GOLD

There is much talk today about gold and silver being profitable investments.

Although to the savvy investor this is clearly a reality, if investment is the only employ one has for gold and silver, then many of their greatest attributes and values have been overlooked.

At Dan El we uphold the rightful place of gold and silver in disclosure of their full spectrum of traditional uses and submit that these unique precious metals have unremittingly sustained their appeal and function as proficiently in 2015 as they did in 1000 CE or even 4000 BCE.  Gold predates coins* by four and a half millennia and paper money* by five and a half millennia, and yet gold is still seen in 2015 by central banks as their preferred means of support to government issued coin, paper notes, and “invisible money”. (Collectively referred to as M1*.)

Throughout history, whenever there has been economic, political or social instability within a community, the ability of gold and silver to repel the attrition of such uncertainties is without parallel.  Professor Roy W. Jastram formalised this observation in his work “The Golden Constant”.  His research entailed studying the purchasing power of gold in modern history from 1560 until 1976. His conclusions were that the purchasing power of gold not only granted stability in times of economic peace, but increased significantly1 in times of economic turmoil.

By taking a brief walk down the memory lane of gold and silver as currency, history will quickly flaunt memorable examples that reconfirm the constant purchasing power of these unique precious metals.

During the rule of the Roman Empire at the time of Christ (1st Century CE), one ounce of gold would have purchased a Roman citizen his toga (suit), a leather belt, and a pair of sandals. Today two millennia later in the west, one ounce of gold will still buy a man a suit, a leather belt, and a pair of shoes.  Nothing has changed. 

In 1000 BCE when King Solomon ruled the House of David we find that this King was often in the market purchasing horses to be trained for his army. We know from historical records that Solomon had thousands of stables2 for these horses that he purchased from Egypt for the price of 150 shekels* of silver.3

In today’s unit of weight this would equate to 55 troy ounces of silver. In Australia, thoroughbred horses off the track, can still be purchased for the equivalent of 55 troy ounces of silver. Nothing has changed.

The Islamic world, ever since the birth of Islam in 600 CE, have embraced gold and silver for the traditional benefits these metals offer, and have granted these metals their rightful and prominent role as units of exchange. The Gold Dinar* and the Silver Dirham* are their chosen currency. In the Near and Middle East, a chicken at the time of Mohammad (600 CE) would cost a family one silver Dirham. Today 1,400 years later, a chicken in the Near and Middle East would still cost a family one silver Dirham.... nothing has changed.   In modern Islam, Gold and Silver still enjoy their traditional roles, one of which is an astounding hedge against inflation. The advertising slogan for the International Gold Dinar Exchange is “zero inflation in 1400 years”... and they are right.

A more modern example of the hedging abilty of precious metals can be drawn from the American experience.  On July 6th 1785, the U.S. Congress unanimously voted to adopt the Spanish Silver Dollar as the official monetary unit of the United States of America. The Coinage Act of April 2nd 1792 (granted by Section 8 ,Article 1 of the U.S. Constitution) defined the US dollar as being 371.25 grains of silver.  Therefore, America's foundational application of monetary policy, was that of a silver standard. However, in time this precious metal standard became debased, and then eliminated entirely.  For example the Silver Dime (10 cents) was a coin made up of 90% silver and 10% copper, and the actual silver weight per coin was .07234 of an ounce.  These Silver Dimes were last minted in 1964.   In 1963 a gallon of gasoline in America sold for 31 cents.  This meant that 3 Dimes could buy a gallon of gasoline.  The total weight of silver in 3 Silver Dimes is .217 of an ounce, which today would buy a gallon of gasoline anywhere in the USA..... nothing has changed.

But why are silver and gold referred to as “precious metals” ?  There are 23 billion troy ounces of silver above the ground worldwide. By dividing these evenly among the 6.7 billon people on the earth, we find there is less than four troy ounces of silver per person. Additionally the above ground worldwide supply of gold totals only 4.6 billion troy ounces. If we were to evenly divide all the gold above the ground worldwide between the people on our planet there would be less than 8/10ths ounce of gold per person!  Gold and Silver are truly precious metals.

It is of interest that throughout history, gold and silver has always returned to a ratio of approximately 14 to 1, which means that it would take 14 measures of silver to buy 1 measure of gold. This is not totally surprising when we understand that silver is found in the earths crust at a ratio of  73 parts per billion and gold at approximately 5 parts per billion.  When we divide these two figures we find a ratio of 14.6 to one. Historically, this has been the ratio of comparative "worth" between the two metals, however, today that ratio is approximately 70 to 1. There clearly exists today a great disparity in this “time established” ratio of equilibrium between silver and gold that many experts believe will be revisited which would provide the conservative investor with a phenomenal opportunity for gain.

Although Dan El endorse to the broader populace the role of gold as being more akin to "insurance" than investment, it is universally accepted that any worthy "insurance" should be valued and measured by its ability to offer the greatest "return" when it’s needed the most. This objective is achieved in no other privately held asset better than in Gold and Silver. They alone, stand supreme.

