Exclusive Interview – James Turk: “There’s Physical Gold and Paper Gold–The Closer You Are to Physical the Higher the Price”
January 11, 2012 | By Tekoa Da Silva
Yesterday I had the chance to share an outstanding conversation and interview with James Turk, founder and chairman of GoldMoney.com.
James is one of the leading voices of the global gold community, and his background and network information is second to none. The topics we discussed in the interview ranged from where GoldMoney.com sources it’s bullion, to the Middle Eastern & Asian perceptions of gold, the coming “PAGE” gold exchange, plus James’ expectations for gold, silver, and mining shares in 2012.
Early on in the discussion, I asked James to comment on the ongoing misunderstandings of the “lack of supply” in the metals markets. James said, “If you’re really looking for large amounts of metal, it’s very difficult and it’s not something that can be filled overnight[the order]…it’s something that’s going to take weeks perhaps to fill depending on the size of the order.”
When asked about the Asian & Middle Eastern perceptions of gold James said, “In Vietnam for example if you’re buying land, you don’t pay for it in terms of the local currency, you pay for it in terms of some weight of gold that you agree on with the seller of the piece of property.” He continued by adding, “Asians are buying high carat [gold] jewelry for the same reason that we buy coins and bars—we buy it because it’s money and it’s a form of savings. Asians and Middle Easterners tend to prefer to hold their fabricated gold as a form of high carat jewelry rather than in terms of a bar or a coin…”
“I did live in Thailand in years past, I’ve also lived in the Middle East, and when you go to a “souq” [marketplace] and pick out a nice form of gold jewelry, you don’t pay for it like you might in the west. They take that jewelry, put it on a scale and mark it up by 7% and you pay for it that way. The markup you’re paying for that jewelry is just like the markup you’re paying when you buy a coin or small bar—it’s the fabrication cost.”
In regards to the pending PAGE(Pan Asia Gold Exchange) launch in H1 2012, James said, “If it’s launched the way they [the Chinese] say they’re going to launch it, and according to the mechanisms and systems they say they’re going to introduce through it, I think it will have a profound impact [on the price of gold]. The reason is that the exchange is very close to physical metal…There are two types of gold–there’s physical gold and there’s paper gold, and the closer you are to physical the higher the price is. That’s why for example the Sprott Physical Silver Trust is trading at a 30% premium to the Comex price–the reason is everyone knows the Comex price is paper, and that there’s really physical silver in the Sprott Physical Trust. The PAGE exchange will probably have a similar type of impact…It will help make people understand there really are two different markets for gold–a paper market and a physical market.”
On the value of the precious metals and expectations for 2012 James commented, “With regard to gold and silver themselves, I think we’ve seen the low for the year. I think we’re going to clear $2,000oz. on gold before too long and I think $100 silver is quite reasonable. Something over $2,000oz. this year seems likely, and something over $50oz. perhaps as high as $100 per oz. on silver seems to me the most reasonable course...The mining stocks are still on the runway [ready for takeoff]. The runway is this trading range they’ve been in for the last couple years now…Eventually they’re going to break out of these trading ranges to the upside, and they’re going to take off. Hopefully it’s going to be the first quarter of this year because I’m expecting much higher prices on both gold and silver as we work our way to the end of the first quarter.”
James concluded by saying, “The key point Tekoa is that gold, silver, and the mining stocks are all undervalued assets, and you rarely go wrong when buying undervalued assets–but sometimes it requires a lot of patience.”
This was another outstanding “must-listen” interview with one of the world’s leading voices in the gold community.
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