Peter Schiff's views as an author, investor and free market idealist are no secret: Abolish the Fed, buy gold and avoid the dollar. With that in mind, Sunday night was something of a dream come true for the President of Euro Pacific Capital.
Thanks To Princeton University's Business Today, Schiff went head to head in New York City with St. Louis Federal Reserve President James Bullard and former Federal Reserve Vice Chairman Alan Blinder in a panel titled, "Challenges of the Global Slowdown: Redefining Government Regulation."
It might as well have been called "Schiff Blames the Fed for the Financial Crisis."
A few weeks ago, Claudio Borio, head of research at the Bank for International Settlements, warned in a solemn note to Group of 20 leaders that modern financial policymakers are “driving while just looking in the rear-view mirror”: western finance officials have focused so much on past risks that they fail to spot new dangers.
Worse still, as policymakers rush to implement reforms in response to one financial calamity, they are apt to create distortions that pave the way for the next disaster. Just such an unintended consequence could now be festering in the banking sector, as its balance sheets are increasingly stuffed with government bonds.
Gold buyers eager to invest in physical gold bullion may choose to purchase bars and ingots when the price of gold rises or falls significantly. During an economic depression or recession, the value of gold can get a bit more volatile than usual. This can tempt investors looking for moderate, reliable returns into deciding to buy gold ingots, sit on them a bit, and sell them when the value of gold rises. Conservative investors, for their part, may find that the pros of investing in physical gold outweigh the cons and opt for the security of long-term rewards over short-term gains.
There are many reasons why sensible columnists prefer to steer clear of writing about gold. One is that you get the weirdest responses. Twenty years ago they would arrive in funny shaped envelopes, often in green ink, often from individuals with extraordinarily peculiar views about the world. These days the risk is that anything you say will be instantly picked up, recycled and commented on in a thousand online blogs. Not all of that community are interested in constructive dialogue. Gold retains its capacity to excite the most extreme polarised views.
There is only one trade in town at the moment — sell the ailing dollar and buy gold — but investors could fare well by going against the grain.
The dollar tumbled to a 15-month low against top currencies last Monday. It closed the week at $1.65 to the pound, taking it down almost 14% so far this year.
...
If you want to buy physical gold, Goldcore’s Perth Mint requires a minimum order of €7,000 (£6,300). It has an upfront charge of 3.9% for investments up to €50,000, 2.5% for €50,000-€100,000, and 2% for larger amounts.
The mounting level of debt in the industrialised world is prompting a growing number of investors to use the derivatives market to bet on the chance of rich governments defaulting on bonds.
The volume of activity in sovereign credit default swaps – which measure the cost to insure against bond defaults – linked to the US, UK and Japan have doubled in the past year because of concerns about their public finances.
CDS volumes for Italy, which has one of the highest debt burdens of the developed economies, are now the highest for an individual country, according to the Depository Trust & Clearing Corporation.
Federal Reserve officials downplayed the consequences of the falling dollar, underscoring that deflation is still a threat. Jim Rickards, of Market Intelligence; Mike Jackson, of AutoNation; and Larry Lindsey, of the Lindsey Group, share their insight.
Please click on the link below to watch the video.
Gold has been getting all the press, but silver is on a streak, too.
Silver has soared to $18.45 an ounce from $10.79 at the start of 2009, a 71% gain. In contrast, gold has gained 32%, closing at a record high of $1,141 Thursday.
But silver is nowhere near a record. When gold hit its 2008 high of $1,011.25 an ounce in April of that year, for example, silver continued to rally to $19.30. And it is nowhere near the record high of $49.50 an ounce it hit in 1980, when Nelson and William Hunt unsuccessfully tried to corner the market.
There are a number of items favoring higher gold now.
Interest rates are at zero, which means the "opportunity cost" of owning gold now is highly favorable. You sacrifice no yield in owning gold vs. Treasury bills. T-bills pay you nothing, so you might as well have your money in gold.
The Bernanke Fed will evidently stop at nothing in its all-out attempt to "jump start"" the wobbly U.S. economy. This means spending and building debt at a never-seen-before rate. This will result in inflation. The Fed can create fiat money -- any quantity at will, but it cannot direct where that money will go. So far, the money is not going into the economy, banks remain reluctant to lend and consumers are reluctant to spend.
