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Should I buy gold coins or gold stocks from Superior Gold Group?

Instead of gold or silver bullion, many investors opt for precious metals mining stocks because they normally yield higher percentage increases than gold and silver when metals prices rise. However, investing in precious metals stocks carries risks beyond buying gold or silver bullion.

The risks are many and varied, and sometimes unforeseen problems can send stock prices plummeting, which, of course, is true of all stocks. Management mistakes cause most mishaps. With precious metals and other mining stocks, the sizes and grades of ore deposits can be overestimated or the cost of extracting the ore can be greater than expected, resulting in lower profits or even losses.

Additionally, businesses always struggle with economic downturns, interest rate increases, labor troubles, governmental interventions, and environmental requirements. Increases in energy costs--even energy shortages--could plague some mining companies, notably those operating in Nevada's famed Carlin Trend.

For disastrous management decisions, Sunshine Mining and Refining Company comes to mind. Once a favorite of silver stock investors, Sunshine traded at $13 in early 1998 on the NYSE. However, by 2000 Sunshine was in Chapter 11, and its stock has traded at less than a nickel on the NASDAQ.

In 1996, Sunshine's management borrowed $30 million and in 1997 an additional $15 million for development of its West Chance ore body at the Sunshine Mine, after which the company is named. Part of the borrowed funds were used to delineate what the company calls a "world-class" ore body in Argentina.

Although management claims the West Chance efforts were successful, management misjudged cash flow and was unable to meet interest and principal payments on the $45 million. Efforts to refinance were unsuccessful, and the lenders took control of the company and mothballed the famed Sunshine Mine. Shareholders wound up with about 3.6% of the company. Unfortunately, this was not Sunshine's only brush with disaster.

In 1972, a fire in the Sunshine Mine nearly destroyed the company. While Sunshine's stock price suffered, the company managed to survive. Now, Sunshine Mining essentially has been taken over by its creditors.

Ashanti Goldfields (Ghana) and Cambior (Canada), two gold producers, also exemplify what can happen to share prices when managements make bad decisions. In early 1996, Ashanti (ASL) traded at $25; in 2000, Ashanti's stock traded below $1.50. In early 1996, Cambior, traded at $16; in late 2000, Cambior's stock traded at twenty-five cents.

Both companies got caught up in forward sales, and their balance sheets were severely damaged by margin calls in 1999 when gold rallied from the $250s level to $338 on the announcement that 15 European central banks would limit gold sales and leasing for five years (The Washington Gold Agreement). Gold's price move caused Ashanti and Cambior to liquidate assets and/or convert loans to equity shares at rates that severely damaged the value of their stocks.

Forward selling remains a threat to other gold mining companies because the amount sold short via forward sales is disproportionate to the size of the gold market. Some estimates have total forward sales equivalent to three to five years of production. One or two small short positions could be unwound with only minor price increases. But, the total position is enormous, and reversing it without the price of gold skyrocketing will be difficult, if not impossible.

Forward selling involves borrowing gold and selling it, and it is done mostly by mining companies because, logically, they should be able to replace the borrowed gold out of future production. Forward selling is profitable because the lenders, primarily central banks, lend with charges (lease rates) of about 1%, sometimes even less. The borrowers sell the gold with effective returns of somewhere between 6% and 10%, depending on the borrower's credit rating.

If the funds from the sales of the gold are invested in high-grade bonds, the borrowers receive probably 6% to 8%, for a tidy margin of 5% to 7%. However, if the borrowers use the funds in operations, thereby permitting those to forego borrowing in the credit markets, then they effectively receive higher rates, depending on the companies' credit ratings.

Hundreds of millions of dollars are made via forwarding selling. The central banks earn fees on an otherwise "sterile" asset. The mining companies earn 5% to 9%, and the bullion houses that arrange the central bank loans and handle the gold sales earn huge fees. Forward selling pays off like a broken slot machine--except for gold mining companies' shareholders. Shareholders lose because forward selling distorts gold's supply/demand fundamentals and puts downward pressure on the price of gold. However, forward selling is not without its risks.

If the price of gold rises, the lenders want additional margin deposits, which is what hammered Ashanti and Cambior. (Despite the borrowers having millions of ounces of gold in the ground, the central banks require "margin deposits," usually US treasuries. This works much the same way as margin deposits do on futures and stock exchanges.) It is believed that some bullion houses have even given the central banks guarantees that the borrowed gold will be replaced. If so, then adverse developments in the forward sales arena could force government bailouts, such as was the case with the Fed-engineered rescue of Long-Term Credit Management.

