Gold & Silver Digest: 1/21/13

Adam Taggart
By Adam Taggart on Mon, Jan 21, 2013 - 6:54pm

The Gold & Silver Digest contains headlines of stories that members of this group deem relevant and/or interesting to precious metals enthusiasts.

If you have articles to submit for the next digest, please email them to me by clicking here.

1/21/13 5:32 PM EST US close metals price quotes from Finviz

Bloomberg: Pacific Group to Convert 1/3 of Hedge-Fund Assets to Gold

The Pacific Group Ltd., founded by a former PaineWebber Inc. trader, is converting one-third of its hedge-fund assets into physical gold, betting that prices will go up as governments print more money to pay off debt.

The Hong Kong-based asset manager plans to take delivery of $35 million worth of gold bars that can be traded on the London Bullion Market Association and other international markets, William Kaye, its founder and chief investment officer, said in a telephone interview on Jan. 18. It has secured vault space at Hong Kong International Airport to store the gold, he said.

Fox Business: Citi Cuts 2013 Gold Forecast; Upgrades Platinum, Palladium Outlook

Citi Monday cut its outlook on gold prices for the year ahead, but raised its view on the price prospects of the platinum group metals.

The bank cut its 2013 average gold price forecast by 4% to $1,675 a troy ounce. It raised its 2013 platinum price forecast, meanwhile, by 1.5% to $1,700/oz and its palladium outlook by 4.2% to $775/oz.

Citi expects demand for platinum to outstrip supply by 94,000 ounces in 2013, with the market returning to balance between 2014 and 2017.

Reuters: India raises gold import tax, unlikely to deter buyers

Jan 21 (Reuters) - India has raised the import tax on gold by 2 percentage points to 6 percent to curb purchases and rein in a ballooning fiscal deficit but industry officials expect only a moderate drop in demand.

India's passion for gold, seen by many as a hedge against persistently high inflation, has led to a rise in its current account deficit, which reached an all-time high of 5.4 percent of gross domestic product in the July-September quarter.

Bloomberg: Goldman Forecasts Gold Rally Amid Debt-Ceiling Confrontation

Gold may climb over the next three months as U.S. lawmakers attempt to tackle the country’s debt ceiling and the world’s largest economy slows, Goldman Sachs Group Inc. said, advising investors to place bets on advances.

“We see current prices as a good entry point to re- establish fresh longs,” analysts Damien Courvalin and Alec Phillips wrote in a Jan. 18 report. The bank reiterated a three- month target of $1,825 an ounce, as well as a forecast for prices to weaken in the second half as the U.S. economy rebounds.

Gold fell 5.5 percent last quarter, the worst performance since 2008, on expectations for a recovery and potential end to central bank stimulus in the U.S. An advance to $1,825 would be consistent with rallies into debt-ceiling decisions, the analysts wrote. Since 1960, Congress has raised or revised the debt limit 79 times, according to the Treasury Department.

Money Morning: Gold Prices: Have We Reached "Peak Gold"?

Expectations for gold prices just grew brighter due to a recent outlook on production numbers.

Gold producer Iamgold Corp. (NYSE: IMG), which has mines in Canada and Mali, forecasts gold prices will soar to a record $2,500 an ounce as global output peaks and ore grades decline.

Grade is the relationship between quality, tons, geometry and depth that indicates if a gold find can be extracted at a cost that makes doing so profitable. High grade is key in a gold deposit.

Gold Seek: Impact of Germany’s Gold Repatriation

Germany has announced that it plans to take home all 374 tonnes of its gold stored at the Banque de France, and 300 out of 1,500 tonnes held at the Federal Reserve Bank of New York (http://www.ft.com/intl/cms/s/0/97970542-5fd2-11e2-b128-00144feab49a.html#axzz2I9UZ7iGA).

Silver Bear Cafe: Why QE Will Accelerate…And Gold Will Follow

Some investors are disappointed as gold only went up 7% in USD in 2012. After having compounded at over 19% p.a. over 11 years, gold certainly should be allowed to just gain 7% without some people calling an end to the bull market. Those who believe the bull market is over are mainly the investors who have missed gold going up almost 7 times in since 1999.

Let me be very clear, the real move in gold hasn't started yet, it is still to come.

Silver Seek: Last time the US Mint ran out of American eagles the silver price jumped from $34 to $49 an ounce

History does not necessarily repeat itself but when the US Mint last ran out of silver American eagle coins within a couple of weeks the price of silver sprinted from $34 to $49 in a mini-spike that quickly proved unsustainable.

