Silver is used in the electronics industry and is consumed daily; stock piles of silver are dwindling. On top of that, for the first time in modern history, there is more gold in the world than silver. In other words, silver is more valuable than gold. The good news is, at less than $20 an ounce, almost anyone can afford to start preparing for the worst and building their own house of silver.
In conclusion: My mom and dad lived through the last depression. They knew lean years. The baby boom generation is about to have their fat cows eaten by skinny cows. The good news is, if you can thrive when times are bad, these are the best of times.
Gold is traditionally seen as a safe haven that benefits during periods of financial dislocation, yet during 2008 it rose by only 6% in US dollar terms, whereas other safe-haven assets such as government bonds and the US dollar soared.
One explanation for this anomaly is that the second half of 2008 was as much about liquidity (or the lack of it) as about falling profits and recession, and gold was an area in which cash-strapped investors could easily liquidate their holdings to meet margin calls elsewhere.
Another is that gold is subject to supply and demand balances, and the global recession has inevitably resulted in weaker demand for jewellery. Finally, it was a period in which the US dollar rose strongly, which is historically a negative for the gold price.
Core inflation fell a record 2.4pc in September, a steeper drop than at any time during the country's Lost Decade. A surging yen is twisting the knife further. The currency has risen 22pc against the euro, 27pc against the dollar, and 43pc against sterling since mid-2007.
Hirohisa Fujii, finance minister, ditched his non-intervention policy yesterday, saying Tokyo would "take necessary steps" to prevent disorderly currency moves.
Yen strength is asphyxiating Japanese exporters and feeding a self-reinforcing spiral of lower prices and wages. This 1930s process increases the real burden of debts. Corporate debt alone is 180pc of GDP.
The dollar's position as the global currency of last resort is no longer unassailable following the shift in economic strength that has taken place in the wake of the credit crisis, the head of the World Bank has warned.
World Bank group president Robert Zoellick said the global economic crisis was contributing to shifts globally that would have an impact on, among other things, currency markets. And he warned against complacency when it came to the dollar's role.
He said: 'The United States would be mistaken to take for granted the dollar's place as the world's prominent reserve currency. Looking forward, there will increasingly be other options to the dollar.'
Sometimes it takes a crisis to restore reason and equilibrium to the world, and so it is with the trade and capital imbalances that were arguably the root cause of the financial collapse of the past two years.
To economic purists, the changes now under way in demand and trade are inevitable, necessary and even desirable. Even so, dollar supremacy and the geo-political dominance of the West are both likely long-term casualties.
One, almost unnoticed, effect of the downturn is that past imbalances in trade and capital flows are correcting themselves of their own volition, the simple consequence of lower demand in once profligate consumer nations.
Current-account surpluses in China, Germany and Japan are narrowing, as are the deficits of the major c
With the G-20 meeting wrapping up in Pittsburgh, there is much talk about the dollar and whether it can maintain its role and vitality as the world's leading currency and reserve asset. Surely, gold's role in the international monetary system -- and its value to private investors -- is evolving favorably for the yellow metal.
Countries like China -- while talking tough -- have a strong interest in maintaining a stable dollar and an undervalued yuan to support exports to the U.S. and a growing economy with high employment at home. At the same time, China -- and a number of other major countries -- are interested in gradually diversifying reserves into gold and other currency reserve assets.
The world's leading nations have agreed "tough new regulations" to prevent another global financial crisis, declared Barack Obama, as the two-day meeting drew to a close. The G20 has "taken bold and concerted action to forge a new framework for strong, sustainable and balanced growth".
Obama's oratory was typically impressive. The trouble is, it wasn't true. No specific rules on banks' capital reserves were announced at this summit. No leverage caps were agreed. Nothing "bold" was done to lessen systemic dangers or overhaul the global regulatory regime.
Pittsburgh produced nothing more than the usual photo calls and drab theatre. The lack of questioning of the status quo was spectacular. The world needs to learn from what
"The old system of international economic cooperation is over," announced Gordon Brown at the G20 summit in Pittsburgh. "The new system, as of today, has begun."
