Month: October 2015

How To Start Your Own Gold Dealer Website

GoldSilverBitcoin – Entering into the gold business and starting your own gold dealing site is easier than ever. As goldbugs and silverbugs might notice, there is quite a bit of turnover in the online bullion retail scene. Moreover, the general websites that are highlighted are not the only ones. There are many, many online gold dealers who have carved out their own niche. The industry itself has gone through a lot of flux lately. We highlight in this article how you – Yes, YOU – can enter into the gold selling space. While we can’t go into certain technical details, this guide will make you aware of the tools you need. Here’s how.

There are numerous products precious metals oriented online retailers focus on, such as bullion gold, silver, platinum and palladium coins and bars, semi-numismatic gold and silver coins such as Morgan Dollars and Saint Gaudens (Pre-1993 gold coins), tube holders and survival gear. One thing many people, in my opinion, do not consider while opening a precious metals shop is jewelry. While precious metal coins oft carry small premiums – save for the Pre-1933 gold coins – jewelry has higher margins.

Read More

Ted Cruz Suggests Gold Standard To Help Working Women

At the third GOP presidential debate Wednesday night, moderator Becky Quick asked Ted Cruz how we could “try and help” working women in the US who “still earn just 77 percent of what men earn.” In a stumbling manner, Cruz ultimately landed on the gold standard to help women.  In a disjointed tirade Cruz began:

“Hillary Clinton and Bernie Sanders and all the Democrats talking about wanting to address the plight of working women, not a one of them mentioned the fact that under Barack Obama, 3.7 million women have entered poverty. Not a one of them mentioned the fact that under Barack Obama and the big government economy, the median wage for women has dropped $733. The truth of the matter is, big government benefits the wealthy, it benefits the lobbyists, it benefits the giant corporations. And the people who are getting hammered are small businesses, it’s single moms, it’s Hispanics.”

Cruz later tied “loose money” to the plight of women. “I think the Fed should get out of the business of trying to juice our economy and simply be focused on sound money and monetary stability, ideally tied to gold,” Cruz said.

Cruz is not the only Presidential candidate to support the gold standard. Rand Paul has called for similar. “We need to think about our currency that once upon a time had a link to a commodity, and I think we should study it,” he once said.

Of course, in the end, it doesn’t seem like Cruz answered the question at hand.

Gold & Silver Domains Command Record High Prices

People have bought domains since the advent of the Internet for business, projects and investment purposes. This trend continues to this day and there are implications for the precious metals space. Consider the recent story of the record sale of gold.co.uk. It comes on the heels of a major purchase of another precious metals domain: silver.com. 




British entrepreneur Rob Halliday-Stein paid a record £600,000 for “gold.co.uk“,  the highest price ever paid for a .co.uk domain name. It took him seven years to acquire it. Halliday-Stein trades gold and silver bars and coins. The previous record for a .co.uk domain name was £560,000 for “cruise.co.uk” in 2008.

“Whilst this is a significant amount to pay I strongly believe the domain will prove to be great value over the long term,” Halliday-Stein said of the purchases. In 2012, JM Bullion acquired Silver.com for $875,000.

“We decided we needed a domain name that would help us become the largest online precious metal retailers in the world and believe we have found that with Silver.com,” said Kendall Saville, an investor in Silver.com. This domain purchase was the largest of 2012.

The British billionaire has been in the gold business since 2008. He merely wanted to purchase a small amount himself. He became disillusioned with the poor customer service in the industry, and entered into the space.

“Given what I knew about online marketing, ecommerce, and customer services, I thought that this [bullion trade in the UK] could be done better. So I contacted someone who ran the UK branch of a big European refinery, who offered to do the gold side of the business while I took care of the marketing and customer services,” Halliday-Stein told Vice.

“My intention was to be the UK’s number one online bullion dealer,” said Halliday-Stein, who foresaw the profitability of selling bullion via e-commerce. For a domain he settled on “gold.co.uk.”

In 2008, the domain name belonged to Jack Gold, who requested £50,000 for it. Halliday-Stein opened a lease on the domain. Vice explains what happened next:

But disaster soon struck. Gold separated from his wife, reneged on Halliday-Stein’s agreement, and sold the website to someone else for a quick cash fix.

Halliday-Stein ultimately purchased “bullionbypost.co.uk” instead.  Today, his business does £100 million a year.

“Someone found me out for the purchase of the domain because we were now the biggest gold dealer. They offered a significantly increased price, but to be honest, I wanted the domain—there was a bit of ego at play,” he said.