Precious metals stocks are a way to participate in the gold and silver market; however, compared to gold and silver bullion, stocks are risky. No one ever went broke holding gold or silver. The same cannot be said of paper assets. Call the <a href="http://www.usgoldinvestors.com">Superior Gold Group</a> today and start your account NOW!

About the Author

The Superior Gold Group is an industry leader in the precious metals investment industry. With 1,000's of satisfied customers and a long list of highly respected industry partners, the Superior Gold Group can help individuals, corporations and broker dealers alike to satisfy their desire to add gold, silver and platinum to their portfolios

Magid 6687 Clutch,Gold/Gold,One Size $116 Magid 6687 Clutch,Gold/Gold,One Size

GOLD OVER SIZE HOLLOW RHINESTONE HOOP EARRINGS $12.99 GOLD OVER SIZE HOLLOW RHINESTONE HOOP EARRINGS

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Magid 6690 Clutch,Gold/Combo,One Size $122 Magid 6690 Clutch,Gold/Combo,One Size

Betsey Johnson BS26710 Wristlet,Gold,One Size $68 Betsey Johnson BS26710 Wristlet,Gold,One Size

Magid 6694 Clutch,Gold/Topaz,One Size $216 Magid 6694 Clutch,Gold/Topaz,One Size

Gold Ring Size 6 $195 ITEM INFORMATION: Product Type: Ring, Condition: Brand New, Material: 10K Two Tone Gold, Total Item Weight: 3.5G , OTHER INFORMATION: Width: 6Mm , Height: 1.5Mm , Gender: Ladies, Ring Size: US-6, Brand: Vivid Gemz Size/Dimensions: 6 Metal Stamp: 10 kt Material: Gold Gender: Women

Full size helmet, risers, gold mirror finish $203.99 Full size helmet, risers, gold mirror finish Full size helmet, risers, gold mirror finish

Super Jersey Long Sleeve Crewneck Tee $39.95 "This long sleeve classic tee features size vents and a slight A-line shape for full coverage and easy movement. Made of a heavier weight cotton that never clings and shaped just for the plus size woman."

QuikCool Double-Scoop Bra Top $29.95 "Looking for a plus size bra top that is soft, light and supremely comfortable? QuikCool plus size bra tops are the answer. This dual layer, fully-lined plus size bra, offers light support while the wicking fabric is smooth and sumptuous. It surrounds the body to push moisture away from the skin to keep you dry and comfortable. Wear this plus size style during yoga, under a casual tee, or even sleeping. Cut for a plus size woman, this sporty top can be worn for low-impact activities or casual wear. Tee shirts slide over the smooth fabric. You’ll love the careful Junonia cut. It is longer at the sides for full and flattering fit, and slighter higher front and back for support. The armholes are not too tight, yet have excellent coverage and the wider straps support and can cover a plus size bra for extra support. Antimicrobial and fast-drying, QuikCool dries quickly, and is perfect for travel. "

UV-Protective Stretch Nylon Half-Zip Pullover $19.95 "We designed this versatile plus size pullover to protect you from the sun. It does that beautifully with UPF 50 and the highest possible UV rating. But then we noticed how versatile it is! We cut this plus size jacket long with princess seams to give you a flattering plus size jacket over plus size leggings and even a plus size bathing suit swimsuit on the beach. The arms are cut full for air flow, and roll up with tabs, and it has side slits for easy moving. This womanly plus size jacket also serves as a wind breaker jacket and is a perfect travel companion, ready for any activity, or those casual walks on the beach. Front slit pockets, quarter zip neckline "

Juno Stretch Naturals Leggings $36.95 "Luxurious cotton with spandex for ultimate stretch and comfort. Created with Junonia’s plus size fit and long-lasting quality. Covered elastic no-chafe waist."

Juno Stretch Naturals Capris $36.95 "Luxurious cotton with spandex for ultimate stretch, and comfort. Created with Junonia’s plus size fit and long-lasting quality. Covered elastic no-chafe waist."

Seashell Classic Pique Polo $29.99 "Don’t miss out on this fabulous deal! Nothing beats the crisp appeal of the classic plus size polo. It never goes out of style. Junonia’s womanly cut is also a winner. We’ve kept the plus size shape in mind with a great fit. Active or casual, the longer length means you can wear this shirt over plus size jeans or plus size leggings. Long side slits and a perfectly cut armhole mean you can play, run and laugh with the kids. Best of all is the gorgeous all-cotton pique fabric. It is a medium weight for a smooth no-cling appearance and feels great year around. Durable and breathable 100% Cotton, this shirt washes like a dream. Subtly embroidered with a Junonia seashell at the hem, your guarantee of exceptional fit and quality. If you are between sizes or prefer an oversized tunic fit, we recommend ordering a size up. "

