Gold Compared to the Velocity of Money

It is a simple business concept that a good regulation of the supply of money can control inflation. Hence, the regulation of global monetary policies hopes to achieve this goal with roots in Milton Friedman theories of policy making. However, the debate is still hot over the best model to apply for measuring and controlling inflation with regards to the supply of money. But there is little discussion over the correlation of velocity of money to the pressure of inflation, even if all variables were held constant.

The year 2007 saw a contraction of the global economy which gave rise to fears of an impending global depression; global central banks commenced drastic measures to avoid a total economy collapse by applying quantitative easing to put economic depression at bay.

Quantitative easing refers to the printing of currency by the government. An alternative was to lower benchmark rates as much as possible. Even with these measures implemented, there is no guarantee that higher inflation can be avoided in time to come.

Velocity of Money

One way to assess money velocity is to measure the GDP against the amount of money available. Simply put, consider the amount of money printed to the amount of money currently available in the country. With this comparison, one can measure gold against the velocity of money in America; the fact shows that gold will play an active role in indicating inflation in the future. History records the price of gold to lag behind inflation over a year, although it is possible that other factors affecting gold prices may change the trend. But recently, collected data indicated a possible 0.4% rise in money velocity was affected by a 10% rise in gold prices within a year.

As is, the last 20 years seemed pacified in relation to inflation which is reason enough for today’s economic policies to be fearful of impending inflation ahead; gold price is on the increase with the velocity of money ready to move forward.

Overview of GDP

It is difficult to determine the global GDP against the supply of money when there is insufficient good global data for analysis. Hence, gold may be the better choice to indicate an oncoming of inflation as one cannot confirm if more money printed can stimulate the GDP or economy. GDP is one factor in calculating the velocity of money where economy growth translates into a new velocity.

Supply of money

The amount of money available changes the gold prices with a possible 6 months lag. Although money supply is just one factor on gold price changes, a one percent change does affect gold price similarly.

Because of this historical trend, economists and investors are fearful that the rising gold prices are a good indication of an impending high inflation.

Some Reasons to Own Numismatic Gold Coins

Numismatic gold coins have many benefits which attract buyers like bees to honey.
The first benefit is that numismatic coins of gold give their owners peace of mind and wealth security as they are considered hard assets. They have been proven time and time again in mankind’s history of economic fluctuations. Owners of numismatic gold coins do not see a decline of their wealth when adverse economic conditions come into play on the global economy scene. Paper investments quickly succumb to the adverse economic conditions with a correlating value decline as was seen in the Great Depression of the 1930s, again in the 1970s high inflation and the recent crisis of subprime loans.

The next benefit is that there is an amazing return on numismatic gold coins as the supply of such coins is limited due to President Roosevelt’s stop production order in 1933. Such rare coins were no longer produced or minted at the US Treasury, resulting in limited pieces. Moreover, with the factors of wear and loss, numismatic gold coins have seen an incredible increase in their demand. In simple economic terms, when supply decreases with an increased demand, the numismatic gold coin value increases.

The third benefit is that numismatic gold coins are able to shield you against any public scrutiny of your wealth. There is a form of protection on your personal financial standing which diverts prying eyes. Many people, not just Americans, wish to keep their financial condition private and numismatic gold achieves that objective easily as its trading generates no reports of buy or sell operations to anyone other than the broker. No social security number is required to transact numismatic gold which will provide any authority or individual with information of your acquired wealth.

The fourth benefit is that numismatic gold has protected its owners from gold confiscations of the past. From history, President Roosevelt passed a law in 1933 which required all gold bullion to be returned to the US government; owning gold was considered an outlaw act between 1933 and 1974. In 1963, President Kennedy made it illegal to own gold outside of America too.

However, gold ownership was allowed again in 1974 with the president reserving the right to outlaw the act at anytime. Hence, it was quite risky to buy gold during that period of time for it could be seized by the government at any time the president recalled the legalization of gold ownership.

In contrast, numismatic gold coins have been exempted from all laws and regulations of ownership; thus, it became clear that one way to protect wealth was to own numismatic gold.

Advantage of Owning Rare Gold Coins

United States rare gold coins offer advantages for their buyers that are hard for any other asset to match. To first understand the advantages of rare gold coins, you have to understand what makes gold have a rarity that is sought after by collectors.

Rare gold coins consist of minted gold by the United States from 1795 to 1933. It was in 1795 that the mint in Philadelphia first starting minting gold to be used as currency. This practice ended in 1933.

What makes gold coins rare are twofold? The first reason is that the Federal Government has confiscated gold on three separate occasions. The first recall of gold came in 1830s when the issue was that the gold content of each coin did not match is face value. During the Civil War many US gold coins were melted down as the price of gold had more value in overseas markets. The last confiscation came in 1933 when President Franklin Roosevelt made it illegal to own gold as a private citizen and that all gold be turned over to the Treasury Department. The second aspect of rarity is simply the age of the coins which has led to lost coins and coins that are not in a mint enough condition to be attractive to collectors.