“It’s a strong brand and it gives us significant SEO benefits of around £100k a year as well,” told Vice. “The thing about the ‘bullion by post’ brand was that it wasn’t right for higher net-worth individuals. It was always aimed at smaller to medium investors. Now our average order on gold is already about three times what our ‘bullion by post’ order is.”

 

What Will Happen If COMEX Defaults?

A group of eight central banks in the US and Europe, the London Gold Pool controlled the price of gold for six years until the Pool collapsed leading into a more than decade long bull run. Gold reached nearly $1,000 per ounce, silver nearly $50. The central banks had pegged the price too low causing runs on gold, the British pound and US dollar. France boisterously left the pool and repatriated gold reserves, like many nations today are wont to do. In March 1968, the London Gold Pool collapsed amidst chaos in the market.

A two-tier system of official exchange and transactions was implemented after the London Gold Pool controls failed in order to suppress the gold price. The gold window closed altogether in 1971 during the Nixon Shock. Gold rose in price to $850. Western nations had to sit out the bull run as eastern markets remained open in the days following the Pool’s collapse.

In 1960, gold buying sent the price to more than $40 per oz. The US Federal Reserve and Bank of England allocated for the sale of BoE gold supplies in order to keep the price down. Banks worked feverishly to maintain the $35/oz gold price despite the free market dictating appreciation. The banks began “targeted selling and buying of gold” in order to achieve the price controls. They ultimately failed.

Poor economic conditions amid Vietnam War protests created instability in the US and thus the London Gold Pool. Inflation became an issue for the US. It would not exchange foreign-held dollars into gold and France left the Pool in June 1967. The nation moved large amounts of gold across the Atlantic from New York to Paris.  In 1967, Britain devalued its currency causing panic and a gold run.

By spring 1968, according to the Federal Reserve, “the international financial system was moving toward a crisis more dangerous than any since 1931.”

The British government devalued the pound on November 18, 1967 by 14.3%. The US adopted measures to slow down the gold run. London sold 100 tons of gold at market price on March 8th, a major increase in a typical sale for the bank. The pool released a statement:  “the London Gold Pool re-affirm their determination to support the pool at a fixed price of $35 per oz”.

On March 14, 1968 the US government and the British government agreed to close the London gold markets the following day. The British government declared March 15 a bank holiday.

The London gold market remained closed for two weeks. Around the world, gold trading continued amid rising prices. Switzerland founded the Zürich Gold Pool, helping to establish Zürich as a gold trading center of the world. The Federal Reserve funds rate had increased from 2% on October 25, 1967 to 5.13% on the day the Pool collapsed. The fed fund rate appreciated to 10.5% during the summer of 1969.

 

The two-tiered system stipulated $35 gold. Gold pool members did not trade gold with regular people. The US government suspended gold sales to governments trading in private market.

Although the gold pool members refused to trade gold with private persons, and the United States pledged to suspend gold sales to governments that traded in the private markets inflation ravaged the US. West Germany abandoned the Bretton Woods System in May 1971. The dollar declined. Switzerland purchased $50 million worth of gold in August. France purchased $191 million in gold. By then, US gold reserves had reached their thinnest levels in nearly fifty years.

President Richard Nixon unilaterally ended dollar convertibility to gold in what’s called “The Nixon Shock.” This effectively ended Bretton Woods. The Federal Reserve wanted the US, BoE, West Germany, France, Switzerland, Italy, Belgium, Luxembourg and the Netherlands to begin selling gold so that gold would not appreciate.

According to Fed chairman William McChesney-Martin, the US would protect the $35 gold price  “down to the last ingot”. The London Gold Pool airlifted emergency shipments of gold from the US to London due to high demand. Demand for gold was overwhelming. The Fed failed.

So what can we expect from a Comex default?

Market manipulation and price controls do not work. Free markets manage supply-and-demand better than central planners. When central planners scheme to control the price of goods, services, etc. it is only a matter of time before their cartel begins to fade. They generally try harder to manipulate the market, but always the free market dictates.

The London Gold Pool collapse and the COMEX default could come amid a similar situation: the world reserve currency is at risk. However no amount of government authority, command-and-control economics (Communism) can drown out the reason of the free market over the long-haul.

The end of the London Gold Pool cost the member banks (and so therefore the countries) billions of dollars. The same would happen with a COMEX default. The gold price appreciated 2300% between 1968 and the 1980 peak. This time around, the silver price would skyrocket in a similar manner.