Since 1991, central banks around the world have collectively reduced their gold holdings by some ten percent. However, it now appears that attitudes are changing.
Gold has been hitting new highs in recent weeks, with the US Dollar weakening under loose monetary policy, reversing the gains it made in late 2008. Investors are betting that Asia's emerging economic powers will buy more of the precious metal to diversify their foreign-exchange reserves against a weakening US Dollar.
Earlier this month, the Reserve Bank of India (RBI) announced that it had purchased 200 tonnes of gold from the International Monetary Fund (IMF). This US$6.7 billion transaction was the largest purchase of gold made by a central bank in 30 years.
Gold may advance as investors seek to hedge against a weakening dollar and possible inflation, a survey showed.
Nineteen of 26 traders, investors and analysts surveyed by Bloomberg, or 73 percent, said bullion would rise next week. Five forecast lower prices and two were neutral. The metal for delivery in December was up 1.8 percent this week at $1,137.30 an ounce at noon yesterday in New York.
...
“Concerns about the long-term outlook for the value of fiat currencies and the threat of inflation are leading many investors and savers” to gold as a store of value, GoldCore Ltd., a brokerage in Dublin, said yesterday in a note.
The last parabolic spike in gold took off when central banks joined the fray in the 1970s, hoarding bullion with the same enthusiasm as gold bugs.
Dylan Grice from Société Générale says it smells much the same today.
He sees an eery similarity between the decision of India’s central bank to buy half the IMF’s entire sale of gold, and the move by France’s central bank to start converting dollars into gold in 1965 — which was, of course, the start of the slippery slope leading to the collapse of Bretton Woods and the closure of the US gold window under Nixon.
India’s recent decision to buy International Monetary Fund gold could just herald the start of a new bull market in bullion, says Dylan Grice, strategist at Société Générale.
He notes several parallels between conditions now and those during the gold bull market of the 1970s. “That period saw tight energy markets, overly accommodative central banks and nervousness that policymakers had lost their way,” he says. “Sound familiar?”
Furthermore, he says the price at which the dollar would be fully backed by gold (as it was at the peak of the 1970s market) is $6,300. “So there is a case for gold being ‘cheap’.”
There's one mention of the word gold in the Bank of Canada's latest annual report. There are no mentions of bullion.
Canadians once owned 30 million ounces. Now we own none, preferring to back our currency with rock-solid things such as U.S. dollars and other pieces of paper worth something only as long as we all agree they're worth something.
Meanwhile, India is buying gold. So are other countries, especially those not in the sphere of U.S. influence. Latvia and Honduras, have more than we have, which isn't saying much, but seems to emphasize the point.
The soaring international price of gold, combined with many people's urgent need for funds during the recession, has led to a UK gold rush. Or rather, a gold-selling rush. All over Britain, cash-strapped consumers are trading in their old jewellery, coins and even teeth for cold hard cash. Business is booming for pawnbrokers; and many online gold buying companies – made famous by flash, celeb-fronted ads on daytime TV – are doing a roaring trade.
Gold grinds to new highs -- but the gold bugs are still optimistic.
On Friday evening, Australia's The Privateer headlined the link to its (free) long-term US$ Gold 5 x 3 Point and Figure chart: "Latest update November 13, 2009 -- Gold closes above $1,115.00 -- new all time high."
And very handsome it looks too. Significantly, the uptrend line which marked the top of gold's run in March, 2008 is still safely far away.
A question no one can answer yet is whether India will touch off a bidding war among central banks. Not that India cares all that much at this point. As it leapfrogs past Russia to become the ninth-biggest government holder of gold, China is now looking at even higher precious-metals prices. If you are looking for the next big industry in Asia, it may just be manufacturing fortified warehouses. Many nations will need a Fort Knox of their own to store all those gold bars as the dollar’s reign falters.
I suspect the costs will be seen mostly in increased currency volatility. Those central banks which have engaged in unconventional "funny money" policies need to see sustained results. If those results fail to materialise, we'll be left with weak economies and a broken printing press. The strength of the gold price in recent months suggests that investors still have their doubts about unconventional policies. They're buying insurance in case of failure. They're right to do so.
