How Much Gold Does The New Iphone 13 Contain And What Is Its Price?

Edwin Baugher 0 Comment Gold ETFs

All smartphones, including the new iPhone 13, rely on gold to function. Due to its high conductivity, stainless steel and durability, the precious metal is indispensable in small components used in them. As smartphones, and all other smart devices, have more and more features, such as 5G connectivity, gold is increasingly being used in their manufacture.

Data from the World Gold Council support this information. Although there is still a shortage of chips, the amount of gold used in the electronics industry has returned to pre-pandemic levels. At the end of the second quarter, it stood at 66.3 tonnes, almost the same as in the first quarter of 2019.

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How Much Gold Is In The Iphone 13?

We don’t know exactly how much, but we can make estimates using alternative calculation methods.

The main components for which gold is used in the manufacture of smartphones is the coating of the motherboard, camera, some connecting circuits and chips. The precious metal is usually applied as an extremely thin layer on the mentioned elements, due to its properties mentioned above.

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Calculate the Precious Metal

Generally, the more features and connectivity a smartphone offers, the more gold is required. This is especially true in the transition from 4G to 5G connectivity that will come with the new iPhone 13.

That’s why a Greenpeace report said that in 2007, the average smartphone used 3 milligrams of gold. By 2014, when the iPhone 6 was released, the amount of gold had increased to 25 milligrams. After another 2 years, the weight of gold used in each iPhone reached 30 milligrams, and in 2020 – to 34 milligrams.

Weight

Into The Motherboard

Based on this logic, the iPhone 13 should have around 35-37 milligrams of gold, as it comes with more functionality (although some components, such as RAM, will be the same ). However, this is not the case. According to the latest Environmental Progress Report , published earlier this year, Apple managed to reduce the gold used for the iPhone 12 motherboard by 50% compared to the previous generation.

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Device

Price At The Time Of Launch

However, it is not the only component that requires the use of the precious metal. So we can assume that the new iPhone 13 has about 25 milligrams of gold or maybe a little more. In any case, we will use 25 milligrams as the basis for the calculations below. At a gold price (at the time of writing ) of $56.54 per gram, the amount of gold in the new iPhone 13 will be worth $1,413 per device.

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Opinion

How Much Gold Should Apple Buy For The Iphone 13

Apple uses gold to make its products. As it turns out, it’s a vital part of how smart devices work. But in some cases, the Cupertino company has taken it a step further.

We refer to the case of the Apple Watch gold edition, of which the manufacturer emphasized in 2015 that it wants to make 1 million units. According to the company, for one copy, between 50 and 75 grams of 18-carat gold were used . On average this means exactly 2 ounces of gold (weighing 62.2 grams). By 2020, Apple is estimated to have sold around 100 million watches in 5 years, but it’s unclear how many of those have a gold case. However, if the company had produced the 1 million pieces in question, it would have needed 746 tons of gold. The amount equates to a quarter of total global gold production by 2015.

Let’s go back to the new iPhone 13. The amount of gold the company needs is not yet clear. This largely depends on the units produced and sold. The exact amount of gold required for a new iPhone will become public only after such devices begin to be recycled.

The analyst company, Wedbush , estimates that there are currently 250 million users globally using various iPhone models that are over 3 years old. Therefore, we can use this number as the number of potential sales of the new iPhone 13, although it is not clear in what time period.

So, Apple will need 6.2 million grams of gold to produce the iPhone 13, the equivalent of 200.9 thousand ounces. Therefore, for the production of the potential 250 million units of iPhone 13, the company will have to invest 353 million dollars in gold.

Going back to Apple’s report, it uses 100% recycled gold for the motherboard and some types of connections. The manufacturer also states that:

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Recycled Metal On Technology

We are working to increase the use of recycled gold and reduce the amount of gold needed to manufacture components, while supporting greater transparency in the global gold supply chain.

But in addition to using recycled gold, the company also offers other interesting facts. They say they’ve recycled their own older phone models, using the metals found in the new iPhone 13. Apple estimates it’s extracted so much gold and copper from a ton of old devices that the amount is equivalent to digging up 150,000 tons of ground

Furthermore, 109 of the company’s suppliers in nearly 30 countries use renewable energy to manufacture devices. In addition, all suppliers with whose materials the iPhone 13 is assembled are certified as 0-waste producers. In the case of gold, this means they have reduced their waste by between 95 and 99%. The norm for silver is between 90 and 94%.

