Nov 182014
 

In the world of finance, the word “arbitrage” refers to buying something in one market, and simultaneously selling it in another, profiting from a temporary price difference. According to Investopedia, this form of profit is considered practically risk free for the investor/trader. ūüėÄ Well I have recently found such an arbitrage opportunity in the gold bullion market.

Introducing the 2014 Howling Wolf 99.999% Gold Coin

Several days ago I went out to buy the 1 oz. pure gold 99.999% Р2014 Howling Wolf coin made by the Royal Canadian Mint. The Howling Wolf gold coin cost me $1,389 CAD to purchase. The slight premium over the spot price of gold is due to the spread charged by the broker and the unmatched purity of the coin (most bullion is only 99.99% pure gold.) Details below with proof of purchase.

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If you live around Vancouver you can buy it from the VBCE, which is where I bought my coin. The current quoted price on their website is about $1,400 CAD. In Calgary albern.com currently sells it at $1429 CAD. In Florida, gainesvillcoins.com sells this coin for $40 over spot per oz. If you live around Toronto you can visit the Canadian Bullion Services to buy the coin. You can also order it online and pick it up in their store or have them mail it to you. In fact many of these companies I mentioned ship worldwide. There are hundreds of dealers across North America so this coin is relatively easy to obtain.

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Mar 192013
 

The government of Cyprus (a small island country near Turkey) announced they want to charge a one time tax on all their citizens’ savings and checking accounts, up to 9.9% of their balance (O_o) This is so the country can qualify for a $13 billion bail out package which they so desperately¬†need. It certainly sets a very controversial¬†precedent¬†for countries facing bankruptcy. Cyprus citizens rushed to the banks to withdraw their cash so they won’t be taxed only to find out the government has ordered financial institutions to stay closed for fear of a bank run.

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If it’s not even safe to store your money in the bank anymore, where CAN you put it?¬†The Fed is continuing its money easing policy and with an increased supply of cash and credit in the economy we will¬†inevitably¬†see some kind of inflationary pressure in the future. I was recently looking at the price of gold and noticed that it has really come down from a year ago. It also seem like the price of gold has found a support level at around $1550/oz.¬† Well today gold is roughly at $1600/oz. I like to buy stocks when they are undervalued. But right now it’s hard to pick a good company because the US stock market is at an all time high, lol. However gold is near its 52 week low. And historically it has been a great store of value, and a hedge against uncertainty and inflation.¬†So I think this is a golden opportunity for me to start accumulating some physical gold.

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But what kind should I buy?¬†There are gold bars which are pretty boring. Then there are collectible gold coins which usually demand quite a hefty premium over the spot price of melted gold. Finally there are the globally recognized 99.99% gold maple leaf coins¬†made for¬†high liquidity and circulation purposes. Last year I posted about the Royal Canadian Mint’s 100 kg (220 lb) 99.999% pure gold coin with a face value of $1 million. It holds the world record for being the largest fine gold coin ever created, and it’s purity is unmatched. Well for those who can’t afford the best in the world the mint has also made miniature 1 oz versions of this coin with the same design, quality, and purity. Sounds pretty good to me¬†(^_^)

So earlier today I went to the local bullion exchange and bought myself a one ounce .99999 fine gold maple coin. This shiny little bullion can be sold at any gold dealership. But it also has some properties that make it unique like a¬†collectible¬†coin. For example it’s 99.999% gold which the Mint said is unrivaled for its purity, compared to the standard maple leaf coin in circulation at only 99.99%. It also has a mintage so it’s more rare than the massively produced standard coins. Due to these special features it’s 2.2% more expensive than the standard maple leaf coin. But for an unmatched work of art and engineering I think that’s very reasonable. I spent $1750 on this little beauty today. The cost fluctuates depending on the market price of gold but the place I bought mine from, VBCE, has a website that lists their current spreads¬†so you can check online for the latest prices.¬†Click image below to enlarge. I included a toonie and quarter in the shot to show scale.13_03_1ozgold

I already own gold mining companies like Goldcorp, but this is my first time investing in the commodity directly. It’s quite amazing to hold something so small in my hand and know it’s worth more than everything in my closet, lol. ¬†It’s hard not to feel emotionally attached to gold after seeing it up close in its purest form like this. It’s just so pretty („āúo„āú)¬†I think gold is interesting from both a scientific and investment perspective.¬†As an element gold is known for its stable properties. It doesn’t break down, burn, or corrode so all the gold that has ever been extracted from the ground since the beginning of civilization, which is 171,300 tons (or 5 billion ounces) according to¬†the¬†World Gold Council,¬†is still being used somewhere today.¬†There’s 7 billion people on earth. So if all the discovered gold was evenly distributed each person would claim roughly 0.7 ounces. Which means as of today I own more than my fair share since I have a whole ounce :0)¬†About 50% of gold mined this year will be used for jewelry, 10% for industrial purposes like semiconductors, and the remaining 40% ends up in official holdings and investments like being made into maple leaf coins for example ūüėÄ

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As you can see the gold coin is enclosed in a plastic case and set in a 5″ x 4″ laminated card. On the front the coin displays 3 maple leaves matching the design of the larger 100 kg coin. On the back the coin displays Queen Elizabeth II and a visible “200 DOLLARS” is imprinted to indicate the face value of the coin.¬† The card represents a certificate of authenticity backed by the Royal Canadian Mint.¬† Overall I give this coin 10/10. Great quality. Would buy again ūüėÄ Click image below to enlarge.

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