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The US
Mint is on pace to produce just over 1 million oz. of gold Eagles this year,
for just over 300 million Americans. The last time the US Mint produced
so much was before the year 2000 due to the Y2K scare. The current
Minting pace works out to be just under 1 gold Eagle sold per year for every
300 people in the nation. That would be 100/year for a small town of
30,000 people.
In our
first two months of business at the JH MINT, we have sold about 100 gold
eagles per month, for our area of 30,000 people, which is 12 times higher
than the national average. (90 in September, 112 in October). Our
local gold buying customers are very smart. They know the
historical importance of gold, and they are well aware of current market
conditions such as the excessive short selling by banks that can only be
discovered if you search heavily on the internet, such as can be found
in this excellent overview of the gold market by Chris Powell,
"Gold suppression is public policy and public record, not 'conspiracy
theory" here: http://gata.org/node/8001
Why
did we sell so much? A better question might be, why does America buy
so little?
Last
week, India bought 200 metric tonnes of gold from the IMF, which is 6.4
million ounces. How does that compare to US Gold Eagles sold? The
million one-ounce Gold Eagles that America bought is only 31 tonnes, 1/6th
the amount that India bought.
For
about ten years running, the Indian public used to buy an average of 800
tonnes per year. But in 2008 it was down to about 675 tonnes, and is
now down to 250 tonnes so far for Calandar year 2009, to add to India's
central bank purchase of 200 tonnes.
Likewise,
the American public also buys more gold than just Eagles, but not very much.
At the
JH MINT, and the Rocklin coin Shop, over half of the gold sold to the public
is in the form of Gold Eagles. All other forms combined, such as
Kruggerrands, Maples, Philharmonics, Gold bars, and foreign gold coins, are
less than half of Gold Eagle sales.
Thus,
I think it's a fair assumption that Gold Eagle sales for the US Mint represent
well over half of the gold purchased in America.
This
assumption would exclude all forms of paper gold, such as gold certificates,
gold pools, gold futures, gold options, gold accounts, gold ETFs, and all
forms of paper gold that don't typically result in any movement of any real
physical gold, but only represent some kind of gold liability. In our
view, this kind of paper gold no more represents the real gold market than do
paper dollars that used to be a valid form of gold liability.
This would also exclude gold jewelry, as that kind of gold is not suitable
for investment. This also excludes trading of old gold, since the net
in any such trade would be zero.
The
kind and type of physical gold sales at the JH MINT, and Rocklin coin Shop,
combined with the sales totals of the US MINT, imply that American investors
buy less than 2 million ounces of new physical gold per year, out of the 80
million ounces produced by the world's mines each year.
Those
2 million gold ounces bought in the USA can be worked out as a percentage of
Gross Domestic Product, GDP, which, in the USA, is $14.4 trillion.
America
spends 00.013% of annual wealth (GDP) on less than 2% of the world's annual
gold production. In contrast, India is spending 1% of their annual
wealth (GDP) on 18% of the world's annual gold production.
To put
it another way, the median household income in the USA is $50,233, and
buys, on average, $6.53 of gold per year. While in India, the per
capita income is $1,016, and that person buys $10.16 of gold.
The
per household numbers are a good way to put it into perspective, but they are
somewhat misleading, since nobody spends $6 on a gold investment since a
typical one troy ounce coin costs well over $1000.
The average gold purchase at the JH MINT far exceeds $1,500, which is the
price level to get the California excemption from sales taxes on
bullion. The average gold purchase is probably well over $6000.
That implies that less than one household in 1000 is acting to protect
themselves with gold. Or, again, stated another way, what this means is
that 99.9% of people in the US buy no gold at all.
The
implications are clear, and important to note.
Gold
prices are not "sentiment driven," not by US investors,
anyway. And those who claim that it is "sentiment driven by
Americans," are misleading people, because there is 0.01% sentiment for
gold in the USA. Those who claim that sentiment is a factor in the gold
price seem to be suggesting that 1/3 or 1/2 of all American investors are
swinging into gold and out of gold on a regular basis to affect the
price. The truth is vastly different. Gold is completely off the
radar screen of 99.9% of Americans.
In the
gold market, 99.9% pure gold effectively means "100% pure".
There is no real way to get gold significantly more pure than that.
