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This blog discusses The Perth Mint's bullion coins and bars, providing information about our latest designs, mintages, sales volumes and sell outs. On a broader front, we share relevant research and opinions for anyone interested in gold and silver bullion investing.

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Coin Investors Among The First To Jump Back Into Gold And Silver

Topics [ gold market gold coins gold investment gold prices ]

IN THE NEWS

Retail buyers are acquiring gold and silver coins in what could be an early sign of a rally in precious-metal prices, the Wall Street Journal reports.

“After a steep decline in the value of gold and silver in the final month of last year, coin investors and collectors have been among the first to jump back into the markets and take advantage of what they see as bargain prices compared with the peaks of 2011”, its report said.

In comments made for the article, Perth Mint sales and marketing director Ron Currie underscored the view that retail buyers were becoming more active, stating that the Mint’s gold coin sales during December and January are up around 80% compared with the same months a year earlier, while silver-coin sales have doubled.

"Numismatics used to be the realm of the retired, but that just isn't the case anymore," Ron told the publication. "Just about anyone and everyone walks into the shop these days, from the guy who has just become a grandparent and wants to buy a present for his grandchild, to full-time investors looking for something that has legal tender status."

Read the WSJ story (subscription required): Gold's Fall Draws Coin Fans

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If It Sounds Too Good To Be True…

EDUCATION

Following on from Wednesday’s post on Gold Scams, Kid Dynamite drew my attention to the story of one-time NBA star Dikembe Mutombo’s involvement in a “proposed deal to extract more than a thousand pounds of gold from his native Democratic Republic of the Congo, amidst the core of the conflict mineral trade, and sell the haul for more than $10 million.”

Forbes reports that the “money generated was to be split between him, Nigerian-born Houston energy mogul Kase Lawal and Third World mineral trader Carlos St. Mary.

The deal ultimately went haywire, with the gold ending up in Congolese custody, $4 million in the hands of Eddy Michel Malonga, the supposed real owner of the stash, and another $6.6 million of Lawal’s money in cash in the pockets of General Bosco Ntaganda, a local warlord under indictment from the International Criminal Court, whose militia controls mining operations in parts of eastern Congo.”

For those interested in the soap opera-style story, see the article at the Houston Chronicle’s website. They report that as the deal progressed, there was a request for “40 percent up front” – always a classic sign of a scam – upon which “Lawal reluctantly turned over almost $4 million in cash, [bad move] but only after getting a certificate of ownership  [issued by whom and proving what?] and having the gold placed in a secure customs warehouse in Nairobi, the capital of Kenya. A week later, Malonga — and the gold — disappeared. The purported customs facility was a sham.”

All of these scams use the hook of “discounted gold” to tempt people by appealing to their greed. None seem to ask why would anyone sell gold below spot price. This was part of a scam last year as reported by Emirates 24|7 where “several tons of gold imported into the UAE by traders and investors turned out to be fake on closer inspection…” and quoting the Managing Director of Emirates Gold as saying “The traders got greedy. They thought they were getting gold at a discounted rate.”

The article goes on to describe the typical scam:

African gold merchants claim to be in possession of large quantities of gold dust or gold bars, which they offer to sell at below market prices. The would-be buyer is made to send money for travel of the seller, for insurance, for shipping and for refinery assays before they would receive anything of any value. Investors are shown samples, which may be original gold. But when the consignment reaches the port, it will be only mud or sand. … The seller can walk away at any point with virtually no risk of being caught as all contacts are via anonymous free webmail accounts accessed from Internet cafes and via prepaid mobile phones.”

You may think who would fall for these scams, but The Perth Mint receives these sorts of requests with unfortunate regularity. The scammers never contact us directly (they know we know too much about the gold market to fall for the scam) but rather contact another person who then contacts us to buy or sell gold (at a discount, of course).

We have had these requests come from all types of people, often suburban accountants or lawyers, with greed in their eyes that they are going to receive 1% of a $100 million deal just for facilitating a deal. A few don’t respond well when we tell them it is a scam and suggest that they ask themselves why would a legitimate buyer with $100 million need to pay a suburban accountant $1 million to act as an intermediary when the buyer could just come to us directly.

