Gold salesmen are always publishing papers that assert that paper money is worthless. Here's a standard pitch. Always remember that they're SELLING something!!
Money is not valuable because it's backed by precious metal, or exchangeable for precious metal. It's valuable strictly because it's a medium of exchange -- I will give you goods and/or services in exchange for money. As long as I will do that, the dollar has value -- for you and me.
The idea that it's paper, and worthless, is really crazy if you think about it. That implies that any written agreement between two people is worthless. "Not worth the paper it's written on" somebody would say. And of course, a contract is simply a meeting of the minds, and if we don't have that meeting, we really don't have a contract. People shouldn't sign contracts if they don't understand, and have "a meeting of the minds." Their signature signifies that they do understand.
The phrase "A man's signature is not to be taken lightly" is often quoted in Business Law.
Back to money. Most of the money involved in commercial or government transactions is not currency. People are always fond of saying "If the government needs money, they can just print more!" but of course, neither the government nor the banks needs a printing press to create money. When a bank loans you money, it is creating that money from nothing, basically. They cut a check, for accounting purposes, and put the money in your account. No cash involved. You can write a check on that account to pay debts, and there's still no cash involved. The vast number of business transactions in the world don't involve currency at all.
Ralph Fonseca goes to the US and negotiates a hundred million dollar loan for Belize. Do you think he comes back with a suitcase full of money? Of course not. That money will probably never become currency.
People are fond of calling it "funny money" but it's not funny. It's just as real as currency.
Now, having said that, do you understand why I say the US and its social security system, are not "bankrupt" and will not go bankrupt in the foreseeable future. Social Security puts a deposit in my bank in the US every month, and it is _money_, whether I ever change any of it into currency. I do -- I write a US check to a Belizean friend and he gives me Belizean dollars to spend in Belize. He takes my check (I left the "Pay To" blank) and sells it to a Belizean businessman who needs US dollars to buy things for sale in the free zone. I also pay my credit card accounts with an online transaction which transfers money from my bank to the credit card company. No currency involved.
If you want to buy gold, do it because you think it's a good investment; don't do it because you think the money you have now is worthless. Gold is a good investment at around $700 an ounce; a "good suit" costs over $800. But you'll have trouble spending it.
Source: http://www.belizenorth.com
Monday, June 20, 2011
Sunday, June 19, 2011
Gold holds firm as equities, oil drop further
NEW YORK |
(Reuters) - Gold rose on Wednesday for a second straight session on safe-haven buying triggered by a sharp pullback in equity markets amid fears of a U.S. economic slowdown and signs that Greece's debt crisis may escalate. Investors turned to gold after U.S. consumer prices logged their biggest rise in nearly three years and a regional manufacturing gauge contracted this month. Uncertainty related to talks on the U.S. debt ceiling also provided support.
"Gold is a bastion of strength right now when the equity, crude oil and other commodity markets are weak," said Robert Lutts, chief investment officer at Cabot Money Management, a wealth management firm with $500 million in assets.
Spot gold was up 0.2 percent at $1,527.04 an ounce by 3:18 p.m. EDT (1918 GMT), having recovered from a session low of $1,513.86.
The U.S. August futures contract settled up $1.80 at $1,526.20 an ounce, after trading between $1,514.50 and $1,535.70. Volume was one-third of its 30-day average, consistent with recently lower levels.
The CBOE Gold Volatility index .GVX, a bullion market fear gauge, rose more than 5 percent for its biggest one-day gain in more than a month.
Gold fell in early trading, dragged down by selling across the board and a surge in the dollar due to the worsening European debt crisis.
Gold is up 3 percent over the past four weeks on a flurry of disappointing U.S. economic data including a weak jobs report.
Spot silver rose 0.7 percent to $35.58 an ounce, about 30 percent below a record high of $49.51 set on April 28.
U.S. stocks measured by the S&P 500 index fell 1.5 percent as investors ditched risk-linked assets after data showed an unexpectedly fast rise in prices in May and a contraction in New York State manufacturing activity.
Gold was one of the few gainers among commodities on Wednesday in the face of an almost 2 percent surge in the dollar. The Reuters-Jefferies CRB commodities index .CRB dropped more than 2 percent for its largest daily loss in more than a month as U.S. crude oil futures slid as much as $5.
GREEK CRISIS
Flight-to-quality buying emerged as Greece's prime minister offered to quit and make way for a national unity government after mass protests against an austerity plan turned violent and the country teetered on the brink of default.
"The theme of the European sovereign debt crisis just won't go away, and on that basis there is a limit to how much you want to sell gold at this moment in time," Saxo Bank senior manager Ole Hansen said.
Reflecting investor discontent over the euro zone debt crisis, the euro fell nearly 2 percent against the dollar, pushing up the price of gold in euros by 2 percent in its largest one-day rise in almost a month.
