He was not certain whether it was gold or not and did not want to get people’s aspirations up. So Marshall tried to break the yellow rock with a hammer. It did not split, but it did dent. just like gold would. The woman who was cooking meals for the saw mill construction crew, tried another test by boiling the rock in lye.

They boiled it all day, but it did not change colour. So, they passed the rock over to the mill’s owner, Mr. John Sutter, who also conducted a few tests. Eventually, everyone agreed that this rock was indeed gold.

It seems that the Sierra Nevada Mountains hid huge hordes of gold, but that over tens of thousands of years, erosion had loosened up gold nuggets and the mountain streams flushed them down to the bottom of the mountains. Sutter’s property was situated between two rivers and so was likely to generate great wealth.

Sutter had ideas to build an agricultural empire on his 39,000 acres of land, so he asked his employees to keep stum about the strike. However, as is to be anticipated, word leaked out. In due course news of the gold strike reached the small town of San Francisco.

There, a newspaper publisher shouted around the streets: “Gold from the American River!” and within three days of the news arriving, 400 of the 600 inhabitants had set out for Sutter’s land. It was a groundswell and by the end of the year, gold prospectors had traveled to California from as far afield as Mexico and Chile.

When word of the gold strike reached the east coast, President Polk confirmed the finding. It was December 1848 and ‘The Gold Rush’ became a national and even a worldwide phenomenon. The gold prospectors of 1849 and later years became known as forty-niners.

What has to be borne in mind is though, that most people, who came from Canada, Mexico and the eastern United States came by wagon train, as there were not locomotive! This meant a arduous trek of between six and nine months

Nevertheless, at least 32,000 people actually walked to California in 1849, and about 44,000 more got there in 1850. Others, such as South Americans, faced an arduous journey by sea. They suffered storms, shipwrecks, hunger and thirst, disease, and overcrowding and after all that, some still had to face mule rides through jungles and deserts! Still, in under a year, about 40,000 people arrived in San Francisco from abroad.

The new arrivals caused a dramatic change in California’s population, because in 1848, California had had about 100,000 residents, most of whom were Native Americans, but within two years, the state population more than doubled but the variety of backgrounds increased tens of fold.

Some prospectors found gold and made a fortune in the Californian riverbeds, but most people did not become rich in the Gold Rush. When gold was found, the cache was usually cleared quickly. James Marshall had little achievement as a miner, and he died impoverished. John Sutter, who had once owned 39,000 acres, left California in serious debt after miners flattened his land.

In fact, it was simpler to make money selling spades and other provisions to the prospectors. Most people lost everything they had, so they stayed to farm the vast expanse called California or to set up businesses. By 1856, San Francisco had a very cosmopolitan population of over 50,000 people and California had become the most exhilarating state in the nation.

Owen Jones, the author of this piece, writes on many topics, but is currently involved with Celtic knot rings. If you have an interest in gold rings, please go to our website now at White Gold Claddagh Ring

The valuation of gold mining shares is based on a number of factors including the company’s potential future revenue which is often impossible to predict. No one really knows how gold prices will evolve nor if the company will be successful in keeping their operational costs down or creating gold reserves.

One of the factors to affect gold mining shares is the relatively recent geographical shift of gold production. For example, up until 2006 the four major producing countries were South Africa, the United States, Canada and Australia but their share of the global production has slipped to approximately 36%. The reason being that large scale gold production has moved to other countries, whether due to discovery of new reserves or simply because of lower operational costs.

China has become the biggest global gold producer with the bulk of the industry being made up of small, private mines which produce little individually making them quite inefficient. However, there are large scale projects in development which also include foreign gold mining companies who are veterans in the industry. Thus the Chinese gold mining industry should see a boost in gold production as well as efficiency.

Another variable that affects the shares of gold mining companies is the expenditure on exploration. Annually over $7 billion are spent on gold exploration but one must remember that even though it sounds like a large budget versus previous years it does not take into account the effects of inflation nor the fact that exploration is generally more costly now. Everything associated with exploration from drilling to the cost of energy to labor have all become much more expensive. The problem is that all the easy gold has already been found and now gold mining companies are being forced to go to more remote and far flung locations to find new reserves which means that there is no supportive infrastructure and implicitly higher costs.

As an investor you should closely monitor how much any of the gold mining companies you wish to invest in spend on these projects and what the ROI is. The lower the exploration cost per ounce the higher the positive impact it will have on future earnings and thus the price of gold mining shares.

