The Boardroom Talk podcast: All about gold

Interview with Moneyweb and Alex Hogg: All about gold

MONEYWEB [Felicity Duncan]: Hello and welcome to Boardroom Talk Podcast. It is Thursday, the 19^th of March and I'm sitting in the studio with Alec Hogg who is going to give us some insight into the events of the week. Alec, let's start talking about the gold price because there were some very interesting moves this week in that area.

ALEC HOGG: Hmm, all over the place. Today was a big day for gold, last night when the Fed decided it was going to spend a whole lot more money, pulled out of thin air, gold bulls got excited, pushed the gold price up $35 and as we're talking right now, coming from a level of around $890, it's now trading $935 to $940. It was interesting on the radio show and the interaction we had with a couple of chief executives from the, well in fact the two biggest South African gold mining groups, both of whom are very bullish on gold. Most bullish is Nick Holland, the chief executive of Gold Fields Ltd. It's interesting to note, I was going through our YouTube channel, that the interview we had with Nick Holland has been very well watched, in fact it's one of our top five interviews.

MONEYWEB: Those gold bugs out there, they just love it, they can't get enough!

ALEC HOGG: Well the Americans, certainly the mid Americans or middle Americans, tend to love gold and they're going for it in a big way. Nick said he'd just returned from America and he heard some fairly reputable commentators over there now talking about $2 500/oz.

MONEYWEB: It's amazing. You know, I heard this week that a Krugerrand back in '79 was R200.

ALEC HOGG: And it's now over R10 000.

MONEYWEB: Like that is serious asset depreciation.

ALEC HOGG: Well in fact it has been probably the best investment that you could have made, certainly in the last couple of years. But what was interesting was the reasoning behind Nick Holland's view. He didn't say it would go to $2.5 thousand, but he also felt that it would go north of a thousand in the not too distant future. He felt that the inflationary boosts that are going on in the United States are likely to have a direct impact on what he produces, but it was interesting, perhaps even more interesting and more supportive of this view, was our discussion with Mark Cutifani, we had a ten minute chat on Wednesday and this was after John Paulson had made an investment of 11% or he paid just over a billion dollars for 11% of AngloGold - Mark Cutifani, the CEO of AngloGold. And what is interesting here and Mark said he met John Paulson in the past, John Paulson, when you start digging into his background, is quite an incredible investor. Forbes magazine rates him as one of the top three. Steve Forbes said that if we were to have a Mt Rushmore for investors, in the United States Mt Rushmore which you well know because you've been there, have got the heads of presidents ...

MONEYWEB: Great big ones, ja.

ALEC HOGG: ... on a mountain and if we had them for investors, he said, it would be Bill Gross of Pimco, Warren Buffett and John Paulson. So that puts him right up in the very top league and not surprisingly because he's only 53 and he's very much a self-made man , started his business in 1995, a hedge fund, his hedge fund bet against the subprime bank owners...

MONEYWEB: Good bet!

ALEC HOGG: Fantastic bet! Well personally he made billions of dollars. Last year he went from position 175 to a position in the top 75 on the billionaires' list and the primary reason for that is that his company, which has come from nothing, has now got assets of $35bn and he's betting on gold and more specifically he's betting on Mark Cutifani's firm, AngloGold Ashanti. So that's a very strong tip for us.

MONEYWEB: Yes, it's fascinating. I heard the interview and Cutifani, when you asked him if he was going to drop the Anglo part of AngloGold, said that they were actually looking around and considering buying more assets.

ALEC HOGG: It is interesting that they are going on that kind of approach. He said nothing imminent yet, which is a bit of a giveaway for us journalists, to say that they're looking clearly quite seriously at some assets and likely to do, again it will be a high quality gold asset, you know that they have sold a few Bardington assets in Australia and one here in South Africa, to Simmers. But to me the big part of this whole thing is that John Paulson who is like a Warren Buffett, makes substantial investment in a South African based company that is in the gold market. And we had support of that as well in another of the podcasts with market commentators through the week and the one that is always the best read is with the Allan Gray commentators and Delphine Govender was explaining that they are overweight gold in the Allan Gray portfolios and overweight AngloGold in the gold side of the portfolios, so AngloGold is also their favourite.

MONEYWEB: They don't miss a trick, although ...

ALEC HOGG: Neither should we!

MONEYWEB: ... they've missed one trick, haven't they, with the news out of Super Group this week and they turned down, was it R17 a share offer ...

ALEC HOGG: It was R10 two years ago.

MONEYWEB: Ja, and then there was the one previously to that... Anyway, they turned down a lot of money for a stock that's now looking bad.