"There are still big problems with Greece and here with our debt ceiling," Jonathan Jossen, an independent floor trader in COMEX gold options, said.
A group of top U.S. lawmakers set an ambitious July 1 goal to reach a broad debt-reduction deal, even though Republicans and the White House are still far apart on taxes and healthcare. They are trying to reach a deal to raise the $14.3 trillion debt limit so the world's biggest economy can avoid default and keep borrowing.
Among platinum group metals, platinum slipped 1.1 percent to $1,770.24 an ounce, and palladium fell 2.3 percent to $771.72 an ounce.
Prices at 3:18 p.m. EDT (1918 GMT)
(Additional reporting by Amanda Cooper and Pratima Desai in London; Editing by Dale Hudson and Jim Marshall)
Source: http://www.reuters.com
Saturday, June 11, 2011
Is Silver The New Gold?
Investors are talking about gold, and why not? In the past 10 years, the price has climbed more than fivefold from less than $300 to more than $1,500 an ounce. A $10,000 investment made in June 2001 would be north of $50,000 in value today.
But guess what? Silver has actually done quite a bit better, rising from less than $5 to nearly $40 per ounce - good for about an eightfold price gain over the previous decade. So instead of the $50,000 you'd have if you bought gold, your $10,000 would now be worth around $80,000. (For more on silver, read Silver Thursday: How Two Wealthy Traders Cornered The Market.)
TUTORIAL: Investor Guide To Commodities
Considering this outperformance, it may be time to think of silver as "the new gold." Indeed, there's compelling evidence it could soon replace gold as the precious metal of choice for investors. For example, some analysts project silver prices as high as $90 an ounce by the end of 2011 - more than double current levels. Gold, however, may hover around $1,500 an ounce throughout the year, suggesting there won't be much, if any, money to be made in the yellow metal for a while.
Why Silver's Hot
Silver has skyrocketed for many of the same reasons as gold, a big one being widespread fear about the condition and direction of the economy. Anytime there's economic uncertainty and a risk of higher inflation, just like there is right now, precious metals become increasingly popular because of their perceived safety and reputation as strong inflation hedges.
The big advantage of silver is it's not mainly a store of value like gold. Besides offering an inflation hedge and helping to calm investors, silver has many applications in industry, medicine and dentistry thanks to its electrical and thermal conductivity, usefulness in making metal alloys and other unique properties. Commercial and industrial applications account for about 60% of silver demand each year. (To help take advantage of these increases, read Investing In The Metals Markets.)
Why It Will Get Even Hotter
Whereas gold might be in a cooling phase, silver could be set to soar for several reasons.
1. Industry and Investor Demand Are Set to Rise
These groups may both want to bulk up their silver holdings, but for different reasons. Whereas the pickup in hiring and other signs of economic recovery we've seen could spur higher demand from industry, investors may want more silver because they're not yet convinced the recovery is for real and still want a safe haven for their money.
2. Silver's Popular in Emerging Countries
While the United States and other Western economies have been struggling, China, India and many other emerging countries have been expanding by leaps and bounds. Their industries need lots of silver. Moreover, the number of investors in emerging countries is rising as those areas become more affluent, and many of those investors value precious metals like silver for the same reasons we do.
3. There's a Threat of Higher Inflation
Significant inflation isn't here yet, but it could be on the way (we've all seen food and gasoline prices go up). The government has been printing billions of dollars to cover its huge debt, creating more new money in the past couple years than at any other time in U.S. history. This sets the stage for higher inflation by diluting the money supply and reducing the value of the dollar. (To learn more on how metals increase and decrease in value, check out A Beginner's Guide To Precious Metals.)
The Bottom Line
The economy is at a crossroads of sorts: There are signs of recovery, yet conditions are ripe for inflation. In this situation, silver may be a better investment than gold because there are two sources of demand - investors and industry. Gold, by contrast, is much more at the whim of investors and tends to sink or swim based on their need to feel safe. If the economy really picks up steam and investors start to feel bullish about stocks, gold could quickly become yesterday's news. (To learn more on gold and silver, see Trading The Gold-Silver Ratio.)
http://www.sfgate.com
But guess what? Silver has actually done quite a bit better, rising from less than $5 to nearly $40 per ounce - good for about an eightfold price gain over the previous decade. So instead of the $50,000 you'd have if you bought gold, your $10,000 would now be worth around $80,000. (For more on silver, read Silver Thursday: How Two Wealthy Traders Cornered The Market.)
TUTORIAL: Investor Guide To Commodities
Considering this outperformance, it may be time to think of silver as "the new gold." Indeed, there's compelling evidence it could soon replace gold as the precious metal of choice for investors. For example, some analysts project silver prices as high as $90 an ounce by the end of 2011 - more than double current levels. Gold, however, may hover around $1,500 an ounce throughout the year, suggesting there won't be much, if any, money to be made in the yellow metal for a while.
