Are you serious with this? I got more people putting in orders than ever before. I have had a few people PM me asking me for my contact info so they can get in the market so I posted it here. I wont even address such a stupid comment again.I knew you were a Pimp ....
Ok guys. I am taking the first weekend of college football and working to get this to as many people as possible. When I started this thread silver was at 13.25 per Oz. Now its 16.22 and when the below news gets out and hits main stream media this week watch what happens. Woofdaddy. At this point I dont care if your offended that I post. I am a part of this community and I am bringing this info to the people here whom I have been conversing with for years. The month of September is gonna be a huge month in this country. You will see this economy get really heated. Unemployment numbers hit a new high for the first time in 26 years. And this is just to start of things to come this month. Fasten your seatbelts for the month of September. Especially when congress gets back next week.
China pushes silver and gold investment to the masses
A report suggests that the Chinese government is pushing the general public into buying gold and silver bullion, which could have a dramatic effect on the markets.
by Lawrence Williams
Thursday, September 3, 2009
www.mineweb.com
LONDON -
We are indebted again to Paul Mylchreest's Thunder Road Report for news that will bring big smiles to gold and silver investors everywhere. Apparently China is pushing the idea of buying gold and silver for investment purposes to the general population in the way that Western television sells soap powder. If 1.3 billion Chinese citizens start buying gold and silver, even in tiny quantities, imagine what that will do to the market!
The report notes that China's Central Television, the main state-owned television company, has run a news programme letting the public know how easy it is to buy precious metals as an investment. On silver investment the announcer is quoted as saying " China has introduced its first ever investment opportunity for silver bullion. The bars are available in 500g, 1kg, 2kg and 5kg with a purity of 99.9%. Figures show that gold was fifty times more expensive than silver in 2007, but now that figure has reached over seventy times. Analysts say that silver has been undervalued in recent years. They add that the metal is the right investment for individual investors and could be a good way to cash in."
What appears to have happened in China is a total relaxation of strictures on holding precious metals by the individual with the government pushing gold and silver as an investment option, seemingly at every opportunity. This is a far cry from the situation only a few years ago where the distribution of gold and silver was strictly controlled. Now, the Thunder Road Report notes that every bank will sell gold and silver bullion bars in four different sizes to individuals and gold related investments are said to be soaring in popularity.
Around a year ago, Leyshon Resources managing director, Paul Atherley, in an investor presentation in London - and no doubt delivered elsewhere in the world too - commented that some employees at the company's gold mining project in northern China would, on pay day, go to the local bank and buy a small gold bar as an investment and wealth protector. To an extent we put this down at the time to mining company hype - but this seems to be exactly the same phenomenon noted by Thunder Road. The Chinese are being converted from being the lowest per capita gold consumers in the world to a nation of small precious metals investors. Now, by next year, Chinese consumption of gold is likely to exceed that of India, which has been for years the world's biggest gold market. And one suspects that the potential for gold purchasing by individuals is only in its earliest stages. As more and more Chinese move into the cities and individual wealth grows, this trend is only likely to accelerate.
Paul ends the piece on Chinese gold and silver potential with the following comment: "Simply put, the Chinese government is trying to trigger a national gold craze...and it's working. The Chinese public now has gold trading platforms on steroids.... ...Also, for the first time in history, Chinese investors can even trade gold abroad (in London) with the swipe of a ‘Lucky Gold' card. I can't even get Bank of America to open a foreign currency account."
This may be an overstatement of the case from a precious metals bull - or it may not! Certainly if China is indeed pushing the public to buy gold then there may well be a hidden agenda here. It's unlikely they are doing it and will suddenly pull the rug out from under millions of investors. A cynic (or a raging gold bull) would suggest that this will precede a move to switch a good proportion of the country's reserves into gold which would have a huge effect on the global gold price and could prove disastrous for the dollar. Maybe it's not in China's interests to drive the dollar down too much until it has managed to divest itself of the huge dollar overhang (see the article on Chinese Sovereign Wealth Funds we published yesterday - Chinese sovereign wealth fund dumping dollars for strategic investments like gold). The country may well already be, of course, surreptitiously building its gold reserves without reporting the build-up.