To give you an idea of what these scams look like, below are three example emails we have received. The first demonstrates five classic signs of a gold scam – anonymous email (no corporate website we can check up on), overly formal language, ridiculously large amounts, representing someone else (never the actual buyer themselves) and mentions of letters of credit. Calling us the Australian Mint doesn’t help.

-----Original Message-----
From: xxx [mailto:xxx@hotmail.com]
Sent: Friday, 10 February 2006 1:02 AM
To: yyy

Subject: Purchase of gold,silver, platinum coins and bars

Good day Mr. yyy:

I obtained your contact information from the Royal Australian Mint website.

I represent an international firm that is interested in purchasing bullions, bars and coins. Specifically, we are interested in purchasing:
 
1. $ 1, 000, 000, 000.00 (1 billion) in gold;
2. $ 1, 000, 000, 000.00 (1 billion) in silver ; and
3. $ 1, 000, 000, 000.00 (1 billion) platinum.


To secure the purchase, we will issue Letters of Credit that are secured by US. Government Treasury securities and by gold.

What are the procedures for entering into a contract with the Australian Mint for the purchase of the above-referenced precious metals?

Thank you for your attention to this matter.

xxx
Agent


This next one has a few more classic signs – use of “au-metal”, “buyer’s mandate” and “swiss procedure” to make it sound more impressive and professional to the average person. Professionals never use those terms, so a dead giveaway there.

-----Original Message-----
From: xxx [mailto:xxx@yahoo.com]
Sent: Friday, 6 October 2000 14:34
To: info@goldcorp.com.au
Subject: PURCHASE OF AU-METAL

06.10.2000

FROM: xxx
Email: xxx@yahoo.com/xxx@hotmail.com  
 
TO: M/S   CORPORATION.

KIND ATTN: MR.yyy.

DEAR SIR,

WE WOULD LIKE TO INTRODUCE OURSELVES AS EXPORT-IMPORT MARKETING REPRESENTATIVE FOR AU-METAL.

WE HAVE VISITED YOUR WEB-SITE AND HAVE COME TO KNOW THAT YOU ARE ONE OF BIGGEST PRODUCERS OF AU-METAL IN THE WORLD.

WE ARE NEXT TO BUYER'S MANDATE HOLDERS/BUYERS THROUGH THE WORLD WHO ARE INTERESTED TO PURCHASE AU-METAL OF YOUR AVAILABLE QUANTITY.  OUR BUYERS FOLLOW UP SWISS PROCEDURE. IF YOU HAVE YOUR PROCEDURE,  PLEASE INFORM US SO THAT WE COULD DISCUSS WITH OUR BUYERS.

ALSO WE WOULD LIKE TO KNOW WHETHER YOU ARE ALSO A SELLER OR ONLY THE PRODUCEER ?

IF YOU ARE ONLY A PRODUCER AND NOT A SELLER, PLEASE INFORM THE SELLERS WHO ARE KNOWN TO YOU.

WE AWAIT YOUR REPLY PLEASE.

THANKS AND BEST REGARDS,

xxx,
CHIEF EXECUTIVE.


This last one was forward to us by the “mark” as proof it was a legitimate deal. I don’t know about you, but I wouldn’t be giving some guy with a yahoo.fr email address my residential address and passport, no matter how much his “prcie is cheaper”!

-----Original Message-----
From: xxx [mailto:xxx@yahoo.fr]
Sent: Monday, 9 June 2008 7:19 PM
To: yyy
Subject: From: Chief xxx.

From: Chief xxx.
Chairman & president of
Xxx Inc,
Abidjan-cote d' Ivoire.
West-Africa.

Attn: The Director,

Sir,

It is my pleasure to contact you for the purchase of my products A/U Gold Dust and uncut diamond which i have accumulated for sales, if you are ready and willing to buy revert back to me immdiately.  Indeed,I am the right owner and the head of the above named Company. My Company represents and helps a group of village Gold mining washers to buy  locally from the miners and sell their natural noble metals; mainly A/U Gold Dust and 360 carats of uncut  Diamond.