Why Silver's Hot
Silver has skyrocketed for many of the same reasons as gold, a big one being widespread fear about the condition and direction of the economy. Anytime there's economic uncertainty and a risk of higher inflation, just like there is right now, precious metals become increasingly popular because of their perceived safety and reputation as strong inflation hedges.
The big advantage of silver is it's not mainly a store of value like gold. Besides offering an inflation hedge and helping to calm investors, silver has many applications in industry, medicine and dentistry thanks to its electrical and thermal conductivity, usefulness in making metal alloys and other unique properties. Commercial and industrial applications account for about 60% of silver demand each year. (To help take advantage of these increases, read Investing In The Metals Markets.)
Why It Will Get Even Hotter
Whereas gold might be in a cooling phase, silver could be set to soar for several reasons.
1. Industry and Investor Demand Are Set to Rise
These groups may both want to bulk up their silver holdings, but for different reasons. Whereas the pickup in hiring and other signs of economic recovery we've seen could spur higher demand from industry, investors may want more silver because they're not yet convinced the recovery is for real and still want a safe haven for their money.
2. Silver's Popular in Emerging Countries
While the United States and other Western economies have been struggling, China, India and many other emerging countries have been expanding by leaps and bounds. Their industries need lots of silver. Moreover, the number of investors in emerging countries is rising as those areas become more affluent, and many of those investors value precious metals like silver for the same reasons we do.
3. There's a Threat of Higher Inflation
Significant inflation isn't here yet, but it could be on the way (we've all seen food and gasoline prices go up). The government has been printing billions of dollars to cover its huge debt, creating more new money in the past couple years than at any other time in U.S. history. This sets the stage for higher inflation by diluting the money supply and reducing the value of the dollar. (To learn more on how metals increase and decrease in value, check out A Beginner's Guide To Precious Metals.)
The Bottom Line
The economy is at a crossroads of sorts: There are signs of recovery, yet conditions are ripe for inflation. In this situation, silver may be a better investment than gold because there are two sources of demand - investors and industry. Gold, by contrast, is much more at the whim of investors and tends to sink or swim based on their need to feel safe. If the economy really picks up steam and investors start to feel bullish about stocks, gold could quickly become yesterday's news. (To learn more on gold and silver, see Trading The Gold-Silver Ratio.)
http://www.sfgate.com
Thursday, June 9, 2011
Gold little changed after Bernanke comments
NEW YORK | (Reuters) - Gold ended flat on Tuesday and showed little reaction to U.S. Federal Reserve Chairman Ben Bernanke's comments acknowledging a slowdown in the economy but offering no suggestion on further monetary stimulus to support growth.Gold has gained 5 percent in the past three weeks, boosted by disappointing U.S. economic indicators including Friday's weak jobs data. Investors have been trying to gauge whether the U.S. Federal Reserve will embark on a new round of government bond buying, or quantitative easing.
"Everybody was looking for some concrete proposal but his speech is pretty vague right now. That's one of the reasons why the gold market was looking tired and the equities came off," said Bruce Dunn, vice president of trading at bullion dealer Auramet.
Spot gold inched up 64 cents to $1,543.69 an ounce at 3:51 p.m. EDT (1951 GMT), off the session high of $1,550.
U.S. gold futures for August delivery settled down $3.20 at $1,544 an ounce, ranging from $1,537.20 to $1,549.90.
COMEX gold futures volume was slightly above 100,000 lots, almost half its 30-day average. Volume has been lackluster since last week.
Silver was up 0.7 percent at $36.98 an ounce.
"U.S. economic growth so far this year looks to have been somewhat slower than expected," Bernanke said in remarks prepared for delivery at a banking conference in Atlanta.
"A number of indicators also suggest some loss in momentum in labor markets in recent weeks," he added.
Analysts said soft U.S. economic data led some to expect the Fed might extend quantitative easing. The second round of quantitative easing, dubbed QE2, in which the central bank has bought $600 billion of government bonds to stimulate economic growth, is to expire by the end of June.
Gold would probably rise further if the Fed continues its easy monetary policy, but two top Fed officials on Tuesday were less inclined to use a third round of QE to boost the economy.
OPTIONS VOLATILITY EASES
Gold options trading has been quiet, with some investors selling at-the-money straddles and producers buying puts to hedge against downside risk, said COMEX gold option trader Jonathan Jossen.
A straddle allows an investor to bet on market volatility by purchasing a call and a put option at the same time, profiting when the market veers too far from a set price.
The CBOE gold volatility index .GVX, a gauge of bullion investor anxiety, dropped more than 2 percent, its third session of decline.
Wall Street fell for a fifth day on Tuesday after Bernanke's comment, .N but a weaker dollar supported gold.
