What does war mean for the gold price?

In the last week or so there has been a changing sentiment toward what is driving gold, a large part of the focus is now directed toward Syria and less so on the FOMC’s tapering. Depending on whom you believe, Syria may determine the outlook for the gold and silver price.
But how much of an impact will a war with Syria really have on the gold price?
Other commodities, such as oil are also impacted by murmurings of war but even they too are looking at factors beyond Syria as price drivers.
Many analysts believe the gold price (COMEX:GCZ13) will climb as investors turn to it as a safe-haven in times of geo-political crisis. This may be the case, but whether this will matter once foreign military action begins, or even if it never begins, is an important question.
On the face of it, it may seem obvious that the gold price will climb as action surrounding Syria holds the world’s attention. After all, the price of gold has climbed to a three-month high reportedly on the back of events in the Middle East and the war rooms of the West.
In the last month, as discussions surrounding Syria have heated up the gold price has climbed by as much as 9%. At the time of writing it is up by 6%, as the threat of war seems less imminent than it did earlier in the month.
Gold and war
There is much to be said about the run to gold during a war, the mentality of both civilians and soldiers during war and how they react to gold but let’s put this to one side for now and look at how gold behaves in the run up to a war. Whilst it may seem there are too many wars, there are also several ‘run-ups’ to them before anything, if at all, happens.
Rumors of military action
Of course, at the moment all we have is talk of a war. This has happened many times before, and often with no outcome.
As rumors of a war with Iran peaked at the beginning of November 2007, gold soared to reach a 27-year high touching $806/oz. This was five-months after the U.S. government issued a warning to all U.S. citizens not to travel to Iran and just a month or so after the first batch of U.S. sanctions were placed on the country. Again, it seemed gold ‘smelled’ war.
The red line indicates when gold soared, it then fell to levels not seen since the previous month before climbing and falling over the next couple of months. It wasn’t until the beginning of January when the gold price pushed above the highs seen in November.

The 1933 Saint-Gaudens Gold Double Eagle - Illegal Coins To Own


The 1933 Gold Double Eagle was Never Officially Issued:

The U.S. Gold Double Eagle, Saint-Gaudens type, had been issued from 1907 until 1932. Although 445,500 Double Eagles had been minted with the 1933 date, none were released into circulation because of changes made to currency laws during the Great Depression. In an effort to end the run on the banks and stabilize the economy, President Franklin Roosevelt took America off the gold standard. Not only were no more gold coins to be issued for circulation, people had to turn in the ones they had.

The 1933 Double Eagles are Ordered to be Destroyed:

It became illegal for private citizens to own gold coins, unless they clearly had a collectible value. This law was enacted during desperate times to prevent the hoarding of gold currency. Since there would be no more gold currency issued in the U.S., the Mint had melted down the 1933 run of Gold Double Eagles and converted them to gold bullion bars by 1937.

Some of the Double Eagles Escaped the Melt Down:

Two of the 1933 specimens were given by the Mint to the U.S. National Numismatic Collection at the Smithsonian Institute. These were the only two legal specimens to ever become part of a coin collection; however, by 1952, the Secret Service had confiscated 8 more 1933 Double Eagles! How did they leave the Mint? Why weren't they melted down?

Was the 1933 Double Eagle Switched for Another Coin?:

We may never know for certain how these coins left the Mint, but there is a general consensus among scholars that a Mint cashier by the name of George McCann exchanged about 20 1933's doomed for destruction and replaced them with earlier dated Double Eagles. This way, the accounting books would balance and nobody would realize that anything was amiss.


What we do know for sure is that a Philadelphia area jeweler by the name of Israel Switt came into possession of at least 19 of the coins.

The Coin of a King:

Israel Switt sold at least 9 of the 1933 Double Eagles privately to collectors, one of which found its way into the collection of King Farouk of Egypt. When the Secret Service discovered that these coins had surfaced, they confiscated them all because they were considered to be stolen property of the U.S. Mint. However, King Farouk had legally exported his coin before the theft was discovered, and the Secret Service was unable to recover his specimen through diplomatic channels.

The King's Specimen is Recovered in a Sting Operation:

After King Farouk was deposed in 1952, his 1933 Double Eagle briefly appeared on the market, but when it became clear that U.S. authorities still wanted to confiscate it, it vanished again! More than 40 years later, British coin dealer Stephen Fenton showed up with it in New York, and the Secret Service finally seized it during a sting operation during which they purportedly negotiated to purchase the coin.

The 1933 Double Eagle is Nearly Destroyed by Terrorists:

Fenton fought a several year-long legal battle in the U.S. courts over ownership of the coin, during time which it was stored in the Treasury Vaults at the World Trade Center. A mere 2 months before the terrorist attacks of September 11, 2001, the lawsuit was settled and the Double Eagle was moved to Fort Knox. Fenton and the U.S. Mint had come to a compromise: the coin would be sold at auction, with the proceeds split between the Fenton and the Mint.

Legal Tender at Last - and the Most Valuable Coin in the World:

The 1933 Double Eagle sold at auction on July 30, 2002, for $6.6 million, plus the 15% buyer's fee, which brought the total cost to the buyer to $7,590,000, plus $20 to monetize the coin and compensate the Mint for the $20 it believes it lost when the coin was thought to have been stolen. The buyer chose to remain anonymous, so once again we don't know where the Farouk specimen is, or when it might suddenly show up again. One thing is for sure: the Secret Service can't confiscate it any more!

