Wednesday, February 24, 2016
You desire the safety of hard assets like bullion but want your bullion working for you;
You wish to participate in the potential growth of the bullion markets (hard assets only, no paper assets);
You would like to receive interest payments while storing your gold and silver;
You believe in a buy-and-hold strategy; and
You want your bullion stored safely and securely."
'via Blog this'
Tuesday, July 14, 2015
We have warned about this for many years and warned as recently as April this year that people should avoid using safety deposit boxes in banks.
“Greeks cannot withdraw cash left in safe deposit boxes at Greek banks as long as capital restrictions remain in place”, Nadia Valavani, a Deputy Finance Minister in Greece told local television station according to a Reuters report."
Investors should hold some physical gold and silver outside of the banking system in secure and private safe deposit box facilities. Precious metals should also be held in jurisdictions with a reputation for respecting private property such as Switzerland, Hong Kong and Singapore.
'via Blog this'
Tuesday, January 21, 2014
As you listen, please take note of his thoughts on:
- Why can't Germany have it's gold back now?
- Who is selling massive quantities of gold during light trading hours--a practice guaranteed to maximize losses?
- What's happened to the gold of the West?
- How long until the dam bursts?
Tick, tock . . .
Friday, August 2, 2013
recent (as past 2, 5, or 12 hours) movement up (or down) in stocks, bonds, commodities, etc. And despite the gravity given to their explanations, it's most often meaningless in the long term. I suppose that's the cost of a 24/7 news cycle. Someone has to say something--constantly.
|Where's the Gold?|
One collection of news items I do look forward to is collected, edited, and emailed out weekly by Grant Williams of Maudlin Economics. It's his "Things That Make You Go Hmmm..."
It's a collection of stories that he finds interesting. Frankly, in a typical issue, a few are over my head or not in my area of interest, but I always find a few I'm really glad to have seen.
Often the most interesting part is the introduction by Grant Williams. This was never more true for me than with his July 15th issue, titled, "What If?" In it, he stitches together a number of recent events related to the gold market. In capsule form, they are as follows (It's a picture, so please imagine quotes):
If you have any interest in the gold market, I STRONGLY suggest you check out the full story on the Maudlin Economics web site. Mr. Williams ties together a broad array of recent events, which often seem contradictory, and makes sense of them. Better still, he just a good storyteller.
Saturday, June 1, 2013
"I am going to start researching what it would take for me to get delivery of a COMEX 100 oz gold bar via the futures process (via a commodity broker). I would be starting at "Ground Zero" (knowing almost nothing), so this will take some time for me to set up.
I will only do this if I get a lot of "moral support" (comments at ZH do not count -- too easy), these would be by email or better by comment at my blog. I can do this with my own money, although it would require substantial shuffling around of assets (including selling some of my physical gold now). I do not ask or want anyone else's money! Only your encouragement as well as suggestions and recommendations (a cooperative commodity broker for example)."Sometimes though, our natural inclinations can lead us astray. As I commented on Mix' blog:
"I support the idea of trading fiat for a hundred oz of gold. I would NOT trade physical gold. If the "music stops" while this is in progress, you're left holding what???"In short, this experiment is just too risky for my blood. I wish Mr. Mix the very best, and for that reason a part of me hopes he will change his mind about this move.
Wednesday, April 17, 2013
Spoiler alert! The title of his post is "Buy PHYSICAL Gold. NOW: The Discount of a Lifetime: Or Why You Must Abandon the Fake Paper Gold Market
"If someone is selling anything, the rational thing to do would be to get the best price possible, right? Would you get the best price if you sell your lot in one go flooding the market? Would you want to overwhelm all the bids and crush the price? Yes, but only if exactly that was your objective – to crush the price. Nobody sells 400 tons (!) of gold in one go if they are trying to get the best possible price. So this wasn’t a case of varied market participants selling their gold holdings having considered the fundamentals for Gold and arrived at the conclusion their long position didn’t make sense anymore. This was a case of concerted selling by one single entity whose sole intention was to drive down the price. Not only that, nobody sells $20 BILLION worth of Gold in ONE GO without some sort of state/CB backing."So how is the situation different? Gold is on sale! Get some now, or right after you finish Gordon's post.
Tuesday, April 16, 2013
In the end, I guess it means something different for each of us. A highly leveraged trader is in trouble, or perhaps kicked out of his trade already. A long-term accumulator may be in a very different situation. "Look! It's on sale!"
The real question is, what does it mean to you?
Wednesday, April 10, 2013
Now it appears that countries and states are perhaps not the only ones who want their gold "closer to home" Check out this from Bull Market Thinking.
"A stunning piece of information was brought to my attention yesterday. Amid all the mainstream talk of the end of the gold bull market (and the end of the gold mining industry), something has been discretely happening behind the scenes.
Over the last 90 days without any announcement, stocks of gold held at Comex warehouses plunged by the largest figure ever on record during a single quarter since eligible record keeping began in 2001 (roughly the beginning of the bull market). See chart below."
"Bottom line: While mainstream voices question whether or not gold is still in a bull market, smart money appears to be questioning something else. They appear to be asking themselves, “Do we want to continue storing our physical metal within the Comex system? How can we best whisk it away from fraud, theft, or bankruptcy (including our own)?”I can't tell you what this means, but it does raise a question. Is that gold you own, and store elsewhere, or that gold or silver ETF, ETN etc., really as safe as you want it to be?