The U.S. currency slumped when an official at China's foreign exchange regulator said Beijing should guard against risks from excessive holdings of dollar-denominated assets.
Investors expect the European Central Bank will be quicker to raise interest rates than the Federal Reserve, so the euro has risen nearly 10 percent on the dollar this year.
Precious metals consultancy GFMS meanwhile predicted gold, silver, platinum and palladium prices would retain upside potential in 2011, with negative real interest rates remaining the principal driver.
Platinum was up 1.3 percent at $1,828 an ounce. Palladium gained 2.9 percent to $806.47, with traders reporting buying of the metal for exchange-traded funds.
Prices at 3:53 p.m. EDT (1953 GMT)
(Additional reporting by Jan Harvey in London; Editing by David Gregorio and Jim Marshall)
Source: http://www.reuters.com
"Everybody was looking for some concrete proposal but his speech is pretty vague right now. That's one of the reasons why the gold market was looking tired and the equities came off," said Bruce Dunn, vice president of trading at bullion dealer Auramet.
Spot gold inched up 64 cents to $1,543.69 an ounce at 3:51 p.m. EDT (1951 GMT), off the session high of $1,550.
U.S. gold futures for August delivery settled down $3.20 at $1,544 an ounce, ranging from $1,537.20 to $1,549.90.
COMEX gold futures volume was slightly above 100,000 lots, almost half its 30-day average. Volume has been lackluster since last week.
Silver was up 0.7 percent at $36.98 an ounce.
"U.S. economic growth so far this year looks to have been somewhat slower than expected," Bernanke said in remarks prepared for delivery at a banking conference in Atlanta.
"A number of indicators also suggest some loss in momentum in labor markets in recent weeks," he added.
Analysts said soft U.S. economic data led some to expect the Fed might extend quantitative easing. The second round of quantitative easing, dubbed QE2, in which the central bank has bought $600 billion of government bonds to stimulate economic growth, is to expire by the end of June.
Gold would probably rise further if the Fed continues its easy monetary policy, but two top Fed officials on Tuesday were less inclined to use a third round of QE to boost the economy.
OPTIONS VOLATILITY EASES
Gold options trading has been quiet, with some investors selling at-the-money straddles and producers buying puts to hedge against downside risk, said COMEX gold option trader Jonathan Jossen.
A straddle allows an investor to bet on market volatility by purchasing a call and a put option at the same time, profiting when the market veers too far from a set price.
The CBOE gold volatility index .GVX, a gauge of bullion investor anxiety, dropped more than 2 percent, its third session of decline.
Wall Street fell for a fifth day on Tuesday after Bernanke's comment, .N but a weaker dollar supported gold.
The U.S. currency slumped when an official at China's foreign exchange regulator said Beijing should guard against risks from excessive holdings of dollar-denominated assets.
Investors expect the European Central Bank will be quicker to raise interest rates than the Federal Reserve, so the euro has risen nearly 10 percent on the dollar this year.
Precious metals consultancy GFMS meanwhile predicted gold, silver, platinum and palladium prices would retain upside potential in 2011, with negative real interest rates remaining the principal driver.
Platinum was up 1.3 percent at $1,828 an ounce. Palladium gained 2.9 percent to $806.47, with traders reporting buying of the metal for exchange-traded funds.
Prices at 3:53 p.m. EDT (1953 GMT)
(Additional reporting by Jan Harvey in London; Editing by David Gregorio and Jim Marshall)
Source: http://www.reuters.com
Sunday, June 5, 2011
MONEY CALL-Durable Gold's Hold For Long-Term Investors
Gold has hit record highs this year at a time when a double-dip recession threatens the global economy and governments everywhere are pulling back from the spending binges used to blunt the 2008 financial crisis.
Austerity and economic slowdown hardly seem like strong arguments for buying an inflation-sensitive precious metal.
Still, gold bugs are bullish as ever. And some are predicting the metal will rise to $2,000 an ounce over the next year, nearly a third above the present level.
"The reasons for buying gold haven't diminished," said Jeff Clark, the Sacramento, California-based senior precious metals analyst for Casey Research. "Unless we change course of how we handle the debt and deficits, there is a good reason to buy gold."
The pervasive bullishness stems from lessons learned in the financial crises of the past decade.
Gold does have staying power during big fiscal dramas and financial meltdowns. Discredited as a serious investment during the stock market boom years, it's regained its shine at the worst of times over the past decade. It's especially attractive when the dollar declines, as it has been wont to do in the current era of fiscal imbalances.
But even if it has earned a place in portfolios, gold poses challenges: What form should you buy it in? And when should you buy it?
THE LONG RISE
Skeptics have called for a pullback at regular intervals -- and still it stands tall: Gold has appreciated 500 percent since mid-2001, a 17.5 percent annualized return. The top-performing U.S. mutual funds of the past decade had invested directly or indirectly in the metal which Cortes carried back from the New World by the boatload.