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What Are Gold Exchange Traded Funds?

Edwin Baugher 0 Comment Gold ETFs

Gold exchange traded funds (ETF = exchange traded funds) are investment schemes whose shares are traded on regulated stock markets. Imagine a group of investors and investment managers who raise funds and buy certain types of assets. These assets can be stocks, bonds, commodities, real estate and more.

The next step is to create a fund to put the shares on the market. They are listed on regulated stock markets and can be purchased by any individual investor, but also by public companies – such as Coca Cola, Microsoft, etc. The main difference between gold exchange-traded funds and mutual funds is the share price, which is traded constantly throughout the day. Unlike corporate shares, exchange-traded gold fund shares include commissions and management expenses depending on the fund structure.

The share price of exchange-traded funds should change almost entirely with the movement of international asset prices in the fund.

The main role in the process of creating and buying shares of exchange-traded funds is played by the so-called authorized participants. These are registered broker-dealers who can request a fixed number of newly created shares of the exchange-traded fund in exchange for a basket of assets that corresponds to the stocks in the fund. In the primary market, requests to increase the total number of shares are in block accounts of 50, 75, 100, 200 thousand, which are called newly created units.

Authorized intermediaries can hold new shares of exchange-traded gold funds or sell them to investors on the secondary stock market. Retail investors cannot buy shares directly from the fund (ETF sponsor).

The exchange is done “in kind”, that is, exchange of securities or assets without the use of money. The purchase process is a mirror, when authorized intermediaries wish to sell the shares held by the fund and receive the basket of assets.

Difference Between Gold Exchange Traded Funds And Mutual Funds

In the gold exchange traded fund market we have a very different trading structure. As already shown, investors are isolated from each other and participate in the secondary market. The main transaction is carried out by authorized intermediaries on the basis of “in kind” exchange.

As expected, exchange-traded gold funds have different structures. There are 2 main types:

Gold Exchanges Trading Funds That Invest In Physical Gold

The largest exchange-traded fund ($57.7 billion as of mid -September 2021) backed by physical gold is SPDR Gold Shares (GLD). The fund has 2 types of assets – gold bullion of approximately 400 ounces (good delivery gold bullion of the London Bullion Market Association) and cash . The gold is stored in an HSBC vault in London. The share price is formed by the movement of the gold price on the international markets (LBMA Gold Price) minus the management costs of the fund.

Depending on daily traded stock volumes, GLD must buy or sell gold to maintain the mirror movement of the stock price and spot gold price. Authorized intermediaries, who provide the necessary liquidity, play an active role in conducting sales. This includes Citi, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America Merrill Lynch. They enter into an agreement with the fund, which allows them to deposit gold or shares for further trading until the end of the fund’s operation.

The price structure of GLD per share is 1/10 of the spot price of gold. Many investors are misled into thinking that a purchased share is a claim for 1/10th of an ounce of physical gold, which they can eventually claim. It’s not necessary. The Fund makes no commitment to convert shares into physical gold.

Synthetic Exchange Traded Funds

The other main type of exchange-traded gold funds are those that do not invest in physical gold, but hedge their equity issuance with futures and options. Such funds are often called synthetic. In most cases, the futures and options contracts they use are without the actual delivery of physical gold. Upon reaching the “delivery” date, they continue to be in effect or go through financial settlement.…

Similarities And Differences Between Exchange Traded Funds And Investment Gold

Edwin Baugher 0 Comment Gold ETF vs Gold Fund

In the case of gold ETFs, the investor owns shares issued by the fund, backed in whole or in part by gold, without a claim on the physical gold. On the other hand, investors in physical gold own actual ounces of it. This specificity gives rise to a number of differences between physical gold and exchange-traded funds.

When you buy shares of exchange-traded gold funds, you pay a brokerage fee. When you buy physical gold, you owe the dealer a premium. It is true that when buying physical gold, dealers’ premiums are higher than brokers’. Of course, in addition to price, deciding which products to invest in and assessing the different types of risk we are exposed to also play an important role.