ALEC HOGG: Well it is. It just shows that no matter how clever they are and how good people like Allan Gray are, even they are fallible and I like their approach because they don't hide behind it. It's almost like the Warren Buffett approach that you trumpet your disappointments and speak quietly over your successes and she was very vocal in our discussions about Super Group, explaining that, yes, they didn't do the right thing two years ago when they had the offer for Super Group to be delisted, looking and back on what happened as recently as October where there was R500m was raised by shareholders, put into Super Group at a share price of R4. Allan Gray was one of the biggest of the supporters there...

MONEYWEB: Yes, they followed it, I remember.

ALEC HOGG: Now you've got to put this in context, that was R500m in fresh capital that was put in in October. The market capitalisation of Super Group today is 278, so ...

MONEYWEB: Value destruction...

ALEC HOGG: ... not only has half of that money, the fresh money that was put in, gone, but whatever it was worth at that stage when the rights issue was done, has disappeared. I thought Larry Lipschitz was disingenuous when he was on the radio, saying that everything started going wrong when there was a $5m liability from an Angolan operation that went bad. Now $5m doesn't collapse a whole firm...

MONEYWEB: No, it's not big enough.

ALEC HOGG: This firm's been going bad for a long time and Delphine is convinced that with the operations now having been cleaned up with all of the problems being taken out, that Super Group is in a position where it's going to make money, the management have got a long, long way to go to rebuild any credibility, as you would imagine, from a company that's come from R22 a share, to 45c.

MONEYWEB: Now he signalled that he might be leaving, Lipschitz, I mean he was a bit evasive about it, but he did seem to say that it was a possibility.

ALEC HOGG: Well if you presided over value destruction on that scale, I'm surprised that he actually sticks around and he did say he's doing that because of the 12 000 employees, he feels a sense of loyalty towards them and he wants to see this thing through and to his credit - there were many who felt as recently as six weeks ago, there was a strong rumour in the market that the banks were going to pull the plug on Super Group. So they've somehow miraculously managed to stay afloat. It looks with the billion rand extra that's going - now remember, a company worth R278m today, another billion has to be put into it just to keep it afloat...

MONEYWEB: It just shows...

ALEC HOGG: But with that going in, they feel that they will be able to turn the ship.

MONEYWEB: And it's a dilutive offer, right, four to one at 45c, so if you don't follow your rights, you're going to be vastly diluted.

ALEC HOGG: Well if you take it back to where you were in October last year and this brings in the black economic empowerment partner, Peu, Peu borrowed money from Deutsche Bank internationally, it had to sell a whole bunch of shares in October 2007 to pay part of the interest one presumes or, well who knows, but anyway, if you borrowed money to buy Super Group shares anywhere north of R5, you've got to be in big trouble now. So one doesn't know, is Super Group going to lead to the destruction of Peu? Well we've heard nothing from Peter ...... and his people. All Larry Lipschitz could say to me yesterday was he believes the Super Group shares are unencumbered, which is not surprising because they're not worth a whole lot anymore, but if you've got so much capital and you're trying to develop it and grow it, you would presumably be using that as collateral in other areas. So I think we are going to see some spectacular BEE collapses - Peu must be one of the favourites.

MONEYWEB: Absolutely. Now, there was a lot of nefarious corporate news out this week and one of the most interesting was the Huge Group, I know there was a huge story about their single-stock future misbehaviour. Do you want to maybe explain that?

ALEC HOGG: It's a very good story and it's one that shows so easily how you can confuse the public. I know they are trying their best, the two fellows behind Huge, to put a positive spin on it, but in essence what happened was that the two of them decided to cash in part of their shareholding. It was something that was offered to me in fact here at Moneyweb as well, when things were going up, the perpetrators of this kind of nefarious crime because that's really what they were, came to me and said, take part of your Moneyweb shareholding, sell it and then take single-stock futures to offset the amount that you sold and in that way you can release capital that you've got tied up in the business and of course single-stock futures, you buy them in at a pretty low level, so as they go up, you make your money.

MONEYWEB: Voila! And you hold your shareholding, you don't get diluted or ...

ALEC HOGG: And in theory it sounds good and of course as the share price went up, what happens with futures is that you get credited every day with the value of the growth. So all of a sudden from being worth maybe 10m or 20m, these guys were worth 40m, 50m and the money comes into your bank account, which you then presumably spend and it's happened in a lot of cases. But when the reverse occurs, where are you going to find the money to repay the cash that has come from you? Because as share prices go down, you have to keep topping up the margin and this is exactly what happened with the Huge Group. They did some kind of a deal with a stock broking company called Watermark, where the Huge company bailed out effectively the two directors at a price of 362c a share. That share today is trading at R1.20. The stock exchange has forced Huge Group to go back to its shareholders and ask them, "Would you be prepared to endorse the decision by these two directors for the company to buy these shares at 362c", and no shareholder who has got any sense whatsoever, is going to endorse that.