A deepening budget crisis in Washington has gold sailing high again in some buyers' dreams. The reason? A budget crisis could trim the currency further. Gold's strength comes largely from the erosion of the dollar, which has lost 37 percent of its value since its last peak in mid-2001.
And investors haven't missed the boat.
"Definitely still time and there always will be 'still time'" to buy gold, says Al Korelin, chairman of AB Korelin and Associates in Semiahmoo, Washington. "You buy gold as insurance and not necessarily as a short term investment."
Spot gold was last at $1,532.99 an ounce XAU=, down but not far off the May 2 record high of $1,575.79 an ounce, according to Reuters data. It fell later that day after news of the death of al Qaeda leader Osama Bin Laden.
HOW SOON TO $2,000?
Commodities often hesitate at key price points, owing to the heavy use of leverage in futures accounts and heavy reliance on stop-loss orders linked to key price points. Which begs the question: When might gold rise from its current peak to the next lofty level?
"Gold will eventually go up to $2,000 an ounce," said Mike Frawley, global head of metals at the Newedge Group in New York, though "probably not much before early next year."
Frawley said the price of the currency now has backing based on supply and demand fundamentals. But the currency factor could swing back into play.
"The value of the dollar vis-a-vis other major world currencies is considerably important," he said. "Global demand (for gold) is still strong from Asia Pacific, India and China in particular."
CitiFX Technicals, a note from Citigroup, said gold could test an all-time high in the weeks ahead, top $1,700 this year and rally to more than $2,000.
Todd Horwitz; the Chicago-based chief strategist for the Adam Mesh Trading Group is waiting for the metal to top technical resistance. "I would not become bullish on gold until it made new highs over $1580."
BULLION VS MINING SHARES
For investors who think gold is heading on another run, the pure play, bullion, is an option. The physical product is not hard to acquire.
Casey Research's Clark said investors should avoid gold bars, half ounce bullion coins or rare gold coins and stick to the well-known one ounce gold coins like the American Eagle or Buffalo, the Canadian Gold Maple Leaf or the South African Krugerrand. Better-known gold instruments are better to have when it comes time to sell, Clark says.
Buying the metal, as opposed to the shares or producers, has distinct advantages, Clark says. That's because companies carry the risk of bad management, inaccurate accounts of deposits and the costly pitfalls of mining.
On the other hand, buying bullion will entail storage and security costs whether you hold it at home, in a safety deposit box or at a managed storage facility.
However, others say buying the shares of producers is more productive.
"You should put up to 10 percent of your capital in the bullion, 55 percent in the senior producers and the remaining 35 percent in the smaller companies," says AB Korelin's Korelin.
His suggested senior producers are Goldcorp Inc. (G.TO), Newmont Mining Corp. (NEM.N) and Kinross Gold Corp. (K.TO).
Two favorite junior companies are International Tower Hill Mines Ltd (ITH.TO) and Extorre Gold Mines Ltd (XG.TO).
BUYING GOLD BELOW THE SURFACE
Bill O'Neill, partner of commodities investment firm LOGIC Advisors in Upper Saddle River, New Jersey with $200 million in total assets, says he is cautiously optimistic on gold.
The firm continues to be heavily involved in the producers as gold in the ground is cheaper than the spot price for bullion, he says.
Given the associated costs to store and secure the bullion, he said LOGIC isn't a big advocate of bullion, instead favoring the low cost scenario of ETFs such as Blackrock's iShares Gold Trust (IAU.P) and the SPDR Gold Trust (GLD.P), the world's largest gold-backed exchange-traded fund.
Buying the physical metal would only be to protect against a global monetary system collapse, he said.
But whether waiting for a strong technical signal, the dollar to fall further or U.S. political gridlock on deficit reduction to signal further gains ahead, the overwhelming consensus is that gold is going higher.
"Look at what the Chinese are doing in buying more precious metals," says AB Korelin's Korelin. Are they stupid?" (Reporting by Nick Olivari; Editing by Richard Satran and Bernadette Baum)
Source: http://www.reuters.com
Austerity and economic slowdown hardly seem like strong arguments for buying an inflation-sensitive precious metal.
Still, gold bugs are bullish as ever. And some are predicting the metal will rise to $2,000 an ounce over the next year, nearly a third above the present level.
"The reasons for buying gold haven't diminished," said Jeff Clark, the Sacramento, California-based senior precious metals analyst for Casey Research. "Unless we change course of how we handle the debt and deficits, there is a good reason to buy gold."
The pervasive bullishness stems from lessons learned in the financial crises of the past decade.
Gold does have staying power during big fiscal dramas and financial meltdowns. Discredited as a serious investment during the stock market boom years, it's regained its shine at the worst of times over the past decade. It's especially attractive when the dollar declines, as it has been wont to do in the current era of fiscal imbalances.