Christ in the Storm on the Lake of Galilee
by Rembrandt. 1633. Oil on canvas. Isabella Stewart Gardner Museum, Boston, MA, USA

 

The ability of private silver and gold holdings to serve as a reliable insurance policy and a sound investment strategy, particularly during the economic storms of life, are without question and worthy of consideration.

It is the view of Dan El, that without detracting from the present occasion to invest in gold and silver, that if investment is all one sees in these precious metals, then the holder has been short changed and has missed out on their broader and more personal designs.

For 6000 years since man first walked in the Garden of Eden, gold and silver have established themselves as a sound medium of exchange, a store house of wealth, a true measure of value, a secure protection of heritage, an adornment of beauty and a means of transferring the efforts and rewards of ones labour from his generation to the next or from one country to another.

Further, gold has no "use by date".... it can’t be counterfeited... it can’t be deflated by the printing of paper money.... it has no time limits or shelf-life.... it’s internationally excepted.... trans-cultural.... trans-lingual.... trans-political.... trans-geographical.... and trans-millennial.  Fire won’t burn it.... water won’t ruin it.... it can store much wealth in a small space.... it requires no maintenance.... does not need feeding...it’s not affected by inflation...or subject to weather conditions...its duration will last for thousands of years.... it's easily transported, and they are not making any more of it!

But most importantly, it is a private, God given asset.

                                                                                                                      Please...enjoy our pages on Gold and Silver.

WHY AM I BUYING GOLD?

When considering a purchase of gold or silver, you should ask yourself the question.. "What is my reason for buying gold?"

If your answer is either ….

1. Investment

2. Insurance 

3. Transfer of Wealth

" .... then Dan El can assist."

We will consider these reasons seperately.

INVESTMENT

When investing in physical bullion be it gold or silver, you would generally purchase what is called "London Good Delivery Bars". These are either a 400 troy ounce gold bar with a minimum purity of 995 (that is 995 parts in 1,000 are pure gold), or a 1,000 troy ounce silver bar, with a purity of 999. (Dan El also offer a one kilo gold bar at 999.9 purity)

As these bars are big, heavy and expensive (go to GOLD & SILVER CERTIFICATES page on this website to calculate today's price for a 400 try ounce gold bar and a 1,000 troy ounce silver bar),  investors often prefer to have the bars held in vaults, and obtain proof of title to their bars. Investors then trade these bars off when the market has favored their position. Any profit realised is then the investor’s return on investment. Because the investor rarely takes possession of these bars, he can enjoy the saving of costly shipping, multile handling fees and transit insurance which affords the investor opportunity to maximize profit. 

Dan El provides this service to its clients, and acquires gold and silver bars for its clients direct from bullion refineries at very low margins over spot. Our clients obtain these bars through Dan El at our cost, which allows them to enter the bullion market on the same footing as the big players in the industry.  These bars are then transfered to private vaults where they are stored at extremely competitive rates, and a Certificate is issued to the client. Dan El clients pay transport to and from the vault, which over a shipment of numerous bars, is miniscule. Dan El currently charge a fee of .009 of metal purchased per annum for this service which is paid in bullion from the vaulted bars. 

This program is one of the finest in the world, and possibly the market leader on low fee private bullion acquisition and storage.

INSURANCE

For those who see benefit in providing "insurance" for times of economic upheaval, privately minted coins and jewelry are the time tested logical “policy” to hold. We suggest that this form of bullion holding should be stored securely by the owner in a safe and private "under the bed" facility, where the bullion can be accessed if needed. History has shown time and time again that when there is a major (and in many cases not too major) economic downturn, gold and silver have increased dramatically in their purchasing power. 

Coins (and select jewelry) by their very nature of creation, carry a greater premium above spot price than say the LBMA 400 ounce investment bar. This is because in effect gold coins start their life as a 400 ounce bullion bar…. the bar is pressed into a flat sheet…. artwork and design is created and machined into a die…. and then 800 half ounce coins can bepunched from that sheet. Now instead of one pouring fee as in the case of a 400 ounce bar, we now have to add the collective costs of one pouring fee, fabrication costs to manufacture the sheet of gold, 800 striking fees, artwork and design, die manufacture, and additional handling and machine costs. If the coins were to be one tenth of an ounce then there would be 4,000 strike fees. This is why coins (and jewelry) demand a higher margin over spot per ounce than a bar, but this convenience is also the reason small weight denominated coins possess great advantage as they become more tradable in time of economic catastrophe, as we have seen in history. It is for this reason that we suggest gold coins should be as small as 2.5grams and generally no bigger than 1 ounce. 

