Tuesday, November 29, 2011

Hyperinflation Warning, Preserve Value With Gold

John Williams: www.shadowstats.com
The Gold Report: www.theaureport.com

Among the specters lurking in ShadowStats.com's Editor John Williams' gloomy outlook for the U.S. are the demise of the dollar, hyperinflation and the ongoing lack of political will to take sound corrective measures. Still, as he tells The Gold Report in this exclusive interview, investors have options. Williams contends that turning to gold, silver and strong foreign currencies would protect wealth and position savvy investors to take advantage of extraordinary opportunities likely to flow out of the turmoil ahead.

Excerpts from the interview:

TGR: Let's go back to gold. According to your research, the September 2011 high of $1,895/oz gold was below the historic high of $850/oz in 1980, if the 1980 figure was adjusted for inflation. The $850/oz in 1980 would have equaled $2,479/oz in Consumer Price Index--all Urban consumers (CPIU)-adjusted dollars, or $8,677/oz Shadow Government Statistics (SGS)-alternate-CPI-adjusted gold prices in 2011. Is gold underpriced if you put it into that context?

JW: On that basis, yes, it is. It also depends on when you measure it. My hyperinflation report looks at what has happened to the dollar over a longer period. Since President Roosevelt took the U.S. off the gold standard domestically in 1933, the dollar has lost 98--99% of its purchasing power. People tend to forget that. But if you look at the gold price movement since 1933, it actually has moved a little more than the government-reported pace of inflation. My estimate of what inflation should be if we had consistent CPI reporting shows that the loss of the dollar's purchasing power against gold is the same as it is measured by the CPI.

So over time--and this is true over millennia--gold tends to maintain purchasing power, which means it holds its value net of inflation. Not that you'd break a piece of gold down to a small enough unit to buy a loaf of bread, but if you did, it also would have bought a loaf of bread in ancient Rome.

TGR: For the same amount of gold.

JW: Same amount of gold. Gold has a long tradition as store of wealth. That's why--globally--gold generally has been viewed as such. It only got bad press in the U.S. because private ownership of gold was outlawed after Roosevelt's action. It became legal for Americans to own gold again after Nixon abandoned the international gold standard. Yet, even today, some on Wall Street discourage investment in physical gold, largely because they cannot make a commission on it, as they do with stocks and bonds.

Given the gold ownership limitations after 1933, those in the U.S. who wanted to buy gold turned to buying gold stocks. But because of what happened in the 1930s--that's now two generations or so ago--gold as an investment and as a hedge to protect wealth lost some of what had been its commonly recognized value in the U.S. Outside the U.S., almost everyone views gold as a traditional hedge.

TGR: That's physical gold. What about exchange-traded funds and gold equities in the juniors? Will those investments also preserve wealth?

JW: I wouldn't count on the financial system working as it should. I look at physical gold, preferably sovereign coins, not only as a store of wealth, but also for purposes of liquidity.

Gold stocks also should preserve wealth over time, but I would look at them as longer-term holdings. There could be periods of systemic failure with resulting interim liquidity issues.

TGR: You talked about hyperinflation coming as early as 2014, or even before that. But 2012 is just weeks away. What can people expect next year in terms of the data you watch and maintain versus some of the government-issued statistics?

JW: I can tell you that the economy is weaker and will remain weaker than the government reports. We don't have an economic recovery in place. We'll tend to see higher inflation.

TGR: Something to watch out for. Thank you, John.


Tuesday, November 22, 2011

A 60 Minutes Re-Cap From Last Year

Inspired by the TF Metals Report

Michael Lewis on 60 Minutes March 14, 2010
Part 1 of 2

Compare this to today's MF Global and CME shenanigans?

Friday, November 18, 2011

Coin Investments Trump The FTSE

Investors who bought the Avarae Investment Trust haven't exactly made a mint but they have beaten the FTSE by around 10 percentage points over the past year – a return not to be sniffed at in these troubled times.
The trust has returned 4pc over the past year, compared with the index's loss of 5pc. The relatively small – £7.5m – Aim-listed fund has done well over a three-year view as well, returning 40pc compared with the FTSE 100's growth of 26pc.