The first part of that statement is partly true. The second is a fantasy.
The G20 is not a system of international economic co-operation, or a board of directors, or a governing council for the global economy, to pick some of the terms that have appeared in the media. It is a forum where the heads of state of 20 economies discuss some important economic issues. It has very little ability to directly implement its decisions.
The dollar's grip on the cliff's edge by its fingernails has become ever more tenuous. Looking at the chart below you can see that the cliff edge level is 77.5. In August it represented important support, since then the dollar has fallen below, rallied to it then fallen again. Any further weakness could lead to a deathly fall.
China, Russia and others keep sniping about the dollar's role as the world's reserve currency. Their rhetoric sounds like a genuine and determined campaign. Their aim is to oust the dollar from its role as the reserve currency. If China has its way, it will be replaced by a basket of currencies with the dollar's role dramatically reduced.
When China achieves this objective, then the risk to America's living standards would be sufficiently severe to
Looks like the gold bugs had reason to be wary when gold broke through $1000. But now it's back down, they're not particularly worried.
When I last looked, Australia's "The Privateer" Web site was calling for a confirmation close around $1,015 on its magnificent long-term U.S. dollar 5-times-3 point and figure chart.
It got it. Then, however, although every chartist I follow was screaming, "Breakout!" gold churned for several days before slumping some $25.00 late last week. Spot gold closed Friday below $1,000 at $990.70.
Most shorter-term charts now have an ominous "head and shoulders" top appearance. Even The Privateer's long term chart has slipped back into formation and looks sad.
Gold's drop in recent days, after rising to the $1,020-an-ounce level just one week ago, certainly appears to be déjà vu all over again.
On four previous occasions over the last two years, gold has approached, or slightly exceeded, the $1,000 level. On each of those earlier occasions, gold promptly retreated.
But there is one big difference: Gold timers are a lot more discouraged now than on any of those four previous occasions.
Contrarian analysts, who believe that the consensus is rarely right, therefore give gold better odds this time around of mounting a rally that rises to markedly higher levels. If so, then this week's correction in the gold market would be a mere pause -- and not the beginning of a major bear market.
It was "the U.S. is not indebted enough" comment heard 'round the world (well, at least in our world).
In a wildly contrarian view, money manager Ken Fisher last week argued the U.S. has too little debt and that we have a much higher borrowing capacity.
Greg Ip, U.S. economics editor for The Economist, isn't nearly as sanguine as Fisher about America's rising deficit: More government debt crowds out the private sector's ability to borrow and ultimately results in higher interest rates -- slowing down the overall economy.
However, Ip doesn't expect a debt shock for America, as seen in East Asia during the late 1990s, and says America's massive deficit isn't as bad as the bears like Peter Schiff and Marc Faber fear -- especially relative to the rest of th
If there are any German readers of this blog, I would like to know what they think of the latest breath-taking provocations of German finance minister Peer Steinbrück.
Remember that Herr Steinbrück is not a journalist, pundit, or back-bench maverick. He speaks officially for the German government and for the German nation on the international stage.
Every assertion that he made about Britain in his interview with Stern is either factually wrong, or such a serious distortion of events that it amounts to a smear. Furthermore, it was quite threatening.
What he said, in effect, is that Germany will marshal its forces to ensure that a chunk of the British economy is shut down - whatever the social consequences. This is the closest thing I have seen to a declarat
Unlike the "legitimate bull markets" of many foreign markets, Peter Schiff believes the U.S. is merely experiencing a "rally in a bear market," and is lagging the rest of the world "for a reason."
The worst is not over, according to Euro Pacific Capital's Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold.
A longtime dollar bear and gold bull, he foresees gold hitting $5000 per ounce "in the next couple of years," and predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1.
Schiff believes gold is currently "climbing a wall of worry" but will eventually become as hot as tech stocks in 1999 and start moving up $100 per
The Fed upgraded its view of the economy Wednesday, declaring: "Economic activity has picked up following its severe downturn."
But forget all the talk about recovery, V-shaped or otherwise. The economy is actually worse today vs. during the depths of the recession, according to Peter Schiff, president of Euro Pacific Capital and author of Crash Proof 2.0.
