mixed lesser metals such as copper into their gold and silver. And last but not least, they invented the not-so-subtle art of revaluation meaning they simply minted the same but with a higher face value on them. By the time Diocletian ascended to the throne in A.D.284, the Roman coins were nothing more than tin-plated copper or bronze, and inflation (and the Roman populace) was raging. Deficit spending went into overdrive. When he ran short of funds, Diocletian simply minted vast quantities of new copper and bronze coins and began, once again, debasing the gold and silver coins. This resulted in all currency-based trade coming to a virtual standstill, and the economic system reverted to a batter system. As you will see, debasing the currency to pay for public works, social programs, and war is a pattern that repeats throughout history. It is a pattern that always ends badly. From the book “Guide to Investing in Gold & Silver” by Michael Maloney
The Battle of the Ages – Part 1
Currency A lot of people think currency is money. For instance, when someone gives you some cash, you presumably think of it as money. It is not. Cash is simply currency, a medium of change that you can use to purchase something that has value, what we would call an asset. Currency is derived from the word current. A current must keep moving or else it will die (think electricity). A currency does not store value in and of itself. Rather, I am a medium whereby you can transfer value from one asset to another. Money Money, unlike currency, has value within itself. Money is always a currency, in that it can be used to purchase other items that have value, but as we’ve just learned, currency is not always money because it doesn’t have value in itself. If you are having a hard time grasping this, just think about a hundred-dollar bill. Do you think the paper is worth $100? The answer is, of course, no. That paper simply represents the value that is stored somewhere else – or at least it used to be before our money became currency. Fiat Currency A fiat is an arbitrary decree, order, or pronouncement given by a person, group, or body with the absolute authority to enforce it. A currency that derives its value from declaratory fiat or an authoritative order of the government is by definition a fiat currency. All currencies in use today are fiat currencies. Adventures in Currency Creation Fiat currencies don’t usually start out that way, and those rare cases when they have were very short-lived. Societies usually start with high-value commodity money such as gold and silver. Gradually, the government hoodwinks the population into accepting fiat currency by issuing paper demand notes that are redeemable in precious metals. These demand notes (currency) are just “certificates of deposit,” “receipts,” or “claim checks” on the real money that is in the vault. I would venture to say that many Americans think this is how the U.S dollar works today. Once a government has introduced a paper currency, they expand the currency supply through deficit spending, printing even more of the currency to cover that spending, and through credit creation based on fractional reverse banking (something we’ll cover later on). Then usually due to war or some other national emergency, like foreign governments or the local population trying to redeem notes (bank runs), the government will suspend redemption rights because they don’t have enough gold and silver to cover all the paper they printed, and poof! You have fiat currency. From the book “Guide to Investing in Gold & Silver” by Michael Maloney
The Royal Mint honours the Queen one last time
The Royal Mint has decided on the way forward with regard to the final design of the 2023 British Silver Britannia. For a limited time only, the Royal Mint has decided to launch a limited number of Britannia coins with the effigy of Queen Elizabeth II. The minting and production of this version of the 2023 Britannia will be terminated by mid-November. I suspect that production may be less than 2 million coins. This is based on the assumption that there are no breakdowns, interruptions, and a full supply of silver blanks available thought the 6 weeks. In any case, no doubt, these coins will trade at a premium over previous or possibly even later releases. From mid-November onwards, the Royal Mint will swap over to the effigy of King Charles III for the remainder of 2022-2023 production season. In short, there will be a 2023 Britannia with the Queen’s effigy (limited to volumes that can be manufactured in a 6-week period). Article courtesy of Silver-Sphere
On the 50th anniversary of the Krugerrand
In 2017, on the 50th anniversary of the Krugerrand, the South African Mint issued limited edition, collectible versions of the coin in silver and platinum, for the first time. Limited edition gold Krugerrands in 5 ounce, 1/20 ounce, 1/50 ounce and 50 ounce coin were also featured. “At the beginning, the Krugerrand was only issued in the weight value of one ounce. This soon changed following a sharp increase in demand. Today, these investment coins are also available in fine gold weight values of 1/2 ounce, 1/4 ounce and 1/10 ounce, thus we are offering investors a greater variety of investment opportunities. The huge interest in this coin continues to this day. Since it was first introduced 50 years ago, more than 52 million ounces of the Krugerrand have been sold around the world. In 2016, the Krugerrand was the world’s most popular gold bullion coin.” ~ Richard Collocott, Executive Head Marketing at Rand Refinery “50 years ago, no one could ever have envisaged that the Krugerrand would be such a huge worldwide success. To continue this success, we consider it is very important to uphold tradition by retaining the original design and thus its high degree of recognition. However, this does not mean that we turn a blind eye to current developments. These developments include, for example, an increasing relevance of precious metals other than gold in the investment sector.” ~ Tumi Tsehlo, Managing Director of South African Mint.
