Precious Metals News 6 th August 2011

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Beatrix Shepherd
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1 Hello and welcome to the CELTICGOLD newsletter. Thank you very much everyone for your feedback and suggestions. This week was very exciting as gold hit all time highs in the US-Dollar, the Euro and the British Pound. Given what occurred we are expecting more volatility in all asset classes in the coming weeks. We hope you enjoy reading this week s newsletter and find the information helpful and educational thank you for your time. All the best, Stefan Krämer Director CELTICGOLD This week you ll find: - Markets: Gold and silver - Knowledge: Storage What are your options? - Story/Tale: Euros4Gold What s behind it? Weekly update for the Gold Market Well.. what a week. We saw Gold break through to just under $1680 before dropping to just above $1650 an ounce. Gold's initial rise was due to the debt situation in Europe accelerating as interest rates on 10 year Spanish and Italian bonds spiked. However, Gold began to slide as the US stock market imploded on Thursday dropping over 500 points as investors were forced to sell positions to cover losses. According to trader Dan Norcini the technicals in Gold are a bit negative in the short term. He is looking for Gold to climb back and hold at $1665 to somewhat negate a bearish pattern. If a significant pullback occurs it would represent an ideal buying opportunity as we expect a big move up in Gold later in the year.

2 Keep in mind what we discussed last week. In our opinion this Gold bull market has much further to go. The third phase which is historically the most explosive has yet to begin. We may see volatility pick up dramatically in next couple of months as investors sell risky assets to seek more safety. We see that investors are losing confidence in European and US monetary leaders to fix the debt problem and restore the western economies which is very bullish for Gold. Update on the Silver Market As expected the pullback in Silver was much larger than in Gold. In times when investors are seeking safety and avoiding risk Gold will outperform Silver. Silver investors need to be long term oriented. The Gold to Silver ratio is currently about 42:1 and the traditional level has been 16:1. We expect that Silver will continue to have massive moves both up and down in the coming weeks and months. So hold steady and keep a long term view.

How to store physical gold? What are my options? Before our customers buy gold, there is often the question: How and where do I store my gold? Please read the following options: 1.

If you intend to bury it in the garden, we recommend the following things: Dig a hole that you intend to bury your gold in and dig it deep, very deep. Bury your gold, cover it with dirt.

3 How to store physical gold? What are my options? Before our customers buy gold, there is often the question: How and where do I store my gold? Please read the following options: 1. At your home or buried in the garden Some people store their gold in the bedside table or hide it in the house somewhere. There is nothing wrong with that, as long as you feel safe with it. If you intend to bury it in the garden, we recommend the following things: Dig a hole that you intend to bury your gold in and dig it deep, very deep. Bury your gold, cover it with dirt. Before filling the entire hole with dirt put some nails at the top of the hole and cover it with dirt. Then dig a few more holes in the surrounding area, get some more nails and bury them as well. Do that so that the neighbours can t see you. If you dig at night make sure you don t make much noise. Mark and measure the golden hole properly in your mind finito. If ever anyone comes with a metal detector they will probably find the nails instead of the gold. 2. At your home in a safe. There are many inexpensive safes available in the market. When purchasing a safe look for the following features: - protected against burglary and fire - security against flame cutting - double-walled door. Let s look at a couple of examples. I m fond of Burg Waechter a German safe manufacturer. You find the English website on

If you need something with more security there is literally everything you can think of available. This safe here is called Diplomat 48 E, weighs 94 kilo = 207 lbs and fits 55 litres in volume.

4 This safe on the left hand side is called Karat and weighs 43kg = 95 lbs) that fits 25 litres volume. The safe costs around 450 EUR. The features are: - security against flame cutting: Body made of stainless steel - double-walled door, door leaf thickness 7 mm SM steel The safe shown above can be qualified as a starter safe. If you need something with more security there is literally everything you can think of available. This safe here is called Diplomat 48 E, weighs 94 kilo = 207 lbs and fits 55 litres in volume. The costs are 2,580 EUR. It features: - with integrated fingerscan-module in series - protected against burglary and fire - fire-protective material in body and door according to DIN 4102-A1 - body and door double-walled, door leaf thickness 10 mm SM steel - security advantage: special protection against drilling in front of each bolt and in front of the lock These are two examples for home safes. If you need to buy a safe, here s the buyer s guide: Choose which size you need. How many documents, Jewellery, coins and other valuables you would like to store. Determine how much space you need. Choose the security level that suits you. You don t need to spend 10,000 EUR for a safe if you only want to store two gold coins in it. If you build a new house consider a wall mounted safe. Choose the lock technology. Some like to have a key, some want a digital lock and others like a fingerprint lock. TIP: When storing silver, make sure you have enough space. Also calculate extra space for future purchases. TIP: Make sure, should you loose your key, that you can change the lock without additional costs of the safe.