MONEYWEB: Absolutely, using the company money to protect your own...

ALEC HOGG: Some would say that it's fraud. The stock exchange is certainly throwing the book at these guys and it's not going to have a happy conclusion.

MONEYWEB: Well that's all we have time for, unfortunately, this week, but we will definitely hear some more from Alec Hogg next week, Thursday. So from the Moneyweb Boardroom Talk podcast, we hope you enjoyed it.

Geniuses with gold

Shining golden week

According to Alec Hogg, this week has been all about gold.

Felicity Duncan
19 March 2009 17:15

With all the chaos in the world - big banks blowing up, normally responsible governments printing trillions with abandon, and even pirates trawling the high seas - it's understandable that investors are looking for the safest assets they can find, and this is where gold comes in.

As safe harbours go, gold is an all-time favourite. The gold price has rocketed upwards ever since the disaster-riddled nature of the global financial system became apparent. Right now, gold is trading at $950, and it's tapped to head upwards as the real economy sputters.

According to Moneyweb editor-in-chief Alec Hogg, speaking in the weekly Boardroom Talk Podcast, there can be little doubt that this week, gold has held centre-stage.

On the gold price, Hogg said: "[Thursday] was a big day for gold, [Wednesday] night when the Fed decided it was going to spend a whole lot more money, pulled out of thin air, gold bulls got excited, pushed the gold price up $35 and as we're talking right now, coming from a level of around 890, it's now trading 935 to 950."

"The Americans, certainly the mid-Americans or middle Americans, tend to love gold and they're going for it in a big way. Nick [Holland, CEO of Gold Fields (JSE: GFI)] said he'd just returned from America and he heard some fairly reputable commentators over there now talking about $2 500 an ounce."

"But what was interesting was the reasoning behind Nick Holland's view. He didn't say it would go to $2 500, but he also felt that it would go north of $1 000 in the not too distant future. He felt that the inflationary boosts that are going on in the United States are likely to have a direct impact on what he produces."

Mark Cutifani, CEO of AngloGold Ashanti (JSE: ANG), took a similarly bullish view.

"What was interesting and more supportive of this view, we had a ten minute chat on Wednesday ... after John Paulson had made an investment of 11%, or he paid just over $1bn for 11% of AngloGold [we had a chat with] Mark Cutifani."

"And what is interesting here, and Mark said he met John Paulson in the past, John Paulson, when you start digging into his background, is quite an incredible investor. Forbes magazine rates him as one of the top three. Steve Forbes said that if we were to have a Mount Rushmore for investors, in the United States - Mount Rushmore which you well know because you've been there, have got the heads of presidents on a mountain - and if we had them for investors, he said, it would be Bill Gross of Pimco, Warren Buffett and John Paulson. So that puts him right up in the very top league."

Paulson shot to fame after his hedge fund took a large bet against the sub-prime debt holders and house price.

Explained Hogg: "Personally he made billions of dollars. Last year he went from position 175 to a position in the top 75 on the billionaires' list and the primary reason for that is that his company, which has come from nothing, has now got assets of $35bn."

Given Paulson's investing acumen, and the prestige he now has, it's very interesting that he has chosen to get in on the gold game.

"He's betting on gold and more specifically he's betting on Mark Cutifani's firm, AngloGold Ashanti. So that's a very strong tip for us. John Paulson, who is like a Warren Buffett, makes [a] substantial investment in a South African-based company that is in the gold market."

"And we had [further] support of that as well in another of the podcasts with market commentators through the week - the one that is always the best read is with the Allan Gray commentators - and [Allan Gray director] Delphine Govender was explaining that they are overweight gold in the Allan Gray portfolios and overweight AngloGold in the gold side of the portfolios, so AngloGold is also their favourite."

For Hogg's insights on the Huge Group (JSE: HUG) SSF debacle, and the troubles of Super Group (JSE: SPG), check out the Boardroom Talk Podcast.

2009 Wealth Preservation Guide

2009 Wealth Preservation Guide Building a Fortress of Protection Around Your Life Savings

The perfect financial storm we predicted over three years ago arrived in 2008, catching millions of Americans by surprise, and it continues to destroy wealth in a way not seen since the Great Depression. It was a year when every major asset class from Stocks, real estate, and commodities to high-yield bonds suffered double-digits losses as over $30 Trillion of wealth disappeared.

