Gold Filled
Posted in Uncategorized on 10/27/2008 12:55 pm by admin
Gold Filled
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Should I buy gold coins or gold stocks from Superior Gold Group?
Instead of gold or silver bullion, many investors opt for precious metals mining stocks because they normally yield higher percentage increases than gold and silver when metals prices rise. However, investing in precious metals stocks carries risks beyond buying gold or silver bullion.
The risks are many and varied, and sometimes unforeseen problems can send stock prices plummeting, which, of course, is true of all stocks. Management mistakes cause most mishaps. With precious metals and other mining stocks, the sizes and grades of ore deposits can be overestimated or the cost of extracting the ore can be greater than expected, resulting in lower profits or even losses.
Additionally, businesses always struggle with economic downturns, interest rate increases, labor troubles, governmental interventions, and environmental requirements. Increases in energy costs--even energy shortages--could plague some mining companies, notably those operating in Nevada's famed Carlin Trend.
For disastrous management decisions, Sunshine Mining and Refining Company comes to mind. Once a favorite of silver stock investors, Sunshine traded at $13 in early 1998 on the NYSE. However, by 2000 Sunshine was in Chapter 11, and its stock has traded at less than a nickel on the NASDAQ.
In 1996, Sunshine's management borrowed $30 million and in 1997 an additional $15 million for development of its West Chance ore body at the Sunshine Mine, after which the company is named. Part of the borrowed funds were used to delineate what the company calls a "world-class" ore body in Argentina.
Although management claims the West Chance efforts were successful, management misjudged cash flow and was unable to meet interest and principal payments on the $45 million. Efforts to refinance were unsuccessful, and the lenders took control of the company and mothballed the famed Sunshine Mine. Shareholders wound up with about 3.6% of the company. Unfortunately, this was not Sunshine's only brush with disaster.
In 1972, a fire in the Sunshine Mine nearly destroyed the company. While Sunshine's stock price suffered, the company managed to survive. Now, Sunshine Mining essentially has been taken over by its creditors.
Ashanti Goldfields (Ghana) and Cambior (Canada), two gold producers, also exemplify what can happen to share prices when managements make bad decisions. In early 1996, Ashanti (ASL) traded at $25; in 2000, Ashanti's stock traded below $1.50. In early 1996, Cambior, traded at $16; in late 2000, Cambior's stock traded at twenty-five cents.
Both companies got caught up in forward sales, and their balance sheets were severely damaged by margin calls in 1999 when gold rallied from the $250s level to $338 on the announcement that 15 European central banks would limit gold sales and leasing for five years (The Washington Gold Agreement). Gold's price move caused Ashanti and Cambior to liquidate assets and/or convert loans to equity shares at rates that severely damaged the value of their stocks.
Forward selling remains a threat to other gold mining companies because the amount sold short via forward sales is disproportionate to the size of the gold market. Some estimates have total forward sales equivalent to three to five years of production. One or two small short positions could be unwound with only minor price increases. But, the total position is enormous, and reversing it without the price of gold skyrocketing will be difficult, if not impossible.
Forward selling involves borrowing gold and selling it, and it is done mostly by mining companies because, logically, they should be able to replace the borrowed gold out of future production. Forward selling is profitable because the lenders, primarily central banks, lend with charges (lease rates) of about 1%, sometimes even less. The borrowers sell the gold with effective returns of somewhere between 6% and 10%, depending on the borrower's credit rating.
If the funds from the sales of the gold are invested in high-grade bonds, the borrowers receive probably 6% to 8%, for a tidy margin of 5% to 7%. However, if the borrowers use the funds in operations, thereby permitting those to forego borrowing in the credit markets, then they effectively receive higher rates, depending on the companies' credit ratings.
Hundreds of millions of dollars are made via forwarding selling. The central banks earn fees on an otherwise "sterile" asset. The mining companies earn 5% to 9%, and the bullion houses that arrange the central bank loans and handle the gold sales earn huge fees. Forward selling pays off like a broken slot machine--except for gold mining companies' shareholders. Shareholders lose because forward selling distorts gold's supply/demand fundamentals and puts downward pressure on the price of gold. However, forward selling is not without its risks.
If the price of gold rises, the lenders want additional margin deposits, which is what hammered Ashanti and Cambior. (Despite the borrowers having millions of ounces of gold in the ground, the central banks require "margin deposits," usually US treasuries. This works much the same way as margin deposits do on futures and stock exchanges.) It is believed that some bullion houses have even given the central banks guarantees that the borrowed gold will be replaced. If so, then adverse developments in the forward sales arena could force government bailouts, such as was the case with the Fed-engineered rescue of Long-Term Credit Management.
Precious metals stocks are a way to participate in the gold and silver market; however, compared to gold and silver bullion, stocks are risky. No one ever went broke holding gold or silver. The same cannot be said of paper assets. Call the <a href="http://www.usgoldinvestors.com">Superior Gold Group</a> today and start your account NOW!