5 CELTICGOLD Service: If you fancy Made in Germany we provide a delivery service throughout Europe from my Mums shop in Germany. We figured that the German retail prices for the same safe including delivery costs is cheaper than buying from the local dealer. 3. In a safety deposit box Depending on the country that you re in, you can rent a safety deposit box with a bank of your choice. Check with your current bank if they provide the service. In some countries, like the UK, there are several vault companies such as Silver Vaults ( This is a very good way to store valuable goods at low cost. A small box is around 60 EUR per annum and the usual rental contract is one year. Our recommended option is to rent a box through a private storage company and not through your local bank. The two downsides to a safety deposit box are, that you have be physically there to access the box and your goods are not insured. 4. In a full serviced and insured private vault This solution is the most convenient but also the most expensive. The process works as follows: A transport is arranged with valuables from point A to the vault. The goods arrive in the vault. The goods are sealed in a safe bag by two employees from the vault company. A safe bag is a high durable plastic bag with a unique code/number on it (see picture on right). Once the safe bag is sealed it can t be opened without destroying the seal. The customer receives an with the seal number. This safe bag gets stored in the vault. Written on the safe bag is the name and invoice number of the customer. The safe bag is fully insured and cannot be opened without the customer s permission. The rental contract period is flexible based on the customers need. The customer can take delivery of their valuables at any time. An insured courier will delivery the package to the chosen location; personal pick-up is also available. The typical private vault will charge a fee that ranges from 0.5 to 1.2% of the value of the stored goods per year, usually invoiced on a quarterly basis.

6 CELTICGOLD offers this service through a reputable private vault company in Germany. For more information please visit our website 5. Other ways to purchase and store precious metals: Metal Accounts and Unallocated gold etc. Besides purchasing gold/silver coins and bars there are many other ways to buy and store precious metals. These include: - Metal account with bank - Perth Mint Certificates - ETF s - Bullion companies In future newsletters we will provide an in depth analysis of the Pros and Cons of each one of these options. In our opinion none of these options should be considered until you have a core position in physical precious metals. Story: Euros4Gold and Cash4Gold What s behind it? Within the last year, shops have opened up all around Europe with signs in the window stating Cash4Gold. These companies are local Jewellers and independent companies taking advantage of the bull market in gold. The two most recognisable shops are Cash4Gold and Euros4Gold. Please be aware that I don t mean Cash4Gold in the USA, I m talking about the European shops, mainly in Ireland. The business model is easy to understand. People go with their jewellery, gold coins, tooth gold, etc. into the shop. The gold is weighed and quantified and the seller receives x amount of Euros for the gold. Let s look into the mechanisms of the gold market. The daily price of gold is measured in Ounces and Kilos. One Ounce equals grams. The daily price you find is also called spot price and that means for one ounce of 24 karat or 999/1000 metric purity you pay, 1,651 US/oz (5. August 2011).

If you have 333/1000 purity jewellery and your necklace weighs 31.1 grams (1 ounce), your chain is worth 1/3 rd of a pure Ounce of gold (24 karat) = 550.33 US$/oz market price from 5. August 2011.

7 If you have 333/1000 purity jewellery and your necklace weighs 31.1 grams (1 ounce), your chain is worth 1/3 rd of a pure Ounce of gold (24 karat) = US$/oz market price from 5. August Due to the dealers transportation, fees and insurance costs these shops will pay you less then market price for your gold which is a normal business practice for these types of companies. In the gold markets we talk about premiums in percentage above spot. The spot price of gold is the market price that gold is trading at on any given day. For example if you buy a 1oz Maple Leaf coin, with a spot price of 1,651 US$/oz, the actual price that you would pay would be between 4 and 6% above spot in a normal market. Meaning you pay 1,651 US$/oz plus/minus 5% = 1, US/oz for the gold coin. The premium paid over the spot price of gold represents the cost to mint the coin or the bar, as well as gold dealer and transportation costs. Ok, here s the story. I was curious about these shops, because they are sprouting everywhere in Ireland. So I went in one of the shops to find out how much they paid for their customers gold. The Canadian Maple Leaf for example is 999/1000 pure or 24 karat. So I rocked up, the shop looked good from the outside and very dirty on the inside. There was a scale, 4 old chairs, a counter and business cards everywhere. The lad came from the back of the shop and I asked him how much he d pay for a 1oz gold coin. He didn t know, but said: We pay the best price and it s worth a lot. He then needed to phone his boss and came and said: 750 EUR. A friend of mine went into the very same shop and was quoted 500 EUR for the same type of coin a couple of weeks earlier. I kindly thanked him and left.

8 The spot price on that day was 1,000 EUR/oz. The quote that they provided for my 1oz gold coin was 25% below spot price and was 50% below what they offered to my friend. After further research we discovered he s selling gold coins at 5% over spot to UK bullion dealers. The net result would have been a 30% profit for Euros4Gold. When buying precious metals be very aware about premiums when you buy from bullion dealers. Coins and bars are usually bought back near spot price not 25% below and only do business with reputable precious metals dealers that have a well referenced customer base. As gold traders we re only interested to buy back coins and bars, so unfortunately people that need to sell jewellery and other gold products, the Euros4Gold, Cash4Gold etc, shops are the fastest way of converting precious metal into money. However understand it is our recommendation to do further research before selling your jewellery and other gold items to these types of companies to receive the best price. Celticgold: Our take on the financial markets We at celticgold believe that a stratospheric rise of gold and silver happens in the next few years. Government bailouts, billions and trillions of dollars and euros of budget deficits at the expense of the taxpayer and massive money printing by central banks will result in a collapse of the major currencies. We at celticgold believe that one of the few ways to protect your wealth from the coming economic chaos is through physical ownership of the precious metals. Preview for next week: Knowledge: Different gold and silver coins and their purity Story/Tale: Gold coin in your pocket

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