As the financial world fell off a cliff, millions of Americans lost 30% to 40% of their life savings due to a failure to focus on wealth preservation.

Lack of Government oversight, greedy Wall Street bankers, and irresponsible Stock brokerage firms have destroyed confidence in the financial system. That’s exactly why Gold survived the Stock Crash of 2008 and actually increased in value by 6%.

Consumer-Driven Economy is Dead
We see little reason for the economy to come back to life soon. The $700 Billion taxpayer bailout has done little to avoid the worst recession since the 1930s. Despite massive Government spending, saving the economy will be like using a teacup to bail out the Titanic!

Corporate profits will continue to fall and we feel Stocks will have a tough year. The consumer-driven U.S. economy, based on borrowing and spending, is over. Stores are closing, the malls are emptying out. Today, investors need safe havens to park money in for the long haul. Too few investments have weathered the global financial crisis so far. However, Gold is one bright hope! Gold traded $46 higher in 2008 as the precious metal resumed its traditional “wealth preservation” role.

Stocks Need Decades to Recover After Crashes
Far too many investors have been brainwashed to believe “stocks always go back up” and quickly. That's not always true, stocks don't recover quickly after a "bubble and bust."

• After the 1929 crash, U.S. Stocks lost 80% and the Dow did not recover to pre-crash levels until 1954.
• 19 years after Japanese Stocks hit all-time highs, the Nikkei closed 2008 trading 78% below the record.
• The NASDAQ hit 5,132 at the height of the dot-com bubble in March of 2000 and trades nine years later at 75% below the all-time high.

WARNING: There’s a real possibility that before the current banking crisis ends U.S. Stocks
could fall in value another 20% to 40% and not recover for decades.

Prepare Now– The Worst is Yet to Come
We believe this is not the time to bet your life savings on Stocks or Bonds alone. The world economy entered 2009 in the worst shape ever. Something is terribly wrong with the banking system and won’t be fixed for years. Despite the U.S. Government’s $8 Trillion promises and corporate welfare, the taxpayer bailouts won’t fix what’s really broken. America must learn we cannot borrow our way out of debt! Nor can the government create paper money and spend our way to prosperity.

There will be a day of reckoning. The U.S. economy, based 70% on consumer borrowing and spending, has ended. We face years of sharply rising unemployment, soaring bankruptcy rates, a deep recession, and in the midst of it all comes inflation– with a vengeance.

In these harsh economic times, we remain convinced investors will need to own Gold to survive, thrive, and prosper. What's the best private and non-reportable gold? How can you buy gold?

Ask ga or jb now!

World Gold Supply Update

Global markets remained under pressure. Locally the Anglo American annual results disappointed investors with the suspension of the dividend. The price fell almost 16%. This dragged the local JSE down. The one area that remained firm on the local market was gold, which moved close to the $1000/oz level – currently around $996/oz.

We discussed the demand side of gold yesterday. Let’s look at the supply side.

The World Gold Council reckons that the best estimate of gold mined over history is approximately 158 000 tonnes, of which around 66% has been mined since 1950’s. As can be seen from the table below annual mine production is coming in at around 2500 tonnes per annum.

While gold is mined on every continent, South Africa has been the dominant producing country in the world, producing 1000 tonnes per annum in the 1970’s. This has steadily declined. Until 2006 SA was the world top producer. China overtook SA in 2007 and it looks like USA overtook SA in 2008.

SA produced 247,2t in 2007 and the 2008 number was down 16%.

The statistics from the WGC reflect global mine production slowing to 2476 tonnes in 2007 and an annualised 2388 tonnes in 2008. From this they subtract producer hedging (i.e. gold sold forward in previous years) to arrive at mine supply.

Central banks and government sponsored organisations hold around 1/5 of global above ground stock of gold as a reserve asset. This percentage is decreasing steadily. These are largely owned by central banks in Europe and US.

Central Banks have been net sellers in recent years and from 1999 the bulk of these sales were covered under the Central Bank Agreement on Gold, which put a cap on the annual total sales by central banks. There does appear to be a slowdown in the sales from this sector, even as the price gains ground.

Classically the Bank of England auctioned off a large portion of its gold holdings in 1999 to “Restructure the UK’s Reserve Holdings”. It did this at the bottom of the gold price.

Then gold is also supplied as recycled gold. This comes from fabricated products and is melted down, refined and reused. Most recycled gold comes from jewellery, smaller amounts from electronic components and some from investment bars and coins.

Investors pile into gold coins

Investors pile into gold coins

Johannesburg - Aware that gold is the ultimate store of value, concerned South Africans are piling into Krugerrands and Nelson Mandela gold medallions, the SA Gold Coin Exchange said on Friday.