"Ben Bernanke is keeping his record of perfection intact of never getting anything right. Once again he's gotten it wrong," Schiff says. "If the Fed really thought the economy was sound, why does he have it on life support? If he pulls the plug, our sick economy is going to die."
Although the Fed never said the economy is "sound", Schiff is referring to the FOMC's renewed
Property companies are calling the bottom of the market, reports The Times.
Taking advantage of investors' current generous mood, housebuilders Barratt and Redrow, and shopping centre group Liberty International stuck out their hands for a total of £1.13bn. The money will be used to pay off debt and build up land banks now that land is "cheap."
We suppose you could suggest that this marks the bottom.
Or perhaps, it just shows that companies can't believe their luck, and are rushing in to grab some easy money from institutions and individual investors before they return to their senses...
L: Doug, we’ve talked about cars, cows, and cash, but the investment world thinks of you as a gold bug, so let’s give that a go; why gold?
Doug: Sure. First of all, it’s because gold is actually money. It’s an unfortunate historical anomaly that people think about the paper in their wallets as money. The dollar is, technically, a currency. A currency is a government substitute for money. Gold is money.
Now, why do I say that?
Historically, many things have been used as money. Cattle have been used as money in many societies, including Roman society. That’s where we get the word “pecuniary” from: the Latin word for a single head of cattle is pecus. Salt has been used as money, also including in ancient Rome, and that’s
In today's FT, Martin Wolf writes about China's $2.1 trillion in foreign currency reserves:
It is little wonder such a huge exposure makes the Chinese government nervous. But nobody asked the Chinese to do this. On the contrary, US policymakers have consistently (and wisely) advised them to do the opposite. Having made what I believe was a huge mistake, the Chinese government cannot expect anybody to save them from its consequences.
A substantial appreciation of the Chinese currency is inevitable and desirable in the years ahead. The longer the Chinese authorities fight it, the bigger their losses (and the pain of adjustment) are going to be. What they have to do is cut those losses, by ceasing to accumulate yet more reserves.
Post summer doldrums, we're beginning to see a nice fall run up in the gold price according to seasoned bullion dealer, investor and newsletter writer Greg McCoach. He sees a number of factors culminating in ever-increasing prices going forward. Interview with The Gold Report.
Our 17-year-old son, who is studying for his exams, withdrew £2,216 from his Isa (individual savings account) in cash from Barclays Bank. Included in the sum were 2 x £1,000 of £20 notes within the enclosed paper band.
After walking to Halifax bank to pay this sum into his account, he was informed that one counterfeit £20 note was found when the cashier weighed the bundle.
He immediately returned to Barclays' customer service, where he was told he should have checked all the notes before leaving the bank. We feel this is an impractical suggestion not only for the time it would have taken but how would he know what a counterfeit note looks like?
September
30
September
Kiyosaki: Taking Steps to Prepare for the Worst
Sep 30 2009 Yahoo News
Silver is used in the electronics industry and is consumed daily; stock piles of silver are dwindling. On top of that, for the first time in modern history, there is more gold in the world than silver. In other words, silver is more valuable than gold. The good news is, at less than $20 an ounce, almost anyone can afford to start preparing for the worst and building their own house of silver.
In conclusion: My mom and dad lived through the last depression. They knew lean years. The baby boom generation is about to have their fat cows eaten by skinny cows. The good news is, if you can thrive when times are bad, these are the best of times.
Continue Reading
30
September
Why gold is the world's only safe currency
Sep 30 2009 Citywire
Gold is traditionally seen as a safe haven that benefits during periods of financial dislocation, yet during 2008 it rose by only 6% in US dollar terms, whereas other safe-haven assets such as government bonds and the US dollar soared.
One explanation for this anomaly is that the second half of 2008 was as much about liquidity (or the lack of it) as about falling profits and recession, and gold was an area in which cash-strapped investors could easily liquidate their holdings to meet margin calls elsewhere.