If the Chinese are indeed beginning to buy gold and silver as the quoted report suggests then this has to be a strong signal that prices are going to rise, and perhaps rise dramatically, in the relatively near future. We await comment from other China watchers for confirmation of the gold and silver buying spree, but with global gold production at best flat and probably in decline, even a small increase in Chinese buying could have a substantial impact on gold and silver prices.
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US debt outlook worsening
Posted: August 27, 2009
In announcing that Ben Bernanke would be reappointed to a second four-year term as Federal Reserve chairman, the White House admitted that the US debt situation continues to worsen. The Congressional Budget Office (CBO) says the US debt outlook is worse than what the White House says.
Read the rest
Meltdown
by: Thomas E. Woods Jr.
Buy The Book
Read Our Review
Read three pages of Meltdown-any three pages-and you will see why this book hit The New York Times Best-Seller list. If you think that Obama's bailout programs will solve all problems, Woods will dispel that erroneous thought. In fact, Woods will present a compelling case for bailouts making things worse. Now on sale at a discounted price.
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China pushes silver and gold investment to the masses
A report suggests that the Chinese government is pushing the general public into buying gold and silver bullion, which could have a dramatic effect on the markets.
by Lawrence Williams
Thursday, September 3, 2009
www.mineweb.com
LONDON -
We are indebted again to Paul Mylchreest's Thunder Road Report for news that will bring big smiles to gold and silver investors everywhere. Apparently China is pushing the idea of buying gold and silver for investment purposes to the general population in the way that Western television sells soap powder. If 1.3 billion Chinese citizens start buying gold and silver, even in tiny quantities, imagine what that will do to the market!
The report notes that China's Central Television, the main state-owned television company, has run a news programme letting the public know how easy it is to buy precious metals as an investment. On silver investment the announcer is quoted as saying " China has introduced its first ever investment opportunity for silver bullion. The bars are available in 500g, 1kg, 2kg and 5kg with a purity of 99.9%. Figures show that gold was fifty times more expensive than silver in 2007, but now that figure has reached over seventy times. Analysts say that silver has been undervalued in recent years. They add that the metal is the right investment for individual investors and could be a good way to cash in."
What appears to have happened in China is a total relaxation of strictures on holding precious metals by the individual with the government pushing gold and silver as an investment option, seemingly at every opportunity. This is a far cry from the situation only a few years ago where the distribution of gold and silver was strictly controlled. Now, the Thunder Road Report notes that every bank will sell gold and silver bullion bars in four different sizes to individuals and gold related investments are said to be soaring in popularity.
Around a year ago, Leyshon Resources managing director, Paul Atherley, in an investor presentation in London - and no doubt delivered elsewhere in the world too - commented that some employees at the company's gold mining project in northern China would, on pay day, go to the local bank and buy a small gold bar as an investment and wealth protector. To an extent we put this down at the time to mining company hype - but this seems to be exactly the same phenomenon noted by Thunder Road. The Chinese are being converted from being the lowest per capita gold consumers in the world to a nation of small precious metals investors. Now, by next year, Chinese consumption of gold is likely to exceed that of India, which has been for years the world's biggest gold market. And one suspects that the potential for gold purchasing by individuals is only in its earliest stages. As more and more Chinese move into the cities and individual wealth grows, this trend is only likely to accelerate.
Paul ends the piece on Chinese gold and silver potential with the following comment: "Simply put, the Chinese government is trying to trigger a national gold craze...and it's working. The Chinese public now has gold trading platforms on steroids.... ...Also, for the first time in history, Chinese investors can even trade gold abroad (in London) with the swipe of a ‘Lucky Gold' card. I can't even get Bank of America to open a foreign currency account."
This may be an overstatement of the case from a precious metals bull - or it may not! Certainly if China is indeed pushing the public to buy gold then there may well be a hidden agenda here. It's unlikely they are doing it and will suddenly pull the rug out from under millions of investors. A cynic (or a raging gold bull) would suggest that this will precede a move to switch a good proportion of the country's reserves into gold which would have a huge effect on the global gold price and could prove disastrous for the dollar. Maybe it's not in China's interests to drive the dollar down too much until it has managed to divest itself of the huge dollar overhang (see the article on Chinese Sovereign Wealth Funds we published yesterday - Chinese sovereign wealth fund dumping dollars for strategic investments like gold). The country may well already be, of course, surreptitiously building its gold reserves without reporting the build-up.