How to comply with SARS Domestic Reverse Charge requirements on valuable metals – compulsory from 1 August 2022
ALL MOON SUPPLIERS & CUSTOMERS PLEASE URGENTLY NOTE THE FOLLOWING REGARDING DRC VAT RE-VALIDATION PROCEDURES AND CUSTOMER VAT REGISTRATION CERTIFICATES As from the 1 August 2022, the following conditions apply to all VAT registered vendors who supply or buy valuable metal (i.e. anything containing gold) to or from us: If you have registered for DRC you should have received an automated response from SARS with an email acknowledging receipt, along with an automatically generated case number. Please forward this email to us as proof that the re-validation process has been followed. If you did not receive this automated response please submit your application again. The case number is crucial. For example, Moon Investments submitted applications at the beginning of the month for both our second hand and investment divisions, for which no response was received. Once re-submitted, we then did receive the automatic response with the case number. For all our affected customers, please forward us a copy of your VAT registration certificate, along with the copy of the SARS auto reply email and case number. In certain instances suppliers and/or customers would have been automatically identified by SARS as falling within the ambit of the DRC regulations. This “letter of intent for re-validation” will suffice for trading purposes if we have it on file. Please ensure you confirm we have received. We will be unable to trade with VAT vendors in valuable metal (from 1 August 2022) unless we have received the above. If you are in the process of de-registering for VAT please bear in mind that until such time as SARS confirm de-registration, you are still a VAT vendor and subject to DRC regulations. Please ensure all of the above is sent to shani@cpmct.co.za with the following in the subject line: DRC – (your vat number) – (your registered trading name) We have limited time to ensure we are compliant with the new legislation and one of our compliance staff or reps will be in touch with those suppliers and customers who still need to be confirmed. Should you have any questions or queries, please do not hesitate to contact shani@cpmct.co.za or call on 021 551 2066 (ext. 227) / 066 067 9785. Moon Investments have added a section to our website with examples of the documents you’ll need to complete your compliance procedure. Go to https://mooninvest.co.za/s/governance/ and scroll down to the VAT Certification section for these download links. Additional guidance on DRC is available from SARS and we would strongly suggest all affected parties familiarise themselves with the following: Frequently Asked Questions: Domestic Reverse Charge Regulations VAT regulations on Domestic Reverse Charge relating to valuable metal Summary: Domestic Reverse Charge Webinar Final June 2022 Summary: Domestic Reverse Charge Webinar Operational Requirements Thank you!MOON MANAGEMENT
How to place an order of bullion with Moon Investments: purchasing our in-house investment bullion
How to purchase investment bullion manufactured in-house by Moon Investments: The investments that are manufactured in-house by Moon Investments include Silver Bars, Silver medallions, Platinum medallions and Gold Medallions. The steps to take when placing an order are as follows: Contact your Moon Investments Sales Representative and place your order. A member of the Moon Investments Internal Sales team will then send you a quotation for payment. Payment needs to be made before the close of business on the same day the quotation is sent out to you. Our trading hours are: Mondays, Tuesdays, Wednesdays and Thursdays from 08:00 to 16:00, and Fridays from 08:00 – 15:00. We are not open on weekends or public holidays. Proof of Payment must be sent to your Moon Investments Sales Representative or Internal Sales team member before the close of business to secure the quoted price. Your Sales Representative will stay in contact with you and keep you up to date on an estimated time of arrival for your investments. Please note that Platinum Medallion quotations are available on request depending on stock availability.
How to place an order of bullion with Moon Investments: purchasing Rand Refinery investment bullion
Moon sells Rand Refinery Gold Bars, and Gold and Silver Krugerrands. The steps to take when placing an order for these items are as follows. Contact your Moon Investments Sales Representative and place your order. A member of the Moon team will then send you a quotation for payment. For Gold Bars and Gold Krugerrands payment needs to be made before 10:00 the same day as the quotation is sent out. Proof of Payment must be sent to your Moon Investments Sales Representative or Internal Sales team member before 10:00 to secure the price for Gold Bars and Gold Krugerrands. For Silver Krugerrands payment needs to be made before the close of business on the same day the quotation is sent out to you. Monday to Thursday we close at 16:00, and Friday close of business is at 15:00. Your Sales Representative will stay in contact with you and keep you up to date on an ETA for your investments. Please note that once your Rand Refinery Investments are confirmed and paid for we are not able to cancel or credit your investment. When purchasing a Rand Refinery Investment it is ideal to inform your Moon Representative a full day in advance, so that our Internal Sales team can then prioritise your quotation the following morning. Prices are only released at around 09:00 which doesn’t give us much time to quote, pay and confirm your order.