Advantages of Owning Rare Gold Coins

Over the long term rare coins or numismatic gold coins have outperformed gold bullion coins do to their added demand by collectors, plus their inherent gold content.

Gold is the one asset that has a tract record that goes back over 5,000 years. When there was no US dollar or Euro there was gold to use as a means of trade for goods and services. Rare gold coins still offer the same value do to their gold content.

One key aspect to buying rare gold coins is they are considered a private position in gold. There is no paper trail making rare coins a more financially private matter. The Federal Government still reserves the right to confiscate gold in private hands again. The one caveat to this is rare gold coins which have made them exempt from government confiscation.

For added diversification, gold including rare gold coins prices move up or down typically different then paper investment and other assets. What typically makes the stock market go down in value increases the value of gold coins?

One interesting aspect to rare gold coins that no other form of currency can state is that the exact rare coin you purchase was the exact same coin owned by the people living over a hundred years ago. Rare coins are a true piece of American history that were owned by the pioneers that made our county great.

ITM Trading offers expert advise on buying gold coins plus Liberty gold coins.

What to Consider when Investing in Gold

The best thing you can do as an investor is to get all the information you require about the kind of acquisition you want to venture into. Buyers always take enough time to analyze their purposes and needs in making sure that the end results justify the means. It is a good idea to hold consultations to get all your concerns taken care of.

In the same way, understanding the demand and supply as well as the market level of gold is essential for those looking to invest in this precious commodity. This is because gold prices are determined by the demand and supply trends. The demand for the commodity is increasing with time and usually exceeding the supply, although this kind of shortage is met well by the different forms of gold production somehow stabilizing the prices, even though they remain high.

The meaning of gold investment

Every buyer should consider the possible future demand and supply assets. And since we all know that demand is growing by the day, gold should be taken as an insurance against some of the future catastrophic occurrences which may negatively affect other assets. This is because most of these occurrences don’t effect gold positively.

Gold coins also work to the advantage of the buyer or owner since its purchasing power stands firm even in hyperinflation periods. Although this kind of inflation is not very common, it is known to happen. Gold also has monetary standards and trades around the world thereby making it a very flexible form of insurance against any inflation or catastrophe anywhere in the world. This is why it is very important to know the different prices of gold in different countries. It is true that a catastrophe experienced by one major country can highly influence the entire global financial system.

To conclude, the one thing that is very important for gold buyers to consider and get enough information on is the demand and supply patterns of the commodity, as well as the general behavior of the gold market. By doing this, it becomes easy to come up with a strategy of investing that will bring about happy returns and save your other assets in hard economic times.

The fact that the value and purchasing power of gold is not likely to go down any time soon makes it a great form of investment alongside your other assets.

US Gold Coins – What you should know

Various collectors and investors follow certain gold coins series from different countries. Public trade of gold coins takes place in New York, London, Sydney, Zurich and Hong Kong. So, US gold coins are not the only ones that are popular. However, gold coins minted in the US are of a higher quality due to which these are more sought after by investors.

In the United States, collectors actively pursue US gold coins because they are not as familiar with coins from other countries. Due to this, the price at which non-US gold coins are traded is often just a fraction of the price of US coins.

US Gold Coins: History
The United States issued its first series of gold coins in 1795. It was called the $5 half eagle. The value of the US dollar was set at 24 grains of gold by the US Mint. That value was set considering the universal price of the precious metal, which was $19.39 per troy ounce during those days.

US gold coins were issued by seven different mints in the country. These coins differed in size from one gold piece to fifty dollar denomination. The worth of the gold coins minted at that time was at par with their weight in gold. Till 1933, gold coins were used as a medium of exchange in the US. It was during the Great Depression that President Roosevelt forbade hoarding gold under Executive Order 6102 in 1933. Since then, the world stopped using gold coins as currency. The government melted million of coins into bars, with the result that US gold coins became a rare commodity. The restriction was later abolished in 1975.

Every US gold coin minted before 1933 is valued individually based on its make, rarity, grade and demand among collectors.

Some of the popular US gold coin series are

• Saint-Gaudens Double Eagle
• Indian Head Gold Piece
• Proof Gold Coinage
• Liberty Head Double Eagle

These are graded and certified by the Professional Coin Grading Service (PCGS) and the Numismatic Guaranty Corporation (NGC).

US Gold Coins: Where to Find Them
US gold coins are popular not only because they are rare, but also because they represent the history and art of the country.

How Does Gold's Value Change with the Stock Market?