To paraphrase the Dos Equis man, "Stay careful my friends."
Tuesday, April 9, 2013
You could have fooled me. I thought the Fed was providing 85 billion reasons a month, the Japanese were on the same track, and Europe was burning!
I have got to learn to look at the bright side of things.
Friday, April 5, 2013
This reminds me of some famous quotes from the last few years. Most apropo might be Charlie Munger's "Gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 . . ." Or, apparently, an Italian family in 2013. We can all learn from Charlie in the video below.
Friday, March 22, 2013
You're probably not as smart or as stupid as your investments make you feel. All of us can see good reasons to be puzzled about the broad market rally. Many of us see compelling reasons for gold, and the gold miners, to push higher. It's worth remembering that famous Keynes quote: "The market can stay irrational longer than you can stay solvent."
And "solvent" isn't only issue. A close friend recently invested heavily in the Market Vectors Gold Miners ETF. I have something similar, the Fidelity Select Gold Portfolio. I'd rather own GDX, but that's not an option in my 403B.) He got in just in time for a 15% jump in price, followed by a drop to 21% below his purchase price--then he dumped almost half of his holding.
If you're holding something similar, or anything in the sector, please think carefully before you make a move. The gold mining stocks may be much closer to a bottom than to a top. Here's what Jeff Clark has to say in DailyWealth. Spoiler alert! The title includes the words "the market's single-best value today."
"We also have the potential for one heck of a buy signal coming from the gold sector bullish percent index (the BPGDM).
The BPGDM is so oversold, it's almost mathematically impossible for gold stocks to get much cheaper. The percentage-based index can range anywhere from zero to 100. On Wednesday, it closed at 3.33. Take a look...
The only time the BPGDM was more oversold than it is now was back in October 2008, when the index dropped to zero. The HUI was 100% higher just two months later. And within one year, it had gained 230%.
We'll officially get a buy signal from the BPGDM when it turns higher from here. Normally, I'd wait until we get that signal before buying gold stocks. But given how oversold the sector is, gold stocks could easily move 10%-15% higher before the BPGDM turns up from here. And we don't want to wait for that to happen."
By the way, Clark has a great reputation not only as an investor in gold stocks, (frankly, it hasn't been that tough in the last decade), but also as a trader--which is considerably more challenging.
If you haven't read his whole article, please do! He's got a couple more charts just as compelling as the one above. And if you're thinking of dumping gold stocks now, you might want to think again.
Thursday, March 21, 2013
That cautionary tale highlights a key point any investor should keep in mind. Position sizing. The short explanation? Never put so much onto a single concentrated position that a large drop would keep you up at night. Sure, GDX is in essence a fund, and offers diversification, but it's also totally concentrated in one small sector.
The real point of this post though, is to look at the value available in gold stocks (and specifically Barrick Gold) at today's prices. Matt Badiali at Growth Stock Wire has some thoughts on that.
"But just how cheap are gold stocks getting? Let's use the world's largest gold miner, Barrick Gold (NYSE: ABX), as an example...Is it time to put some money into Barrick? Don't ask me. I'm already in.
First, let's see how much gold Barrick has on the books. To do that, we'll use "tangible book value" (TBV). TBV is simply the value of a company's gold mines, excluding things like goodwill and patents. This is an important tool because it tells us if a company's assets "go on sale." That's the case with Barrick today...
Barrick's price-to-TBV ratio (its share price divided by its tangible book value) hit a high of 5.3 times in the first quarter of 2008. Its average price-to-TBV from January 2008 to today is 3.4 times. And the current value is 2.3 times.
That means Barrick's assets are trading at a 32% discount to their five-year average. And they're trading at a 57% discount to their 2008 high. Those are steep discounts. But the price of gold tells us Barrick's projects should be worth even more today..."
Tuesday, March 19, 2013
Easy enough at first glance to consider this gent a bit off. On closer reflection, perhaps he's the only one I've seen exhibit a rational (and aware) response.
Just two thoughts on Cyprus. First, a "one time" event is only one time until the next time. Second thought is really a question. While it's Cyprus now, can any of us really believe that Spain, Ireland, France, (insert more countries here) and the USA will not face the same fate, a little sooner or a little later?
It all goes back to rule #1. Protect the banks, the bankers, and the elites at all costs. And that leads to rule #2. If you don't hold it, you don't own it.
Monday, March 18, 2013
"Please note that until yesterday all depositors in Cypriot banks were insured up to the value of €100,000 with any one bank. Today that solemn governmental promise has been shown for what it is; a lie. Worse and actually far worse and quite scary in fact is that the European Union and the European Central Bank and the IMF has not just allowed violation of the deposit insurance but demanded it. One thing is certain here; if they can void deposit insurance in Cyprus then they can void it in any country in Europe. Further; if they can void deposit insurance then they can void bond covenants with the scratch of a pen on paper. Nothing now; Nothing is safe!"What's that You missed the part about gold confiscation? So did I, and that's the point. Cash in a bank is a remarkably easy target for politicians and bureaucrats eager for a fix. To be clear, so are ETFs purporting to hold gold, and even mining shares.
When things get bad, really bad, the safest counter-party is no counter-party at all. Parents, it's 10:00. Do you know where your gold is?