When can we be sure that economic recovery is in the bag? The world economy seems to be in a much better place today than it was at the beginning of the year. Policymakers haven't repeated the mistakes made during the Great Depression. The banking system seems to be in better shape, thanks in part to a large taxpayer bailout. Asset markets have recovered, suggesting that the earlier collapse in animal spirits may be over. And economists are revising upwards their forecasts for economic activity, concluding that the worst must now be behind us.
For all these reasons, investors are increasingly focused on so-called "exit strategies". How and when should economic life-support policies be removed? After all, interest rates in the developed wo
Last week the price of gold rose to $1,100, the highest ever recorded. Gold is still an important measure of the world economy. The theory of the 19th-century gold standard was that gold was “real money” in the same way as landed property was “real estate”. All types of paper money are capable of being created by banks or governments, so the supply is potentially unlimited. It was observed that gold holds its purchasing power over centuries, whereas paper money tends to depreciate towards the value of zero.
Of course, the rise in the gold price reflects the weakness of the dollar as well the strength of gold. I have been writing about the significance of the gold price since the early 1970s. The latest rise in price reflects the significance of gold as par
November
24
November
Fed Face-Off: Peter Schiff Goes Toe-to-Toe With Alan Blinder, Jim Bullard
Nov 24 2009 Yahoo News
Peter Schiff's views as an author, investor and free market idealist are no secret: Abolish the Fed, buy gold and avoid the dollar. With that in mind, Sunday night was something of a dream come true for the President of Euro Pacific Capital.
Thanks To Princeton University's Business Today, Schiff went head to head in New York City with St. Louis Federal Reserve President James Bullard and former Federal Reserve Vice Chairman Alan Blinder in a panel titled, "Challenges of the Global Slowdown: Redefining Government Regulation."
It might as well have been called "Schiff Blames the Fed for the Financial Crisis."
Continue Reading
24
November
Could sovereign debt be the new subprime?
Nov 24 2009 The Financial Times
A few weeks ago, Claudio Borio, head of research at the Bank for International Settlements, warned in a solemn note to Group of 20 leaders that modern financial policymakers are “driving while just looking in the rear-view mirror”: western finance officials have focused so much on past risks that they fail to spot new dangers.
Worse still, as policymakers rush to implement reforms in response to one financial calamity, they are apt to create distortions that pave the way for the next disaster. Just such an unintended consequence could now be festering in the banking sector, as its balance sheets are increasingly stuffed with government bonds.
Continue Reading
24
November
Buy Gold Bullion Bars as an Investment
Nov 24 2009 Suite 101
Gold buyers eager to invest in physical gold bullion may choose to purchase bars and ingots when the price of gold rises or falls significantly. During an economic depression or recession, the value of gold can get a bit more volatile than usual. This can tempt investors looking for moderate, reliable returns into deciding to buy gold ingots, sit on them a bit, and sell them when the value of gold rises. Conservative investors, for their part, may find that the pros of investing in physical gold outweigh the cons and opt for the security of long-term rewards over short-term gains.
Continue Reading
23
November
Ignore Buffett – gold’s time has come
Nov 23 2009 The Financial Times
There are many reasons why sensible columnists prefer to steer clear of writing about gold. One is that you get the weirdest responses. Twenty years ago they would arrive in funny shaped envelopes, often in green ink, often from individuals with extraordinarily peculiar views about the world. These days the risk is that anything you say will be instantly picked up, recycled and commented on in a thousand online blogs. Not all of that community are interested in constructive dialogue. Gold retains its capacity to excite the most extreme polarised views.
Continue Reading
23
November
Be brave and buy the dollar!? (GoldCore Featured)
Nov 23 2009 The Times
There is only one trade in town at the moment — sell the ailing dollar and buy gold — but investors could fare well by going against the grain.
The dollar tumbled to a 15-month low against top currencies last Monday. It closed the week at $1.65 to the pound, taking it down almost 14% so far this year.
...
If you want to buy physical gold, Goldcore’s Perth Mint requires a minimum order of €7,000 (£6,300). It has an upfront charge of 3.9% for investments up to €50,000, 2.5% for €50,000-€100,000, and 2% for larger amounts.
Continue Reading
23
November
Bets rise on rich country bond defaults
Nov 23 2009 The Financial Times
The mounting level of debt in the industrialised world is prompting a growing number of investors to use the derivatives market to bet on the chance of rich governments defaulting on bonds.