Packable Apple Fit Sport Pant $19.99 "These are a steal! If you love our black cotton plus size stretch pants, (and who doesn’t?) you’ll love having a pair of our best selling plus size pants in this warm and versatile cocoa brown color. Match up these woman-friendly plus size pants with your plus size tops in light blue, mango, and even black! The fabric is smooth with just the right amount of stretch for ease. Toss these in and out of the wash; they just bounce back into shape, keeping you looking your best. They not only look good, but these are incredibly comfortable. We cut these plus size pants full just for the plus size shape with a soft covered elastic waist. The legs and seat on this pant are cut for a slim appeal. Wear these for casual, for walking, and even to active pursuits like yoga class. Cling-free cotton/spandex is durable and just so comfortable. These even have side seam pockets for all our pocket-loving customers! Buy two or you’ll regret it! "

V-Neck Tank Top $19.95 "A versatile and flattering, sleeveless plus size top. In soft lightweight non-cling summer cotton, this knit pullover is just the elegant detail you’ve been looking for. Worn under a jacket for those office meetings, it also looks great over a pair of plus size jeans. This is not really an active top, but would make the perfect travel companion, sauntering over cobblestones and shopping the markets. Add jewelry and scarves for fun. You’ll love the flattering neckline that takes this well above a simple plus size tank. The womanly cut of the armholes is perfect and the length just right. At this price you’ll want one in each color!"

Super Jersey Long Sleeve V-Neck Tee $39.95 "No-cling cotton skims the body for a flattering silhouette. Comfortable and long-lasting top-quality cotton. Wash after wash, from play to casual this plus size v-neck will become a favorite. "

Junowear All-Cotton Classic Brief $12.95 "Our best-selling brief ever! This generous full-cut plus size classic features a comfortable knit elastic waistband and non-chafe stretch edging at the leg. Natural waistline fit with a conservative leg. "

UV-Protective Stretch Nylon Zip Jacket $19.95 "Protect yourself from the harmful rays of the sun in this sporty plus size jacket. The fabric is rated at UPF 50 and has the highest possible UV rating. But you’ll be grabbing this versatile plus size jacket on even cloudy days, as a perfect top layer for chilly mornings or cool weather strolls. Pretty details include a stylish mock neck and contrast stitching, a Junonia logo on the two-way zipper pull and elegant shirring at the chest and cuffs. Back vented design allows for easy shoulder movement, while cord locks at the hem let you adjust for warmth and comfort. Cut a little longer to work for all your needs from casual walks to topping a plus size bathing suit swimsuit at the beach. Front slit pockets. This is a perfect plus size travel jacket! "

Seashell Crossback Suit with Binding $49.95 "The most flattering plus size athletic tank you’ll ever wear. You’ll love the freedom of the X-back style for swimming. The front inset avoids water scooping when you are powering through the water. The side bust coverage is plus size perfect and the leg conservative but comfy. The back is a little higher for support and coverage, and the wide piped straps are striking. Inside our unique swim bra design, utilizes a special power mesh swim aqua bra system that combines under bust support with around-the-body sport bra construction for a natural but defined bust line. You’ll be amazed at how secure you feel in this plus size suit! We’ve made this plus size swimsuit from our best Nylon/high-spandex fabric with extra chlorine resistance. The thicker fabric offers elegant support and control. Wear for aqua activities, or simply look great lounging on a beach."

Juno Stretch Naturals Bike Short $24.95 "Luxurious cotton with spandex for ultimate stretch and comfort. Created with Junonia’s plus size fit and long-lasting quality with longer inseams. Covered elastic no-chafe waist."

QuikCool Full-Coverage Brief $19.95 "We dare you to find a more comfortable and sumptuous brief. We have cut this beautiful style for a woman, with full coverage yet with a sleek and slightly sexy appeal. But the secret to this popular style is the fabric. QuikCool is silky soft and stretchy, with the wicking power that makes all the difference. These wicking plus size panties push moisture away from your body keeping you dry and comfortable in all temperatures. Say goodbye to clammy plus size underwear. Junonia has carefully fit these for the plus size shape, and added a double inner gusset and soft, no-chafe bound edges at both the leg and waist. Enjoy the light stretchy support for active and all-day casual wear. Versatile and fast-drying, these briefs are perfect for sport, active and everyday casual wear. Antimicrobial and fast-drying, QuikCool is just the ticket for travel. "

ActiveLife Pear Pant $59.95 "We built this pant on our best-selling silhouette just for the plus size pear shaped woman. Lusciously fuller at the hip and thigh, this go-everywhere pant fits to flatter your curves, finishing with a straight leg bottom. The elegant and versatile stretch fabric is complemented by covered elastic waist and invisible zipper slash pockets. "