It never quite broke through the all-time high of $50 and change that silver hit in 1980 when our old friend Gerhard Schubert, now head of precious metals at Emirates NBD made that trade. Thirty-two years later we are all a lot older but the silver price has never been that high since then. Last week the US Mint again ran out of silver eagles.

Silver Seek: Buying Silver as Kyle Bass Makes the Case for Hedge Funds

Up to this point, no major or big money has entered the silver market or stood for delivery in a significant way outside of outspoken Toronto-based silver ETF manager Eric Sprott.

Yet it is rather hard to imagine why they would not be joining Sprott, with QE's stretching to infinity, Fiscal Cliffs, Debt Ceilings, European Financial Crises, and now Germany no longer trusting its precious metal "custodians" as it repatriates its gold.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

24 Comments

KennethPollinger's picture
KennethPollinger
Status: Silver Member (Offline)
Joined: Sep 22 2010
Posts: 173
Thanks for this NEW category

I'm thrilled that the EEE community now has a great way to keep up to date

on relevant info concerning PMs. Many thanks to Peak Propsperity

rag54's picture
rag54
Status: Member (Offline)
Joined: May 1 2012
Posts: 4
Self Directed Roth IRA LLC

Anyone have a comment regarding this method of holding Precious Metals? Have any of you tried this? What are the draw backs?

Thanks

Auntie_Lo's picture
Auntie_Lo
Status: Member (Offline)
Joined: Jan 12 2013
Posts: 3
IRAs

For me the problem was I couldn't figure out how to keep any metals in an IRA that was physically close to me. If you find something, let me know!

LesPhelps's picture
LesPhelps
Status: Gold Member (Offline)
Joined: Apr 30 2009
Posts: 255
IRAs

Set up a self directed IRA (checkbook IRA).  Basically, it's a LLC within an IRA.  You have a LLC checking acount that, once funded, you can use to buy precious metals and other assets and store them locally.  You can keep metals in a safety deposit box.

Several business can help you with this.  One that is mentioned frequently is irafinancialgroup.com.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
LesPhelps wrote: You can keep

LesPhelps wrote:

You can keep metals in a safety deposit box.

How do you insure the contents of the safety deposit box against theft?  Unless you are able to have the contents insured, this is not good advice.

KathyP's picture
KathyP
Status: Bronze Member (Offline)
Joined: Jun 19 2008
Posts: 81
Homeowner's Insurance

ao,

you add the metals to your homeowners' insurance policy under Scheduled Personal Property Declarations.

rag54's picture
rag54
Status: Member (Offline)
Joined: May 1 2012
Posts: 4
California IRA LLC Issue

California, broke and desperate for funds, has an annual charge (tax?) of $800.00 for any LLCs doing business in California… welcome to the Golden State!

janb's picture
janb
Status: Bronze Member (Offline)
Joined: Mar 11 2008
Posts: 55
Safety deposit box

Can you describe a scenario where a bank safety deposit box is compromised due to theft?  To open one, the key of the renter is inserted along with the key of the bank representative. . Someone would have to disable the bank alarm system, break thru several locked vault doors and then drill into the individual boxes or else blow up the bank.  That seems a whole lot less likely than a flood or tornado or fire.  Just wondering what you are familiar with or imagining.  Many thanks.  Regards,   Jan 

kenkelley89's picture
kenkelley89
Status: Member (Offline)
Joined: May 3 2011
Posts: 16
safety deposit box

bank goes under...deposits are insured by FDIC, safety deposit boxes are not.  

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
let me count the ways

janb wrote:

Can you describe a scenario where a bank safety deposit box is compromised due to theft?  To open one, the key of the renter is inserted along with the key of the bank representative. . Someone would have to disable the bank alarm system, break thru several locked vault doors and then drill into the individual boxes or else blow up the bank.  That seems a whole lot less likely than a flood or tornado or fire.  Just wondering what you are familiar with or imagining.  Many thanks.  Regards,   Jan 

No imagination here.  Just the facts.

Thief cuts in through roof.  Drills out boxes.  Worked all weekend on it.  Had quite a haul.  Check the archives.  I wrote about these things years ago but don't have the link offhand.  If you do a little Google searching, I'm sure you can find what I found.

But the best one was in the UK.  Police raid safe deposit boxes in large bank to investigate suspected illegal guns, drugs, cash, etc.  Police video each box as they drill it out, for the alleged security of the person who owns the contents of the box.  But, oops, during opening one box in which there was a large stash of legal cash and jewelry, the video "malfunctioned" (dontcha just hate it when that happens) and poof, cash and jewelry are gone.  Police didn't see anything.  Owner is outa luck.