Thursday, March 7, 2013
"Exchange traded funds have transformed the gold market. Since the first fund was launched nearly a decade ago, the products have become so successful in offering a simple way for investors to buy physical gold that they have acquired the nickname “the people’s central bank.”"First, the truth. Gold ETFs have changed the gold market. There is no denying that at a time when billions are invested in what is considered gold by way of these vehicles. (I wonder, in fact, if ETFs are responsible for the sometimes lackluster performance of gold stocks.)
I'll admit it. I own a bit of Sprott's PHYS and PSLV--nervously.
But the anti-truth that follows is astonishing in its audacity. ". . . the products have become so successful in offering a simple way for investors to buy physical gold." Really? Physical gold? Let me assure you, that while I hold some PHYS, Sprott claims it is 100% backed by gold, that ownership is utterly different than a Maple Leaf, Kruggerand, or Gold Eagle in my control.
Never forget that in the worst case situation, gold is favored because there is no counter-party risk. Gold ETFs may perform in a similar fashion to gold for a day, a month, or a thousand years. Still, the counter-party risk will remain.
Saturday, November 24, 2012
Sunday, September 2, 2012
"The hostile positions of miners versus the corporate firms is becoming stark and clear. The unfortunate outcome is that gold and silver mine output will surely go into worse decline. The Jackass forecast is that from the global mine output factor alone, the physical precious metal prices will rise, while the mining stock share prices will fall. Output risk joins jurisdiction risk and dilution risk for the mining companies. For every mining stock winner, expect 20 to 30 losers."I'm counting on broad diversification to protect me from jurisdiction risk, but I have to admit that when it comes to dilution risk, I may be swimming naked. Are you?
Monday, August 20, 2012
"I don't see any alternative."Hear the entire interview (about 12 minutes) courtesy of King World News.
Wednesday, August 15, 2012
"On Monday, the company, Amber Gold, Sp. z o.o., which sold a gold-indexed investment of its own design and offered higher interest rates than banks, said it was halting operations. It pledged eventually to repay about $24 million it said it owed to roughly 50,000 clients in Poland.Sure, this was Poland, and the guy had a questionable past. If we get right down to it, how different is that from the U.S. and Jon Corzine?
Amber Gold's 28-year-old founder, Marcin Plichta, who has publicly acknowledged past convictions for misappropriating funds, couldn't be reached to comment."
Bottom line? One of the greatest strengths of gold is that there is zero counter-party risk--IF YOU HOLD IT YOURSELF! Sure, "paper gold" is convenient, but is it worth it?
Friday, May 11, 2012
Jim Grant says we are living in a central bank created fantasy world.
"Gold stocks are astoundingly... and disconcertingly... ...and dismayingly cheap... ...cheap as businesses and as hedges."
And for the music lovers in the crowd. . .
Sunday, April 29, 2012
Then he goes on to detail the incredible rising demand for physical gold (Am I the only one that feels silly needing to say 'physical' in connection to gold?) in the rest of the world. Odd then, that gold prices seem to be an "immovable object" lately. As I read Sprott, we may soon see an "irresistible force."
"We have written at length about the disconnect between the paper gold price and the physical gold market. If the demand changes stated above applied to any other market, the investing public would lose their minds. "And when they lose their minds, gold can be expected to go parabolic. THAT is when we reach bubble territory, and when it's time to consider liquidating your precious metals and converting them to. . .
Tuesday, April 24, 2012
"While gold demand from the western investors and store of wealth buyers has fallen in recent months, central bank demand continues to be very robust and this is providing strong support to gold above the $1,600/oz level. IMF data released overnight shows that Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March." Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tons according to a statement by its central bank on April 20."Who's right? Who knows? Maybe both are. If so, my guess is that the sellers are right in the short term. If Europe implodes, who knows what kind of rush to liquidity that might cause? In the long term though, that almost certainly means vastly more QE (give it a different name if you care to), and we know what THAT does to prices of everything.
Finally, if this next QE is the one where our monetary masters lose control, it's hard to imagine a price too high for gold--or too low for fiat currency.
Sunday, February 26, 2012
Monday, December 5, 2011
The one that I found most interesting, though, is a technique for eliminating counter-party risk while holding gold in your IRA. Now it's not particularly difficult to hold gold in your IRA. And for those who only require "gold like" performance, there are, of course, the gold ETF's.
Here's the thing. Many of us hold gold as a form of crisis insurance. I can't speak for you, but in a crisis, I don't want to count on anyone to hold my most precious assets. And Terry Coxon just may have the answer.
"There is a third alternative, which I've dubbed the Open Opportunity IRA, that starts with a simple idea but opens many doors for you. It's an IRA that directly holds just one thing – a limited liability company that you manage. The IRA custodian is the legal owner of the LLC, but you deal with the custodian only during the setup process. During that process, assets are rolled over from your old IRA to the new custodian and then into the LLC. After that, you as Manager of the LLC have your hands on the steering wheel and can invest and reinvest in just about anything with any broker, dealer or other party, and you can do so without waiting for the custodian to approve anything and without paying the custodian for storage or for handling transactions."I have to say that after the last few years I am more than intrigued at the thought of securing my retirement assets far from Wall Street. It seems very clear to me that while Wall Street manages to treat Wall Street. Well, it treats the rest of us poorly on a fairly regular basis. Wouldn't it be nice to put at least a portion of your retirement savings out of reach of Wall Street?