I have at present for 300 kg of Gold dust whose characteristics are as follows: * Origin: Bokinafaso,Ghana and Abidjan-cote d'Ivoire in West Africa here, and/or i also have an offices on the above three countries now while the Quality is : 22 Karats + * Nature: Gold Dust * Rate of purity: 93.06%* pure. Bear in mind my prcie is cheaper.

If my proposal meets you in a  favourable considerations to purchase, then revert back to me but be informed that if you really want to have my products either you or your representative must come to see it physically because i want to build trust with you as my foreign business partner that can never mess me up because there are so many bad people today claiming what they can not do.Your  telephone / fax number including your residential or postal addresses is highly needed including a copy of your passport so that i shall in reurn send to you mine .

Thanks &
Regards,

Chief xxx


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Classic Gold Scams

EDUCATION

Peter Schiff from Euro Pacific (a dealer in our bars and coins and Perth Mint Certificates) has a free special report on gold scams perpetrated by crooked coin dealers. It covers techniques such as:

The Bait and Switch
The Confiscation Con
The Numismatic Hype
The Proof Set Rip-Off
The Leverage Trap

It is available from www.goldscams.com

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Dollar Cost Averaging - A Strategy For Making The Most Out Of Fluctuating Gold Prices

QUICK GUIDE

Dollar cost averaging is a strategy that lessens the risk of investing a large amount in a single investment or portfolio at the wrong time. It is especially worth considering when markets are volatile. This recent blog post by precious metal experts APMEX explains the fundamentals of dollar cost averaging as a way to avoid mistiming your entry into the market.

“When investing in gold, it’s only natural to think in terms of cost per ounce.  Many people see the price of gold and decide to jump in. They make a one-time investment, and wait for gold prices to go up.  While gold has indeed trended up throughout 2011, there is a natural fluctuation in pricing.  It goes up and then down and then up again.

There’s a way of using the fluctuating price of gold to your advantage and it’s called dollar cost averaging. Instead of making a single investment, you invest a fixed amount on a fixed schedule.

Here’s an illustration of how it might work. Say an investor has $12,000 to invest, so using dollar cost averaging they decide to invest $1000 per month in Stock ABC. The first month Stock ABC sells for $50 per share, so the investor purchases 20 shares. The second month Stock ABC is $25 per share, so the $1000 can purchase 40 shares. The third month, stock ABC is up to $40, so they can purchase 25 shares. All together, they now own 85 shares of Stock ABC at the average per share price of $35.29.

If this investor had spent the entire $12,000 up front they would have paid $50 per share, but by dollar cost averaging after three months, they only paid $35.29 per share. If investments only went up, this would not be an advisable way to invest, but in a market environment where there has been a great deal of volatility like we have seen in 2011, dollar cost averaging will help reduce risk.

Dollar cost averaging is an especially prudent investment strategy for gold and silver. Make a commitment to how much you can spend on a weekly, monthly or quarterly basis and then simply follow through. We have all heard the adage that you cannot time the markets. Dollar cost averaging accepts this as truth and gives an investor a simple plan to follow.”

This article courtesy of APMEX.

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Picture This: All The World’s Gold!

Topics [ gold bars invest in gold gold gold bullion prices bullion ]

RESEARCH & ANALYSIS

A gold mine of information for all to share.

All The World's Gold


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Reasons For Gold’s Weakness

Topics [ gold market gold prices invest in gold ]

TREASURY VIEW

In the past four months gold has dropped from just above $1900 to settle around $1600. While this 15% correction has not broken gold’s bull market trend (as discussed in this earlier post), a $300 drop is severe enough to test the most committed of investors, especially in the face of mainstream financial media chatter that gold’s bull run is over.

I agree with Jeff Clark from Casey Research, who says investors should not “confuse short-term volatility with long-term forces” and stay the course. In this article I discuss the short-term factors Jeff identifies, and also analyse the recent decline in Indian consumer demand, another significant issue in the gold market.

 

Download now (pdf 364KB):
REASONS FOR GOLD’S WEAKNESS

 

 


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