If the Chinese are indeed beginning to buy gold and silver as the quoted report suggests then this has to be a strong signal that prices are going to rise, and perhaps rise dramatically, in the relatively near future. We await comment from other China watchers for confirmation of the gold and silver buying spree, but with global gold production at best flat and probably in decline, even a small increase in Chinese buying could have a substantial impact on gold and silver prices.
Visit Us Online
Visit our BLOG
US debt outlook worsening
Posted: August 27, 2009
In announcing that Ben Bernanke would be reappointed to a second four-year term as Federal Reserve chairman, the White House admitted that the US debt situation continues to worsen. The Congressional Budget Office (CBO) says the US debt outlook is worse than what the White House says.
Read the rest
Meltdown
by: Thomas E. Woods Jr.
Buy The Book
Read Our Review
Read three pages of Meltdown-any three pages-and you will see why this book hit The New York Times Best-Seller list. If you think that Obama's bailout programs will solve all problems, Woods will dispel that erroneous thought. In fact, Woods will present a compelling case for bailouts making things worse. Now on sale at a discounted price.
CMIGS takes calls
Mondays - Fridays
7:00 a.m. to 5:00 p.m MST
1-800-528-1380
FOLLOW BILL HAYNES ON
When changing your email address, do not forget to unsubscribe the old address (below) and re-enter the new address here.
• Home |
• About CMIGS |
• Contact Us |
• Gold |
• Silver |
• Platinum |
• Palladium |
• Glossary
• Spot Prices |
• Survival Coins |
• Precious Metals in your IRA |
• Doing Business with CMIGS
Forward email
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Wow Gold is approaching an all time high and silver isnt looking too shabby either.
$5,000/oz gold? Rob McEwen says it's coming in 2014 or 2015
Über gold promoter Rob McEwen has also developed a taste for silver mining.
by Dorothy Kosich
Tuesday, September 15, 2009
www.mineweb.com
RENO, NV -
When über mining investor Rob McEwen makes predictions on gold prices or appears to have developed an interest in silver mines, retail investors heed his clarion call and place their bets that the gold price is about to soar.
In a presentation to the Denver Gold Group on U.S. Gold Monday, McEwen was somewhat subdued as he only briefly mentioned he thought gold could hit $5,000 an ounce before the end of the gold cycle. As this reporter scrambled for a clarification of his remarks in a brief interview, McEwen stuck by his prognostication, forecasting the end of the gold cycle would occur either on 2014 or 2015.
McEwen is so dedicated to the power of gold, he told his audience of fund managers, analysts, investment bankers and miners that he personally owns 21% of U.S. Gold. In comparison most major mining CEOs own a mere pittance.
He is steadfast in his belief that the Cortez Trend-which hosts Barrick's massive Cortez Hills gold project-will yield millions of gold ounces for his U.S. Gold company.
But, McEwen also has developed a fondness for silver, albeit he lacks the same passion for the precious metal as he feels for gold.
He declared to his audience Monday that "El Gallo, Mexico is becoming one of the world's great silver discoveries. " With a 540,000-acre position in what he called "highly mineralized lands," McEwen's U.S. Gold is spending $10 million in exploration over 12 months. He anticipates an initial resource and heap leach test during the first quarter of 2010.
Though he told Mineweb his interest in silver has been stimulated more by individual mining properties rather than a newfound passion for silver, McEwen has also become active in Minera Andes, which he says owns 49% of the world's ninth largest silver mine, San Jose in Argentina. By 2010, McEwen forecasts that San Jose will have 7.5 million ounces of silver and 95,000 ounces of gold. He also predicts the operating cash costs will go lower than the 29% drop to $4.99/oz achieved in the first quarter of this year,
He also believes that Minera Andes' Los Azules project is "one of the largest undeveloped copper discoveries in the world. And in keeping with his philosophy as Minera's Chairman and CEO, McEwen owns 33% of the company's shares.
As the years roll by, McEwen's legendary penchant for marketing to the max remains intact as he offered audience members trillion dollar notes as an impromptu raffle prize at the conclusion of his talk.
Visit Us Online
$5,000/oz gold? Rob McEwen says it's coming in 2014 or 2015
Über gold promoter Rob McEwen has also developed a taste for silver mining.
by Dorothy Kosich
Tuesday, September 15, 2009
www.mineweb.com
RENO, NV -
When über mining investor Rob McEwen makes predictions on gold prices or appears to have developed an interest in silver mines, retail investors heed his clarion call and place their bets that the gold price is about to soar.