Here's another.  Under the Patriot Act, your government has the right to confiscate the contents of your safe deposit box in the interests of ... dum, dum, dum ... "National Security". 

Also, in the event of a banking holiday, you will lose access to your safe deposit box.

Those enough reasons not to put your money in a safe deposit box?

If you want imagination, how about a riot?  In big nasty riots, the police stay away until it calms down.

Or a bank employee who makes a copy of your key.  Remember when they gave your key to you.  That means they had possession of it at one time.  That means it's pretty easy to make an impression of one and use some metal and a file and viola, without even going to a locksmith, they have a key.  Or they go to a crooked locksmith and offer to split the loot.  I can come up with a whole lot more scenarios but it's time to get my beauty rest.

Bottom line.  Don't leave a large stash of cash, PMs, jewelry, or any other valuables in a safe deposit box.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
KathyP wrote: ao, you add the

KathyP wrote:

ao,

you add the metals to your homeowners' insurance policy under Scheduled Personal Property Declarations.

And how much do you think they'll cover Kathy?  If your homeowners' insurance covers more than 50K and has the top Weiss rating (or equivalent), please let me know.  I'll change insurances.  And very often things such as PMs are excluded or you'll pay for an extra rider, even for a less amount of PMs.  Also, insurances often have clauses about acts of war or riots.  A National Security emergency could be declared which would fall into the act of war category and your insurance could be null and void.  Ditto with a riot.  I would check it out very careful and get explicit written verification from your insurance company.   

LesPhelps's picture
LesPhelps
Status: Gold Member (Offline)
Joined: Apr 30 2009
Posts: 255
Storing assets

Every way to invest in PMs has it's associated risks.  Diversifying the ways you invest in PMs and hold them seems the best approach to me.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
LesPhelps wrote: Every way to

LesPhelps wrote:

Every way to invest in PMs has it's associated risks.  Diversifying the ways you invest in PMs and hold them seems the best approach to me.

I generally don't think of PMs as an investment but rather as a wealth preservation method.  There's a difference.  Also, some ways of holding PMs are distinctly more risky than others.  Diversification has its risks too, especially if it's macro rather than micro.  Proper selection is most important.  For example, if one were well diversified in asset classes in the past decade (equities, bonds, cash, commodities, currencies), one would have much poorer performance than diversifying within more optimally performing asset classes.  Ditto with where to put your PMs.   

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
LesPhelps wrote: Every way to

LesPhelps wrote:

Every way to invest in PMs has it's associated risks.  Diversifying the ways you invest in PMs and hold them seems the best approach to me.

I generally don't think of PMs as an investment but rather as a wealth preservation method.  There's a difference.  Also, some ways of holding PMs are distinctly more risky than others.  Diversification has its risks too, especially if it's macro rather than micro.  Proper selection is most important.  For example, if one were well diversified in asset classes in the past decade (equities, bonds, cash, commodities, currencies), one would have much poorer performance than diversifying within more optimally performing asset classes.  Ditto with where to put your PMs.   

LesPhelps's picture
LesPhelps
Status: Gold Member (Offline)
Joined: Apr 30 2009
Posts: 255
Devil's Advocate

Gee thanks ao.  That topic did come up once or twice in both my BBA in Accounting and my MBA in Finance.  Granted speculation would be a more appropriate choice of words.  I wouldnt't be speculating if the investment environment risk/return ratio was acceptable.

Once again you nit pick and diverge from the main topic by emphasising a suboptimal word choice that is not related to the primary question.

Good job.

KathyP's picture
KathyP
Status: Bronze Member (Offline)
Joined: Jun 19 2008
Posts: 81
Good Question

ao,

Good question.  I don't have a clue.  Personally, I don't insure more than 20K because the premiums are so high.  And, mine is insured with an extra rider. And, it's only insured for the purchase value, which is less than today's book value.   With an IRA, I'd expect most people to have considerably more to insure.  The premiums would begin to eat up any increase in value of the PM. 

I'm not convinced that any one storage option is safer than the others.  They all seem to have drawbacks.  My strategy is to use a number of options so if one fails, I have some fallbacks. 

I do thank you for your question.

LesPhelps's picture
LesPhelps
Status: Gold Member (Offline)
Joined: Apr 30 2009
Posts: 255
Insurance

There are 4 risks that I can think of regarding keeping PMs in a safety deposit box within an IRA.  I consider bank robbery the least probable risk by a very large margin.  

