Cedar Rapids Gazette, December 8, 1974, Page 159

Publication: Cedar Rapids Gazette December 8, 1974

Cedar Rapids Gazette (Newspaper) - December 8, 1974, Cedar Rapids, Iowa Start! Yn Bn MI? by Ira U. Cobleigh Since Jan. 30, 1934, it has been illegal for U.S. citizens to own, or trade in, gold bullion (bars or ingots); and there has been a $10,000 federal fine for anyone caught doing it! All along, however, it has been perfectly legal to own shares in gold mining companies, gold coins minted before 1934 "of recognized numismatic value” and gold in jewelry, teeth, art work or gold dust. Recent legislation, however, will restore the legality of gold ownership On Jan. 1, 1975, Americans will once again be permitted to buy gold bars. Thousands await the opportunity Why? There are three plausible reasons. • First, gold is an amazing metal, excelling all others in beauty, luster, durability, imperviousness to corrosion and as a store of value. Treasured for jewelry and ornamentation, it also has important industrial uses. For 6000 years gold has been man's most cherished portable possession. • Second, in times of war, panic, invasion or political upheaval no other personal asset has proved more dependable than gold. Whenever there have been uncontrolled inflations and repeated devaluations of paper money, gold has been the favorite haven for savings around the world, century after century. • Third, common stocks, for years thought to be excellent hedges against inflation, have not proved so in 1974 when stocks touched their 12-year lows. Accordingly, thousands of investors have profitably turned to gold in coin and mining stocks. Soon they may be stampeding to buy gold bars! In fact, many Americans have been buying bars abroad illegally, and stash-•ng them in foreign vaults. (.ommercial banks are getting ready to go into the gold business. Some banks are already selling gold coins. At the outset Americans will be able to buy at banks in three popular sizes: five- and one-ounce bars, and a one-half-ounce wafer. Banks are well positioned to sell gold. They have vaults where purchases may be safely kept in excellent condition and readily available for delivery in event of later resale. In general banks will sell gold at prices based on the afternoon London price fixing (noon New York time); probably add a fee for stamping and certification of weight and fineness; and charge a commission of 6 to 7 percent.Where to buy Many traditional dealers in gold coins, jewelry stores, and private mints expect to enter the bullion business. Certain department stores, broker-dealers and Stock Exchange firms will also be selling gold. How can a buyer be sure he's getting full weight; and that the bar is, as it should be, 999 5 fine (practically pure 24-karat gold)? There are some guidelines here: Patronize an established commercial bank, a responsible coin dealer, private minting company, or security firm. It is probable that Stock Exchange firms may solicit gold buying, probably not so much in small bars for outright purchase, as "contracts” on a commodity exchange Two commodity exchanges in New York and two in Chicago are preparing to offer, and to trade, "forward" contracts in gold in 1975. The standard unit will be the 100-ounce bar and "futures” contracts may run up to 18 months. In other words, you will be able to purchase a contract calling for delivery of 100 ounces of gold, as far as a year and a half in the future, at a fixed price lf gold goes up meanwhile, you're in clover; if it goes down, you're in trouble! Of course buying gold bullion, or speculating in it, assumes that, in times of inflation, hard metals (gold and silver) are likely to advance as the purchasing power of the dollar goes down. Granting that, it's important to know how gold prices are established. The principal gold bullion market for over 150 years has been in London. Each morning five members of leading London gold dealers meet at the offices of N. M. Rothschild to fix the opening price for the day. They meet again in the afternoon to set the second "fixing." After and between fixings, gold is traded actively in London, Paris, Zurich, and following the sun, in Canada on the Winnipeg Stock Exchange. Presumably active markets in gold will be made on the commodity exchanges of New York and Chicago after Jan. 1, 1975; trading in the U.S. might even exceed the daily volume in London.The speculation The "free,” or world, market for gold bullion has zoomed Expectation that it may go higher is based on: (1) world inflation driving "scared money” into gold, (2) increasing industrial demand, (3) Arabian buying, (4) short world supply. Many people believe that our dollar, now floating paper money, will be revalued, later on, in terms of gold at $200 or higher per ounce. All these factors lend speculative zest to gold, and support the viewpoint that it may go much higher. The coming opportunity to buy gold bullion has animated the American investing public. How big will the demand be? It's hard to say, but our guess is that there would be $300 million worth of individual "store-away" bars purchased in 1975. This doesn't include gold coins purchased; nor the speculative gold trading volume in commodity markets (which may exceed $1 billion annually). Where will this gold come from? From prior holders (hoarders) and new production but probably not from any heavy unloading from Treasury reserves of the U.S. or from central banks of other nations. The U.S. Treasury gold supply is now $11.7 billion (calculated at the nominal price of $42.22 an ounce).Use caution It does seem probable that in the present inflationary economy, sequestering a percentage of one's funds in gold may protect assets, provide liquidity or resources, and even lead to rewarding capital gains. The volume of new buying may itself increase the gold price. But with gold selling near its all-time high, caution is urged. Gold, in bar or coin, pays no interest or dividend, so its virtues must be found in its dependability as a store of value, and in the not unreasonable expectation of a higher gold price over time.LOVED ONES FROM SHOPLIFTING We can help you with this problem. Send for “Danger — Hands Oft” for positive answers, cures. Benefit from our FREE book s good advice before a life is ruined./h 1 INTERNATIONAL LUTHERAN LAYMEN'S LEAGUE Dept 71, 2185 Hampton Ava. St Louis, Missouri 63139 Pleas* send s FREE copy of "Danger-Hands Off r in plain envelope.5- h- 0) A mass media ministry of the International Lutheran Laymen s League We re the people who broadcast L 'The Lutheran Hour and telecast This Is The Lite A ;

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Publication: Cedar Rapids Gazette

Location: Cedar Rapids, Iowa

Issue Date: December 8, 1974

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