Rising operational costs are also a key factor in the value of gold mining shares. Even though gold mining companies are producing much more gold they are also paying a lot more to mine it than they did as little as a decade ago. Recent years has seen operational and exploration costs rise rapidly with production costs going up from around $170 per ounce in 2001 to over $400 in 2007, almost tripling in as little as six years. For this reason gold stocks have not performed as well as gold bullion even though gold mining companies have managed to maintain their margins, albeit with difficulty.

These are just a few of the factors that should influence your decision when deciding whether or not to invest in gold mining companies. It is best to treat it as an investment in any other corporate stock and not to lump it in with gold bullion, which plays a completely different role in a well structured investment portfolio.

Gold Mining: Panning

The original method of mining gold from water was known as panning and is a manual technique to sort gold from gravel and sediments present in a stream. The pan is filled with material from the stream bed and then submerged underwater and shaken. As gold is much denser it falls to the bottom of the pan.

Gold panning is probably the easiest technique to find gold but again it is not commercially viable for large scale production. It is sometimes used as a method to identify placer deposits of gold which can later be evaluated for their commercial value.

Gold Mining: Sluicing

Another method that is still used to day of mining gold from water is sluicing. The technique uses a sluice box, a channel with riffles set in the bottom, where the material is placed at the top and water carries it to the bottom with the gold dropping out of the water due to its density.

Larger scale mining operations also use screening plants to remove larger debris and boulders before the resulting material is moved to a sluice box. These types of operations involve much more gold mining equipment such as excavators, rock trucks, loaders and many more to remove the material from the stream or river and transport it to the different stations where the gold is separated out.

Dredging

Dredging is mainly used by small scale operations and usually suction dredges are used rather than the classic bucket and line method. The former is much more efficient and different size hoses can be used to target difficult to reach areas such as behind large boulders. Essentially a floating processing unit sucks up the material from the river bed in a temporary pond, processes it on board and expels the water and unwanted gravel or sediment back into the pond.

This is a very cost-efficient method of mining gold from water and also has a low environmental impact because no vegetation needs to be stripped and all the water is recycled. The operation is also seasonal as permits are issued only for periods that do not conflict with the spawning season of fish.

In terms of efficiency and commercial viability for large scale mining operations, hard rock mining is still the preferred gold extraction method.

If you have a desire to take up gold mining on a small scale then your best option would be to start with panning as the investment in gold mining supplies is minimal versus other methods of mining gold from water. Once you get a feel for gold mining you can graduate to more complicated methods if you have the necessary investment. Of course you could also consider starting a junior exploration company of your own with backers to become the next big gold producer.

The goal of gold futures contracts is for traders to sell the gold they have purchased before the date of settlement for a profit and this method allows them to leverage much larger amounts for higher rewards but higher risks as well. On the date of settlement they will then have to settle only their profit or losses. The same is valid for the seller.

Gold future trading requires a margin for the simple reason that if gold prices fall the seller has little guarantee that the buyer will not walk and vice versa. The margin ranges from 2% to 20% depending on the conditions of the market and if gold prices fall you will be required to add to your initial margin and you can’t get out of a margin call until you sell the gold. This is where the risk comes in as you may end up paying a lot more for the gold than you initially invested.

Leveraging: High Reward Comes with High Risk

The lower the margin you are required to put down the higher the leverage and thus the higher the potential profits. Since you are only putting down a percentage of the value yet can trade with the entire amount it is easy for you to get carried away. Gold futures trading is a high risk trade because a slight adjustment in gold prices for a day can force you into a margin call which if you don’t meet you lose your initial investment and if you do you are still liable to lose both the initial investment as well as the extra margin deposited due to emotion as you will be tempted to close out your position. The fact of the matter is that most people lose money trading futures because of leverage since a meager difference in price can completely wipe out your investment.

Gold Future Trading: The Process

To trade gold futures you will have to find a broker who deals in futures who will manage your trades and your relationship with the gold futures market by contacting you to collect margin as an example. Be prepared to sign a legal agreement which explains the risks of trading gold futures and by signing you agree to accept all the risks without holding the broker liable. You will be required to provide personal information regarding your identity and creditworthiness and within a few days your account will be opened, after the broker conducts some background checks.

Gold Futures: Pricing

Understanding how gold futures are priced is vital before you consider trading because no one will allow you to use their gold/money for free. When you buy gold futures the contract is signed at the spot price of gold on that day but with the actual exchange taking place later.