The volume of activity in sovereign credit default swaps – which measure the cost to insure against bond defaults – linked to the US, UK and Japan have doubled in the past year because of concerns about their public finances.
CDS volumes for Italy, which has one of the highest debt burdens of the developed economies, are now the highest for an individual country, according to the Depository Trust & Clearing Corporation.
Continue Reading
20
November
Jim Rickards: If gold is money again, it goes to between $4,000 and $11,000
Nov 20 2009 CNBC
Federal Reserve officials downplayed the consequences of the falling dollar, underscoring that deflation is still a threat. Jim Rickards, of Market Intelligence; Mike Jackson, of AutoNation; and Larry Lindsey, of the Lindsey Group, share their insight.
Please click on the link below to watch the video.
Continue Reading
20
November
Silver price soars on heavy demand, high hopes for gains
Nov 20 2009 USA Today
Gold has been getting all the press, but silver is on a streak, too.
Silver has soared to $18.45 an ounce from $10.79 at the start of 2009, a 71% gain. In contrast, gold has gained 32%, closing at a record high of $1,141 Thursday.
But silver is nowhere near a record. When gold hit its 2008 high of $1,011.25 an ounce in April of that year, for example, silver continued to rally to $19.30. And it is nowhere near the record high of $49.50 an ounce it hit in 1980, when Nelson and William Hunt unsuccessfully tried to corner the market.
Continue Reading
20
November
Banks Reject Own Paper for Gold
Nov 20 2009 The Street
There are a number of items favoring higher gold now.
Interest rates are at zero, which means the "opportunity cost" of owning gold now is highly favorable. You sacrifice no yield in owning gold vs. Treasury bills. T-bills pay you nothing, so you might as well have your money in gold.
The Bernanke Fed will evidently stop at nothing in its all-out attempt to "jump start"" the wobbly U.S. economy. This means spending and building debt at a never-seen-before rate. This will result in inflation. The Fed can create fiat money -- any quantity at will, but it cannot direct where that money will go. So far, the money is not going into the economy, banks remain reluctant to lend and consumers are reluctant to spend.
The newly created money has bee
Continue Reading
20
November
Central Banks Increasing Gold Reserves
Nov 20 2009 Market Oracle
Since 1991, central banks around the world have collectively reduced their gold holdings by some ten percent. However, it now appears that attitudes are changing.
Gold has been hitting new highs in recent weeks, with the US Dollar weakening under loose monetary policy, reversing the gains it made in late 2008. Investors are betting that Asia's emerging economic powers will buy more of the precious metal to diversify their foreign-exchange reserves against a weakening US Dollar.
Earlier this month, the Reserve Bank of India (RBI) announced that it had purchased 200 tonnes of gold from the International Monetary Fund (IMF). This US$6.7 billion transaction was the largest purchase of gold made by a central bank in 30 years.
Continue Reading
20
November
Gold May Advance on Dollar, Inflation Concern, Survey Shows (GoldCore in Bloomberg)
Nov 20 2009 Bloomberg.com
Gold may advance as investors seek to hedge against a weakening dollar and possible inflation, a survey showed.
Nineteen of 26 traders, investors and analysts surveyed by Bloomberg, or 73 percent, said bullion would rise next week. Five forecast lower prices and two were neutral. The metal for delivery in December was up 1.8 percent this week at $1,137.30 an ounce at noon yesterday in New York.
...
“Concerns about the long-term outlook for the value of fiat currencies and the threat of inflation are leading many investors and savers” to gold as a store of value, GoldCore Ltd., a brokerage in Dublin, said yesterday in a note.
Continue Reading
19
November
Is $6,300 fair value for gold?
Nov 19 2009 The Telegraph
The last parabolic spike in gold took off when central banks joined the fray in the 1970s, hoarding bullion with the same enthusiasm as gold bugs.
Dylan Grice from Société Générale says it smells much the same today.
He sees an eery similarity between the decision of India’s central bank to buy half the IMF’s entire sale of gold, and the move by France’s central bank to start converting dollars into gold in 1965 — which was, of course, the start of the slippery slope leading to the collapse of Bretton Woods and the closure of the US gold window under Nixon.
Continue Reading
19
November
India’s bullion buy starts gold bull-run
Nov 19 2009 The Financial Times
India’s recent decision to buy International Monetary Fund gold could just herald the start of a new bull market in bullion, says Dylan Grice, strategist at Société Générale.
