World Buying In Gold Coins Soars

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton

"Gold has worked down from Alexander's time... When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory."
Bernard M. Baruch

World mints report soaring demand for gold coins
Fri Mar 13, 2009 8:36am EDT

LONDON (Reuters) - Mints around the world say demand for gold coins has risen sharply as interest in the precious metal soars on the back of financial instability and concerns over the inflation outlook.

The Royal Canadian Mint, which produces Maple Leaf bullion coins, said it quadrupled its production capacity late last year as demand for gold and silver bullion products leapt.

Gold was one of the few commodities to rise last year as turmoil in the financial sector sharpened investors' appetite for assets seen as a safe store of value, such as bullion.

Spot gold rallied to an 11-month high of $1,005.40 on February 20 as a slide in equity markets increased interest in the precious metal. Demand for physical gold products such as coins and bars has been particularly strong, traders say.

The United States Mint said sales of its one-ounce American Eagle gold bullion coins rocketed to 710,000 ounces in 2008, from 140,000 ounces a year before.

"The demand for gold and silver has been unprecedented," a spokesman for the Mint told Reuters.

The chairman of the French Mint, Christophe Beaux, said sales roughly doubled last year in value terms and are expected to rise by another 50 percent this year.

The 2009 catalog the mint had produced was almost entirely pre-sold, he said. The French Mint produces 100 euro gold coins, and plans to mint 10-ounce and 1-kilo coins this year.

In South Africa -- the world's second-largest gold producer -- Natanya van Niekerk, deputy general manager for numismatics at the South African Mint Company, said she had seen a big increase in demand for gold.

"I think we will see this same trend in this and the next quarter," she said. "Gold surely has been resilient in these times."

Michael O'Kane, head bullion trader at the New Zealand Mint, said many overseas buyers had come into the New Zealand market. "We're seen as a safe-haven market," he said.

He said buying had been strong since the collapse of U.S. investment bank Lehman Brothers in September, as investors moved money from banks into hard assets like gold.

The mint was averaging "a month's transactions in a day," he said, adding he saw demand continuing to rise.

China Central Bank Sees New Gains for Metals, Gold, and Oil

There is a big "if and but" in this forecast from the China Central Bank.

If the government stimulus regenerates aggregate demand, we will see a rebound in the world economies and prices of industrial commodities, as well as gold which will be a hedge during the subsequent monetary inflation.

But if it does not, we may be turning Japanese, and suffer at least a few lost years.

Reuters
China central bank sees rebound in metals, new gold peak
by Zhou Xin, Langi Chiang and Simon Rabinovitch
Fri Mar 13, 2009 8:19am GMT

BEIJING, March 13 (Reuters) - Copper and aluminium prices could rebound in 2009, while gold might scale a new peak and oil could chalk up big gains in the second half of the year, the People's Bank of China said on Friday.

In its annual international financial markets report, the central bank said it expected global demand to continue to weaken this year but held out the hope that the forceful policy response of governments could lead to a turning point in the world economic crisis.

Berkshire Hathaway's Credit Rating Downgraded by Fitch

"Weep over Saul, Who clothed you luxuriously in scarlet, who put ornaments of gold on your apparel." 2 Samuel 1:24


Berkshire has sustained heavy losses in US equities as the value investing approach which Warren Buffett follows has fallen prey to this most vicious of bear markets.

The company still retains exposure to derivatives contracts that concerns Fitch.

Forbes
Buffett Loses Sterling Credit Rating
Peter C. Beller
03.12.09, 08:30 PM EDT

Fitch downgrades billionaire's Berkshire Hathaway to lowly AA because of possible stock and credit market losses.

For decades, one of the brightest banners to fly above Warren Buffett's castle was his company's AAA credit rating, one of a handful in the United States. In his annual letter to shareholders he bragged that Berkshire Hathaway's credit was "pristine." But the financial crisis is laying siege to even the mightiest balance sheets.

In the past year, shares of Berkshire Hathaway the insurance and electricity conglomerate that Buffett controls, have lost 35%. Buffett saw his personal wealth decline by $25 billion. Now Fitch Ratings has snatched away his top-notch rating, downgrading Berkshire to AA.

The full extent of the damage to Berkshire won't be clear until the other two ratings agencies--Standard and Poor's and Moody's (of which Berkshire owns more than 20%)--decide whether to follow with their own downgrades. But conservative lenders often consider the lower of a company's split ratings as the one that counts. A lower rating could hurt Berkshire's business if lenders demand higher interest rates from the company to compensate for increased risk.

Fitch said it downgraded Berkshire because of its large stakes in publicly traded companies, such as Coca-Cola and American Express, as well as huge derivatives contracts that expose it to possible losses in the credit and stock markets. Berkshire's bondholders are also behind insurance policyholders to get paid back if the company runs into trouble. Nothing about that is new; Berkshire has long had major insurance interests. But Fitch said that the financial crisis had led it to reassess the risks to financial firms across the board.

Buffett himself seems to have played a role. Fitch said that the company's success is so dependent on the Oracle of Omaha's ability to choose wise investments that it constitutes a credit risk not "consistent with an AAA rating." The agency also complained that Berkshire management has declined to meet regularly with Fitch analysts in contrast to General Reinsurance, a Berkshire subsidiary. Fitch threatened to drop the AA rating further if stock market declines and earnings shortfalls hurt the firm's capitalization.

Despite the crisis, Buffett has pursued a number of big deals designed to take advantage of lower stock prices and a lack of available capital for struggling firms. Berskhire has plowed billions into Goldman Sachs (nyse: GS - news - people ), General Electric and Swiss Re and opened a municipal bond insurance company.

While Berkshire's net profit last year fell 62.1% to $5.0 billion, Buffett has said that Berkshire will make money in the long run. (See "Buffett Bloodied But Not Bowed") "Our economic system has worked extraordinarily well over time" he wrote in his annual letter to shareholders. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."