When you invest in ETF shares, you must pay an annual management fee. It currently averages 0.40%. Interestingly, if we consider an investment period of 5 years, it will be found that the accumulated management fee will reach the tax on the purchase of physical gold.

For investments in physical gold there are no such costs. As the investment in physical gold is long-term, the lack of annual management fees brings a positive result on the aggregate return at the end of the investment period. On the other hand, there are no storage costs in the gold ETF market, while investing in physical gold involves an annual storage fee if you use a bank vault.

Liquidity

It appears that physical gold is equally liquid in times of calm and crisis. This cannot be said for exchange traded funds. However, in times of banking and financial turbulence, liquidity can quickly become a problem, not least because the stock exchange can close its doors, creating a systemic risk to the financial system.

Spreads between buying and selling physical gold are also relatively small (% of face value). There is no such risk when investing in physical gold as we own the gold directly. In a situation of force majeure in the financial markets, the price of gold would rise more strongly than the share price of the ETFs, which in turn presents the risk of insolvency of the fund itself.

The Possibility To Participate

Gold ETFs have the ability to enter the market with minimal or relatively smaller amounts compared to direct investments in the physical gold market. In this situation, participation in the gold market is entirely focused on the possibility of capital gains on the shares of the fund.

There is a myth that investing in physical gold requires large sums of money. In the physical gold market, there are enough products (bars and coins) at competitive prices, the value of which is less than or close to the price of a share of GLD. In this case, entry into the gold market is direct, not indirect, as is the case with gold ETFs.

Liability And Confidentiality

Full liability to financial authorities is required when purchasing a gold ETF. In the United States, all SEC (Securities and Exchange Commission) and FINRA (Financial Industry Regulatory Authority) requirements must be met. In Europe, the main regulatory burden is in the hands of ESMA (European Securities and Markets Authority). In addition, when concluding a contract with a financial intermediary, it is necessary to provide personal data.

Trading in physical gold has its own peculiarities, depending on the specific jurisdiction. In Bulgaria, for example, every purchase of physical gold up to BGN 10,000 does not need to be declared. On the other hand, selling gold to an authorized bullion dealer involves providing personal data to the customer. It should not be underestimated that, in crisis situations, economic agents may resort to direct payment in gold due to distrust in the local currency.

Insolvency Risk Of Intermediaries

In the ETF market, there is a risk that authorized intermediaries (banking institutions, stock exchanges, treasuries, etc.) may declare insolvency or that your shares may not be liquid at any given time. If you want to insure yourself against the collapse of the financial system, holding ETF shares will not help you. Simply put, authorized intermediaries are the first to close their doors in a financial turmoil, and your assets will be locked up indefinitely. Investing in an exchange-traded fund carries the risk that the other party will default, ie file for bankruptcy. On the other hand, investing in physical gold does not involve this risk because you own the investment product directly. Of course, if you use a safe in a bank and it closes, you won’t be able to use the investment when you need it. On the other hand, in most other cases, if you store your gold elsewhere, the risk of theft is relatively higher. In practice, both investments carry their own specific risks and it is best for the investor to become familiar with these before making an investment decision.

When using gold ETFs, there is a risk of forfeiture of stored collateral as well as seizure of accounts by regulators. And in the case of physical gold there is this risk, but it is minimized. One of the most notorious cases of confiscation of physical gold was the seizure of gold from American citizens in 1933 during President Roosevelt’s administration. The state can more easily seize your assets if they are in an easily accessible and strict liability place, such as the financial system. On the other hand, holding physical gold is largely confidential.…

Laws Governing The Gold Exchange Traded Fund Market

Edwin Baugher 0 Comment Gold ETFs

The current year is quite favorable for gold, including for exchange-traded funds. The SPDR Gold Trust (GLD) has enjoyed a suc cessful year to date, with $12.3 billion in new investment added to the fund through the end of November. Almost all of the fund’s net investment growth accrued in the first quarter, amounting to $12.2 billion (FactSet Research Systems, Inc.). In the first 3 quarters of 2016, physical gold-backed exchange-traded funds added a record 725 tonnes of gold.