Another is that gold is subject to supply and demand balances, and the global recession has inevitably resulted in weaker demand for jewellery. Finally, it was a period in which the US dollar rose strongly, which is historically a negative for the gold price.
Continue Reading
30
September
Japan tips ever deeper into deflation
Sep 30 2009 The Telegraph
Core inflation fell a record 2.4pc in September, a steeper drop than at any time during the country's Lost Decade. A surging yen is twisting the knife further. The currency has risen 22pc against the euro, 27pc against the dollar, and 43pc against sterling since mid-2007.
Hirohisa Fujii, finance minister, ditched his non-intervention policy yesterday, saying Tokyo would "take necessary steps" to prevent disorderly currency moves.
Yen strength is asphyxiating Japanese exporters and feeding a self-reinforcing spiral of lower prices and wages. This 1930s process increases the real burden of debts. Corporate debt alone is 180pc of GDP.
Continue Reading
30
September
Don’t take dollar's pre-eminence for granted, World Bank warns
Sep 30 2009 Citywire
The dollar's position as the global currency of last resort is no longer unassailable following the shift in economic strength that has taken place in the wake of the credit crisis, the head of the World Bank has warned.
World Bank group president Robert Zoellick said the global economic crisis was contributing to shifts globally that would have an impact on, among other things, currency markets. And he warned against complacency when it came to the dollar's role.
He said: 'The United States would be mistaken to take for granted the dollar's place as the world's prominent reserve currency. Looking forward, there will increasingly be other options to the dollar.'
Continue Reading
29
September
The Dollar is Dead - Long Live the Renminbi
Sep 29 2009 The Telegraph
Sometimes it takes a crisis to restore reason and equilibrium to the world, and so it is with the trade and capital imbalances that were arguably the root cause of the financial collapse of the past two years.
To economic purists, the changes now under way in demand and trade are inevitable, necessary and even desirable. Even so, dollar supremacy and the geo-political dominance of the West are both likely long-term casualties.
One, almost unnoticed, effect of the downturn is that past imbalances in trade and capital flows are correcting themselves of their own volition, the simple consequence of lower demand in once profligate consumer nations.
Current-account surpluses in China, Germany and Japan are narrowing, as are the deficits of the major c
Continue Reading
29
September
The Global Role of Gold: A Question for the G-20
Sep 29 2009 Resource Investor
With the G-20 meeting wrapping up in Pittsburgh, there is much talk about the dollar and whether it can maintain its role and vitality as the world's leading currency and reserve asset. Surely, gold's role in the international monetary system -- and its value to private investors -- is evolving favorably for the yellow metal.
Countries like China -- while talking tough -- have a strong interest in maintaining a stable dollar and an undervalued yuan to support exports to the U.S. and a growing economy with high employment at home. At the same time, China -- and a number of other major countries -- are interested in gradually diversifying reserves into gold and other currency reserve assets.
I believe we are now at a key turning point in
Continue Reading
29
September
No reform, just a cosmetic patch for a discredited, flawed regime
Sep 29 2009 The Telegraph
The world's leading nations have agreed "tough new regulations" to prevent another global financial crisis, declared Barack Obama, as the two-day meeting drew to a close. The G20 has "taken bold and concerted action to forge a new framework for strong, sustainable and balanced growth".
Obama's oratory was typically impressive. The trouble is, it wasn't true. No specific rules on banks' capital reserves were announced at this summit. No leverage caps were agreed. Nothing "bold" was done to lessen systemic dangers or overhaul the global regulatory regime.
Pittsburgh produced nothing more than the usual photo calls and drab theatre. The lack of questioning of the status quo was spectacular. The world needs to learn from what
Continue Reading
29
September
The G20 Fantasy
Sep 29 2009 The Guardian UK
"The old system of international economic cooperation is over," announced Gordon Brown at the G20 summit in Pittsburgh. "The new system, as of today, has begun."
The first part of that statement is partly true. The second is a fantasy.
The G20 is not a system of international economic co-operation, or a board of directors, or a governing council for the global economy, to pick some of the terms that have appeared in the media. It is a forum where the heads of state of 20 economies discuss some important economic issues. It has very little ability to directly implement its decisions.