Thursday, November 17, 2011

Central Banks Make Biggest Gold Buy In Decades

London— Financial Times

The activity of central banks is one of the most important drivers of the gold market, but many banks disclose few details about the changes in their bullion reserves.
Central banks became net buyers of gold last year after two decades of heavy selling - a reversal that has helped propel the price of bullion to a high of $1,920.30 (U.S.) a troy ounce in September, up 600 per cent in a decade.
This year, led by emerging market central banks intent on diversifying their growing foreign exchange reserves, they are set to buy more gold than at any time since the collapse of the Bretton Woods system 40 years ago, the last time the value of the dollar was linked to gold.  LINK...

World Gold Demand Up 6% In Third Quarter

Market Watch
By Francesca Freeman
LONDON (MarketWatch) -- World gold demand rose 6% in the third quarter, boosted by a 33% increase in investment demand as the deteriorating economic landscape in Europe heightened the appeal of the yellow metal as a hedge against insecurity, the World Gold Council said Thursday.
Third-quarter gold demand totaled 1,053.9 metric tons, up from 991.1 tons in the same period of 2010, the industry body said in its latest Gold Demand Trends report. In dollar terms, this equated to $57.7 billion, an all-time high in value terms.   LINK...

Saturday, November 12, 2011

Fake Silver and Gold Hit Markets


This is precisely why we strictly deal in high quality "investment grade" bullion products, NO collector coins. Not that collector coins are bad, it's just they are more difficult to verify for authenticity. We believe that if investors want leverage in their gold portfolio the best place is the gold mining companies and of course our trusted source for mining shares is none other than,
Bob Chapman of the
International Forecaster
He answers everyone and if you ask nicely he'll give you his stock recommendations at no cost. Besides, all our bullion suppliers are rigorously investigated and tested before we do any business with them. We verify all credentials of our refiners through the Certified Coin Exchange and the International Standards Organization (ISO) for certification. We do NOT accept walk-in business so all the products we trade are from existing clients. Our focus is on building long-term relationships with our clients to ensure a "closed loop" system of trade. Any product we sell, is a product we stand behind. Any product we buy is examined for purity and tested for authenticity. We have access to highly sophisticated X-Ray devices that measure the purity and full composition of any metal. The personal nature in the way we conduct business and the fact that all products we purchase are thoroughly examined before any cash is paid out will deter any counterfeiters from attempting to sell us fake product. People cannot just come into our office to make a quick deal and leave. Most products are sent to our warehouse before any funds are released. We spend the time with our clients to get to know them and ask many questions about their investment ideas. For those of you that have been to our office in person, know that we deal in an intimate setting and our office is not open to the public. All clients must book an appointment before they visit.    BK
Counterfeiters BEWARE!
You're up against the best technology:

S1 SORTER, handheld PMI gun for alloy ID

Friday, November 11, 2011

Will Italy Fail and Gold go to $3,000?

Tuesday, November 08, 2011

Commentary by Peter Morici, Ph.D.

Simply, private investors and other governments, notably cash-rich China and other big exporters, expect Italian and other European sovereign debt to fail. They are concerned the euro will simply implode all together, and then no European government will have both the resources and inclination to stand behind the ESFS's failing bonds.
At that point, nothing is left but gold. Now trading at $1790, it could zoom right past $2000 to $3000 an ounce.
Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former Chief Economist at the U.S. International Trade Commission.    LINK...

Monday, November 7, 2011

Germany Fights to Keep Their Gold

News release from Zero Hedge

Germany to G20: German Gold “Must Remain Off Limits”; Italian Gold Sale Again Proposed In Germany


If gold is so important to the most powerful country in Europe during this global crisis, don't you think gold deserves a position in YOUR portfolio? 
All the gold critics should take notice of the lengths to which Germany is taking to protect their gold, even though it's "JUST a metal" and "doesn't produce any interest or dividends?" WAKE UP PEOPLE!   BK 

Friday, November 4, 2011

No Wonder Silver is Not $80 Yet?

From: Jesse's Cafe Americain
CFTC Update on the Investigation Into Manipulation of the Silver Market In Progress Since 2008

We believe $80 silver will be a reality in 2012.   BK

Central Banks Quietly Accumulating Gold - Declared Purchases of 206 Tons Through September 2011

From: Zero Hedge

Gold appears to have broken out above resistance at $1,750/oz after consolidating between $1,600 and $1,750 in recent weeks.
Demand for gold bullion remains broad based and global in nature. One of the most important sources of demand continues to be central bank demand.
According to data from the IMF, central banks continue to be significant net buyers of gold. Mexico has added most to its reserves, with a net 83.7T of gold between January and September 2011, followed by Russia, which has added 59.3T this year, and Thailand, which has added 52.9T (see chart).