Some refiners sincerely question whether it is possible to even make .9999
gold, or if that is merely marketing hype. In other words, in gold terms,
if 99.9% of Americans don't own gold, then America is "100% purely
out" of the gold market.
Imagine
what gold prices will do, as even 1-2% of American wealth starts to buy gold,
as is sure to do at some point. After all, at least some prudent
Americans will move to protect their dollars from inflation.
Well,
we don't have to imagine, we can calculate it to get a rough estimate.
One percent of $14.4 trillion is $144 billion. In a gold market that
sees annual production of 80 million oz., such buying could double or
quadruple the price, depending on how tight the market gets from competition
from other nations buying. $144 billion / 80 million = $1800/oz.
If
another tripling of the gold price attracts even 2% of American wealth into
the sector, as Americans like to jump on trends, that would be $288 billion,
and in that way, the gold price could easily start to run away well beyond
$3,600 per oz. ($288,000 million / 80 million oz. = $3,600), especially
when other, poorer nations, such as India, are already buying about 6 times more
gold than Americans.
You
should buy gold. Call the JH MINT today at (530) 273-8175
We are buying gold, too, like Cash4gold does.
Cash4gold
in the Roseville Galleria Mall was paying $13 per pennyweight for 14k gold on
the weekend of Nov. 7-8, when gold was about $1097/oz.. 1 troy ounce =
20 pennyweight. 14k gold is 14/24 = 58.3% 58.3% of $1097/oz. is
$640. Cash4gold offered $13 x 20 = $260. Cash4gold offered $260/$640 =
40.6%. Cash4gold is a rip-off.
We pay
at least 60% of the spot price for all scrap gold, and up to 85% of the spot
price if the gold is over 5 total gold ounces.
===============
Figures and sources:
US
Mint Gold Eagle 2009 Sales Totals:
2008: 860,500 oz.;
2009: (Jan-Nov. 1,098,500 oz.)
http://www.usmint.gov/mint_programs/american_eagles/index.cfm?flash=yes&action=sales&year=2009
USA
Population: 308 million, as of Nov, 2009
http://www.census.gov/population/www/popclockus.html
World
annual gold production: 80 million oz.
http://www.dailyfutures.com/metals/
USA GDP: $14.4
trillion
http://en.wikipedia.org/wiki/Usa_economy
India GDP: $1.2
trillion
http://en.wikipedia.org/wiki/Economy_of_India
India
annual gold imports: 250 tonnes + 200 tonnes by India's central bank.
http://www.stockwatch.in/india-s-gold-imports...ecline-63-23584
target="_blank" http://www.lewrockwell.com/rozeff/rozeff319.html
450 metric tonnes
= 14,467,836 troy ounces
target="_blank" http://www.google.com/#hl=en&source=hp...b658cc5049dc510
14,467,836
/ 80,000,000 = 0.18084795 = 18% of world gold production.
14,467,836
x $950/oz. = $13,744,444,200
$13,744,444,200
Dollar value of Indian gold bought / $1,200,000,000,000 Indian GDP = 0.01145
x 100 = % of Indian GDP spent on gold.
JH
MINT Estimates gold sales are over 1/2 as Gold Eagles, so total American gold
consumption is under 2 million oz.
$2
billion USA Gold bought / $14.4 trillion GDP = 2 / 14,400 =
0.000138888889 x 100 = 0.013% of USA GDP spent on gold.
===============
I strongly advise you to get real
gold and silver, at anywhere near today's prices, while you still can.
See
the JH MINT, and some of our gold inventory, at Youtube here (we
also now have Gold Buffalo 24k coins):
http://www.youtube.com/watch?v=9-ocXNbdEeU
Call us today.
Yes, we sell silver, and gold at the JH MINT!
Buy it
now! Buy Silver or Gold Now!
Inventory & Price List
Call the JH MINT, 10AM to 5PM Pacific, Monday to Friday:
100 oz. silver minimum, USA shipping, wire transfer only!
(530) 273-8175
Janelle (530) 913 0553 silver_support1@vzw.blackberry.net
http://www.jhmint.com/
Active, live price quotes list:
http://jhmint.com/cgi-bin/ssrbidask
Sincerely,
Jason Hommel
www.find-your-local-coin-shop.com
www.silverstockreport.com
www.miningpedia.com
www.bibleprophesy.org
Read
all the other articles written by Jason Hommel
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