"On the back of global financial turmoil, the ever-popular Krugerrand has soared through the R10 000 mark, handsomely rewarding investors who several months back anticipated the global financial turmoil that has driven the rand price of the yellow metal into orbit," Alan Demby, executive chairperson of the SA Gold Coin Exchange said in a statement.

Technically, the surge could be directly ascribed to a combination of an advancing dollar gold price and a weakening rand.

"Based on current demand levels, the SA Gold Coin Exchange's sales have been running at levels in excess of R100m a month.

"We have accordingly increased our 2009 sales target to an admittedly conservative R1bn," said Demby.

Reord stock market lows were translating into record highs for gold and Krugerrands, and Demby suggested that in the last six months, a large number of investors had switched from equities into gold coins.

"The smart money has carefully digested the fact that in the past six months the JSE all-share index has slumped by 30%, while the price of a Krugerrand has soared by 64% over the same period," he said.

Demby said it had to be remembered that the all-share was somewhat buffered by "a firm gold share index".

He said that British media had been carrying reports on the flight from cash to gold in the wake of concern over the safety of the banking system.

"Here the concern is more over the value of the currency than the banking system.

"Even so, widespread uncertainty is prompting investors the world over to accumulate gold as the only tried and tested safe haven."

Looking ahead, he predicted ongoing Krugerrand strength.

"Prospective investors in Krugerrands have not missed the boat.

"As the global financial crisis deepens, as it is surely bound to do, gold bullion will continue to advance," he said.

At the same time, South Africa's inflation differential and the risk perceptions attaching to emerging market economies would likely witness ongoing rand weakness, Demby said.

- Sapa

Gold coin investments sought by collectors

gold.org

The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Tuesday, 17th February 2009 (72 views)

Gold coin collectors have been searching for items that will prove to be strong investments given the current economic climate, it has been claimed.

According to the BBC, the Midland Coin Fair held by the British Numismatic Trade Association this month saw a number of people seeking alternative ways of investing their money, particularly as low interest rates mean savings accounts may not be offering good returns.

One collector told the news source about a previously successful gold coin investment, stating: "Just over four years ago I put �30,000 into gold sovereigns, it is now worth �250,000."

Paul Revell, a dealer from Suffolk, explained which features make gold coins more valuable.

"Rarity and condition make coins collectable. The better the condition the more it will be worth," he said.

This news follows comments made yesterday by a columnist for the Times, William Rees-Mogg.

He described gold as a "unique commodity" that offers buyers a good investment.

Gold coin investments sought by collectors

The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Tuesday, 17th February 2009 (72 views)

Gold coin collectors have been searching for items that will prove to be strong investments given the current economic climate, it has been claimed.

According to the BBC, the Midland Coin Fair held by the British Numismatic Trade Association this month saw a number of people seeking alternative ways of investing their money, particularly as low interest rates mean savings accounts may not be offering good returns.

One collector told the news source about a previously successful gold coin investment, stating: "Just over four years ago I put �30,000 into gold sovereigns, it is now worth �250,000."

Paul Revell, a dealer from Suffolk, explained which features make gold coins more valuable.

"Rarity and condition make coins collectable. The better the condition the more it will be worth," he said.

This news follows comments made yesterday by a columnist for the Times, William Rees-Mogg.

He described gold as a "unique commodity" that offers buyers a good investment.

Global Gold Drying Up...

Click above to read the article

What Value Has A Mandela Collectible Coin?

I just found this interesting article written by Erin and Isabel. They speak about the values of Mandela gold coins and how not every Coin with Mandela on will make you rich...