In a presentation to the Denver Gold Group on U.S. Gold Monday, McEwen was somewhat subdued as he only briefly mentioned he thought gold could hit $5,000 an ounce before the end of the gold cycle. As this reporter scrambled for a clarification of his remarks in a brief interview, McEwen stuck by his prognostication, forecasting the end of the gold cycle would occur either on 2014 or 2015.
McEwen is so dedicated to the power of gold, he told his audience of fund managers, analysts, investment bankers and miners that he personally owns 21% of U.S. Gold. In comparison most major mining CEOs own a mere pittance.
He is steadfast in his belief that the Cortez Trend-which hosts Barrick's massive Cortez Hills gold project-will yield millions of gold ounces for his U.S. Gold company.
But, McEwen also has developed a fondness for silver, albeit he lacks the same passion for the precious metal as he feels for gold.
He declared to his audience Monday that "El Gallo, Mexico is becoming one of the world's great silver discoveries. " With a 540,000-acre position in what he called "highly mineralized lands," McEwen's U.S. Gold is spending $10 million in exploration over 12 months. He anticipates an initial resource and heap leach test during the first quarter of 2010.
Though he told Mineweb his interest in silver has been stimulated more by individual mining properties rather than a newfound passion for silver, McEwen has also become active in Minera Andes, which he says owns 49% of the world's ninth largest silver mine, San Jose in Argentina. By 2010, McEwen forecasts that San Jose will have 7.5 million ounces of silver and 95,000 ounces of gold. He also predicts the operating cash costs will go lower than the 29% drop to $4.99/oz achieved in the first quarter of this year,
He also believes that Minera Andes' Los Azules project is "one of the largest undeveloped copper discoveries in the world. And in keeping with his philosophy as Minera's Chairman and CEO, McEwen owns 33% of the company's shares.
As the years roll by, McEwen's legendary penchant for marketing to the max remains intact as he offered audience members trillion dollar notes as an impromptu raffle prize at the conclusion of his talk.
Visit Us Online
Its a shame that this thread got moved to a political satire forum and out of the investment forum. Alot of people would benefit from my knowledge on here since this is what I do for a living. IT IS WHAT IT IS!. I just feel it was wrong. The fact that I posted this on 7/29/09 and documented that Silver was at 13.25 and now its at 17.38 should speak for itself.
Just bringing this thread back up. Silver is sitting at 19.77 per oz as I type this and was at 13.25 on my initial post. Im looking for Silver to hit 25.00 per oz by the end of Jan. Historically speaking Silver's best months are between July and Jan. The Dow has its worse month in October. India has its Raksha festivals beginning 8/24 and it lasts 3 months where they load up on precious metals. Silver has alot of room to run. I posted an article below. Have a heck of a football season guys! Im looking forward to it in alot of ways....
Gold Entering a Virtuous Circle
Egon von Greyerz
September 6, 2010
www.goldswitzerland.com
Fundamental and technical factors for gold are now in total harmony and gold is entering a virtuous circle that will drive the price up at its fastest pace since this bull market started in 1999.
• It is a fact that gold in US dollars (and many other currencies) has gone up 400% in eleven years or 16% per annum annualized.
• It is a fact that the US dollar has declined 80% in value against gold since 1999.
• It is a fact that the dollar and most other currencies have gone down 98-99% against gold since 1913 when the Federal Reserve Bank of New York was created.
• It is also a fact that the Dow Jones (and many world stock markets) has declined over 80% against gold since 1999.
• It is a fact that gold has made a new all time monthly closing high in dollars in August 2010.
Gold trend
We expect gold to start a substantial rise now which will continue for 5-10 months before any major correction. Gold's technical picture is extremely strong with a continuous rising pattern of higher highs and higher lows with the steepness of the curve increasing. From much higher levels we are likely to see a correction that could last up to a year before the next rise which will last several years before we see a significant peak. Once gold has topped we do not expect the same kind of decline as after the 1980 peak since gold is likely to become part of a future reserve currency. At that point gold will be a solid but unexciting investment with very little upside potential. But that is likely to be a few years away.