The same is true for silver coins, but silver coins currently provide a challenge due to the relative low price of silver as currently, the strike fee to make a small silver coin (10-15 grams) is approximately the same as the price of the precious metal content of that coin, which places a 100% premium on the coin immediately it is struck. To many however, this is of no great concern as it is a widely held view that silver has a long way to go to return to the 14:1 ratio (Silver : Gold ) that appears to be its natural equilibrium throughout history. Today the ratio of silver to gold is approximately 70:1. Even considering these larger premium over spot for silver coins, they are still purchased by many who consider such premiums will in time prove to be inconsequential, and “par for the course” in the acquiring of privately issued and owned small silver coins.

 

Having said all of the above, in the promotion of coins as insurance rather than an investment, it should be remembered that the return on coins as measured by their purchasing power in times of economic upheaval, may well outstrip many traditionally accepted investments. The purchasing power of gold from 1929 to 1935 increased by 129%. Not a bad return for any investment, and certainly one that would outstrip the 20% premium over cost that Dan El coins and jewellery currently sell for. 

Coins then become the preferance for "insurance", and Good Delivery Bars, the choice for investment. 

TRANSFER OF WEALTH

Dan El suggest that its clients consider holding bullion for both insurance and investment and counsel that the investment bars should be stored in a jurisdiction outside of the country where the investor lives. This providess an additional and important aspect to asset protection via diversification.

Having examined the reasoning behind gold and silver as insurance and investment, it becomes clear then just how simply Private Bullion Holdings can serve as a means of transferring wealth from one generation to the next, or one jurisdiction to another.

GETTING STARTED

To many, getting started with private bullion holdings is difficult economincally. To some even our minimum purchase of USD5,000 for "Cash & Carry" or USD1,000 for "Part Bar Purchase" is difficult. One solution to this hurdle has been that friends and family have "pooled" their resources to make the minimum "Cash & Carry" purchase or to begin acquiring larger investment bars.

Please contact our office if you have any questions or if we can be of assistance:  mail@DanEl.ch 

                                                                                                                                                                                                     

1. 129% increase in purchasing power from 1929 to 1935

2. 2 Chronicles 9:25
3. 1 Kings 10:29

* Refer to STUDY - LIBRARY on this website.

 
LIVE LONDON TIME
FROM BIG BEN
SAINT STEPHEN'S TOWER LONDON
 

 


 
LONDON PM GOLD FIX
 
 
LONDON SILVER FIX
 

 

 

CURRENCY CONVERTER

Click on abacus to convert your currency

 

 

This ABACUS was the pocket calculator of ancient Rome, used for calculating currency exchange rates in international trade.

LBMA

London Bullion Market Association

The LBMA is the prestigious and internationally accepted standard for gold and silver bullion, based in the City of London.

This trade association’s members comprise what is known as the London Good Delivery List, which is the “who’s who” of the world’s bullion refineries. The multiple roles played by the LBMA are vital to the coordination, communication and maintenance of sound standards and bullion trading practices throughout the global bullion markets. The LBMA conscientiously refine and define bullion bar standards for its member refineries. It is also the industry standard portal for quoted bullion prices, which are accepted worldwide.  To achieve this latter function, the LBMA establish and publish a “Price Fixing” for gold and silver every business day.

 

THE LONDON GOLD AND SILVER FIXINGS

Traditionally these “fixings” were an open process where buy and sell orders were offset until satisfied, thus establishing an acceptable median price or “fix”.  These gold and silver "fix" figures were then published internationally and accepted as benchmarks for the precious metals industry.

 

GOLD FIX

The Gold fixing process first began in 1919.  It is conducted twice every business day by telephone at approximately 10.30am (AM FIX) and again at 3pm (PM FIX).  The price established or “fixed” by this process is then published shortly thereafter. Traditionally there were five Gold Fixings Members that participated in this process. They were:

Bank of Nova Scotia-Scotia Mocatta Barclays Bank                                    Deutsche Bank                                        HSBC Bank (USA)                               Societe Generale

A new gold price mechanism is expected to be introduced in March 2015 and will continue the practice of being set twice daily (10:30am and 3:00pm London GMT) in $USD per fine troy ounce with reference prices in £ and Euro. The new price will be called the LBMA Gold Price.

SILVER FIX

London silver fixing began in 1897.  The silver fixing was conducted once every business day by telephone at 12 noon, and the results published shortly thereafter. Three banks settled this Silver Fix:

Bank of Nova Scotia-Scotia Mocatta Deutsche Bank                                        HSBC Bank (USA)

On 15th August 2014 the historic Silver Fix which had been in existence since 1897 was replaced by the LBMA Silver Price. The LBMA Silver price auction is now operated by CME Benchmark Europe Ltd (“CMEBEL”) and administered by Thomson Reuters Benchmark Services Ltd (“TRBSL”).  The price is still set daily at 12:00 noon London time and is expressed in $USD per troy ounce. Reference prices are also published in £ and & euro.

 

 

       

400 Troy Ounce

995 Gold

London Good Delivery Bar

 

1 kilogram

9999 Gold

Investment Bar

1000 Troy Ounce

9999 Silver

London Good Delivery Bar

 

 

Privately Issued

Open Exchange Bullion Coins

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