Gold blog, gold blogs, blog silver, precious metals blogs

Friday, CMIGS began shipping the year’s first 2009-dated US Mint Buffalo Gold Coins. Before the release, there was speculation that the mintage would be low because the Mint did not produce them until late in the year.

However, as of this writing, the Mint’s web site shows that 86,000 Buffalo Gold Coins have already been sold. Further, wholesalers have placed second orders with the Mint and were given no indications that the coins are in short supply. This seems to indicate that the Mint produced a large quantity before releasing them, and I’m now guessing that mintage of 2009 Gold Buffs easily will exceed 100,000. In 2008, the US Mint sold 172,000; in 2007, 167,500 coins were sold. In 2006, the first year they were minted, the Mint sold 323,000.

As discussed on our web page about Gold Buffalo Coins, packaging remains a problem. Of greater concern is that promotions of First Strike coins have already surfaced.

We caution against paying high premiums for so-called First Strike coins. Actually, since our 2006 expose of First Strike coins, most promoters now call them Early Release coins. By either name, we warn investors not to buy them at high premiums because the premiums on such coins do not hold up in the secondary market.

CMIGS has 2009 Gold Buffaloes in original packaging for immediate shipment. Buffs carry premiums a few dollars higher than the US Mint’s Gold Eagles.

The U.S. Mint just announced that it will begin taking orders for its 1-oz American Buffalo gold coins October 15. CMI Gold & Silver Inc. will take orders for Gold Buffaloes now but does not anticipate having the coins for shipment until the last week of October.

Right now, Gold Buffaloes are priced the same as new 1-oz Gold Eagles. If demand exceeds supply, Buffs may pick up premiums as did 1-oz Gold Eagles during the 2008 financial crisis.

The Gold Buffaloes present an interesting situation. Federal law requires the Mint to produce Buffs every year, but the law does not state the quantity. Further, the Mint did not disclose the number of coins it plans to produce. However, the announcement said that “should demand exceed supply” the Mint will institute “allocation procedures.” Considering the how the Mint worded its announcement, it may not be planning on turning out many Gold Buffaloes.

If the Mint produces only 50,000 to 100,000 Buffalo gold coins, they could be really good buys, with premium potential in future years. Premiums could come from them being a low mintage year as well as from telemarketers promoting them. Telemarketers love to hype low-mintage coins. Of further interest is the Mint’s announcement about fractional ounce Gold Eagles.

Ordinarily, by October the Mint is gearing up for next year’s coins. Actually, in past years in late October and early November, the Mint has stopped selling current-year coins so as to dedicate all efforts to the following year’s production. This year, however, in December the Mint will take orders for 2009-dated fractional-ounce Gold Eagles for the first time this year. As with Gold Buffaloes, mintages of fractional-ounce Gold Eagles coins could be small.

Meanwhile, gold buyers wanting fractional-ounce gold coins should consider the fractional-ounce Krugerrands, which only recently became available. They are priced at government-issued fractional-ounce coin prices. However, the quantity for immediate shipment is not large as the importer has not been bringing in large quantities. The next shipment from South Africa is expected later this month.

If you would like to discuss buying Gold Buffaloes or fractional-ounce Krugerrands, call us at 800-528-1380. Our brokers take call 7:00 a.m. to 5:00 p.m. MST, Mondays through Fridays. If you would like to know more about doing business with CMI Gold and Silver Inc., visit our Doing Business with CMIGS page.

For the first time in twenty-five years, fractional-ounce Krugerrands are being imported into the U.S. in large quantities. And, the news gets better: the coins are priced at the standard premium for fractional-ounce government gold coins. As buyers of fractional-ounce gold coins know, these coins, when they were available, carried huge premiums in the secondary market after the financial crisis of 2008.

The first shipment is expected to hit the U.S. about September 24, and we expect to begin shipping to buyers the following week. Note: that is what we anticipate. We have absolutely no control over when the coins will arrive, but if the shipment time of these fractional Rands goes as recent imports of one-ounce Krugerrands have gone, the coins should be here as anticipated.

Three sizes will be available: ½-oz, ¼-oz and 1/10-oz. We anticipate the biggest demand for the 1/10-oz Rands and are going to attempt to carry a large inventory of them, which means we will be able to make prompt shipments to buyers—unless the demand is bigger than we anticipate.

We have not been told how many fractional Rands are being imported, and the importer does not know if the South African Mint will turn out additional fractional Rands in the near future.

On another note, as this is written we have ten Specials posted on our Specials Page, all of which are gold items. Generally, the items we put on the Specials Page are lesser-known gold or silver investments, forms of gold or silver that we cannot offer on a regular basis because we cannot always get them.