He notes several parallels between conditions now and those during the gold bull market of the 1970s. “That period saw tight energy markets, overly accommodative central banks and nervousness that policymakers had lost their way,” he says. “Sound familiar?”
Furthermore, he says the price at which the dollar would be fully backed by gold (as it was at the peak of the 1970s market) is $6,300. “So there is a case for gold being ‘cheap’.”
Continue Reading
19
November
A rock-solid case for gold reserves
Nov 19 2009 The Globe and Mail
There's one mention of the word gold in the Bank of Canada's latest annual report. There are no mentions of bullion.
Canadians once owned 30 million ounces. Now we own none, preferring to back our currency with rock-solid things such as U.S. dollars and other pieces of paper worth something only as long as we all agree they're worth something.
Meanwhile, India is buying gold. So are other countries, especially those not in the sphere of U.S. influence. Latvia and Honduras, have more than we have, which isn't saying much, but seems to emphasize the point.
Continue Reading
19
November
Don't get ripped off in the gold rush
Nov 19 2009 Yahoo News
The soaring international price of gold, combined with many people's urgent need for funds during the recession, has led to a UK gold rush. Or rather, a gold-selling rush. All over Britain, cash-strapped consumers are trading in their old jewellery, coins and even teeth for cold hard cash. Business is booming for pawnbrokers; and many online gold buying companies – made famous by flash, celeb-fronted ads on daytime TV – are doing a roaring trade.
Continue Reading
18
November
Gold bugs say it's not over
Nov 18 2009 MarketWatch
Gold grinds to new highs -- but the gold bugs are still optimistic.
On Friday evening, Australia's The Privateer headlined the link to its (free) long-term US$ Gold 5 x 3 Point and Figure chart: "Latest update November 13, 2009 -- Gold closes above $1,115.00 -- new all time high."
And very handsome it looks too. Significantly, the uptrend line which marked the top of gold's run in March, 2008 is still safely far away.
Continue Reading
18
November
India Shows Hedge-Fund Savvy With Huge Gold Buy
Nov 18 2009 Bloomberg.com
A question no one can answer yet is whether India will touch off a bidding war among central banks. Not that India cares all that much at this point. As it leapfrogs past Russia to become the ninth-biggest government holder of gold, China is now looking at even higher precious-metals prices. If you are looking for the next big industry in Asia, it may just be manufacturing fortified warehouses. Many nations will need a Fort Knox of their own to store all those gold bars as the dollar’s reign falters.
Continue Reading
18
November
Gold prices are a dead giveaway
Nov 18 2009 Bloomberg.com
I suspect the costs will be seen mostly in increased currency volatility. Those central banks which have engaged in unconventional "funny money" policies need to see sustained results. If those results fail to materialise, we'll be left with weak economies and a broken printing press. The strength of the gold price in recent months suggests that investors still have their doubts about unconventional policies. They're buying insurance in case of failure. They're right to do so.
Continue Reading
18
November
Which will come out on top: paper or gold?
Nov 18 2009 Irish Independent
When can we be sure that economic recovery is in the bag? The world economy seems to be in a much better place today than it was at the beginning of the year. Policymakers haven't repeated the mistakes made during the Great Depression. The banking system seems to be in better shape, thanks in part to a large taxpayer bailout. Asset markets have recovered, suggesting that the earlier collapse in animal spirits may be over. And economists are revising upwards their forecasts for economic activity, concluding that the worst must now be behind us.
For all these reasons, investors are increasingly focused on so-called "exit strategies". How and when should economic life-support policies be removed? After all, interest rates in the developed wo
Continue Reading
18
November
Don't say we didn't warn you this time -- a new crash is dead ahead
Nov 18 2009 The Times
Last week the price of gold rose to $1,100, the highest ever recorded. Gold is still an important measure of the world economy. The theory of the 19th-century gold standard was that gold was “real money” in the same way as landed property was “real estate”. All types of paper money are capable of being created by banks or governments, so the supply is potentially unlimited. It was observed that gold holds its purchasing power over centuries, whereas paper money tends to depreciate towards the value of zero.
Of course, the rise in the gold price reflects the weakness of the dollar as well the strength of gold. I have been writing about the significance of the gold price since the early 1970s. The latest rise in price reflects the significance of gold as par
Continue Reading