In spite of a 5 times increase in the value of gold or an 80% decline against many currencies and stock markets in the last 11 years, most investors own no gold and still do not understand the importance and value of gold. In a world of constant money printing and credit creation leading to devaluing currencies and devaluing assets, gold reflects stability and is virtually the only store of value that cannot be destroyed by governments.
The average asset manager, fund manager, pension fund or private individual owns no physical gold and at best has a very small exposure to some precious metals stocks. And in spite of this gold has gone up over 400% in 11 years. How is that possible? For the simple reason with the relatively modest demand that we have seen in the last few years, there is not enough physical gold even at these levels. The increase in demand that we have seen has most probably been satisfied by central banks leasing or lending their gold to the bullion banks. Central banks supposedly own 30,000 tons of gold but unofficial estimates of their real holdings are at 15,000 tons or less.
So what are the factors that are likely to lead to a major rise in the gold price?
We have for several years outlined in our Newsletters the problems in the world that inevitably will lead to massive money printing and a hyperinflationary depression (see for example "Alea Iacta Est" and "There Will Be No Double Dip... " on the Matterhorn Asset Management website).
There are three insurmountable problems:
• Real unemployment at 22% in the US will continue to go up
• The budget deficit will increase dramatically due to the problems in the economy and in a few years time the interest on the Federal Debt is likely to be higher than tax revenues.
• None of the problems in the banking industry have been solved but merely swept under the carpet by phony valuations of toxic debt with the blessing of governments. The circa $20 trillion that were pumped into the world economy to save the financial system in 2008-9 have had a very short term beneficial effect but solved none of the problems.
The effect of this massive $20 trillion infusion has been ephemeral since we are entering the autumn of 2010 with virtually every single economic indicator and statistic in the US deteriorating rapidly. With interest rates already at zero there is no ammunition left but one. And it is this specific last bullet that will be used to infinity in the next few years and starting very soon, namely UNLIMITED MONEY PRINTING. Every single area of the US economy will need support or printed money, whether it is the federal government, the states, the municipalities, banks, pension funds, insurance companies, the unemployed, corporations, health care, housing market, commercial real estate, individuals, etc, etc, etc. The list is endless and many other countries will follow.
Before we talk about gold in hyperinflationary terms, let's look at where gold is likely to reach in today's money.
Three realistic Gold targets: $6,000 - $7,000 - $10,000:
• In the 1971 to 1980 gold cycle, gold went from $35 per ounce to $850 or up over 24 times. If we were to see the same increase in this cycle, gold would rise to over $6,000.
• The gold peak at $850 in 1980 corresponds to over $7,000 today adjusted for real inflation based on the inflation rate as calculated by John William's Government Shadow Statistics (shadowstats.com)
• Gold and gold mining shares were an average of around 25% of world financial asset between 1921 and 1981. Today, gold and mining shares are only 0.9% of world financial assets. If gold and mining shares were to go to 25% of financial assets, gold would go to over $31,000. But even if we assume that world financial asset would go down by 2/3rds from here that would put gold at over $10,000.
The three historical comparisons above (and see chart below) would put gold anywhere from $6,000 to $10,000 and this is without inflation, or more likely hyperinflation. In a hyperinflationary environment, the price gold will go to is really irrelevant since it depends on how much money is printed. In the Weimar Republic for example gold went to DM 100 trillion. What is more important is that gold is likely to go up at least 5 times from today without inflation and with hyperinflation gold will protect investors against the total destruction of paper money and many other assets.
Wealth Protection
Gold must only be held in its physical form and the holder of gold must have direct access to the gold. We consider ETFs, gold in a bank (whether allocated or unallocated), fractal ownership of physical gold, futures or any other form of paper gold as very risky and a totally unsatisfactory method for owning gold. Physical gold should preferably be stored outside your country of residence and outside the banking system. The holder must have direct access to the vaults where the gold is stored.
Silver
Silver has been lagging gold since its peak at over $21 in 2008. For the last few months the gold/silver ratio has been consolidating between 58 and 71. The ratio is currently around 64 and is likely to start a move down to new lows below the 2006 low at just 44. So this is very good news for silver which is likely to outpace gold substantially in the next few years. Silver is probably the most undervalued precious metal today and has great potential.
But there are many caveats for silver:
• It is an extremely volatile metal and is definitively not for the fainthearted.
