That is the number of times the Federal Reserve has raised rates in a decade. Ten years. This is not how a normal economy works. It is also evidence that we are far from having escaped the shadow of the financial crisis of 2008.
So what happens over the next decade? That is the subject of a lot of electronic ink being spilled. Rising rates are not friendly to $20 trillion in US government debt. Nor is it friendly to the tens of trillions of debt on the books of other world nations.
But what happens when the market forces rates higher? When the Fed is not in the front seat driving, but rather in the back seat watching?
It’s commonly thought that the price of gold and silver fall with rising rates. That correlation holds early in the cycle. However, if either deflation or inflation begins to rear it’s ugly head the price of gold and silver take on a life of their own.
With the glut of debt around the world, it is not out of the realm of possibility that we see one or the other. Just the possibility will send gold bullion prices higher until this situation is truly and finally resolved, and that may take years.
We thought we’d pass on a “feel good” story for those of us who love silver and gold bullion. Seems like Fargo, N.D. is developing a bit of a Christmas tradition. Dropping gold coins into Salvation Army Kettles has been occurring for a decade. Just last week, three more were found.
Timeless value. That is gold and silver. When expressed as a gift during the Christmas season, it further identifies just how precious the metal is. Gold. Frankincense. Myrrh. Although we hope the last two aren’t dropped into the kettles.
Could it happen? About 100 years ago, silver was the preferred precious metals investment in India. Because of the government crackdown on the underground economy by restricting its paper currency, the question is a good one.
India has long held a quasi-dual currency system. Paper rupees used in daily transactions, with gold bullion being a preferred savings currency. The removal of India’s two largest paper currency denominations have had a major impact on the price of gold in India, reviving the question of silver’s role in the country.
Gold demand in India has risen only 25% over the last decade while silver demand has risen by 600%. This isn’t the first time the Indian government has fought precious metals as a currency in their country. Last time it happened the shoe was on the other foot. Silver was taxed and gold became the preferred savings vehicle.
Turnabout is fair play, and people around the world will always seek for a way to protect their wealth.
Geopolitical uncertainty is supposed to help the price of gold right? Over the long term that is certainly the case. However, short to intermediate term fluctuations have more to do with capital flows and traditional correlations. This is likely the reason why the gold and silver price has performed poorly over the last few months.
Traditional correlations say that when the dollar and interest rates rise, the gold spot price falls. That certainly has been the case recently. The US dollar has soared since Brexit, and gained momentum after the election of Donald Trump. These combined with the vote by Italy to reject constitutional reforms (and thus their current government leadership) and we have a well entrenched trend toward increasing geopolitical uncertainty.
It is likely that Italy will now have a change in government that is much more open to leaving the European Union. The geopolitical and economic implications of this are significant. Once the reality of the magnitude of the changes coming becomes manifest in the market place and financial systems, we will likely see gold and silver prices reverse to the upside for a sustained period. In fact it could likely be the catalyst for a new multi-year bull market in gold and silver.
A mysterious 3,000-year-old gold torc, described as one of the largest ever discovered, has been found in the UK. A torc is a stiff ring of metal, made in a single piece or from several strands twisted together. The size of this torc (nearly 50 inches in length) has left open speculation as to what it was actually used for.
Discoveries like this remind us of the timeless value of gold. Whether used by Kings as a store of wealth, priests in ceremonies, or ornamentation, gold bullion has been a significant part of cultures for thousands of years.
In cultures such as India, gold is still a widely used metal for jewelry and ornamentation. These items also serve a dual purpose as a long term store of savings and thus Indian consumption of gold drives a substantial portion of overall gold demand. Meanwhile, in the United States, jewelry usage is more limited and gold demand is now primary investment related.
Regardless of its use, gold bullion has been, and always will be something that fascinates all of mankind. It’s future will be just as exciting as its past.
You can read the full article about this interesting discovery here.
When we think of cities that are struggling with debt, we tend to to look at Detroit, Chicago, and some of the larger cities in California. However the problem extends across the nation and into nearly every major metropolitan area, including Dallas, where the economy seems to be relatively strong. This widespread combination of debt and underfunded liabilities represents a significant factor in the looming debt crisis that threatens the financial system. And it could be a major catalyst for rising gold prices in the years to come.
The World Gold Council recently released a report on gold demand for 3Q16. In it they note that there was a sharp increase in gold investment primarily through Exchange Traded Products. While ETPs such as GLD stock mimics the gold spot price, it does not provide you with the true utility value of gold bullion. At some point, one has to ask themselves why they choose to buy gold and silver in the first place. For the vast majority of people it is more than merely to trade the price. They want to own physical silver and gold.