Still, they are good investments because they are priced much lower than if we had to go into the market to get the items. A good example: Austrian 100 Corona gold coins, which were standard gold bullion coins along with Krugerrands and Mexican 50 Pesos in the 1970s, are put on our Specials Page when available. The Specials Page offers investors opportunities to buy low premium gold.   As the items on the Specials Page are sold, they are removed.

If you would like to discuss buying the fractional Rands or any of the items offered on the Specials Page, call us at 800-528-1380. Our brokers take call 7:00 am to 5:00 pm MST, Mondays through Fridays.

My Sept. 7 post noted that gold had broken out from a consolidation triangle, a move that often forecasts still higher prices. And, higher prices we got, with gold hitting an intraday high just short of $1,012.00 in the New York market on Friday, Sept. 11. Silver followed suit, closing at $16.72. However, it was learned Friday that the large commercials (LCs) increased their COMEX short positions in gold to an all-time record high of 270,797 contracts. The previous record was 252,740 contracts, set in February 2008.

It needs to be noted that the reporting cutoff was Tuesday, which means that the LCs had three additional trading days since the report to add to (or reduce) their positions. The common guess is that they increased their shorts, but we will not know until Friday, Sept. 18.

Increases in the LCs’ short positions often have been harbingers of price declines, sometimes precipitous declines over a few days. However, the LCs have not always enjoyed lower prices after increasing their short positions. In fact, the previous record 252,740 contracts in February 2008 came just before sharp price increases. Although the LCs often get it right and get to cover their short positions at lower prices, that is not always the case.

Gold’s mighty move from the summer of 2005 through the spring of 2006, basically a move from $450 to $700, occurred while the LCs carried large short positions, resulting huge losses for the LCs. So, the big boys are not always on the right side of the moves.

If the LCs always increase their short positions on price rises, there have to be times when they suffer losses because gold and silver are in long-term bull markets. Could this be one of those times?

Gold is up three-fold since 2001, from $250 to $1,000. Silver’s 2001 low was just above $4 to just short of $17. This is a great gold/silver bull market, and I don’t see it ending any time soon. If you’re in, buy the dips. If you’re not yet holding physical gold or silver, buy now. Get comfortable with the process. See that the metal you’re getting is real, not electronic impulses on silica bubbles.

Readers of this blog mostly are long-term gold/silver investors who are not concerned with intermediate moves in gold/silver prices except to use dips in prices as opportunities to add to their positions. Still, daily $1 jumps in silver and $20 jumps in gold are of interest to all precious metals investors. If nothing else, investors have wonder if the moves are of significance in the long-term view.

Gene Arensberg, analyst and editor of Got Gold Report, believes that gold’s September 2 price increase of $21.50 was significant in that it was a breakout from a huge consolidation triangle. Arensberg expects the trading to continue in the direction of the trend that preceded the consolidation. The direction of the trend preceding the consolidation triangle was, of course, up.

This is reassuring to investors who have bought in the past few months. Investors who entered the gold/silver market a few years back were long ago confident that they made correct decisions. Technically, the picture is not as clear for silver, but the price action to the upside confirmed gold’s move out of the triangle.

Reassuring to silver investors are the positions reported by the large bullion banks. The nominal sizes of the banks’ short positions in silver were essentially unchanged, meaning that the banks did not add to their short positions as prices rose, which is what they usually do if they expect lower prices in the intermediate. When the bullion banks expect lower intermediate prices, they add to their short positions.

Relative to all commercial traders’ (36 in all) net short silver futures positions, the two bullion banks’ percentage fell from 76.3% to 62.2% over the past month. This is another short-term positive sign for silver investors as it suggests the bullion banks are not yet ready again to take increased short positions in silver.

Arensberg’s analysis also shows the bullion banks lightening their short positions in gold, which may be the reason that gold broke out of the consolidation triangle. Or, the bullion banks may have reduced their short gold positions out of fear that gold was going to break out the triangle regardless of what they did.

Although following what the bullion banks are doing is interesting (sometimes fascinating), the overriding reasons for buying gold and silver are the expansive monetary policies of the world’s central banks, primarily the US central bank, the Federal Reserve System. In the short-run, the bullion banks’ activities will influence the prices of gold and silver, but in the long-run the quantity of freshly-created fiat currencies will determine gold and silver prices.

Arensberg’s Got Gold Report is, in my opinion, the best free technical analysis of the gold/silver market, especially his look at the large commercials’ and the bullion banks’ positions in the gold and silver markets. I encourage gold/silver investors interested in technical analyses to read Arensberg’s Got Gold Report, a copy of which will be posted on www.stockhouse.com in a few days. When the report is up, I will provide a link.