During that period of delay your cash may earn you approximately 1% while the seller’s gold will only earn him 0.25% which you will have to cover for the duration of the futures contract. Essentially it is the interest you are paying to be allowed to leverage that gold because otherwise the seller could make a trade with instant deliverability.

As long as interest rates for dollars are higher than gold lease rates you will have to pay this difference, therefore you will have to deduct this cost from any profit you make as well. The latter means that you will have to make a significant profit before the future expires and settlement must be made.

Gold future trading is a dangerous game and it is not for the faint of heart therefore it is advisable you only proceed with money you can afford to lose because the outcome is not always a positive one.

The next factor you need to focus on is the type of trading you are interested in, namely day trading, swing or position trading. In day trading, you will be buying and selling your gold the same day without holding on to if for more than 24 hours to avoid overnight interest costs.

Swing trading refers to traders who hold on to their commodities for a medium time frame while position trading can even span years. It depends on what your end goals are with your gold trading, whether you want to simple create a revenue for the short term or to make the best gold investment as a hedge for you assets for the long term.

Gold Trading: Bullion

If you have decided to trade gold bullion then you need to make sure to use a gold certificated supplier and make sure you are buying approved bullion market gold bars. Gold trading and prices can swing from the excitement of watching paint dry to a volatility that can leave you breathless, therefore it is not advisable to start trading if you are a beginner.

When gold trading it is important to remember that gold is heavily affected by fundamentals and a purely technical approach may not be the best tactic to adopt. At the very least, avoid trading when news announcements are being made regarding indicators and forecasts as trading volatility tends to spike a few moments before and throughout the announcement.

The problem is that it doesn’t always go in the direction you expect and even if you believe you can earn a lot by trading the news remember that you can just as easily lose a lot.

Gold Trading: Stocks

If you have opted to go into gold trading via an investment in a mutual fund or a gold mining company, then you will have to conduct an in-depth analysis of the company you intend to invest in.

You will want to study their annual reports, management team as well as the geological surveys so you can get a rough idea of how much ore the company still has access to. You should also look at the trading charts for the company’s stocks to see the evolution of the price. This will be an invaluable tool to help you determine if the price is right for you to invest.

If you find that the shares are near a historical resistance level then you may consider holding off on your investment until the price begins to retrace. If there are no major fundamentals affecting the share prices then you can consider the retracement a minor correction and buy when the price reverses again.

One way to determine if price is reversing is with Fibonacci levels as they have proven historically to be accurate. Therefore if the price tests a Fibonacci level and does not break through it is likely that a reversal is taking place.

Gold trading is essentially like trading any other commodity except that price reacts inversely proportional to market sentiment, In other words, the harsher the economic climate the more gold trading takes place and the higher the price.

Since most countries allow the free import of legal tender gold coins and do not tax their trade, with a few restrictions , you have the luxury of choosing which gold coins you wish to invest in. All gold coins that have been mined since 1800 and have a minimum 90% gold content are considered investment gold and any trade conducted is exempt from VAT in the EU.

How to Buy Gold Coins

There are a number of different types of gold coins available for sale but the top two are British Gold Sovereigns, American Gold Eagles and Krugerrands. You should remember that the selling value of gold coins is tightly connected to the price of gold but they also include a premium which varies across the board for different types of coins as well as the quantity you buy.

British Gold Sovereigns

These gold coins make an excellent investment if you are buying at least 50 coins at a time as the premium is only slightly higher than Krugerrands. If you are buying smaller quantities you may end up paying a premium making gold coin prices too high to be worth the purchase. However, if you are buying “in bulk” then the slightly higher premium is worth paying because the resale value of British Gold Sovereigns is usually much higher and they are also much easier to sell than any other type of gold coin. It should be noted that the profits obtained from an investment in sovereigns are exempt from the Capital Gains Tax in the UK.

American Gold Eagles

The American Gold Eagle was first released by the U.S. Mint in 1986 and is offered in 1/10 oz, ¼ oz, 1/2oz and 1 oz denominations with a guarantee from the U.S. government that they contain the actual stated amount of gold in troy ounces. As the South African Krugerrand, these gold coins are 22 karat and also contain a silver and copper alloy to help increase the coin’s stability. The reason you should buy gold coins in the first place is as a risk management tool and as you would diversify your entire investment portfolio so should you also diversify your investment in gold coins. Since the American Gold Eagle is backed by the U.S. Government this makes it a worthy addition to your gold portfolio.