What Value Has A Mandela Collectible Coin?
By: Erin-And-Isabel
Friday, 8 February 2008
As I was leaving the recently renamed Oliver Tambo airport in Johannesburg last month, I couldn t help noticing an advert for a new gold coin. Now
we re familiar with South Africa s gold Krugerrand. Allegedly it is one of the top 300 brands in the world. Krugerrands were the first 1oz gold coin to
be produced - but that was back in 1967. Of course, the Krugerrand has the head of President Paul Kruger on one side, and a leaping springbok on the
other.
But this coin, which was advertised all over the airport I might add, was not a Krugerrand.
A lot has happened in South Africa since 1967, not least the release of Nelson Mandela from prison in 1990. Now some would say Mr Mandela s
release was down to the vision of South Africa s then white Afrikaans president, FW de Klerk. Others would disagree, arguing that Mr De Klerk s
actions were not visionary but necessary. Personal opinions aside, the two men were jointly awarded the Nobel Peace Prize in 1993 for their
contribution to democracy in South Africa.
Mandela coins certainly generate interest
This brings me to the shiny gold coin advertised at OT airport. It is called the Mandela/De Klerk medallion and is a oz 24 carat gold coin that is part of
the Nobel Peace prize commemorative medallion programme.
Needless to say, one side sports the head of the iconic Nelson Rohlilala Mandela with the inscription "A long walk to Freedom." The other depicts
that of Frederik Willem De Klerk and is inscribed with the words "To bring justice to everybody". The good news is the coin, which was minted in
Norway, has been given the nod of approval by the Nobel Institute and the Nelson Mandela Foundation.
This 1oz gold coin and variations on the Mandela theme are now actively marketed by the South African Gold Coin Exchange. There are other
Mandela coin productions too, in varying weights, but no pure De Klerk medallions! Just for the record, the Exchange is currently South Africa s
biggest distributor of gold investment, bullion and collectable coins. And its current chairman Alan Demby has strong views on coin collecting.
Well, surprise surprise, the cynics ( Erin included!) among you might say. "Be careful with coins," Erin says. "Many of them are a rip-off, bearing little
relationship to gold, and have large spreads in the buy/sell price so that getting in and getting out is not that profitable!"
But Mr Demby claims to have a close eye on who is buying gold coins. In his view smart investors have 10 to 20% of their investment portfolio in
coins. Around 70% of that should be in Krugerrands or sovereigns, the remaining 30% in collectible coins (coins that are of interest to collectors
rather than gold bugs). Mr Demby also says that there has been huge interest from around the world in the 1oz Mandela commemorative coins. They
currently sell for around $2,500 (edit jb)
It goes without saying that this is not the first time that Mandela s head has appeared on a coin. The Presidential Inauguration Medallion was minted
in South Africa in May 1994 and has become pretty sought after by coin collectors, according to Mr Demby.
But not one is a winner...
So does a Mandela image on a coin always equate with financial rewards? The seemingly obvious answer is that all coins sporting a Mandela bust will
become increasingly valuable with time. After all this is an iconic man revered as one of history s most extraordinary men. Right?
Well, one South African coin dealer had a fine old time spinning this yarn. It put out a statement claiming that "all legal tender coins with a Mandela
theme have shown the highest rates of financial performance in the shortest period of time". Back in 2006 this dealer started a marketing campaign for
the Mandela ZAR inauguration coins. An advertisement on its website claimed that one of these coins had sold for a staggering R100,000 ($15,000)!
That equates with a1.9m percentage rise in value in just six years!
What the advert didn t say was that this happened to be a proof coin rather than a coin you might find in your purse. A proof coin is an early sample
of a coin issue - this used to be done to check things like dyes but now more are struck for the purposes of coin collectors (otherwise known as
numismatists). You will never find a proof coin in circulation.
Predictably this dealer was rapped over the knuckles for a misleading advertising. The man on the street might be led to believe that any old coin with
Mandela s smiling face on it might sell for ZAR 100,000. And that is simply not true.
According to figures from the SA Mint in 2000 5.2 million Mandela ZAR5 coins were issued. At the end of 2003, due to a shortage of the coins, a
further 1.024 million Mandela coins were struck. But only a few thousand were sold as "proofs"
If the law that rarity makes a coin a "collectible" applies, then the circulating Mandela coins have no great intrinsic value. But that hasn t stopped
many people hanging on to them.
There is a simple rule to apply when buying collectible coins. The fewer there are, the rarer they are - and the more likely they are to appreciate. Add to
that the face of one of the world s most iconic men and there is a chance of a winning formula.
If this floats your boat, the limited edition Nobel Prestige Set with two 1oz gold coins and one 1oz silver coin may be for you. Only 1500 have been
minted around the world, so these are considered to be scarce Mandela coins. This set is currently selling for 42,000 (+/-$4,300)(edit jb).
Happy collecting,
Erin and Isabel

2009 gold price revised down - Standard Bank

2009 gold price revised down
Jade Menezies
Posted: Mon, 19 Jan 2009

[miningmx.com] -- The 2009 gold price could average $900/oz because of decreased demand and an easing of a prevailing supply deficit, said Standard Bank in its Equities Research report for this year.