• We only recommend physical silver owned directly by the investor.
• Physical silver currently weighs 64 times more than gold for the same amount invested and is circa 120 times bulkier (due to its lower density).
• Therefore silver is not as practical as gold as a means of payment.
• Also, silver is subject to Vat (value added tax) in all European countries. Thus silver cannot be moved freely across borders.
• Physical silver for investment purposes can be bought/sold and stored tax-free in Switzerland but if the investor takes possession, Vat must be paid.
Due to the above factors investors should carefully consider the split between physical gold and silver.
Stock Markets
At the beginning of July this year we sent out a message to investors that, based on our proprietary indicators, we expected stock markets to finish the correction up at the end of July and resume the major downtrend in August. We also said that gold would start its major rise in August. And this is exactly what has happened so far.
We now expect major falls in all stock markets worldwide over a sustained period. We would not be surprised to see the Dow down to the 1,000 area (in today's terms) before this bear market in over. But it will not be a straight line and there will be extreme volatility. When hyperinflation sets in, stock markets will have a major but temporary surge.
The only stocks that investors should hold are precious metals stocks and possibly some resource and food stocks. But it must be remembered that stocks do not represent the same degree of wealth preservation as physical precious metals held directly by the investor.
Currencies
Currencies should in the next few years be looked upon as a necessary evil and not as a store of value. All currencies will continue to decline against gold, just as they have in the last 11 years and in the last 100 years. Due to money printing by most governments, we will have a fierce game of competitive devaluations by virtually all central banks. We have seen the Euro and the pound weaken substantially and the next currency the speculators will jump on is the US dollar. The dollar is grossly overvalued, partly due to the weak Euro, and is likely to weaken significantly due to the problems in the US economy.
Currencies only reflect relative value and not absolute value since they can be and are printed until they reach their intrinsic value of zero. It is a fallacy to measure the value of a currency relative to another currency since they are all losing value. Currencies should only be measured against real money which is gold. This is the only method that reveals governments' deceitful actions in destroying the value of paper money. Therefore it is a mug's game to speculate or invest in currencies since they will all decline in an extremely volatile and unpredictable market.
So are there currencies which are likely to perform better on a relative basis for funds that have to be held in paper money? We believe that Norwegian kroner, Swiss Franc, Canadian Dollar, Singapore Dollar, Australian Dollar and Renminbi will perform relatively better than many other currencies.
Government Bond Markets
The bond market is the biggest bubble in financial markets worldwide, in our opinion. Investors around the world are worried about the state of financial markets and therefore believe that government bonds represent a safe haven. These investors will receive the most enormous shock on two accounts. Firstly, no government will be able to repay the debts outstanding. So there will either be government defaults, moratoria, or money printing that totally destroys the value of the bonds. Secondly, interest rates are likely to go up significantly to at least 10-15%, totally destroying the value of the bonds.
Conclusion
We are now entering a period when most major asset classes and in particular stocks, bonds and currencies are starting a major decline. Since most financial assets in the world are invested in these three categories plus real estate which will also decline, we are likely to experience major shocks and crises in the financial system and the world economy. Wealth protection is now more important than probably at any other time in history. Physical gold and possibly other precious metals directly controlled by the investor will be a vital part of a wealth preservation portfolio.
Gold Entering a Virtuous Circle
Egon von Greyerz
September 6, 2010
www.goldswitzerland.com
Fundamental and technical factors for gold are now in total harmony and gold is entering a virtuous circle that will drive the price up at its fastest pace since this bull market started in 1999.
• It is a fact that gold in US dollars (and many other currencies) has gone up 400% in eleven years or 16% per annum annualized.
• It is a fact that the US dollar has declined 80% in value against gold since 1999.
• It is a fact that the dollar and most other currencies have gone down 98-99% against gold since 1913 when the Federal Reserve Bank of New York was created.
• It is also a fact that the Dow Jones (and many world stock markets) has declined over 80% against gold since 1999.
• It is a fact that gold has made a new all time monthly closing high in dollars in August 2010.
Gold trend
We expect gold to start a substantial rise now which will continue for 5-10 months before any major correction. Gold's technical picture is extremely strong with a continuous rising pattern of higher highs and higher lows with the steepness of the curve increasing. From much higher levels we are likely to see a correction that could last up to a year before the next rise which will last several years before we see a significant peak. Once gold has topped we do not expect the same kind of decline as after the 1980 peak since gold is likely to become part of a future reserve currency. At that point gold will be a solid but unexciting investment with very little upside potential. But that is likely to be a few years away.