Krugerrands

These gold bullion coins are offered at a low premium as the South African Mint sells them for only an extra 3% as well as shipping and insurance costs but they sell only directly to large banks as well as bullion dealers. There are many other coins available but due to their longevity and the low premium which is caused by the high number of Krugerrands sold, they make for a wise investment.

Like with any gold purchase you will want to make sure that gold coin prices and premiums are not at a peak when making your purchase. Also consider other factors such as ease of liquidation because you may buy gold coins easily but some of them are more difficult to resell. Also check the historical trend of the resale value of the coin which will help you determine whether or not they make a good choice. As pointed out above, even if you pay a higher premium it may be worth it if the selling value of the gold coins is much higher.

Where to Buy Gold Coins and Bullion

When you buy gold coins it is critical that you use a reputable, authorized gold coin dealer and due to the Internet they are not as difficult to find anymore. Your first option is to speak to your current broker to see if they either deal in gold coins or can connect you to the best gold coin dealers. Most of the time they will have one or two names for your to deal with and since word of mouth is worth more than its weight in gold this is the best option.

How to Buy Gold as a Hedge

Gold bullion is most often used as a hedge as it is the metal itself which retains value thus making gold equity useless in terms of asset protection. You can either buy bullion in the form of marked bars or gold coins. Coins are usually easier to move liquidate both due to their smaller size as well as the fact that they are clearly marked. For this very reason it is recommended that if you decide to buy gold bars you should only buy clearly marked ones because there have been many cases in which the bar was only made up of a gold shell and the rest was a different type of metal with a similar weight to volume ratio as that of gold.

There are certain factors you need to consider when deciding how to buy gold and that includes timing. Historically, one can see from the charts that the price of gold has a habit of decreasing during the holiday months, around August and then picks up again starting late September when countries like India buy up a lot of gold for their festivals and weddings. This leads to the conclusion that the holiday season may be the best time to invest in gold

How to Buy Gold for Profit

If you intend to invest in gold to grow your investment and make a profit then your best option would be to either buy bullion at a low price or to invest in gold equity. However, it is important to remember that equity in the shape of stock, bonds, futures and others carries different risks than owning gold bullion. If you own gold bullion you will never completely lose all your money whereas owning gold equity can bankrupt you just as it can make you a healthy return on your investment.

As with any shares you will want to conduct fundamental analysis in the meantime to get a clear view of the macroeconomics as well as any changes that may intervene. For example, until recently most investment advisors coached their clients to take a bearish position and now the market has reversed with everyone beginning to turn bullish. So your best bet would be to buy gold while it in the off-season as prices will be much more reasonable.

How to Buy Gold the Safest Way

Since we live in an imperfect world where con artists try to wring out your last drop of blood you will have to be careful when deciding where to buy gold. Of course, the best places to buy gold are dealers with a stellar reputation and trademark, who can also be found online. The Internet gives you the advantage of being able to get recommendations from previous customers easily which will help you determine whether or not the seller is trustworthy.

When deciding on how to buy gold you will first have to define your goals which will make the process that much easier

Gold has always maintained its value, irrespective of the condition of the economy, due to its resilience and scarcity. Gold is one of the few metals that does not degrade in time which makes it highly valuable. Due to its stability people tend to move their assets into gold bullion to protect against paper currency devaluation.

The current gold market price and demand seems to indicate that there is much uncertainty about the future which is diametrically opposed to what many economists are declaring, namely that we are well on the way to recovery. A number of factors that are not economic perse lead to the high demand for gold including an unstable geo-political climate with wars seeming to take place everywhere as well as the war on terrorism. People are worried about the future and in the case of war the only thing that will maintain its value will be gold.

What is the Price of Gold Today?

The current gold market price is just above $1,100 per ounce and appears to have stabilized for the moment but this is most likely due to reduced trading volume after the holidays.

There are pessimistic voices who believe that we will be facing a double dip recession with the second dip still to come. They feel that the second part of the recession may even be more severe than the first which will drive the value of precious metals through the roof, including the price of gold and silver. If they are even only half right then it is still worth investing at the current gold market price because it could even double as we may be faced with hyperinflation as well as the collapse of various financial institutions.

Judging by the economic conditions as well as current political instability all over the world the double dip scenario seems to be more and more realistic, especially since the deficit continues to climb and the purchasing power of strong currencies continues to drop. A quick look at the real estate market is enough to convince one that the future is not quite as bright as it is being made out to be as foreclosures are rising daily and companies are opting to strategically default on under performing investments. Banks are attempting not to flood the market with foreclosed properties or property prices will crash but they can only hold on to these assets for a limited time until lack of cash flow brings everything to a grinding halt.