"In the case of gold and silver, since the metal will be owned by the LLC and not by the IRA custodian, you will be limited to American Eagles and Buffaloes. But you are free to buy them from any source that is not related to you, and you can store them in whatever way you think is best – in a safe deposit box, under the floorboards at home, or in the back of your refrigerator. And they don't need to stay or even be purchased in the US."I have to say this seems almost too good to be true. So as always, please be sure to investigate this idea to your own satisfaction.
Friday, November 25, 2011
"Maybe, gold will touch $1,100 or so but $1,500 or $2,000 as predicted by Jim Rogers is nonsense,” Roubini told investors at the Inside Commodities Conference in New York.As usual, ZeroHedge says this better than I do.
Sunday, November 20, 2011
"While Gerald Celente is crying about his lost six-figure account, Bill Fleckenstein also has personal money tied up with MF Global. He is hopeful that he will get it back but is critical of the authority figures involved. Celente does not expect to get all of his money back. Ann Barnhardt of Barnhardt Capital Management has shuttered its operations after six-years in the business. She did not feel like her clients’ funds were safe in the futures and options market any more. Lawrence Lepard, who posted on Zero Hedge, wonders if the MF Global failure was a hit job done by the Fed. My point is not about who is right or wrong . . .The author, in addition to coining the phrase "fractal in a frying pan," makes the point that a global banking meltdown we are all at great risk of losing assets we believed to be safe.
I have no idea who first said that gold has no counterparty risk. It's quite likely that I first saw the idea expressed by Bill Bonner in his Daily Reckoning. In any case, it's probably worth considering that idea at least one more time.
Insurance contracts, stocks, mutual funds, ETF's, CDs, annuities, bonds, dollars, and a host of other investments all share one potentially fatal flaw. Each is only as reliable as some party on the other side of the equation.
A gold or silver coin in your hand is an entirely different matter. While it's true that you may need another party to trade it to, thousands of years of history suggests that your gold or silver coin will remain a safe store of value.
And please note that I did say "in your hand." Iin good times or even fair times I have a reasonable amount of faith in GLD, SLV, Perth Mint Certificates and the like. It seems fairly likely, though, that we have bad times ahead. Plan accordingly.
Wednesday, November 9, 2011
"TGR: If war and hyperinflation are the inevitable future, how can investors survive or maybe even thrive during a time like this . . .I spent a fair amount of time thinking about gold silver. When push comes to shove though I'm not really a goldbug. Honestly, I think it's much easier to save and transact in dollars.
RM: Well, I wouldn't put $100 under the mattress, at least not for very long, because it will soon become worthless. But commodities, stocks of raw materials firms, gold and silver and platinum coins have value. Generally, I try to see the world in terms of two kinds of investments: dollars and non-dollars. You definitely want non-dollars, things that do not have their value tied to the value of the dollar. An example of a dollar asset is something like a bond or bank CD. Their values are tied directly to the value of the dollar. If the dollar falls, then their values fall.
Gold is a non-dollar asset. When the dollar falls, usually gold rises. The same is true with silver and oil. All of these things have values that are not tied to the dollar. My advice is to invest in non-dollar assets. Gold would be at the top of the list, silver and platinum and then oil."
But Richard hit the nail on the head here. Now is not the time (if there ever was one) to store value in dollars. So many actions that our government (and governments around the world) are taking seem to indicate with crystal clarity:
- They can never repay their debts.
- They don't intend to pay their debts (at least not in good money).
- They will bail out their bankers at any cost.
- They will continue to fund the unfundable at the cost of destroying our currency.
Sunday, November 6, 2011
"I believe it is critical to hold physical bullion, not an exchange-traded fund (ETF) that invests in gold. The volume of contracts that trade on the futures markets (where ETFs control a lot of metal) dwarfs the amount of actual physical gold in the entire world. This indicates two things to me...
First, the price of gold is likely depressed by selling in the futures markets. Whether that's a conspiracy or simply good trading, I can't say. . . But whether the price of gold and silver is manipulated doesn't really matter to me because, like it or not, the price is eventually going higher.
The second thing the volume of futures trading relative to the supply of gold tells me is... sooner or later... there will be a run into physical gold. When that happens, the futures markets will collapse because there won't be enough metal to meet demands for physical delivery."I don't often use a quote unless I can link to the original material. I made an exception here for a couple of reasons. First, I think Stansberry has a lot on the ball. You might even want to subscribe.
The reason I couldn't resist this quote though, is that it makes two really vital points. The first is that investing in precious metals ETF's is very different from investing in precious metals bullion. The results may be similar--last year, this year, next year, and beyond. But someday, they made the diverge dramatically, and perhaps even catastrophically, for those who have relied on ETF's.
The other key point, which is implied if not stated, is that we may not recognize the difference between ETF and bullion until a run on bullion (and crashing ETF prices) occurs. At that point, of course, it will be too late to adjust your holdings without suffering significant financial loss.
Monday, October 10, 2011
This video is a bit long, but raises some very interesting points.
1. No civilian has seen the gold in Fort Knox since 1974.
2. The US has a huge advantage gained through the worldwide acceptance of our currency as the reserve currency.
3. If the price of gold can be/is manipulated down, the dollar benefits.
There is a lot more to see. Enjoy!
Friday, September 30, 2011
That's right--sell it all! Because, as this astute analyst notes, gold isn't backed by any government.
She is probably a very nice woman, but she might do more good, and far less harm, in another profession. (No, I'm not suggesting any profession in particular.)
Monday, August 8, 2011
Sunday, December 5, 2010
SilverStrategies.com freely acknowledges that silver prices may be manipulated.