Continue Reading
29
September
The End may be near for the Dollar
Sep 29 2009 MoneyWeek
The dollar's grip on the cliff's edge by its fingernails has become ever more tenuous. Looking at the chart below you can see that the cliff edge level is 77.5. In August it represented important support, since then the dollar has fallen below, rallied to it then fallen again. Any further weakness could lead to a deathly fall.
China, Russia and others keep sniping about the dollar's role as the world's reserve currency. Their rhetoric sounds like a genuine and determined campaign. Their aim is to oust the dollar from its role as the reserve currency. If China has its way, it will be replaced by a basket of currencies with the dollar's role dramatically reduced.
When China achieves this objective, then the risk to America's living standards would be sufficiently severe to
Continue Reading
28
September
Gold Down, Bugs up
Sep 28 2009 MarketWatch
Looks like the gold bugs had reason to be wary when gold broke through $1000. But now it's back down, they're not particularly worried.
When I last looked, Australia's "The Privateer" Web site was calling for a confirmation close around $1,015 on its magnificent long-term U.S. dollar 5-times-3 point and figure chart.
It got it. Then, however, although every chartist I follow was screaming, "Breakout!" gold churned for several days before slumping some $25.00 late last week. Spot gold closed Friday below $1,000 at $990.70.
Most shorter-term charts now have an ominous "head and shoulders" top appearance. Even The Privateer's long term chart has slipped back into formation and looks sad.
Continue Reading
28
September
Sentiment suggests gold pullback a mere correction
Sep 28 2009 MarketWatch
Gold's drop in recent days, after rising to the $1,020-an-ounce level just one week ago, certainly appears to be déjà vu all over again.
On four previous occasions over the last two years, gold has approached, or slightly exceeded, the $1,000 level. On each of those earlier occasions, gold promptly retreated.
But there is one big difference: Gold timers are a lot more discouraged now than on any of those four previous occasions.
Contrarian analysts, who believe that the consensus is rarely right, therefore give gold better odds this time around of mounting a rally that rises to markedly higher levels. If so, then this week's correction in the gold market would be a mere pause -- and not the beginning of a major bear market.
Continue Reading
28
September
“Termites in the Attic": Is It Time to Panic About America's Soaring Debt?-
Sep 28 2009 Yahoo News
It was "the U.S. is not indebted enough" comment heard 'round the world (well, at least in our world).
In a wildly contrarian view, money manager Ken Fisher last week argued the U.S. has too little debt and that we have a much higher borrowing capacity.
Greg Ip, U.S. economics editor for The Economist, isn't nearly as sanguine as Fisher about America's rising deficit: More government debt crowds out the private sector's ability to borrow and ultimately results in higher interest rates -- slowing down the overall economy.
However, Ip doesn't expect a debt shock for America, as seen in East Asia during the late 1990s, and says America's massive deficit isn't as bad as the bears like Peter Schiff and Marc Faber fear -- especially relative to the rest of th
Continue Reading
28
September
Germany declares economic war
Sep 28 2009 The Telegraph
If there are any German readers of this blog, I would like to know what they think of the latest breath-taking provocations of German finance minister Peer Steinbrück.
Remember that Herr Steinbrück is not a journalist, pundit, or back-bench maverick. He speaks officially for the German government and for the German nation on the international stage.
Every assertion that he made about Britain in his interview with Stern is either factually wrong, or such a serious distortion of events that it amounts to a smear. Furthermore, it was quite threatening.
What he said, in effect, is that Germany will marshal its forces to ensure that a chunk of the British economy is shut down - whatever the social consequences. This is the closest thing I have seen to a declarat
Continue Reading
25
September
Peter Schiff: U.S. Rally Is Doomed, Gold Will Hit $5000/oz
Sep 25 2009 Yahoo News
Unlike the "legitimate bull markets" of many foreign markets, Peter Schiff believes the U.S. is merely experiencing a "rally in a bear market," and is lagging the rest of the world "for a reason."
The worst is not over, according to Euro Pacific Capital's Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold.
