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Ancient Gold, Modern Value
August 12, 2010
A 2,200-year-old gold coin was found recently in northern Israel. No, this isn’t one of those radio commercials you hear all the time about a surprising discovery of a stash of rare gold coins in Europe. This is the real deal.
Archaeologists from the U.S. uncovered the gold coin while digging near the border of Lebanon. At nearly one ounce in weight, it is the heaviest and most valuable coin ever found in Israel, a state official said. And somewhat oddly, the official added that the coin served a symbolic function and wasn’t used as currency.
The coin dates back to 191 B.C., making it older than the Roman Empire, but gold's history goes much further back than that.
The Sumer civilization in ancient Mesopatamia used gold for jewelry and ornaments for headdresses, and thousands of gold artifacts were found in the Varna Necropolis, a gravesite in present-day Bulgaria that goes back to 4600 B.C. Egyptians are believed to have mined gold as early as 2000 B.C.
It’s believed gold as money originated in China about 3,000 years ago, and that the first pure gold coins came from King Croesus of Lydia between 560 and 547 B.C.
Over the millennia, gold’s prices have changed but its intrinsic value as a store of wealth hasn’t. During these uncertain economic times, it seems that more and more investors are appreciating gold’s protective properties.
One of the Best Gold Watchers
July 28, 2010
Pierre Lassonde is one of the smartest people in the gold world, and he has the track record to prove it.
He’s a former president of Newmont Mining, the world’s largest gold producer, and was chairman of the World Gold Council. His achievements aren’t all in the past – now he’s chairman of Franco-Nevada Corp., the most successful gold royalty company.
I’ve known Pierre for years, and have learned that when he talks about gold, it makes sense to listen.
In a recent interview with Mineweb.com, Pierre said gold sector investment is still in its early days, and it will continue for at least five more years.
His reasoning is similar to some of the things we have been saying for a while:
- Gold can provide some protection against currency debasement as governments try to inflate away their massive sovereign debt burdens;
- A rising middle class in China, India and other countries that value gold is a key demand driver for both jewelry and gold as an investment;
- China’s appreciating currency will make U.S. dollar-denominated products (including gold) cheaper for Chinese consumers.
Of course, the interviewer asked Pierre to forecast the price of gold.
I believe in two things. One is that the gold price will have three zeros after the first number - I just don't know how big the first number is going to be. We are now at $1,200 gold and I do not believe for one second that that's the end of the bull market in gold… The U.S. politicians have absolutely no guts for another depression and they will always allow the printing press to run to answer their problem and therefore when I look at the long term gold price - very bullish.
Read Pierre’s Interview with Mineweb’s Geoff Candy
By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. The following securities mentioned in the interview were held by one or more of U.S. Global Investors family of funds as of June 30, 2010: Barrick, Newmont Mining, Franco-Nevada.
Is the Gold Rush Over?
July 07, 2010
I appeared on CNBC’s “Street Signs” yesterday to discuss why I think the gold market is just taking a breather from a gradual move higher.
Host Erin Burnett pointed to the people who’ve embraced gold for fear of Armageddon or runaway inflation, but I’m not one of those gold investors. As I explained to her, gold has pushed higher through a deflationary cycle of currency debasement.
When you go back and look at the drivers, gold doesn’t have to go up because of inflation. It can go up as I’ve said many times for many years on your program, it’s going up on deflation. And whenever you have big currency instability, either big inflation or deflation, gold starts to perform as an attractive asset class.
And the other key factor and all the research shows that whenever we have negative interest rates and you have big deficit spending, gold starts to perform as real money.
The World Precious Minerals Fund (UNWPX) was first in total return among all U.S. gold-oriented mutual funds and exchange-traded funds for the year ended December 31, 2009. The fund was ranked #1 of 71, #34 of 51 and #18 of 29 among gold-oriented funds by Lipper for the 1-, 5- and 10-year periods ended December 31, 2009. The fund was ranked #3 of 74, #35 of 52 and #19 of 31 among gold-oriented funds by Lipper for the 1-, 5- and 10-year periods ended March 31, 2010.
By clicking the link above, you will be directed to CNBC.com. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.
The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. Diversification does not protect an investor from market risks and does not assure a profit.