"If something is important to your livelihood chances are you're going to pay attention to it. Well, we are here to tell you that silver is important to governments, has always been, and is about to get VERY important going forward. Government did not decide that silver is money. People - you and your ancestors - did. So why is it a revelation that governments would be involved in the silver market? Didn't you appoint them to manage the monetary system? We're not saying whether it's good or bad. It just is."
They go on to suggest that ultimately, governments will have no choice but to admit that fiat currencies have failed again, and to seek protection in silver, as they been increasingly in gold.
"Why have central banks from China to Mauritius been buying gold in recent months and years? Not to help your mining shares. You decided that currencies were not doing their job and the central banks concurred. We predict that the same thing will happen in silver. It may not be the central banks doing the buying, - it could be sovereign funds, state owned/controlled companies, government backed agencies/institutions, etc. The flavor of the entity and the form such buying may take will differ from country to country - however, the essence will remain same."
Imagine the price action we'll see in the silver market if this type of move by central banks does occur? Can you say "game changer?" Sure, I knew you could.
Tuesday, October 5, 2010
Why? That's simple. Agriculture has been a lousy investment for 30 years. The resulting underinvestment is certain to lead to higher prices. Kind of like a pig in a python.
Rogers predicts that gold will hit $2,000 within 10 years. But as he points out, that's really not a very outlandish position given our current circumstances.
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Wednesday, June 30, 2010
Those that argue that the price of gold is approximating a bubble, miss the point. What if governments around the world lose the confidence of those that hold their paper money? What if individuals through the private market desire a non-governmental money, as they are starting to today? What if the billions of individuals who do not own gold start to demand it? What price of gold then, knowing that all the gold ever produced would fit into a large swimming pool?
I think for many of us accumulating precious metals now, it's all about the question "what if. . . ?" What if I need a tank of gas, a medicine for my child, some food, or even a weapon, and the only sellers around say no to dollar bills?
To those who think the above scenarios sound far-fetched, I'd recommend The Black Swan, by Nassim Taleb. His turkey story tells us (much more elegantly than I relate here) that the turkey's whole life is ideal--until the day before Thanksgiving. On that day, the turkey might have been well advised to have a krugerrand or two on hand.
The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility"
The New York Times dedicated a chunk of last Sunday’s paper to gold as a mainstream investment. In other words, gold is now legit -- no longer can it be dismissed as the asset of choice for fringe types with a cellar full of canned goods and a stash of bullion buried in the backyard.
He's not so sure that's the case now though--at least not yet.
From a recent research note by UBS: “The sense that some investors only trust a gold holding if they can see it and touch it is a clear indication that some investors are buying gold as a hedge against a full-scale financial crisis and currency debasement.”
In a sense, it's the same argument I hear from my brother. Real estate is "real," but who knows what stocks (or bonds, dollars, etc.) are really worth.
All in all, I agree with much of what he has to say, but perhaps not with the following:
Some extreme gold bulls are urging investors to move half or even more of their portfolio into gold – we are not in that camp. We consistently suggest that investors consider a maximum 10 percent allocation to gold-related assets – half in bullion or bullion ETFs and the other half in gold stocks or a good gold fund – and that they rebalance each year to capture the swings.
Personally, I am weighted closer to 50% in gold, silver, and related equities. On the other hand, my income is 100% in dollars, and that is what I'm trying to hedge against.
Wednesday, June 16, 2010
In this first quote, Doug reminds us of something I very much fear may be true. If it is, I don't imagine it really matters much whether you buy your gold at $800 or $1,400, you'll still be glad to have it when the dollar goes to zero. OK, sure it matters, but you won't regret the $1,400 purchase.
Absolutely every currency in the world is going to reach its intrinsic value in the next few years, and basically every currency is nothing but toilet paper. Basically all the governments are going to wind up destroying their national currencies. That won't be just an academic thing; it will have the consequence of destroying a lot of the middle classes around the world. That will likely create ugly political and sociological fallout.
As if that isn't scary enough, consider the following from Doug, which is certain to cause concern to a great many of us in Europe and North America. My only consolation is that I've been saying the same thing (although much less eloquently) for years--and living on much less than I earn.
Look at it this way, you have the average Chinese making $1 per hour for what the average American is making maybe $10 or $20 per hour. The fact is that the Chinese guy has better work habits, he's just as smart or smarter, and the company he works for doesn't have any legacy costs in the form of medical benefits and pensions, and there are a lot less regulations and taxes. So eventually Chinese wages and western wages are going to meet in the middle. Chinese incomes are going much higher, and western incomes are going to be much lower. This is tough luck for the average person in the west, whose standard of living is going to drop.
Finally, before those of you holding gold get too smug, check out one more quote from Doug.
I guess gold is the least bad thing to be in. I say that because gold is no longer where it was even 10 years ago, $250-$300 an ounce, it's up 4 or 5 times in price. Not withstanding that, it's still probably the best place to be because it's the only financial asset that's not simultaneously somebody else's liability.
I don't see anything here to make me happy, but that's one of the great strengths of Mr. Casey. He's not out to make us happy, or convince us to start spending again. He's simply calling things as he sees them. If it's a grim situation he describes, we each then must decide how close to the truth we think he is. I'd say, he's much closer to the truth than our friends in government or the mainstream media.
Sunday, June 13, 2010
"It is, in fact, impossible for gold to become a major investment channel for China's foreign exchange reserves. I have 1,000 tonnes now, and even if I doubled that holding, according to current prices, that would be about $30 billion," Yi said.