A longtime dollar bear and gold bull, he foresees gold hitting $5000 per ounce "in the next couple of years," and predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1. Schiff believes gold is currently "climbing a wall of worry" but will eventually become as hot as tech stocks in 1999 and start moving up $100 per
Continue Reading
25
September
Bernanke Is Wrong! The Economy Is Getting Worse, Not Better, Schiff Says
Sep 25 2009 Yahoo News
The Fed upgraded its view of the economy Wednesday, declaring: "Economic activity has picked up following its severe downturn."
But forget all the talk about recovery, V-shaped or otherwise. The economy is actually worse today vs. during the depths of the recession, according to Peter Schiff, president of Euro Pacific Capital and author of Crash Proof 2.0.
"Ben Bernanke is keeping his record of perfection intact of never getting anything right. Once again he's gotten it wrong," Schiff says. "If the Fed really thought the economy was sound, why does he have it on life support? If he pulls the plug, our sick economy is going to die."
Although the Fed never said the economy is "sound", Schiff is referring to the FOMC's renewed
Continue Reading
25
September
The housing market hasn’t hit bottom yet
Sep 25 2009 MoneyWeek
Property companies are calling the bottom of the market, reports The Times.
Taking advantage of investors' current generous mood, housebuilders Barratt and Redrow, and shopping centre group Liberty International stuck out their hands for a total of £1.13bn. The money will be used to pay off debt and build up land banks now that land is "cheap."
We suppose you could suggest that this marks the bottom.
Or perhaps, it just shows that companies can't believe their luck, and are rushing in to grab some easy money from institutions and individual investors before they return to their senses...
Continue Reading
25
September
Doug Casey on Gold
Sep 25 2009 Casey Research
L: Doug, we’ve talked about cars, cows, and cash, but the investment world thinks of you as a gold bug, so let’s give that a go; why gold?
Doug: Sure. First of all, it’s because gold is actually money. It’s an unfortunate historical anomaly that people think about the paper in their wallets as money. The dollar is, technically, a currency. A currency is a government substitute for money. Gold is money.
Now, why do I say that?
Historically, many things have been used as money. Cattle have been used as money in many societies, including Roman society. That’s where we get the word “pecuniary” from: the Latin word for a single head of cattle is pecus. Salt has been used as money, also including in ancient Rome, and that’s
Continue Reading
25
September
Martin Wolf: Why China should stop piling up dollars (and why it won't)
Sep 25 2009 Time
In today's FT, Martin Wolf writes about China's $2.1 trillion in foreign currency reserves:
It is little wonder such a huge exposure makes the Chinese government nervous. But nobody asked the Chinese to do this. On the contrary, US policymakers have consistently (and wisely) advised them to do the opposite. Having made what I believe was a huge mistake, the Chinese government cannot expect anybody to save them from its consequences.
A substantial appreciation of the Chinese currency is inevitable and desirable in the years ahead. The longer the Chinese authorities fight it, the bigger their losses (and the pain of adjustment) are going to be. What they have to do is cut those losses, by ceasing to accumulate yet more reserves.
Continue Reading
24
September
Gold to reach $1,500 this fall?
Sep 24 2009 Mineweb
Post summer doldrums, we're beginning to see a nice fall run up in the gold price according to seasoned bullion dealer, investor and newsletter writer Greg McCoach. He sees a number of factors culminating in ever-increasing prices going forward. Interview with The Gold Report.
Continue Reading
24
September
How to Spot Counterfeit Banknotes
Sep 24 2009 The Telegraph
Our 17-year-old son, who is studying for his exams, withdrew £2,216 from his Isa (individual savings account) in cash from Barclays Bank. Included in the sum were 2 x £1,000 of £20 notes within the enclosed paper band.
After walking to Halifax bank to pay this sum into his account, he was informed that one counterfeit £20 note was found when the cashier weighed the bundle.
He immediately returned to Barclays' customer service, where he was told he should have checked all the notes before leaving the bank. We feel this is an impractical suggestion not only for the time it would have taken but how would he know what a counterfeit note looks like?
Continue Reading