ActiveLife Pineapple Pant $59.95 "For the evenly proportioned plus size woman, the pineapple shape flatters her athletic build. A slightly fuller waist and hip with not-too-full thigh, this pant finishes with a wider leg in an elegantly stretchy fabric. Features invisible zipper slash pockets and a covered elastic waist. "

Super Jersey Long-Sleeve Polo $49.95 "Classic, face-framing polo style features silver open-center snaps on the extra long feminine placket. Heavier weight comfortable cotton never clings. Nice length works with all your pants in this versatile long push-up sleeve plus size style. "

Biking With Friends Long Sleeve Tee $39.95 "Nothing is more fun that rolling down a bike trail with a group of friends. This exclusive Junonia design is inspiration to arrange that next outing! Wear it on the bike trail, and everywhere you have fun. A perfect plus-size fit with a long sleeve and beautifully silkscreened design."

Marilyn Jeans by Lee with Tummy Smoother $49.95 "This classic five-pocket jean instantly slims and smoothes your waistline, while providing all day comfort. Designed to sit at your natural waist, this close-fit plus size style has an inner tummy panel that comfortably holds you in. Fashionable straight leg silhouette slenderizes. (See style #460002 for Black.)"

Milan Jeans by Lee with Invisible-Flex Waistband $57.95 "This straight leg jean has that little extra you love in your jeans. Stylish two-tone stitching, and perfectly placed, pieced back pockets with rivets. A great plus size fit, enhanced by the clever invisible flex inner elastic waistband for extra comfort and ease of movement."

PerfecTemp Quarter Zip Fleece Pullover $69.95 "Better than a sweatshirt or a sweater! This cozy, top-quality fleece pullover features a quarter-zip mock neck. Generously cut for layering, this plus size desgin features long straight-hem sleeves, feminine princess seaming, sporty top-stitching. Junonia Spirit logo embroidery at center back collar. "

QuikWik Two-layer Reversible Tank $69.95 "This versatile tank is fully reversible, giving you two looks in one! Two layers of moisture-wicking QuikWik will keep you cool and dry, with no-cling coverage. This plus size tank has a bound neckline and no-gap armholes that will never chafe. A wonderful quick-drying travel choice! 50 UPF UV Sun Protection. "

PerfecTemp Fleece Hoodie $44.98 "Get ready for fun! This classic hoodie has a sporty flair, with two-way front zipper and drawstring at hood. Femininely shaped plus size design with princess seams, and top-stitch throughout, it has front welt pockets. Beautiful top-quality cozy fleece. Junonia Spirit logo embroidery at top of hood."

Best-Fitting 3/4 Sleeve Bateau Top $39.95 "This flattering bateau neckline really fits! We carefully shaped it to ride perfectly at the neckline without pulling or revealing your straps. Then we gave it a designer look with pleats that flatter the plus size woman. This smooth and stretchy Cotton is not-too-heavy and never clings. A perfect weight you’ll enjoy."

Sophisticated Shirred Tank Top $29.95 "With its elegant wide curved neckline, and armhole carefully fit to never gap, this will be your go-to tank. Under jackets or alone with capris, this plus size tank is the one you’ll love. Good thing it comes in so many colors! Soft, smooth and non-cling Cotton stretch jersey in a just-right weight."

Juno Stretch Naturals V-Neck Tee $29.95 "Luxurious cotton with spandex for ultimate stretch and comfort. Take this shirt everywhere: gym, travel, casual. Created with Junonia’s fit and long-lasting quality. This short sleeve v-neck is uniquely cut for plus size with flattering shoulders, sleeve lengths, and relaxed hips."

Juno Stretch Naturals 3/4 Sleeve Tunic Top $36.95 "Luxurious cotton with spandex for ultimate stretch and comfort. Layer this longer plus size top over leggings and jeans for a sleek and flattering look. Perfect for walking, travel and casual wear. Created with Junonia’s fit and long-lasting quality. This center seam tunic is cut with flattering shoulders, ¾ length sleeves, and relaxed hips."

Juno Stretch Naturals Bra Top $29.95 "Two layers of luxurious cotton with Spandex fabric provide confident plus size support with a full-cut design that is longer at the sides. Slightly higher in front and a scooped back provides good bounce control with full comfortable coverage. Soft no-chafe covered elastic band makes getting in and out easy."

Quilted Comfort Reversible Quilted Vest $89.95 "For warmth with a fashionable appeal. Versatile, fully reversible plus size mock-neck vest offers two looks in one! Herringbone quilting on the colorful smooth poly outer is tipped with black binding. Inside is warm and cozy PerfecTemp fleece in versatile black."

This entry was posted on Monday, February 11th, 2008 at 12:57 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.