But even if it has earned a place in portfolios, gold poses challenges: What form should you buy it in? And when should you buy it?
THE LONG RISE
Skeptics have called for a pullback at regular intervals -- and still it stands tall: Gold has appreciated 500 percent since mid-2001, a 17.5 percent annualized return. The top-performing U.S. mutual funds of the past decade had invested directly or indirectly in the metal which Cortes carried back from the New World by the boatload.
A deepening budget crisis in Washington has gold sailing high again in some buyers' dreams. The reason? A budget crisis could trim the currency further. Gold's strength comes largely from the erosion of the dollar, which has lost 37 percent of its value since its last peak in mid-2001.
And investors haven't missed the boat.
"Definitely still time and there always will be 'still time'" to buy gold, says Al Korelin, chairman of AB Korelin and Associates in Semiahmoo, Washington. "You buy gold as insurance and not necessarily as a short term investment."
Spot gold was last at $1,532.99 an ounce XAU=, down but not far off the May 2 record high of $1,575.79 an ounce, according to Reuters data. It fell later that day after news of the death of al Qaeda leader Osama Bin Laden.
HOW SOON TO $2,000?
Commodities often hesitate at key price points, owing to the heavy use of leverage in futures accounts and heavy reliance on stop-loss orders linked to key price points. Which begs the question: When might gold rise from its current peak to the next lofty level?
"Gold will eventually go up to $2,000 an ounce," said Mike Frawley, global head of metals at the Newedge Group in New York, though "probably not much before early next year."
Frawley said the price of the currency now has backing based on supply and demand fundamentals. But the currency factor could swing back into play.
"The value of the dollar vis-a-vis other major world currencies is considerably important," he said. "Global demand (for gold) is still strong from Asia Pacific, India and China in particular."
CitiFX Technicals, a note from Citigroup, said gold could test an all-time high in the weeks ahead, top $1,700 this year and rally to more than $2,000.
Todd Horwitz; the Chicago-based chief strategist for the Adam Mesh Trading Group is waiting for the metal to top technical resistance. "I would not become bullish on gold until it made new highs over $1580."
BULLION VS MINING SHARES
For investors who think gold is heading on another run, the pure play, bullion, is an option. The physical product is not hard to acquire.
Casey Research's Clark said investors should avoid gold bars, half ounce bullion coins or rare gold coins and stick to the well-known one ounce gold coins like the American Eagle or Buffalo, the Canadian Gold Maple Leaf or the South African Krugerrand. Better-known gold instruments are better to have when it comes time to sell, Clark says.
Buying the metal, as opposed to the shares or producers, has distinct advantages, Clark says. That's because companies carry the risk of bad management, inaccurate accounts of deposits and the costly pitfalls of mining.
On the other hand, buying bullion will entail storage and security costs whether you hold it at home, in a safety deposit box or at a managed storage facility.
However, others say buying the shares of producers is more productive.
"You should put up to 10 percent of your capital in the bullion, 55 percent in the senior producers and the remaining 35 percent in the smaller companies," says AB Korelin's Korelin.
His suggested senior producers are Goldcorp Inc. (G.TO), Newmont Mining Corp. (NEM.N) and Kinross Gold Corp. (K.TO).
Two favorite junior companies are International Tower Hill Mines Ltd (ITH.TO) and Extorre Gold Mines Ltd (XG.TO).
BUYING GOLD BELOW THE SURFACE
Bill O'Neill, partner of commodities investment firm LOGIC Advisors in Upper Saddle River, New Jersey with $200 million in total assets, says he is cautiously optimistic on gold.
The firm continues to be heavily involved in the producers as gold in the ground is cheaper than the spot price for bullion, he says.
Given the associated costs to store and secure the bullion, he said LOGIC isn't a big advocate of bullion, instead favoring the low cost scenario of ETFs such as Blackrock's iShares Gold Trust (IAU.P) and the SPDR Gold Trust (GLD.P), the world's largest gold-backed exchange-traded fund.
Buying the physical metal would only be to protect against a global monetary system collapse, he said.
But whether waiting for a strong technical signal, the dollar to fall further or U.S. political gridlock on deficit reduction to signal further gains ahead, the overwhelming consensus is that gold is going higher.
"Look at what the Chinese are doing in buying more precious metals," says AB Korelin's Korelin. Are they stupid?" (Reporting by Nick Olivari; Editing by Richard Satran and Bernadette Baum)
Source: http://www.reuters.com
Dear Capitalists Of The World
The last time I challenged the Billionaires of the world to try to outperform silver, all failed, as I predicted. No billionaire reportedly doubled his wealth since September, 2010.
In September, silver was under $20/oz. Today, silver is $38/oz., and on a dip down from $49.50/oz.