So if I understand Yi, (sorry, I had to do that), he's not saying that they don't want gold or won't buy gold, only that it's impractical to make a "major" move on the scale at which they are operating. Hmmm. 2.4 trillion? I can see the problem.
Not exactly a denunciation of gold, is it? On they other hand, why are they encouraging their citizens to buy gold? Is it possible that the Chinese government doesn't want to risk causing (or overpaying due to) spikes in price, but still wants more gold held in China?
Friday, June 11, 2010
The theme of this video might be simply that no government can borrow and spend its way out of debt. Of course he's unpopular! He's telling us that we can't have it all and send the bill to our children forever.
At 8:45 into the video, Taleb is asked about investment choices to help us survive the current/coming crisis, and tells us that he can't share those. He is willing to say that "You have to look for a currency without a government."
That seems pretty clear to me. What do you think?
Tuesday, June 8, 2010
Naturally I appreciated the following from Mr. Fleckenstein.
As an asset, gold has helped protect and deliver gains versus paper money for 10 years running, yet the popular media heap nothing but scorn on it.
So obvious, but also so vitally important and largely unmentioned by the hacks in the mainstream. As if that weren't enough, he goes on to include this priceless gem.
I keep waiting for the day when folks realize that if you invest in the shares of a gold-mining company, you basically own a piece of the money-creation machine. It's sort of like owning a piece of a central bank that isn't staffed by losers.
This single article was worth the price of my subscription!
Thursday, June 3, 2010
Production of United States Mint American Eagle Silver Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Silver Bullion Coins. Currently, all available silver bullion blanks are being allocated to the American Eagle Silver Bullion Coin Program, as the United States Mint is required by Public Law 99-61 to produce these coins “in quantities sufficient to meet public demand . . . .”
On a personal note, I've noticed that my favorite silver coins (40% Kennedy half dollars) are less available on eBay in large lots than they were just a few months ago. Granted, you can still buy them by the bag at Apmex for the spot price of the silver contained, but just last Fall you could buy large lots on eBay and have them delivered to your door for 3-8% less than spot price.
Of course the pendulum can swing both ways, but it's pretty clear to me that it's swinging towards "less silver available" right now.
Wednesday, June 2, 2010
The thing is, as I tried to point out, is that it is very hard to watch your dollars drop in value for a decade with no end to government spending in sight. On top of that, we can never know when the Chinese will pull the plug on their treasury holdings, when the euro will implode overnight, or even what events like these would mean for the dollar.
In the words of James Turk at the 2010 World Mining Investment Conference:
". . . but even as the prediction may seem extreme, to some, the sting in the tail is that he does not see these levels in the gold price, or Dow, as suggesting real increases in wealth. Rather, such an increase would serve only as wealth preservation as the purchasing power of most currencies is devalued in a hyper-inflationary environment due to the huge volumes of fiat money being pumped into the market by governments in an attempt to stave off global recession."
And I guess that's really where I'm coming from now. I don't expect gold or silver to make me rich, but I'd like to preserve some of what I've worked so long and hard to accumulate.
Wednesday, May 19, 2010
Barclays Wealth in London predicts gold will fall to a fair value of $800 an ounce by 2012, as investors eventually dump it for riskier trades
If "best" news seems a little odd coming from me, (Hey, I'll admit it. I'm a little preoccupied with precious metals.), let me explain. My largest long position is in U.S. dollars. Not because I hold so many, but because my income is 100% U.S. dollars. Sure, that seems OK vs. the euro lately, but long-term I can't envision a happy ending.
A little further on in this Fortune article we read that high prices are leading miners to produce more and "scrappers" to sell more cash for gold. Hey, that makes sense to me.
Gold bullion dealer Kitco says places like China and Russia will help boost the amount of gold from mining by 4% to 6% a year through 2014. Because it costs miners about $480 on average to extract an ounce of gold, they plow ahead when prices are high, eventually leading to an oversupply situation.
Gold as $1,200 also brings out the sellers and resellers.
Still, I think all the money that governments worldwide have (and will!) create amounts to an inflationary pig in a python of biblical proportions. If I have to balance the risk of a drop to $800 vs. a move to an inflation adjusted high, I'll take my chances on gold--even at $1,200!
Monday, May 17, 2010
Suddenly I'm not worried about paying $1,200 for gold or $18 for silver.
Monday, May 10, 2010
As we've noted many times in DailyWealth, you can make a good case that this time is different. Never before has the nation with the world's reserve paper currency – which is backed by nothing but faith in a bankrupt government – promised so much to so many people (Social Security, Obamacare, unlimited military commitment).
Think we're already at the mania phase? Maybe, but take a look at Brian's chart showing gold as priced in euros. If I'm right, gold will also spike in dollar terms, and I expect it to leave the area of the chart and climb at least 3-5 paragraphs up the page. Of course then the question will be, "When do I sell?"
Tuesday, May 4, 2010
"Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit. It can't raise taxes enough to contain this. On the other side, if it cut all government spending except for Social Security and Medicare, it still would be in deficit. With no political will to contain the spending, eventually the government meets its obligations by revving up the currency printing press."
If that paragraph doesn't make you a little queasy, please read it again. Of course he did leave out the option of default, but which will Washington prefer, an outright admission of failure, or a thinly veiled swindle? Later in the article he points out how tranparent and politically inspired are everything we hear out of D.C. Remember when we had to have the bailout or unemployment could top 8%? Now that we sprung for that, all we hear is nonsense along the lines of "green shoots."