Gold-backed exchange-traded funds represent an important part of gold investment demand. To a large extent, they show the mood of wholesale investors, whose behavior is the most difficult to analyze, but also the most important in terms of gold price behavior. Statistics from the World Gold Council show that investment demand for the first half of 2016 represents almost half of global gold demand, setting a historical precedent. In terms of demand for gold jewellery, we have a sharp decline of almost 50% to the lowest levels since 2009. Here a decline was also seen in gold purchases by central banks. It appears that the increase in investment demand is largely due to the demand for ETFs backed by physical gold.

One of the main factors influencing the prices of gold and gold exchange-traded funds is the policy of the US Federal Reserve. Investors are in a very difficult position because the Federal Reserve is inconsistent and therefore dangerous to financial stability. It’s been a long time since we’ve seen Wall Street executives publicly criticize the governor of the Federal Reserve, in this case Janet Yellen. Criticisms target the lack of clarity and predictability in the possible change of key interest rates and quantitative programs. This unpredictability poses obvious risks for higher market volatility ie. stronger price movements.

Gold ETFs are a very useful tool for speculating on the dollar price of gold. They provide an easy and quick way to enter and exit a position, representing an important condition for successful short-term speculation. They are also a useful tool for people who already have the desired weight of physical gold in their portfolio and simply want to trade short-term movements in the price of gold.

Investing in physical gold is, in the long term, what can generate both good capital gains, but also protect us from the negative effects of banking and financial crises.

If we imagine a situation like the bankruptcy of Lehman Brothers , what will be the effects on an investor in gold ETFs, but for one in physical gold? The holder of ETFs has the following risks:

  • The Fund and/or authorized intermediary become insolvent;
  • The imposition of price caps on the fund’s shares due to the sharp increase in the spot price of gold. In turn, this means relative losses (alternative losses from the rise in the value of gold and the loss of purchasing power of the currency).

In such a situation, the holder of physical gold has a huge advantage as they actually hold one of the most liquid assets at any given time. This means that it has the purchasing power to meet its needs even during a public holiday and a severe liquidity crunch in the monetary system.

Therefore, if you are looking for short-term speculation with the dollar price of gold, then exchange-traded funds are a good choice. If you are looking for protection against possible financial turmoil, banking crises, devaluation of the national currency, then gold ETFs will not be useful for you. One of the most useful assets for such a purpose remains the holding of physical gold.…

A Return To The Gold Standard Is Possible. Here’s How!

Edwin Baugher 0 Comment Gold Standard

In a series of articles on the last system based on the gold standard abandoned by the United States in 1971, I have shown that the introduction of a system based on fiat money significantly worsens the global financial structure. Due to the lack of a stable monetary standard, global indebtedness is at unprecedented historical levels, inflation in developed countries is high, and individuals and companies are facing a number of negative phenomena.

The degraded state of finances , especially in developed economies, does not mean that the government is trying to return to a stable currency. Thus, chronic problems, including recurring cycles of booms and busts , will continue to be seen frequently. They are rooted precisely in the growth of the money supply, represented by currency inflation and in the artificial lowering of interest rates by central banks.

If this is desired, there are various ways in which the world can return to stable money – gold and silver. In this analysis we will consider the proposals of three renowned economists.

Henry Hazlitt And The Course Of The New Gold Standard

Journalist and economist Henry Hazlitt (author of “Economics in a Lesson” + others) in his book, ” What You Need to Know About Inflation “, focuses on the steps that should be taken to return to the gold standard and what is the correct course to follow.

According to him, the new gold standard should be related to the market price of gold, and not to any mathematically determined rate. According to him:

The new dollar-to-gold ratio for which we must strive is one in which the convertibility of gold can always be maintained, and which by its nature will not be inflationary or deflationary—in other words, will not cause prices to rise or fall.