Ten More Specimens Hang in Limbo:

In September of 2004, Joan Langbord, one of Israel Switt's heirs, discovered ten more specimens of the 1933 Double Eagle amongst his effects. Apparently unaware of the legal status of these coins (or perhaps just a bit too trusting of the government) she sent all ten specimens to the U.S. Mint to have them authenticated. The Secret Service declared the coins to be seized, and now Langbord is fighting the government over ownership while the specimens languish at Fort Knox.

Is the 1933 Double Eagle Still the World's Most Valuable Coin?:

It will be interesting to see, should the 10 Langbord coins ever come to market, if the 1933 Double Eagle will retain its place as the world's highest priced coin when the number of available specimens increases ten-fold.

5 Tips On How To Find An Honest Coin Dealer

Step number one any dealer willing to share this article must not be afraid and is probably on the right track.  No its not step #1 but obviously a very true piece of sound advice.

(1) Is the Coin Dealer Experienced? There's an old saying around numismatics that goes, "Buy the book before you buy the coin." While this is excellent advice, and I strongly recommend following it, the fact is that not everyone can become an expert. If you are buying coins, especially for investment purposes, you want a knowledgeable, reliable coin dealer who can give you accurate advice. Would you go to a novice for advice on investing in the stock market? If not, then don't go to a coin dealer unless he has solid credentials.

Our Answer: Calaveras Coin & Pawn has been in the numismatic industry for over 20 years with far more than that in the study of coins.

(2) Does the Coin Dealer Have Any Assets? Although the overwhelming vast majority of coins on the market are genuine, there are occasionally some fakes that turn up. You want to know that the dealer is likely to still be in business five years from now if that $20 Saint Gaudens High Relief treasure turns out to have been a high tech fake somewhere down the line. Although certification services and slabbing have palliated this concern somewhat, a coin dealer's financial stability is a good indicator of the likelihood that he'll be around for a long time and financially able to provide recompense.
Our Answer - We have just expanded to meet the overwhelming demand that folks wanting to invest in something other than the stock market have created.  We are not going anywhere and can handle transaction both small and into six figures.   We also guarantee our coins to be genuine.

What Determines the Value and Price of Coins?


There are many factors that go into determining the price and value of a particular coin. First of all you must understand the difference between price and value. To most people these two terms are used interchangeably. To coin collectors they mean different things. The "price" or "retail price" of a coin is what you pay for that coin when you purchase it from a dealer. The "value" or "wholesale price" of a coin is what a dealer would pay to you to buy the coin from you. The coin market is intricate and complex and there are many factors that influence coin prices and values. The following are the major factors that determine values and prices of coins.
Answer:

Mintage

The major influence on the value or price of a coin is the supply of that particular coin in a particular grade that is available for people to buy. The total possible supply available to the market is determined by the initial mintage of that coin. For most countries, at the end of a year, the coin dies with that year on it are destroyed and never used again. Hence, once a year is done the supply of that coin for that date is fixed (note: this does not take into account restrikes).

The 1895 Morgan Dollar - The King of Morgans - The Most Valuable Morgan Dollar


The 1895 Morgan Dollar:

The 1895 Morgan Dollar is known as the "King of the Morgan Dollars" because it is the rarest and most valuable of the entire Morgan Dollar series. PF-68 specimens of this rare coin have sold for upwards of $120,000 at auction.
According to U.S. Mint records, there were 12,000 regular circulation Morgan Dollars struck for 1895, and 880 Proof specimens struck. However, only 75 to 80 of the 1895 Morgans have been accounted for, all of them Proofs. Where did 12,000 plus coins go?

A Mysterious Disappearance?:

Numismatic scholars are divided in their opinions as to why the 12,000 business strike specimens of the 1895 Morgan Silver Dollar have vanished into history. Most believe that the coins were never minted in the first place, and that this notation in the Mint accounting ledgers is in error. Some believe that the coins were minted, but melted down for various reasons. I even read one theory that proposes the coins were lost at sea in a shipwreck.

Silver Prices... How High Could They Go - Continued

Technical Analysis
Fairly conservative technicians currently seem to expect $100 to trade after a $50 breach, although a correction to test the base at $50 could then materialize.
Revised CPI Measures: When the price of silver is inflation adjusted from its historic highs using the old CPI measure, people like John Williams have been quoted saying it should be as high as $500 per ounce.
Using Money Supply: Given the rapid expansion of the money supply since the gold standard was most recently abandoned in 1971, which has accelerated even further after the 2008 financial crisis, analysts like James Rickards have pointed out that a price of $7,000 to $10,000 for an ounce of gold would make more sense. Using the historically reasonable 20 to 1 price ratio, this analysis would put the price of silver in the $350 to $500 per ounce range.
Alternatives to Paper Money: Gold and especially silver may not achieve official currency status any time soon, but they are the best candidates for unofficial non-fiat money that investors can readily purchase.
Financial Repression: Current monetary policy continues with low interest rates, captured bond buyers and real (as of yet absent) growth priced in forced legal tender.
Hyperinflation to Quadrillions of Dollars per Ounce
Un-backed fiat currency money printing is running rampant under the flimsy guise of quantitative easing. Silver investors have all heard quadrillions associated with derivatives for a few years now. The BIS changed their calculation in 2009, making the amount of outstanding OTC derivatives smaller by approximately $500 trillion. Also, the market has long known that the Abe regime in Japan will soon pass the 15 zeros of debt mark, if they have not already done so. The devil is in the details and in this case the hyperinflationary details remain firmly entrenched in a cacophony of noise and distraction.