I wrote, Dear Billionaires of the World
(The Silver Market is a tiny $1.9 billion)
Silver Stock Report
by Jason Hommel, September 2nd, 2010
http://silverstockreport.com/2010/billion.html
I wrote why silver would outperform, and I sent this information out to the top 25 Billionaires who had contact information via email that was available.
Since that time, billionaire Carlos Slim got into the silver market, but he sold 3 years worth of production already, and will likely miss out on much of the upside, unless he covers, and buys back that silver, on this dip.
http://www.businessinsider.com/carlos-slims-incredibly-smart-silver-sales-2011-5
Also, since that time, Eric Sprott, who manages billions, and who might be a billionaire himself, listed my name, along with David Morgan and Ted Butler as "the smartest guys in the room" when it comes to silver.
http://marcfaberchannel.blogspot.com/2011/01/david-morgan-interviews-eric-sprott-1.html
Why silver?
For over 100 years, silver has been demonetized -- meaning, silver is no longer used as money, which reduces demand, which has reduced value, which makes it a perfect undervalued asset.
For over 66 years, since the end of WWII, silver has been consumed in industry, mostly in electronics, to the point that most of the silver ever mined in all of human history has been consumed. This reduction and consumption of supply has made silver more rare, and has created a potential natural monopoly for those who buy silver now.
The world mines just under 10 times as much silver, as gold, each year, suggesting a price ratio of 10:1, showing silver may perform 4 times better than gold, given the current price ratio of 41:1.
In sum, the silver market remains very tiny, for billionaires. World silver mine production is about 700 million oz., yet industrial consumption of silver in over 10,000 different applications continues to increase faster than mine supply.
World investment demand, which is a small portion of overall demand, has vastly increased, but remains a tiny 250 million oz., which, at $40/oz., is a relatively tiny $10 billion, tiny in the scale of world finance.
By the time even a tiny 1% of U.S. paper money tries to buy silver to protect itself from inflation, that would be $180 billion dollars (1% of $18 trillion), or 18 times as much investment money went into silver last year.
Finally, the silver price has risen enough so that a billionaire now actually can buy $1 billion in real, physical, silver bullion.
But the logistics of buying that much will remain difficult. At $40/oz., that would be 25 million oz., which will weigh 1.7 million pounds, or 865 tons. Or, 865 massive truck loads. That's a lot of truck loads of silver, and a lot of fork lifting that needs to get done, and the construction of the vault needed to store all of that needs to get started on immediately.
To put 25 million ounces of silver into perspective, that is also about two and a half times as much silver as was produced by the US mint each year on average, which used to be only 10 million oz., until just the last few years where the US mint is on pace to produce about 35 - 40 million oz. this year.
Warning: Don't store your silver with any bankers or brokers, not anywhere in the world, not even Swiss bankers. And don't buy any ETF silver, either. Why not?
The BIS, the Bank of International Settlements, has a report showing that world bankers are short, or in other words, have silver liabilities, or owe other people or entities, up to $130 billion to $203 billion worth of silver. This is an admission of fractional reserve silver banking, and it's fraud. (Recently, the $203 billion number was revised down to $107 billion, after I began publishing links to their report!)
This BIS report is perhaps the best evidence of the biggest admitted fraud in the entire world. No conspiracy "theory" is needed. This is what the big boys themselves admit freely in their own reports!
Here is the BIS report (they change the location frequently):
Start here:
http://www.bis.org/statistics/derstats.htm
Click here:
http://www.bis.org/statistics/otcder/dt21c22a.pdf
There are two tables. See the second one, Table 22A.
Table 22A: Amounts outstanding of OTC equity-linked and commodity derivatives
By instrument and counterparty
In billions of US dollars
"Other Precious Metals" (IE, mostly silver, but also platinum and palladium, both tiny markets)
Notional amounts outstanding:
$123 Billion, as of Dec., 2010.
This silver debt cannot be paid back easily, if ever. As I mentioned, the world only mines 700 million oz. per year, which, at $40/oz., is only $28 billion. The world banks owe many years of world production of silver, more than could be obtained on the world markets.
Again, it will be very difficult to acquire $1 billion worth of silver, let alone up to $123 billion to $200 billion that the bankers owe.
Good luck trying to outperform silver!
Against this backdrop of the excellent fundamentals of silver, the United States is printing money like crazy, and the rest of the world is racing to print even more.
Last month, when the news was covering the potential government shutdown, while Democrats and Republican budgets were bickering over a mere $30 billion, while the US government is actually spending a whopping $1,600 billion more than they are taking in, the public woke up.
Many of our customers at www.jhmint.com said, "They are not remotely close to fixing the problem, and there will be inflation for years to come." People are waking up.