“Our gold price forecast for 2009 has changed to US$900 from our previous forecast of US$980/oz” Standard Bank said in the report dated 16 January. The average price for 2008 was $872. The impact of the credit crisis will be strongly felt on the demand side for gold, it said. “A slowdown in global growth will likely affect fabrication demand specifically gold jewellery, electronics and other industrial components,” said Standard Bank. “We estimate the downturn in fabrication demand could be between 240 tonnes and 360 tonnes in 2009.” The gold price has not been immune to the global financial crisis; however, relative to almost all other commodities it has been an outperformer, said Standard Bank. The up-trend of the gold price depends heavily on the performance of the dollar, for which the outlook in the second half of the year is poor, MD of GFMS Analytics, Rona O’Connell told SAfm Market Update. “We could certainly see the old high challenged and possibly even taken out, but whether we can stay much above $1,000 for any reasonable period of time has to be open to question, I'd have thought,” she said. The main drivers of the gold price will be investment flows and speculators because the physical side of the market is weak, she said. “The investment fraternity is still relatively friendly but, as I say, not quite friendly enough yet, and the hot money is obviously one of the most important elements when it comes to pushing prices,” O’Connell said. “So, increasing investor activity, particularly from the institutions, from pension funds, is likely to create a drain on the metal supplies. That almost by definition would then be coloured by speculative activity, as speculators piggy-back on top of it - and that's going to be driven by economic and financial uncertainty,” she said. Standard Bank said its calculations now showed the physical gold market in a neutral position for 2009 against a previous expectation of a 315 tonne supply deficit. "We believe the gold price will be volatile and will likely rise significantly by fourth quarter 2009 on the back of seasonality and a gradual upward trend in global GDP. We maintain our long-standing view that the supply and demand fundamentals will remain intact for a long-term upswing in the gold price," it said. O’Connell said sales under the Central Bank Gold Agreement fell considerably during 2008 and was unlikely to be much different this year, meaning there is less gold available to the market.

Gold's 2 year cycle

A Mineweb reader has noticed a recent two-year cycle for gold price behaviour which, if it continues will likely give some guidance to price movements this year and next.
Author: Joseph Cafariello
Posted: Tuesday , 06 Jan 2009
view original article here

EDMONTON, CANADA -

There seems to be a two-year cycle in the gold price which has been repeating itself since about 2004. The even years follow one pattern, while the odd years follow another pattern. The even years tend to reach exaggerated extremes to the upside and to the downside on a percentage basis, while the odd years tend to be a little calmer with less volatility.

For example, 2008 went very much like 2006, with exaggerated highs reached in the spring of each year, and a late start to the traditional autumn-winter-spring upswing, which began around October/November of 06 and 08. On the odd-number side, 2007 went much like 2005, with moderate highs reached in May of each year, and an early start to the traditional autumn-winter-spring upswing, which began around August/September of 05 and 07.

If this is indeed a reliable cycle, we can expect 2009 to be much like 2005 and 2007 all throughout the year. The first half of 2009 should see gold follow the same pattern as the first halves of 2005 and 2007. In the springs of 05 and 07, gold kept hitting its head against the previous year's high all throughout the spring. More than once during the spring of 2007, gold topped out at about $690, coming to within about 5% of the 2006 high of $735. Similarly, the spring of 09 should see gold hitting its head against 2008's high of $1,035, coming to within 5% of it, or up to about $985. That will be the high for the first half of 2009 at around the beginning of May, though this will not be the high for 2009 as a whole.

Given the odd-number year pattern, we might also expect the back half of 2009 to be much like the back halves of 2005 and 2007. In both 2005 and 2007, the summertime pull-backs were modest, and the autumn-winter-spring upswings started early, at around August/September of 05 and 07. The latter half of 2009, then, should see a modest summer-time pull-back of about 5% to 7% of its spring 09 high, taking gold down from $985 in May 09 to about $925 by August 09. However, the low for 2009 will still be the upcoming January low of $800, which is now only about a week or two away. The lows of January 2005 and January 2007 were also "the" or "close to the" annual lows for those years. So the low of 2009 will be at around $800 in January.

The high for 2009 will come in December. The traditional autumn-winter-spring upswing in 2009-10 will be much as it was in 2005-06 and 2007-08, with an early start. The year-end run for 09 will begin around August or the beginning of September, jumping from about $925 in Aug/Sep 09 and rising steadily until the end of December 09. The annual highs for 2005 and 2007 were hit in or near December of each year, and each high was about 20% higher than the average of their first halves. Thus, the annual high of 2009 will be hit in or near December, and will be 20% higher than the average of its first half, putting the 2009 high at about $1,150 in December.

The traditional autumn-winter-spring upswing, however, will certainly not end in 2009, but will spill over into the spring of 2010 much as it did in the springs of 2006 and 2008. The high in the spring of 2008 was about 40% higher than high in the spring of 2006. Hence, the high in the spring of 2010 will be about 40% higher than 2008's high of $1,035, putting gold at about $1,450 in the spring of 2010. Then, the summertime pull back of 2010 will be just as stark as were the summertime pullbacks of 2006 and 2008.