Goldman Sachs Outlook On Gold No Bueno

Goldman Sachs doesn’t have a bullish outlook for precious metals. The investment banking firm foresees prices dropping to $1,000 in 12 months as the Federal Reserve maintains a quiet quantitative easing program.

Gold has increased 8% since mid-July and currently trades for $1,165 per ounce.

“A marked increase in Chinese official sector physical gold purchases during 3Q15 also likely supported gold prices,” Goldman said in the note. The bank anticipates a 25 basis point rate hike at the December Federal Open Market Committee (FOMC) meeting followed by 100 basis points of rate increases during 2016. Read More

MMA & UFC Fighter Jon Fitch One Of World’s Only Athletes Paid In Cryptocurrency

Former top welterweight contender in the Ultimate Fighting Championship,Mixed martial artist Jon Fitch, is currently training or a headline fight at the World Series of Fighting on Saturday.

Fitch, whose eyes were opened after the 2008 financial crisis, is paid in cryptocurrency.

“I was left under $180,000 on my condo in San Jose,” the fighter told Inverse magazine. “I didn’t want to keep supporting people who kind of make those things happen.”

The fighter is not completely paid through cryptocurrency. Nautiluscoin sponsored the fighter last June when he fought Dennis Hallman.

“I think I was the first mixed martial arts fighter who got paid strictly in bitcoin,” Fitch told Inverse.   Fitch went on to detail why Bitcoin and MMA go together. MMA is an international sport, the fighter said, and in some places fighters have trouble getting paid.

“You fight in Brazil or somewhere else, and it takes a few weeks before you get your check,” he said. “It’s not always easy for a lot of fighters. They’ve got people to pay, trainers, expenses, and things like that.” The fighter likes keeping a diverse crypto-portfolio.

“I think it’s important not to put all your eggs in one basket,” he explained. “I like BitGold right now because you can hedge your assets a little bit.” He also likes HYPER and would like to see more secure wallets.

“Anything that makes it more usable, and different apps and things that can be decentralized,” he opines.  “Anything that’ll decentralize, I like.”

During his tenure at the UFC, Fitch was a top contender for the Welterweight championship, receiving a title shot against UFC Welterweight champion, Georges St-Pierre, on August 9, 2008. Fitch was on the November 5, 2008 espide of MythBusters, “Coffin Punch.” The MythBuster wanted to know if someone could punch their way out of a coffin.

Fitch also made a cameo in the award-winning mixed martial arts documentary Fight Life sparring with Jake Shields.

Cryptocurrency has also made its way into the Nascar circuit, with a driver being sponsored by Dogecoin and some hypothesizing a Bitcoin company is next.

There Is No Raw Silver Shortage

Discussion about whether or not there is a silver shortage has divided the silver community. More information about the situation has recently come out. The discussion usually revolves around to points of view: that there is no silver shortage, merely a coin shortage as certain Mints run out of blanks to mint coins. The other says there is not enough silver in the world. As David Morgan:

“A pet peeve of mine is when an article is published talking about a shortage in silver or gold. Recently, we have seen an increase in articles claiming that there is a precious metals shortage simply because both the U.S. Mint and Royal Canadian Mint ran out of blanks. Both Government Mints predetermine a rough amount they will mint at the start of the year. When demand surges, a “bottleneck” can occur and this has happened in the past. Why is this such a pet peeve? Because a shortage in a specific silver product does NOT mean a shortage in the raw material. It would be like saying there is a rice shortage if Rice Krispies stopped being produced momentarily.”

Another sources disagree. For instance, according to The Silver Institute the world’s silver supply is in deficit by 57.7 million ounces.  Nonetheless, news sources seem to only confirm a shortage of American Silver Eagles, Canadian Silver Maples, Austrian Philharmonics, Brittanias and Perth Mint silver coins. Others wonder if so many blank shortages at once has happened before. As Reuters reported:

Government mints around the world are struggling to keep up with unprecedented demand for silver coins, spurred by a drop in silver prices to six-year lows.

The mints in Canada, Austria and Australia have told Reuters they are rationing sales of silver bullion coins.

ROYAL CANADIAN MINT:
The mint has been rationing sales of its silver Maple Leaf coins since July after record monthly sales, an official said. Sales have hit records in August and September.

AUSTRIAN MINT:
The Austrian Mint has been rationing sales of its Philharmonic silver coins and has increased production of silver blanks after higher-than-expected demand in July and August, a spokeswoman said.