There is a common misconception in the financial world that gold moves in the opposite direction of the stock market. This unfortunate interpretation of historical data produces a misleading image that often results in confusion and bewilderment among investors when the two markets periodically move in the same direction.

Negative Correlation or No Correlation?

In order for gold and the stock market to move in opposite directions, there would need to be a negative correlation between gold and stocks. There is no evidence that such a correlation exists and, if there was, and it was true that gold moved in the opposite direction of stocks, it would greatly reduce gold's value as an investment alternative.

If gold and the stock market were on the proverbial see-saw that a negative correlation necessarily implies, there would be no reason for long-term investors to invest in both. The proper decision would be for individuals to choose which ever one outperformed the other over the long-term.

Fortunately, individuals are not faced with such a dilemma.

The fact of the matter is, gold is NOT negatively correlated to the stock market. Nor is it positively correlated to the stock market.

There is NO discernible correlation between gold and the stock market.

Gold: An Independent Asset

In other words, gold reacts independent of stocks, to economic and political factors and market events.

This makes gold the ideal diversifier for a portfolio of stocks. The reason for this is because of the unpredictable nature of world events.

When you get right down to it, consistently predicting near-term and medium-term movements in the stock market is just about impossible. No one has done so with any success to date and no one has developed any trading system that has done so over the long haul.

The same can be said of the gold market. No one has a crystal ball with which to predict the movements in gold either.

Likewise, no one can predict with certainty the timing and nature of the next economic crisis or perhaps the next terrorist attack. All of these kinds of factors impact the financial markets—including the stock market and gold market—and thus need to be accounted for.

Gold: Protection Against Inevitable Uncertainty

The best way to protect your portfolio against unpredictable events in the financial markets, the economy and the geopolitical arena is to diversify as completely as possible. This means not just diversifying across industry by selecting stocks of companies which are engaged in varying lines of business, it means diversifying across asset classes. In addition to a diversified portfolio of stocks from a variety of industries, individuals absolutely must include gold in their portfolio.

Why?

Because gold has no correlation with the stock market. The best way to achieve the stability of your portfolio is to include an asset that is as unpredictable vis a vis stocks as the very events which impact the stock market.

We know from history that gold will not react in the same way as the stock market to crisis, hyperinflation, depression, and other turmoil. This is what makes gold so vital for all people.

No one knows what to expect next from the financial world. One day the stock market is doing just fine and the next a storied name like Merrill Lynch is being bailed out in a deal put together by the Feds. One day the world is calm and the next a 23 year old tries to blow up an airliner over Detroit.

We can't change the unpredictability of future events and the stock market's reaction to those events, but there is something we can do to help protect our wealth from the fallout, and that is to own gold.

ITM Trading offers expert advice on buying St. Gaudens and other rare gold coins.

Top 5 Solutions to Problems with HOA Boards

So, you have a problem with your home owner association (HOA) or its board members. The general rule which seems to apply to most people's feelings as it relates to HOAs are follow the rules or its time to move. What happens when you feel your HOA has outdated policies or you have been treated unfairly? The following at 10 things you can do for solutions with your HOA board.

You do have to keep in mind that you singed a contract as it states with your home owner association so these solutions don't work if you simply are made you can't have a gazebo in your backyard. Those issues and others like it are policies that you would need to have your board members approve. The solutions we are mentioning below are for when you feel that the HOA has acted capricious or in a vindictive manner.

5 Solutions to Problems with HOA Board

1. If you read newspaper columns for advice they will tell you to work it out with your HOA board members. You do have to keep in mind that these columns are typically written by lawyers who represent HOA boards so they are not the best source of info for the home owner themselves. It is still important to attempt to work any issues out directly before taking further course of action.

2. You need to know your bylaws. If you want a state official to help you solve your issue you need to know exactly what you are talking about. Many people don't get far with their cases against HOA boards as their information is filled with emotion more than facts on how HOA bylaws were broken.

3. If there are board members who are apathetic to your situation you can use them to hold special meetings and replace vindictive board of directors. It is important that all policies on these proceedings are followed for them to work.

4. You need to keep all documentation with correspondences between you and the HOA or the HOA's attorneys. You want to get to proof of your violations though you have to realize you will also need proof of your innocence. Just as you want the HOA to have all the documentation, so will you if you are to win your case. If you ever need your own lawyer, the lawyer will need proof to be able to defend your interest.

5. Most issues with home owner associations are consistent courses of action that are in violation or patterns of now working with home owners. You can recommend professional community services take over your HOA's management services which is usually better for both the HOA board members themselves and the individual home owners. Professional community management services are experts in how to handle home owner concerns so that both parties understand and win in the end.

Parker Finch is a professional community management company offering services for HOA board members in Arizona, Colorado, and Nevada.