In spite of a 5 times increase in the value of gold or an 80% decline against many currencies and stock markets in the last 11 years, most investors own no gold and still do not understand the importance and value of gold. In a world of constant money printing and credit creation leading to devaluing currencies and devaluing assets, gold reflects stability and is virtually the only store of value that cannot be destroyed by governments.
The average asset manager, fund manager, pension fund or private individual owns no physical gold and at best has a very small exposure to some precious metals stocks. And in spite of this gold has gone up over 400% in 11 years. How is that possible? For the simple reason with the relatively modest demand that we have seen in the last few years, there is not enough physical gold even at these levels. The increase in demand that we have seen has most probably been satisfied by central banks leasing or lending their gold to the bullion banks. Central banks supposedly own 30,000 tons of gold but unofficial estimates of their real holdings are at 15,000 tons or less.
So what are the factors that are likely to lead to a major rise in the gold price?
We have for several years outlined in our Newsletters the problems in the world that inevitably will lead to massive money printing and a hyperinflationary depression (see for example "Alea Iacta Est" and "There Will Be No Double Dip... " on the Matterhorn Asset Management website).
There are three insurmountable problems:
• Real unemployment at 22% in the US will continue to go up
• The budget deficit will increase dramatically due to the problems in the economy and in a few years time the interest on the Federal Debt is likely to be higher than tax revenues.
• None of the problems in the banking industry have been solved but merely swept under the carpet by phony valuations of toxic debt with the blessing of governments. The circa $20 trillion that were pumped into the world economy to save the financial system in 2008-9 have had a very short term beneficial effect but solved none of the problems.
The effect of this massive $20 trillion infusion has been ephemeral since we are entering the autumn of 2010 with virtually every single economic indicator and statistic in the US deteriorating rapidly. With interest rates already at zero there is no ammunition left but one. And it is this specific last bullet that will be used to infinity in the next few years and starting very soon, namely UNLIMITED MONEY PRINTING. Every single area of the US economy will need support or printed money, whether it is the federal government, the states, the municipalities, banks, pension funds, insurance companies, the unemployed, corporations, health care, housing market, commercial real estate, individuals, etc, etc, etc. The list is endless and many other countries will follow.
Before we talk about gold in hyperinflationary terms, let's look at where gold is likely to reach in today's money.
Three realistic Gold targets: $6,000 - $7,000 - $10,000:
• In the 1971 to 1980 gold cycle, gold went from $35 per ounce to $850 or up over 24 times. If we were to see the same increase in this cycle, gold would rise to over $6,000.
• The gold peak at $850 in 1980 corresponds to over $7,000 today adjusted for real inflation based on the inflation rate as calculated by John William's Government Shadow Statistics (shadowstats.com)
• Gold and gold mining shares were an average of around 25% of world financial asset between 1921 and 1981. Today, gold and mining shares are only 0.9% of world financial assets. If gold and mining shares were to go to 25% of financial assets, gold would go to over $31,000. But even if we assume that world financial asset would go down by 2/3rds from here that would put gold at over $10,000.
The three historical comparisons above (and see chart below) would put gold anywhere from $6,000 to $10,000 and this is without inflation, or more likely hyperinflation. In a hyperinflationary environment, the price gold will go to is really irrelevant since it depends on how much money is printed. In the Weimar Republic for example gold went to DM 100 trillion. What is more important is that gold is likely to go up at least 5 times from today without inflation and with hyperinflation gold will protect investors against the total destruction of paper money and many other assets.
Wealth Protection
Gold must only be held in its physical form and the holder of gold must have direct access to the gold. We consider ETFs, gold in a bank (whether allocated or unallocated), fractal ownership of physical gold, futures or any other form of paper gold as very risky and a totally unsatisfactory method for owning gold. Physical gold should preferably be stored outside your country of residence and outside the banking system. The holder must have direct access to the vaults where the gold is stored.
Silver
Silver has been lagging gold since its peak at over $21 in 2008. For the last few months the gold/silver ratio has been consolidating between 58 and 71. The ratio is currently around 64 and is likely to start a move down to new lows below the 2006 low at just 44. So this is very good news for silver which is likely to outpace gold substantially in the next few years. Silver is probably the most undervalued precious metal today and has great potential.