The Process Of Returning To The Gold Standard According To Hazlit

However, due to high inflation, governments need to test confidence in the free gold market and future benchmark to avoid shocks. According to Hazlitt, this can happen in a 6 step process:

  • The authorities announce in advance their intention to return to the gold standard, and the central bank suspends all sales and purchases of gold. At the same time, a completely free gold market is allowed;
  • Once the market has indicated what the exchange rate should be for the country returning to the gold standard, the government should announce when and at what value the local currency will be pegged to the precious metal. According to Hazlit, this period should not exceed one year;
  • Within half a year of the return to the gold standard, anyone holding the local currency will be invited to exchange it for gold bars, but at a slightly higher gold price than the advertised rate. Hazlit recommends 0.5%. The reason – to avoid shock extraction of gold reserves;
  • When this  half-year is over, the country will return to the bullion gold standard. The exchange of the local currency for gold will be done at the official rate, without any other taxes or discrimination;
  • A year later, the state will return to issuing gold coins.

Hazlitt’s Reason For Recommending A Return To The Gold Standard Is:

 “The gold standard fully secured by coinage is desirable because bullion is the standard of the rich. A person with a lower standard of living must be just as able to defend against inflation as a wealthy person.…

Given The Pension Crisis, It Is A Good Idea To Bet On Gold

Edwin Baugher 0 Comment Gold ETFs

The public pension system is not going through its best moment. Added to the depletion of the so-called “pension piggy bank” is now the negative diagnosis by the European Commission and renowned economists, who consider it financially unfeasible to link pension increases to the CPI. Given such a panorama of crisis in the public system, the possibility of complementing the benefit with the benefits that can be obtained from acquiring physical gold becomes more relevant.

We have already devoted several posts on this blog to analyzing the crisis in the public pension system and proposing the alternative or complement to physical gold, to maintain purchasing power once the retirement age has been reached.

The latest developments only confirm the need for citizens to adopt decisions in this regard, before it is too late.

The Pension Crisis

According to Brussels, our country is among the ten that suffer from imbalances and that have not made any progress in relation to the sustainability of pensions .

In particular, the Commission is seriously concerned about the measures proposed by the Government to permanently re-link pensions to the Consumer Price Index (CPI) and decouple initial pension levels from changes in life expectancy.

“In the absence of adequate compensatory measures, it would increase pension spending significantly in the medium and long term and worsen intergenerational equity ,” according to the report.

The European Commission maintains that the indexation of pensions would increase spending on this item by 4% of GDP by the year 2050 , which would be impossible for the Social Security fund to bear.

Impossible To Link Them To The CPI

Indeed, the indexation of pensions to the CPI is financially unsustainable. As the economist Juan Ramón Rallo explains in El Confidencial , the Social Security system is exposed to a very important demographic imbalance in the medium-long term.

According to Rallo, the problem is that the decision of the Pact of Toledo to eliminate the so-called Pension Revaluation Index (IRP) , introduced in the 2013 reform, has been “one of the greatest acts of economic irresponsibility” .

This index was a budgetary restriction that established that, as long as the system’s expenses are above its income, pensions cannot be revalued more than 0.25% per year .

If, on the other hand, income exceeds expenses, pensions will be increased as necessary to reduce the surplus to zero.

According To Rallo:

“The magnitude of the financial hole in the pension system is such that no minimally reasonable tax proposal is going to be able to cover it . “

The “Piggy Bank Of Pensions”, Under Minimum

As if that were not enough, the Social Security Reserve Fund , known as the “pension piggy bank”, has been progressively depleted (see graph), going from the more than 66,000 million euros it had in 2011 to just over 2,000 last year .

The fund has survived since 2017 on the basis of loans granted by the Ministry of Finance, but without a thorough reform of the system, it will become unfeasible.

Possible Solutions

Among the solutions proposed by the supervisor would be to increase the retirement age again (going from the current 62.7 years to 67 would serve to correct more than half of the problem) or even link it to life expectancy.

This last system is already used in countries such as Italy, Portugal, Denmark and Finland.

Physical Gold, The Ideal Complement

While the Toledo Pact meets to face a thorough reform of the system, citizens are increasingly concerned about the possible impact on their quality of life and purchasing power of a deterioration of the public pension system.

Faced with this situation, there are various alternatives and complements, such as private pension systems which, with few exceptions, have not proven to be a true solution either.

In countries like Germany, Italy or France, physical gold appears as a natural complement to the public pension system. In Germany, the government’s decision to lower the maximum amount to buy gold without identifying oneself to 1,000 euros since January 1st caused an avalanche of buyers in precious metals shops during the last days of December.

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