China Concentrating on Gold
July 02, 2010
You can add gold to the list of items that China can’t get enough of. It was announced last week that China’s largest gold producer, state-controlled China National Gold Group, signed a long-term contract to purchase gold concentrates from the Kensington Mine in Alaska.
China already has the sixth-largest reserves of gold in the world (1,054.1 tonnes as of June 2010) according to official gold holding statistics but this deal could help them grow faster.
China is one of the few countries in the world that could swing this deal because it has the available smelter capacity to handle this type of gold. In order to extract gold concentrate, it is treated with chemicals to strip the gold particles away and then smelted into bars, etc.
The deal also reflects that the Chinese government wants more gold and it'll do what it takes to get it. China agreed to pay for the gold within days of delivery, much shorter than the industry standard of three-months.
Gold demand in China has seen a significant shift in direction in recent years. The government, which used to restrict how much citizens could own, is now running ads on state television encouraging the middle class to own gold.
As a result, gold demand has increased 13 percent annually for the past five years. Retail investment demand jumped 57 percent during the first quarter of this year despite prices hovering near all-time records. At this pace, the World Gold Council (as pointed out in today’s Globe and Mail: China’s Big Gold Rush) says that China will run out of gold in the next six years.
This is why agreements like the one with the Kensington Mine are important. It provides an innovative source for China to increase its gold holdings without going out to the open market to acquire refined gold.
By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content. Diversification does not protect an investor from market risks and does not assure a profit. The following securities mentioned in the article were held by one or more of U.S. Global Investors family of funds as of March 31, 2010: Coeur d’Alene, Industrial & Commercial Bank of China
Vietnam and Gold
June 17, 2010
Many Asian countries have strong affinity for gold, with Vietnam apparently at the top of the list. On a per-capita-income basis, Vietnam consumes twice as much gold as India and 10 times that of China.
Vietnam’s gold market has blossomed in response to a lack of confidence in the country’s currency, according to a story in yesterday’s Financial Times. Since the beginning of 2009, the Vietnamese dong has lost 11 percent of its official value, while gold has risen roughly 42 percent in U.S. dollar terms.
This has spurred many Vietnamese banks to seek out more gold. Last year, as the world climbed out of a crisis, Vietnamese banks paid 3 percentage points more in interest to those making deposits in gold than deposits in dollars.
A key quote from the story: “Demand [for gold] is still growing because people don’t believe in any other channel of investment.”
Vietnam (population 86 million) has seen rapid economic growth in recent years. Its per-capita income of $1,050 last year was nearly fivefold higher than it was in the mid 1990s, and in Hanoi, the income level is closing in on $2,000 per person, according to government figures.
Net retail gold investment in Vietnam reached 14.1 metric tons (543,000 ounces) during the first quarter of 2010, up 36 percent year over year, according to the World Gold Council. Add to that a 20 percent increase in gold jewelry demand, and you see a steadily growing gold market.
Those figures don’t reflect the amount of gold that isn’t tracked or deposited in banks. A Vietnam-based economist estimates that some $30 billion worth of “street gold”—almost a third of the country’s GDP—is held outside of the banking system.
In absolute terms, the Vietnamese gold market may pale in comparison to China and India, but its strong cultural connection and history with gold should keep the country’s gold market an active one regardless of price.
By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.
Net Asset Value
as of 09/08/2010
- Global Resources Fund
PSPFX $8.78 +0.05 - Gold and Precious Metals Fund
USERX $17.44 +0.03 - World Precious Minerals Fund
UNWPX $20.18 -0.01 - China Region Fund
USCOX $8.61 -0.02 - Eastern European Fund
EUROX $9.11 +0.13 - Global Emerging Markets Fund
GEMFX $8.17 +0.08 - Global MegaTrends Fund
MEGAX $7.71 +0.04 - All American Equity Fund
GBTFX $20.02 +0.09 - Holmes Growth Fund
ACBGX $16.04 +0.15 - Tax Free Fund
USUTX $12.58 -0.01 - Near-Term Tax Free Fund
NEARX $2.26 -0.01 - U.S. Government Securities Savings Fund
UGSXX $1.00 No Change - U.S. Treasury Securities Cash Fund
USTXX $1.00 No Change