But there are many caveats for silver:
• It is an extremely volatile metal and is definitively not for the fainthearted.
• We only recommend physical silver owned directly by the investor.
• Physical silver currently weighs 64 times more than gold for the same amount invested and is circa 120 times bulkier (due to its lower density).
• Therefore silver is not as practical as gold as a means of payment.
• Also, silver is subject to Vat (value added tax) in all European countries. Thus silver cannot be moved freely across borders.
• Physical silver for investment purposes can be bought/sold and stored tax-free in Switzerland but if the investor takes possession, Vat must be paid.
Due to the above factors investors should carefully consider the split between physical gold and silver.
Stock Markets
At the beginning of July this year we sent out a message to investors that, based on our proprietary indicators, we expected stock markets to finish the correction up at the end of July and resume the major downtrend in August. We also said that gold would start its major rise in August. And this is exactly what has happened so far.
We now expect major falls in all stock markets worldwide over a sustained period. We would not be surprised to see the Dow down to the 1,000 area (in today's terms) before this bear market in over. But it will not be a straight line and there will be extreme volatility. When hyperinflation sets in, stock markets will have a major but temporary surge.
The only stocks that investors should hold are precious metals stocks and possibly some resource and food stocks. But it must be remembered that stocks do not represent the same degree of wealth preservation as physical precious metals held directly by the investor.
Currencies
Currencies should in the next few years be looked upon as a necessary evil and not as a store of value. All currencies will continue to decline against gold, just as they have in the last 11 years and in the last 100 years. Due to money printing by most governments, we will have a fierce game of competitive devaluations by virtually all central banks. We have seen the Euro and the pound weaken substantially and the next currency the speculators will jump on is the US dollar. The dollar is grossly overvalued, partly due to the weak Euro, and is likely to weaken significantly due to the problems in the US economy.
Currencies only reflect relative value and not absolute value since they can be and are printed until they reach their intrinsic value of zero. It is a fallacy to measure the value of a currency relative to another currency since they are all losing value. Currencies should only be measured against real money which is gold. This is the only method that reveals governments' deceitful actions in destroying the value of paper money. Therefore it is a mug's game to speculate or invest in currencies since they will all decline in an extremely volatile and unpredictable market.
So are there currencies which are likely to perform better on a relative basis for funds that have to be held in paper money? We believe that Norwegian kroner, Swiss Franc, Canadian Dollar, Singapore Dollar, Australian Dollar and Renminbi will perform relatively better than many other currencies.
Government Bond Markets
The bond market is the biggest bubble in financial markets worldwide, in our opinion. Investors around the world are worried about the state of financial markets and therefore believe that government bonds represent a safe haven. These investors will receive the most enormous shock on two accounts. Firstly, no government will be able to repay the debts outstanding. So there will either be government defaults, moratoria, or money printing that totally destroys the value of the bonds. Secondly, interest rates are likely to go up significantly to at least 10-15%, totally destroying the value of the bonds.
Conclusion
We are now entering a period when most major asset classes and in particular stocks, bonds and currencies are starting a major decline. Since most financial assets in the world are invested in these three categories plus real estate which will also decline, we are likely to experience major shocks and crises in the financial system and the world economy. Wealth protection is now more important than probably at any other time in history. Physical gold and possibly other precious metals directly controlled by the investor will be a vital part of a wealth preservation portfolio.
Actually the thread was not moved...when it was created this subforum was titled "Politics & Investments".
The forums were split a short time later. I suggested to Mods already that they Move this thread out of PoliticalSatire and into the Financial forum. Will probably happen over next 24 hours
Good call Chugg, don't get the minor hostilities on this thread. Extremely bullish on silver, when all the manipulation of the metals comes out the price will explode. JP Morgan appears to be holding a substantial NAKED short position which will eventually have to be accounted for. ETF scam also will pop sooner rather than later. imo I also believe the worldwide supply is dwindling for this metal.
With economic hardship ahead EVERYONE should be attempting to get a significant portion of their money into metals. I think we might see 30 before year's end.
With economic hardship ahead EVERYONE should be attempting to get a significant portion of their money into metals. I think we might see 30 before year's end.