About the Author
The Superior Gold Group is an industry leader in the precious metals investment industry. With 1,000's of satisfied customers and a long list of highly respected industry partners, the Superior Gold Group can help individuals, corporations and broker dealers alike to satisfy their desire to add gold, silver and platinum to their portfolios
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Gold-filled Ring Guard $2.29 Small size gold-filled ring guard can be used to make large ring fit a smaller finger. |
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Large Gold Filled Ring Guard #10296 $2.29 Large, gold-filled ring guard. |
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Small Gold-filled Ring Guard #10291 $2.29 Small, gold-filled ring guard. |
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Gold Filled Zodiac Bracelet $120 You don't have to be psychic or even spiritual to enjoy this gold filled zodiac bracelet. The gold filled piece is a sleek way to make a statement about your personality that revolves around your birthday. It's a great way to add a little flair to a simple look. Lobster claw closure. |
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Gold Filled Bead Bracelet $115 This gold filled bead bracelet by Ariel Gordon features two strands of soft, lush silk, which border large gold filled beads that wrap around your wrist. It comes with a hook and eye clasp that ensures it stays where it's supposed to and not on the floor. |
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Gold Filled Zodiac Necklace $105 Put your sign on display with this gold filled zodiac necklace. See how the stars have aligned to provide a glimpse into your personality. The gold plated necklace and pendant make for a great conversation piece. Lobster claw closure. |
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Gold - Filled I Love You Heart Locket $100 Gold-filled I Love You heart locket. |
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Gold-filled Dollar Sign Money Clip - Gold filled Money Clip $170 Gold-filled Dollar Sign Money Clip - Gold filled Money Clip is available from jewelbasket.com for only $119.00. Buy now and save. Jewelbasket offers the best value on Men's Jewelry, Moneyclips & Rings, jewelry and gifts. |
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Mima Desecheo Moonstone and Gold-Filled Necklace $91.54 Gold-filled locket with peach moonstone beads on gold-filled chain Made in United States |
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Gold-Filled Mom Heart Locket $100 Locket has a colored rose engraving. Gold-filled is a layer of real 14kt gold permanently bonded to a foundation metal. Approx. 3/4" x 3/4". |
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14kt Gold Filled Crucifix on 24 Chain $100 14kt Gold filled Crucifix - 34mm x 24mm on 24" chain. |
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14kt Gold Filled Heart on Heart with CZ-18 Chain $70 14kt Gold filled Heart on Heart with CZ on 18" chain. |
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Mima Desecheo Agate and Gold-Filled Leather Necklace $67.13 Agate stone, gold-filled bead detailing Gold-filled chain and mauve leather cord Adjustable closure Made in United States |
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Gold Filled Chain Mail Necklace $220 You'll love the unconventional style of the gold filled chain mailnecklace. Fearless fashion is all about thinking outside of the box and this piece does just that. This necklace fastenswith a lobster claw closure. |
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Engravable Gold Filled Money Clip $183 Engravable Gold Filled Money Clip is available from jewelbasket.com for only $128.00. Buy now and save. Jewelbasket offers the best value on Men's Jewelry, Moneyclips & Rings, jewelry and gifts. |
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Gauge Gold-Filled Teardrop Earrings $70 The classic tear drop shape is done here with master craftsmanship The gold filled wire is manipulated then lightly planished to give depth and complexity to this seemingly design Made in United States |
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A Crowd Watches a Balloon Getting Filled $39.99 Stacy Gold A Crowd Watches a Balloon Getting Filled - Photographic Print |
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14k White Gold Diamond Filled Circle Necklace $125 This charming necklace has been crafted of fine 14k white gold with a small circle filled with 0.05Carat sparkling diamonds. Treat youelf or a loved one to this sweet 14k White Gold Diamond Filled Circle Necklace. |
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14K Gold-filled Bright Oval Cuff Links $175 14K Gold-filled Bright Oval Cuff Links is available from jewelbasket.com for only $92.00. Buy now and save. Jewelbasket offers the best value on Gold Filled Cufflinks, jewelry and gifts. |
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1/20 Gold Filled 16mm Footprints Heart Locket - Chain Includedgold-filled $49.99 1/20 Gold Filled 16mm Footprints Heart Locket - Chain Included crafted in 14 kt Yellow Gold Filled Free 18 inches chain included . FREE GIFT BAG! FREE GIFT CARD! Finejewelers Style Number: QLS288. Brand: Finejewelers Collection Resizable: No Adjustable: NO Diamond Weight: 0.00 Gem Weight: 0.00 Gift Box: Gift Wrapped Material: Gold Plated |
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1/20 Gold Filled 16mm Cross Heart Locket - Chain Includedgold-filled $49.99 1/20 Gold Filled 16mm Cross Heart Locket - Chain Included crafted in 14 kt Yellow Gold Filled Free 18 inches chain included . FREE GIFT BAG! FREE GIFT CARD! Finejewelers Style Number: QLS289. Brand: Finejewelers Collection Resizable: No Adjustable: NO Diamond Weight: 0.00 Gem Weight: 0.00 Gift Box: Gift Wrapped Material: Gold Plated |
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1/20 Gold Filled 20mm Swirled Oval Locket - Chain Includedgold-filled $49.99 1/20 Gold Filled 20mm Swirled Oval Locket - Chain Included crafted in 14 kt Yellow Gold Filled Free 18 inches chain included . FREE GIFT BAG! FREE GIFT CARD! Finejewelers Style Number: QLS295. Brand: Finejewelers Collection Resizable: No Adjustable: NO Diamond Weight: 0.00 Gem Weight: 0.00 Gift Box: Gift Wrapped Material: Gold Plated |
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Gold Filled Cufflinks - Black Onyx 14K Gold-filled Cushion Shaped Cuff Links $168 Gold Filled Cufflinks - Black Onyx 14K Gold-filled Cushion Shaped Cuff Links is available from jewelbasket.com for only $88.00. Buy now and save. Jewelbasket offers the best value on Gold Filled Cufflinks, jewelry and gifts. |
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US $10.99





























































