Adding PMs to your insurance policy inreases the number of people who know about your assets.  Plus, someone might get the idea you are keeping them at home.  It's something to consider.

jcat3022's picture
jcat3022
Status: Bronze Member (Offline)
Joined: May 9 2012
Posts: 75
Hi all, thought I'd add my

Hi all,

thought I'd add my $0.02 because my wife and I rolled over old 401k's from previous employers to a Self-Directed IRA thru IRA Financial Group (they are very good and helpful, FYI).  The cost totaled $1695.

RE: storage, I'm not 100% sure if your metals bought from a retirement account can be placed in a bank safety deposit box?  A place I came across on the internet and where APMEX recommended we store is DDSC - http://www.delawaredepository.com/ . For Non-Segregated storage per year (your metals locked up with other people's in a secured storage unit) the cost is .005% of the price of the metals.  So a $40k investment w/ today's spot would be around $200 a year.

modrare's picture
modrare
Status: Member (Offline)
Joined: Jan 17 2013
Posts: 1
Homeowner's Insurance

Hi Kathy,

You should check with your insurance agent/carrier. My policy, for instance will only cover up to $500 in PMs. My agent checked with the Underwriter and there were no riders or addendums that would increase this coverage. PM's are specifically limited to this amount under the Personal Property Declarations of my policy. My agent was somewhat shocked to find this out. 

I am now looking for other alternatives and will try to revisit this issue with you when I find them.

Best of luck,

Randy 

KathyP's picture
KathyP
Status: Bronze Member (Offline)
Joined: Jun 19 2008
Posts: 81
Homeowner's Insurance

Randy,

Thanks so much.  I think I'm covered.  The insurance agent required the invoices for the gold coins I was insuring.  They definitely know how much they're covering.  Also, the insurance amount is specificallly listed on the Scheduled Personal Property Declarations page.

I hope you're successful in finding another alternative.  I recall back in the 80's trying to insure a sailboat (not under homeowner's but under a boat insurance policy), being told that my boat was too expensive for the company to insure. So, I found another company that gladly issued a policy.  Even though it's time consuming, it pays to shop around. 

You've piqued my curiosity, though.  I have some friends with an "important" art collection that they consider their nest egg.  I wonder what company provides the insurance.

Thanks again for the cautionary note.

Kathy

shawns333's picture
shawns333
Status: Bronze Member (Offline)
Joined: Dec 30 2011
Posts: 41
Specialty Insurance

Insurance companies may not cover your PM assets or may offer additional supplementary insurance with a rider, but it will cost quite a bit.

One path to consider is to join the American Numismatic Association (ANA) and then gain access to a specialty insurer (Hugh Wood) that provides insurance for your collection and/or bullion.

Their rates will likely be significantly better than a "standard" insurance company, since this is what they specialize in and offer ANA members good service.  Joining the ANA is cheap to gain this access and also is interesting, in of itself.  Something to consider.

You will be paying a small fraction of your total PM investment in insurance premiums every year, but that piece of mind (and real protection) may be worth it to you.  Otherwise, you are going "without a net" as you employ various elements of security & stealth in protecting your assets.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
LesPhelps wrote: Gee thanks

LesPhelps wrote:

Gee thanks ao.  That topic did come up once or twice in both my BBA in Accounting and my MBA in Finance.  Granted speculation would be a more appropriate choice of words.  I wouldnt't be speculating if the investment environment risk/return ratio was acceptable.

Once again you nit pick and diverge from the main topic by emphasising a suboptimal word choice that is not related to the primary question.

Good job.

Glad you appreciate the clarification.  Always willing to hope one in need.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
shawns333 wrote: Insurance

shawns333 wrote:

Insurance companies may not cover your PM assets or may offer additional supplementary insurance with a rider, but it will cost quite a bit.

One path to consider is to join the American Numismatic Association (ANA) and then gain access to a specialty insurer (Hugh Wood) that provides insurance for your collection and/or bullion.

Their rates will likely be significantly better than a "standard" insurance company, since this is what they specialize in and offer ANA members good service.  Joining the ANA is cheap to gain this access and also is interesting, in of itself.  Something to consider.

You will be paying a small fraction of your total PM investment in insurance premiums every year, but that piece of mind (and real protection) may be worth it to you.  Otherwise, you are going "without a net" as you employ various elements of security & stealth in protecting your assets.

Good recommendation.  I'll check it out.

KathyP's picture
KathyP
Status: Bronze Member (Offline)
Joined: Jun 19 2008
Posts: 81
Specialty Insurance

shawns33,

Thanks for the tip. I'll follow up even though I currently have a rider that covers my PM.  It could save me a considerable amount of $ in premiums.

Kathy

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