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Platinum Maple Leafs Have Arrived!
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(February 21, 2012) We now have in stock the new 2012 1-ounce platinum Maple Leafs from the Royal Canadian Mint in stock. Plus, Andre Sharon explains why only gold is worth squirrelling away, no matter what the gold sceptics say. (Print, cut out, and carry with you at all times)
Platinum has been a popular choice lately among bullion purchasers, chiefly due to an incredible shift in the platinum/gold ratio which occurred late last year.

A bit of background: Over the past 40 years or so, platinum has nearly always traded at a premium to gold. For instance, at the beginning of 2011 platinum was at $1,753.00, whereas gold began the year at $1,388.00. But starting in February, gold began to climb while platinum traded narrowly on either side of $1800 through August.

Then came September: Platinum traded at $1,873 on September 2nd of 2011, but ended that same month at a price of $1511.That plunge led to platinum trading at a seldom-seen discount to gold, and from that point, retail interest in platinum bullion products soared.

Absent any new production of platinum Eagles from the US Mint, or platinum Maple Leafs from the Royal Canadian Mint, the only current convenient low-cost platinum bullion coin has been Australia’s 1-ounce platinum Platypus.

The Platypus has been a big seller in the US. Some 30,000 coins were produced in 2011, and 97% of those coins were sold here. Why so much demand in the US, and not in Europe? Well, although under EU regulations gold coins are not subject to a VAT (Value Added Tax), European purchasers of platinum, silver, and palladium products are hit with a VAT of around 18%. Naturally, this has practically eliminated demand for platinum bullion in Europe.

The Royal Canadian Mint recently began production of its 99.95% pure platinum Maple Leaf, with coins to hit the market in March. We will have part of the first release, and the price will be competitive with the Australian Platypus that we currently offer.

The platinum Eagle bullion program was begun in 1997, and at that time, interest in the U.S. Mint's first-ever platinum coin was tremendous. In 1998 sales reach their peak as 175,650 ounces of platinum Eagles were sold. From that point onward, demand slipped – in 2004 only 20,100 ounces of platinum Eagles were released.

Demand didn’t improve much over the next few years, and the program was suspended in 2008. As it turns out, a 21st century record amount of 67,400 ounces of platinum Eagles were sold during that year which marked the beginning of our Recent Economic Unpleasantness. But the decision had already been made by the Mint – platinum Eagles would no longer be produced. As it states today on the Mint’s website:

”United States Mint American Eagle Platinum Bullion Coins, which are not mandated by public law, have not been produced or offered for sale since 2008."

Just last month, representatives from the US Mint’s bullion Eagles program met with their primary distributors to discuss the feasibility of renewing the platinum Eagles program. Comments by the Mint were of a non-commital nature after the meeting. Quoted by Paul Gilkes in an article in the 2/20/12 edition of Coin World, Deputy U.S. Mint Director Richard Peterson said of the possibility,

"We're in the discussion phase right now. There's a lot of work to be done to bring a 1-ounce platinum coin to market. I don't know if we're going to get there in calendar year 2012. We are amenable to offering a platinum coin. We've got capacity. If the planets come into alignment where there's market demand and supply-chain availability, we're happy to bring that product out."

Oh well. But, back to gold. A commentary about gold recently caught our attention at 321gold.com, one that had previously been published by Peter Schiff, and at Minyanville.com.

Andre Sharon wrote it, and we bring you a short excerpt here:

I am an economist, with a degree in Money and Banking from the London School of Economics. I know all about the gold and gold-exchange standards. I analyzed the gold mining industry from Canada to Australia, and descended into mines a mile deep in South Africa. I became thoroughly familiar with gold's supply and demand components, and with the mines' marginal cost and revenue curves. And like Keynes and Buffett, I pontificated eruditely but cluelessly on the subject of gold's worth, while totally missing the core issue.

You see, all my education provided less insight than a single conversation I had many years later with the late Dr. Bernard Pacella, then President of the American Psychoanalytic Association. Though he was a quiet and modest man, in the course of our conversation, I soon understood that I was in the presence of an extraordinarily perceptive mind that could see around corners. By the time he was through, I felt that I understood gold for the first time in my life.

Dr. Pacella started by pointing out that the single most powerful force in all of nature is survival. Above all, survival of one's body, and then of the species. By extension, he continued, this involves protection of savings, the fruits of one's toil, and the expectation that there will be a reward for forgoing immediate consumption and gratification. Just as squirrels collect acorns which may sustain them and ensure their survival in the winter, so humans will, if they can, save for enhanced well-being in the future. The medium in which they hold their savings is crucially important: they will not rationally choose a vehicle which is vulnerable to erosion or worse, disappearance.

Here, the significance of gold falls into place. Consider its characteristics:

It is rare, and its quantity is limited. The entire amount extracted from the ground in all of history amounts to 165,000 metric tons. This is equivalent to a cube 20 meters long/deep/wide.

It is difficult and expensive to find, mine, and bring to the surface. It is therefore subject to only small and slow incremental supply.

It is indestructible, homogeneous, and easily reconstituted if diluted or broken up.

It is compact, and therefore permits transportation of a high value in a relatively small space.

It is the only universally used asset that can be instantly converted to cash (even by the world's central banks) that is not someone else's liability.

And, of crucial importance, it is anonymous.

Not one of these attributes is unique to gold. What makes gold unique is that it is the only form of money which combines all of them.

And while its monetary nature makes it difficult to price in the short-run, it also means an investor can count on one thing in the long run: it doesn't change its value - it merely mirrors the erosion in the purchasing power of fiat currency. For example, in the relatively brief 40 years since President Nixon untethered the dollar from its gold anchor, it has shrunk to 18 cents of its previous purchasing power.

We couldn't agree with Mr. Sharon more. Our only quibble might be with the 18c idea. Using the stated CPI numbers may yield that number, but today's gold price is telling a different story. For instance, forty years ago when the Treasury last attempted to fix the gold price, the figure was about $42/ounce. Divide $42 by $1700, and the dollar becomes worth less than 3c versus its 1971 gold value.

 

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