It expects supplies to return to normal by mid-October.

U.K. ROYAL MINT:
The U.K. Royal Mint has seen a 600-percent increase in sales of its silver 1 ounce Britannia coins so far this year on “unprecedented demand,” said Chris Howard, director of bullion at the Mint.
It is increasing production and has significant pre-orders for 2016-dated coins, he said.

PERTH MINT:
The Perth Mint, owned by the government of Western Australia, has begun rationing supply of a new line of coins this month as it is unable to keep up with robust demand, an official said.

It has sold over 2.5 million ounces of silver so far this month, which is a record and three and a half times more than August.

U.S. MINT:
The U.S. mint has been issuing a weekly sales quota for its flagship American Eagle silver coins since the end of July.

A spokesman said its Westpoint production facility is operating three shifts and paying staff overtime to meet demand.

The mint was forced to stop selling its popular silver coins for three weeks in July after selling out of inventory due to strong demand.

I spoke with traders at major bullion wholesalers recently and they said that things would return to normal in 3-5 weeks in terms of silver delays on the most popular products at the retail level.

Germany Moves Towards Gold Transparency

goldcore_bundesbank_gold_bar_24-06-2014aThe Bundesbank recently published the list of all its gold bars on its website in its inaugural report. This is the first time the country has done so. Germany has been in the limelight in recent years after requesting that the New York Fed return its gold. The bank has seemed to turn away from storing 65% of its gold reserves overseas with central banks in London, paris and New York. The Bild-Zeitung, in 2012, ran an article entitled “Bring Our Gold Back Home.” Bundesbank officials began making moves in 2013.

Wednesday’s move for Bundesbank to report where its gold bars are to the public is a move in the direction of re-establishing gold as a concept in the global economic dialogue.  The nearly 3,400-tonne reserve of the metal is accounted for in the 2,300 page list.

“Half of Germany’s gold reserves will be stored in Germany by 2020 at the latest,” Carl-Ludwig Thiele, a member of the Bundesbank’s board said. The list is due to be updated annually.

“There were a lot of conspiracy theories about the gold not being there,” said Guntram Wolff, a German who heads Brussels think tank Bruegel, pointing to ‘disenchantment’ among ordinary Germans who have seen the value of their savings dwindle.

“Trust in the Bundesbank has suffered,” said Peter Boehringer, author of a book entitled ‘Bring our gold home’. “The Bundesbank must prove that the gold is there.” Bundesbank officials see practical reasons for the move.

“The gold reserves show stability. The German people are happy to know that the Bundesbank is watching over this wealth, which belongs to them,” said a former Bundesbank official.

“It could be helpful, for instance, in covering some of the costs were Germany to leave the single currency.”

US Mint Gold Sales Increase As Silver Delays Persist

Why are US Mint gold sales on the rise? When you look closely at the news in silver market, of potentially two month delays on many products, the picture becomes clearer. Purchase of gold ETFs has increased, and the US Mint sold 7,500 ounces in gold coins and 871,000 ounces in silver coins. Sales splits in gold coins include 6,500 ounces in American Gold Eagles and 1,000 ounces in American Gold Buffalo coins.

Silver has been the attention of investors this year, in particular with long delays in the metal over the past month. Nevertheless, gold sales have remained robust. American Buffalo 1-ounce gold coins sales in 2015 are ahead of 2014 levels. As of September 23, the Mint reported sales for the year to authorized purchasers of 169,000 of the 1-ounce gold coins.  In the first nine months of 2014, the Mint sold 139,500 Gold Buffalo coins.

Not only as the US Mint seen an increase in sales. As Reuters reported in September, gold coins sales have surged in the US and Europe, with sales from the US Mint reaching levels not seen since the 2013 prices crash. In the third quarter 2015, gold American Eagle sales have had the highest quarter since 2013.

“The industry has been on an absolute tear for the last three months,” Scott Spitzer, chief operating officer at Manfra, Tordella & Brookes in New York, told Reuters. “Every time there’s been a break in the price and there’s been volatility, there has been enormous growth in retail interest.”

The UK Royal Mint reported increases in Sovereign and Britannia coin sales in the past three months. Sales are over 50 percent higher than the second quarter.
“We had a fantastic month in July with large coin and bar sales,” Chief Executive Wolfgang Wrzesnioch-Rossbach told Reuters. “August was quieter, but still saw 20-30 percent higher demand compared to last year.”