And so the two-year cycle will continue, where even-number years follow a pattern of extremes, while the odd-number years are calmer, but with a nice upward kick at the end. This two-year cycle with even-number years on the extreme side and odd-number years on the moderate side will continue until the commodity boom is over (say around the year 2030, when the populations of China and India finally achieve a 75% middle-class), and until the US dollar recovers at around the same year (2030), when the rest of the world will be looking to the US as a nice place to shop given its then-to-be dirt-cheap dollar.

The above comment was contributed by Mineweb reader Joseph Cafariello who describes himself as "A raving gold bug and proud of it"

I just found this article, its quite old but has some great points fo investing, especially in gold. You can find the article in its original context here

A beginner's guide to investing in gold

Sep 19, 2007 By Mark O'Byrne

For centuries gold has been coveted for its unique blend of near indestructibility, beauty, rarity and because of its status as a universal currency. Empires and nations have sought to possess gold as a medium of international exchange, as a store of wealth and in order to increase and preserve power. Individuals have used gold as a store of wealth and as insurance against the fluctuations and depreciation of paper money and other macroeconomic and geopolitical risks. Perhaps no other market in the world has the universal appeal of the gold market.Successful investing is about the diversification and management of risk. In layman's terms this means not having all your eggs in one basket. We know from history that markets can and do crash and if you are not diversified your entire nest egg can be wiped out.

JSE takes a dive

Johannesburg - The JSE had sunk into the red by noon on Wednesday as investors around the world took profits and markets consolidated after the recent big moves.

By noon, the JSE all share index had given up 0.84% with resources losing 0.82% and platinum counters falling 0.53%. However, gold miners collected 3.87%. Banks weakened 0.72%, financials were flat (down 0.08%) and industrials lost 1.21%.

The rand was last bid at R9.34 to the dollar, from R9.31 when the JSE closed on Tuesday, while gold was last quoted at $863.87 a troy ounce from $848.65/oz at the JSE's last close.

Platinum was at $986.50/oz from its previous close of $964.50/oz.

"It's really not surprising that we are down at the moment. We have had some very big moves," an equities trader said.

"Shares have been over done in the short term. There is profit-taking and markets are consolidating.

"Metals have moved a long way and we could see them come off a bit more," he said.

"The worldwide rally seems to have run out of steam. Dow futures are down at the moment and it wouldn't be surprising if we close lower as well," he added.

Dow Jones Newswires reports that London stocks moved lower as investors consolidated gains from the recent run.

The FTSE was last down 1.32%.

US stocks are expected to fall at the open, caught in the downward momentum of lower trading in Europe. Martin Slaney, trader at GFT Global Markets, calls the DJIA to open down 86 points and the S&P 500 down 8.4 points.

- I-Net Bridge

In an interview on SAfm @ 18:25 on 08 December 2008

Krugerrands hit record prices and there is a shortage of the coins - Alan Demby

In an interview on SAfm @ 18:25 on 08 December 2008

[miningmx.com] -- THERE is a shortage of Krugerrands as trade in the gold coin picks up, said Alan Demby, the executive chairman of the South African Gold Coin Exchange.

"Our turnover has increased dramatically in the last couple of months. I suppose the best hedge, if you will, against the turmoil has really been gold coins and Krugerrands," Demby said on SAfm Market Update. "Of course, gold has come off its highs, but our saving grace in the South African context has really been the rand/dollar exchange rate which, as you all know, has fallen out of bed. So in the last month or two the Krugerrand has reached an all-time high of just over R9,000," he said. In 1986, six million Krugerrands were minted, but that has come down to between 50 000-100 000 coins a year. "But, you know, when the proverbial hits the fan, everyone goes for what really counts, and that's Krugerrands. In fact, today there is a shortage of Krugerrands and the guys can't keep up with minting Krugerrands. So after all is said and done, Krugerrands are still the most popular coin." The exchange-traded fund market is not really a competitor for gold coins, Demby said. "I think we deal with the retail investor, or collector if you will, much like clients buy between, say, one and 2,000 coins. And I think the big institutional buyers really trade in the ETFs," he said. "I like to see that we work alongside each other, and I think that the institutional investors probably trade that market much more aggressively and more frequently than our clients do," he said. "Our clients tend to be on average long-term hoarders, if you will, for want of a better word, and at some stage they might wish to sell or hand it over to their children, grandchildren," he said. "There are over 55 million Krugerrands. It's really easy to buy and sell anywhere from one Krugerrand to a couple of thousand Krugerrands. It's really a very liquid market."