Central bank and jewelry demand may be down, however the average person is giving gold and silver a strong look based on the reality of our economic and geopolitical situation. They have come to the conclusion that we are in a period of time when the precious metals’ place as a hedge against inflation and/or geopolitical tensions needs to be activated.
Gold, a symbol of wealth and luxury, has been treasured by civilizations for millennia. Its lustrous yellow shine and malleability have made it a favorite for jewelry, coins, and various artifacts. But a common question that arises is, does gold rust? Let’s delve into the world of gold and debunk some myths.
Key Insights
Gold does not rust, because it doesn’t contain iron.
Gold is considered a Noble Metal and like other noble metals, it doesn’t react or mix easily with other substances.
Mixing gold with other metals like silver and copper may cause the gold to tarnish.
Maintaining gold items through proper care, such as avoiding chemicals and using gentle cleaning methods, can prevent tarnishing and preserve their luster.
OWNx makes it simple to invest in precious metals.
Gold stands out in the world of metals. Its unique chemical properties make it resistant to many of the issues that plague common metals. Unlike metals like iron, which undergo chemical reactions when exposed to moisture and air, gold remains largely unaffected. This non-reactivity is one of the reasons gold has been so highly valued throughout history.
Does Gold Rust?
When we talk about rust, we’re referring to the reddish-brown compound known as iron oxide. This forms when iron reacts with oxygen and moisture. Rust is a form of corrosion, which is the irreversible damage of material due to chemical reactions. Since gold doesn’t contain iron, it doesn’t rust. However, it’s essential to differentiate between pure gold and its alloys. While pure gold remains rust-free, its alloys, depending on the metals they’re combined with, might be susceptible to some form of corrosion.
Gold and Other Forms of Corrosion
While gold doesn’t rust, it can be subjected to other forms of corrosion, especially when alloyed with different metals. Tarnish, for instance, is a thin layer of corrosion that forms on some metals due to their reaction with oxygen. Metals like silver and copper are prone to tarnishing. Gold, when alloyed with these metals, can show signs of tarnish. However, the tarnishing process is usually superficial and can be reversed in many cases.
Gold Alloys and Their Susceptibility
Pure gold, often termed 24-carat gold, is soft. To enhance its strength, especially for jewelry, it’s alloyed with other metals like copper, silver, or palladium. These alloys, while providing strength, can sometimes make the gold more susceptible to tarnishing. For instance, 14-carat gold jewelry, which is about 58.3% gold, might tarnish faster than an 18-carat piece, which contains 75% gold.
Caring for Gold Items
Gold items, especially jewelry, require care to maintain their luster and prevent tarnishing. Here are some tips:
Avoid exposing gold to chemicals like perfumes or cleaning agents.
Remove gold jewelry when washing hands or showering.
Gold is known as a Noble Metal. In simple terms, think of noble metals as the aristocrats of the metal world – they don’t like to mix or react easily with other substances. This quality makes gold, and other metals like platinum and palladium, resistant to tarnishing and corrosion. However, when gold is combined with other metals that aren’t as noble, like copper or silver, it can become more reactive. For instance, if gold is mixed with copper, it might start to tarnish when exposed to certain chemicals in the air. But remember, it’s the copper in the mix that’s reacting, not the gold itself.
The elements with the black background below are typically considered to be Noble Metals.
Other Noble Metals
Commonly, gold, platinum, and platinum group metals like ruthenium, rhodium, palladium, osmium, and iridium are classified as noble. However, this varies by field. In physics, only copper, silver, and gold are considered noble, while dentistry may exclude silver due to its reactivity in the mouth. In a broader chemical context, the list can include additional elements like copper, mercury, and even some semimetals. Therefore, what is considered a “noble metal” can change based on the specific criteria and context.
The Fundamental Stability of Gold
At the atomic level, gold is less reactive than many metals. It doesn’t easily lose or gain electrons, making it stable and resistant to many chemical reactions. This stability is why gold doesn’t corrode like iron or tarnish like silver. It’s also why gold has been used for centuries in various applications, from jewelry to electronics.
Gold in Everyday Life
Gold’s resistance to corrosion and its excellent conductivity make it valuable in many modern applications. For example, gold is used in electronics because it doesn’t corrode, ensuring that devices function reliably. Gold coins and bullion are also popular among investors as a hedge against economic instability, given gold’s enduring value.
Cleaning and Caring for Tarnished Gold
If your gold jewelry or items show signs of tarnish, don’t fret. Here’s how you can restore their shine:
Mix a few drops of mild dish soap with warm water.
Soak the gold item in this solution for about 15 minutes.
Gently scrub the item with a soft cloth or a soft-bristle brush.
Rinse with warm water and air dry.
For more stubborn tarnish, a paste of baking soda and water can be used. However, always test a small, inconspicuous area first to ensure it doesn’t damage the item.