"You are getting happy news from governments, central banks, financial markets, Wall Street analysts and the popular media, which does tend to cater to Wall Street."
Finally, he gives his thoughts on wealth preservation (that's preservation, not getting rich!)
"In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold."
Please check out the entire article on Mineweb.com if you have time, and again, be sure to check out Shadowstats.com.
Monday, April 26, 2010
1) How much over spot is a good price for silver and gold?
A good price for a 1 oz silver coin like an American Eagle or Canadian Maple Leaf is 12% over spot, and a good price for a 1 oz silver bar is 6% over spot.
For gold, a good price for a 1 oz gold coin like an American Eagle or Canadian Maple Leaf is 4% over spot, and a good price for a 1 oz gold bar is 2% over spot. The larger premium for silver compared to gold indicates a shortage in the physical silver market.
It's worth noting that you can actually buy silver at spot price in the form of 40% silver Kennedy half dollars (and BELOW spot price if you buy the old 35% silver nickels). I prefer the Kennedy halves as they are so easily recognizable, but below spot has a lot of appeal.
The rest of their opinions on this page are interesting too, but they remind me of one of my favorite quotes:
"It's hard to make predictions, especially about the future"
I'll leave it to you to determine who actually said it, but it sounds like Yogi Berra to me!
Sunday, April 4, 2010
The silver market provides a window into what is happening in the gold market. Because the silver market is very small and its short position is so concentrated, its price is easier to manipulate than gold, but the same manipulation is taking place in gold on a much larger but less noticeable scale. In our opinion, the CFTC is under pressure not to do anything about the manipulation because the lower gold and silver prices are, the stronger the U.S. dollar appears to be. If we saw an explosion to the upside in gold and silver prices, it would result in a complete loss of confidence in the U.S. dollar.
I strongly recommend reading the entire letter, and subscribing to their newsletter while you're there.
Wednesday, March 31, 2010
Is this interview credible? I have my own opinion. What do you think? Need further evidence? Check out the emails from Maguire to the U.S. Commodity Futures Trading Commission. Or for a much broader look at the topic, check out the Gold Anti-Trust Action Committee site.
All of this would seem to suggest that there may be a great deal less silver and gold out there than we believe. It makes me feel more certain than ever that the gold you are counting on should be physical gold that you control.
Please be sure to note the HUGE implications for the dollar, as well as many other fiat currencies, which are described about half way through the interview.
This interview is a bit longer than many you'll come across, but worth every second!
Monday, March 29, 2010
Sure, in this video Schiff says gold is still a great buy. The really entertaining part though, is right at the beginning when he directly contradicts the party line at the Fed. If you've seen his old Youtube videos vs. Ben Stein, you may wonder, as I do, if he'll be vindicated 100% this time as well.
If nothing else, you have to love the guy because he's a politician willing to tell us what we don't want to hear. So, that makes 2 with Ron Paul. Now what do we do with the rest of them?
Wednesday, March 10, 2010
Instead of buying physical gold in the open market (where China would be the 800-pound gorilla in the room), China plans to buy gold mines around the world.
An official from the China Gold Association told The China Daily that rather than buy gold from the IMF, China would buy gold directly by buying gold mines "abroad."
If true, it's not hard to imagine this pushing up prices of both gold and gold stocks. Before you load up on gold shares though, you might want to look at the chart for GDX (Market Vectors Gold ETF) in 2008. In that meltdown, gold stocks were crushed like all the rest.
Do I own gold stocks now? Absolutely. Am I "all in?" Not a chance.
Tuesday, March 9, 2010
Am I glad I earn in dollars vs. euros? Yes. Do I want to store wealth in dollars in this environment? Not so much.
How then can the USD be seen as a safe haven from the Euro? The two currencies have similar sized economies and there is no trenchant difference in their health when viewing GDP and inflation data. Yet the debt situation in the US is worse than in Europe and the USD is the most over-owned currency on the planet.
Selling Euros to buy dollars is sort of like exchanging your ticket on the Titanic for a ride on the Hindenburg. The answer is not to sell one sinking currency and jump on another one that is drowning as well. The only truly safe currencies are those that can act as a store of wealth, that cannot be diluted by fiat and whose purchasing power cannot be corrupted by a government. Investors the world over should seek the safer harbor that is derived from owning commodities and precious metals rather than to believe the USD can offer any real protection.
This is not to say that the dollar can't or won't do well short-term. Who could predict that to a certainty?
I am confident that the dollar wil suffer long-term. Can anyone name a fiat currency that hasn't?
PS Don't you love the Titanic/Hindengerg quote?
Monday, March 1, 2010
Recommends at least a 50% portflio weighting towards emerging economies.
Expects Japanese stocks to outperform both Europe and the U.S.
Stresses the need to diversify and avoid the overuse of leverage.
Believes U.S. bonds will be disastrous over the next 10 years.
It's a great watch, and you can see the whole thing on FT.com.
Sunday, February 28, 2010
China may not buy gold from the International Monetary Fund to avoid causing market volatility, the China Daily reported, citing an indentified official from the country’s gold association.
It is unfeasible for China to buy the bullion as any purchase would “trigger market speculation and volatility,” the paper reported, citing the China Gold Association official.