The only protection an investor will have in such a pessimistic scenario is gold bullion even if it is purchased at the current gold market price because any other financial assets from real estate to stocks will crash.

The Phoenix Resource Investment Conference, to be held Thursday and Friday, February 4 and 5, 2010, will include an evening of fun and laughter — a dinner roasting GATA’s irrepressible chairman, Bill Murphy.

The conference will be held where it was held last year, at the beautiful Renaissance Glendale Hotel and Spa at 9495 West Coyotes Blvd. in suburban Glendale, Arizona. It’s hard to beat a few balmy days in February there.

Phoenix conference speakers will include Murphy, GATA board member Adrian Douglas of the Market Force Analysis letter, and your secretary/treasurer, as well as many GATA favorites, including silver market analyst Ted Butler, Silver Stock Report’s Jason Hommel, GoldSeek founder Peter Spina, Thom Calandra of the Ticker Trax letter, Jay Taylor of J. Taylor’s Gold and Technology Stocks letter, Al Korelin of the Korelin Economics Report, and Silver Investor letter editor David Morgan.

Admission to Phoenix conference will be $40 but you can cut that in half by using “GATA” as a promotion code when registering for the conference on the Internet.

The Murphy roast dinner will be held on Thursday, February 4. A reception will begin at 6 p.m. with the dinner and speakers beginning at 7 p.m. Admission to the dinner will be $79.

To register for the Phoenix conference, buy a ticket for the Murphy roast, and get more information about everything, please visit the Internet site of the conference organizer, Cambridge Conferences, here:

http://www.cambridgeconferences.com/index.php/phoenix-resource-investment-conference.html

We hope to see many friends in Phoenix.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Join GATA here:

Phoenix Resource Investment Conference
Thursday and Friday, February 4 and 5, 2010
Renaissance Glendale Hotel and Spa
Glendale, Arizona
http://www.cambridgeconferences.com/index.php/phoenix-resource-investment-conference.html

With world markets falling day by day, more people are starting to look at gold as a way to protect their personal wealth. Placing a portion of a diversified portfolio in precious metals such as gold, silver and platinum could act as a hedge against inflation. Precious metals are normally not as vulnerable to the same pressures as the bond and stockmarkets. Characteristically, gold is not correlated to the bondmarket. A portfolio of gold bullion coins might add stability and value to your well balanced portfolio.

There are quite a few ways you can experience benefits when investing in Gold Maple Leaf coins. Other investments might lose a lot of value, but a gold coin will not. You always have something to show for your asset proving you acquired it. The bullion coin will keep some kind of wealth as long as it’s in your possession.

One of the best ways for small investors to invest in an ounce of gold is with one ounce of gold bullion coins. The older the gold bullion coin generally the greater numismatic value it will build up, if it is kept in a good condition.

Gold bullion coins are not meant to be bought for trading swiftly. They are an asset meant to be stored as a wealth keeper, not a quick trade. In , the value of your gold could grow many times. If you invest in them while they’re inexpensive, you’ll make quite a healthy return on your investment.

Can you easily invest in Canadian Gold Maple Leaf coins? Yes, it is easy to buy them, since they are widely available at online retailers, pawn shops, and local coin dealers. Prices for gold fluctuate from seller to seller, so call around your local dealers and do a few internet research before spending bulk amounts of money at one location for a Gold Maple Leaf bullion coin.

Don’t forget to store them in a safe place, handle them with care, and your wealth will be preserved, especially in troubled times, by one of the best fortune retention assets.

Another advantage to investing in gold bullion coins is its ease to liquidate. Gold bullion coins are one of the easiest assets to liquidate. The reason why gold coins are easy to liquidate is gold coins and gold bullion bars usually have a standard weight and purity stamped on it. If an investor is not too familiar with a bullion coin, they can tell what purity and how much gold they are buying. Investing in gold coins has its benefits; some of these benefits are hard to find in alternative assets. This is what makes gold bullion coins among the best investments out there.

Gold has already risen in price substantially over the last few years. This is nothing compared to the rise the smart money is predicting will come to pass over the next couple of years. Don’t miss out. Get in before it’s too late.

Buy Canadian Gold Maple Leaf bullion coins at The Precious Metal Shop.