Gold’s Place in the World of Metals
In the grand scheme of metals, gold holds a special place. Its unique properties, combined with its rich history, make it one of the most sought-after metals. While it doesn’t rust or tarnish easily, understanding how to care for gold and its alloys ensures that your gold items remain pristine for years to come.
In conclusion, gold’s enduring luster and value are not just due to its beauty but also its chemical stability. By understanding the properties of gold and how to care for it, we can ensure that our gold items remain as radiant as the day we acquired them. Whether you’re wearing a gold ring, investing in gold bullion, or using a device with gold components, this precious metal’s resistance to rust and tarnish ensures it stands the test of time.
OWNx makes it simple to invest in precious metals.
Gold, being one of the precious metals, doesn’t rust in water. However, if the gold is alloyed with other metals, those metals might react with water or other chemicals, leading to discoloration.
How can you differentiate between tarnish and rust on gold items?
Rust is a reddish-brown compound that forms on iron or iron alloys. Tarnish, often seen on silver coins, is a thin layer of discoloration that forms on metals. If a gold item shows signs of discoloration, it’s more likely to be tarnish than rust.
How can you tell if gold is real or fake?
Real gold doesn’t rust. If an item labeled as gold shows signs of rust, it’s likely not actual gold. Other methods include the hallmark test, magnet test, and professional appraisal.
Why is gold often alloyed with other metals?
Pure gold is a soft metal. To increase its strength and durability, especially for jewelry, it’s alloyed with metals like copper, silver, or nickel.
Can gold corrode under any circumstances?
While gold is highly resistant to corrosion, in very rare and specific chemical environments, it might corrode. However, such conditions are uncommon and not encountered in everyday life.
What other metals are as resistant to corrosion as gold?
Platinum and palladium are two metals that, like gold, are resistant to corrosion and tarnishing.
Is tarnishing a sign that my gold jewelry isn’t pure?
Tarnishing can occur on gold alloys, especially those with metals like copper or silver. Pure gold doesn’t tarnish, so if your gold jewelry tarnishes, it might indicate the presence of other metals in the alloy. Cleaning tarnished gold can restore its original luster.
Why do silver coins tarnish faster than gold items?
Silver coins, unlike gold, are more reactive and can tarnish more quickly when exposed to certain environmental factors. Gold’s resistance to tarnish is one of the reasons it’s valued among precious metals.
How can you clean tarnished gold effectively?
To clean tarnished gold and restore its shine, a gentle cleaning solution can be used. It’s essential to ensure the method is suitable for gold and won’t affect any underlying metal in an alloyed item
How do gold bars stand against tarnishing compared to other precious metals?
Gold bars, renowned among precious metals, are notably resistant to tarnish. However, if alloyed, the underlying metal might influence its tarnish resistance, leading to subtle gold tarnish over time.
What’s the recommended method to clean gold tarnish?
To rejuvenate tarnished gold, a mild cleaning solution is advised. It’s crucial to ensure the cleaning method is gold-friendly and doesn’t compromise any underlying metal in alloyed pieces.
This spring we sent out an alert to our clients stating that we believed the price of gold had finally broken out of a four-year decline. Since then, gold has made a confirming move to over $1,370 per ounce. The recent drop to the $1,250 level may leave some wondering if this move was a false move or just a healthy pullback.
When bull markets turn, they rarely do so in dramatic fashion. The painful bear market is still fresh in people’s minds, thus initially the market climbs what long time market participants call a “wall of worry.” Where does the price go from here between now and the beginning of 2017?
The answer is, nobody knows for certain. One can draw on history to make a case for a gold to pull all the way back and retest the $1,050 breakout level. Others can make a case for the immediate resumption of the upward trend. We take no sides in these predictions. Many a gold dealer has used hype and cheer leading to drive short term sales. That’s just not our style.
Rather, we like to focus on why our clients own gold and silver in the first place and how to best use our technology platform to serve them as they seek to achieve their goals in 2017 and beyond. And as we turn the corner on 2016, there are several factors that we believe support the resumption of a longer term bull market in gold and silver.Read More
Owning gold and silver creates different images in peoples minds. Some of our clients are active swing traders who thrive on the swings in the spot price of gold and silver. To them, “volatility” is literally gold. They live in the world of Now, and to them we say – more power to you. For the vast majority of our clients however, their reasons to own gold and silver transcend short term trading profits. They are interested in the long-term (3-5 year+) benefits that gold and silver provide.
As it is, today we live in a world where long established trends are changing. And while gold and silver bullion shine such an environment, the path is rarely a straight line up. This is more so when today paper proxies for gold and silver (such as GLD stock) and an instantaneous access to information on global financial and geopolitical events can amplify short and even intermediate term price swings.