Of course, if it's true, the interesting part would be the reason why. China has already indicated it's desire to diversify its reserves out of the dollar, but let's be open minded and consider a range of reasons China might say no to the IMF gold.
1. They feel gold is simply too pricy at the moment.
2. They foresee prices dropping based on some combination of supply/demand (perhaps another worldwide meltdown?)
3. They don't want to spook others into bailing out of the dollar while they still hold huges reserves.
4. They've had a change of heart and plan to stand by the dollar.
Of these four, I can get my head around 1, 2, and 3, but 4 seems laughable. Am I being too hard on the dollar?
Thursday, February 25, 2010
Silver, the worst-performing precious metal this year, may drop as much as 11 percent to $14 an ounce, according to technical analysis by Barclays Capital.
The attached chart shows prices formed a so-called “head and shoulders top” and then failed to hold above a 27-month pivot line, which the bank says is a bearish signal. The second chart shows a drop to about $14 would equate to a 50 percent retracement of the metal’s advance from October 2008 to December last year, according to a series of numbers known as the Fibonacci sequence.
I mention this because it's in the news, but honestly, it's not really news I care about. I've bought silver at prices ranging from $12-18. I plan on continuing to buy for the foreseeable future.
Sure, I'd like to pick up more at $14, but I think the upside so far outweighs the downside that I'm not really worried about a move of a dollar or two either way. Should you hold off a planned purchase to save a couple of dollars an ounce? Sure, as long as you're sure it's coming. Of course if you are, you should probably be buying put options on SLV.
When you think about it that way, it sort of makes you wonder how sure you are, doesn't it?
Wednesday, February 24, 2010
OK, so there are quite a few buyers in Atlantic City. Still, I have some serious doubts about exactly what this situation, in this location, means.
It looks like few, if any of these businesses buy gold "full time."
Who is selling anyway? Down on their luck gamblers or investors? I have a guess.
Is anyone selling coins or bullion, or is this all jewelry?
Bottom line is this. While I agree with the NIA's premise, that gold is not in a bubble and has a long way up to go, I don't think the evidence in this video offers any type of proof. And I still can't wait for their next video.
Is gold in a bubble? Possibly, but if so, it still has a long way to go before the top is reached. The top will make itself known if you simply watch the market actions. In the meantime, what else can you do, if not invest in gold, to help protect your accumulated wealth?
Indeed, what else can you do? Shorting stocks might be one reasonable possibility. It just makes me very nervous. How high can stocks go when the money supply is potentially unlimited?
Another idea that I'm currently considering is the purchase of 2 or 3 leveraged inverse ETFs. The idea is appealing. These ETFs are designed to achieve a return of 2 or 3 times the opposite of the benchmark they are based on. (FYI, I'm considering small investments in EUO, SRTY, and TBT.)
I really don't like the idea of leverage. Truth be told, I think these leveraged ETFs are built on the house of cards that is our financial system. I wonder though, if a person whose investments are largely weighted towards precious metals might be well served to have a small (maybe 10%?) investment in one or more of these.
If you decide to, please be sure to research thoroughly before you invest. Even the people at Proshares include this warning, among others:
ProShares ETFs may be appropriate if you intend to invest in them as a portion of a portfolio, not as an entire portfolio.
Tuesday, February 23, 2010
In other gold news, SEC documents show that George Soros doubled his gold investment during the end of 2009, while publicly calling gold the “ultimate asset bubble.”
So, do you suppose Mr. Soros is buying because he wants to be in this "ultimate bubble?" It might make sense. Clearly anyone who expects a massive spike from currents prices would be comfortable buying now.
Monday, February 22, 2010
Gold is real money. At least, it’s as real as money ever gets. Gold represents wealth. It can be exchanged for wealth. And since the above-ground supply of gold grows about as fast as the economy itself, gold tends to hold its value over centuries. Today, gold is worth about the same as it was worth 2000 years ago.
FYI, Bonner is no Johnny-come-lately to the gold trade. He touted the idea of "buying gold on dips" as half of his trade of the decade for, well, the last decade.
Saturday, February 20, 2010
The Federal Reserve announced yesterday that it raised the "discount rate" by 25 basis points to 0.75%. This move was meaningless because very few institutions use the Fed's discount window, in comparison to more widely used overnight lending. The current balance of discount window borrowing is only $14 billion, compared to the $1.1 trillion in excess reserves currently being hoarded by banks.
By the Fed raising the discount rate but not the overnight federal funds rate, they are clearly trying to talk up the U.S. dollar and push down gold and silver prices, without reducing the supply of cheap credit. Considering that gold and silver prices rose slightly yesterday following the Fed's announcement and held strong today, it is our belief that the market is calling the Fed's bluff and beginning to realize that artificially low interest rates are here to stay.
Many people forget that gold's bull run from $35 to $850 per ounce during the 1970s came during a time of rising interest rates.
Sure, they're talking their book. Who doesn't? Before you discount what they say, though, you might want to read the full article here. Then, before you dismiss them, try to find the flaw in their data or their reasoning. If it's there I'd love to hear about it!
PS Why not sign up for their newsletter why you're there?
Wednesday, February 17, 2010
Tuesday, February 16, 2010
WASHINGTON - The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.
The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.
". . .could force the government to make higher interest payments at a time that it is running record federal deficits."
Really? Do you think so? And hey, what will the Chinese be doing with their money now? I don't see the Euro is offering much appeal. Other than gold, where do you put big money now?