When horrible inflation hits, there are very few things to actually buy to protect your money. See the empty shelves after a currency crisis in Belarus, on May 23, 2011, three days ago, here:
http://www.stevequayle.com/News.alert/11_Photo_of_Day/110524.photo.of.day.html
Most things in the world have a horrible price spread, that is, a wide price between the buy and sell prices.
Silver and gold are the things to buy. What else is there? Copper? Plastic forks? Laptop computers that will be obsolete in a year or two? Food? No. No. No. And yes, maybe $10,000 for food, or enough for a year or so, enough to protect your life, but it won't protect your wealth.
Silver and gold are real money, even if they are not currently being used as a medium of exchange. In fact, their lack of use as a medium of exchange make them an even better store of value, because you are buying them prior to when the price goes much higher in value when everyone else will need to buy them to protect from inflation.
Soon, the government will need to discuss raising the debt ceiling. That debate will be in the news for a few weeks. People will, again, flock to silver.
Soon, the government will need to discuss a quantitative easing III, because QEII will run out in June, 2011, if it has not run out already. People, again, will flock to silver.
You will not beat the public to the punch, you are already a bit late to the party, and you will be lucky to get silver below $100/oz.
Why? Because the tipping point has already been reached.
Good luck!
Oh, by the way, this email is going out to 82,000 emails, and to the top 25 billionaires in the world. The 82,000 email recipients have an estimated combined net worth of over $10 billion.
=====
I strongly advise you to take possession of real gold and silver, at anywhere near today's prices, while you still can. The fundamentals indicate rising prices for decades to come, and a major price spike can happen at any time.
Follow me on facebook I have 3500 friends, and I hear there is a limit of 5000!
http://www.facebook.com/jason.hommel
Sincerely,
Jason Hommel
http://news.silverseek.com
In September, silver was under $20/oz. Today, silver is $38/oz., and on a dip down from $49.50/oz.
I wrote, Dear Billionaires of the World
(The Silver Market is a tiny $1.9 billion)
Silver Stock Report
by Jason Hommel, September 2nd, 2010
http://silverstockreport.com/2010/billion.html
I wrote why silver would outperform, and I sent this information out to the top 25 Billionaires who had contact information via email that was available.
Since that time, billionaire Carlos Slim got into the silver market, but he sold 3 years worth of production already, and will likely miss out on much of the upside, unless he covers, and buys back that silver, on this dip.
http://www.businessinsider.com/carlos-slims-incredibly-smart-silver-sales-2011-5
Also, since that time, Eric Sprott, who manages billions, and who might be a billionaire himself, listed my name, along with David Morgan and Ted Butler as "the smartest guys in the room" when it comes to silver.
http://marcfaberchannel.blogspot.com/2011/01/david-morgan-interviews-eric-sprott-1.html
Why silver?
For over 100 years, silver has been demonetized -- meaning, silver is no longer used as money, which reduces demand, which has reduced value, which makes it a perfect undervalued asset.
For over 66 years, since the end of WWII, silver has been consumed in industry, mostly in electronics, to the point that most of the silver ever mined in all of human history has been consumed. This reduction and consumption of supply has made silver more rare, and has created a potential natural monopoly for those who buy silver now.
The world mines just under 10 times as much silver, as gold, each year, suggesting a price ratio of 10:1, showing silver may perform 4 times better than gold, given the current price ratio of 41:1.
In sum, the silver market remains very tiny, for billionaires. World silver mine production is about 700 million oz., yet industrial consumption of silver in over 10,000 different applications continues to increase faster than mine supply.
World investment demand, which is a small portion of overall demand, has vastly increased, but remains a tiny 250 million oz., which, at $40/oz., is a relatively tiny $10 billion, tiny in the scale of world finance.
By the time even a tiny 1% of U.S. paper money tries to buy silver to protect itself from inflation, that would be $180 billion dollars (1% of $18 trillion), or 18 times as much investment money went into silver last year.
Finally, the silver price has risen enough so that a billionaire now actually can buy $1 billion in real, physical, silver bullion.
But the logistics of buying that much will remain difficult. At $40/oz., that would be 25 million oz., which will weigh 1.7 million pounds, or 865 tons. Or, 865 massive truck loads. That's a lot of truck loads of silver, and a lot of fork lifting that needs to get done, and the construction of the vault needed to store all of that needs to get started on immediately.
To put 25 million ounces of silver into perspective, that is also about two and a half times as much silver as was produced by the US mint each year on average, which used to be only 10 million oz., until just the last few years where the US mint is on pace to produce about 35 - 40 million oz. this year.
Warning: Don't store your silver with any bankers or brokers, not anywhere in the world, not even Swiss bankers. And don't buy any ETF silver, either. Why not?
The BIS, the Bank of International Settlements, has a report showing that world bankers are short, or in other words, have silver liabilities, or owe other people or entities, up to $130 billion to $203 billion worth of silver. This is an admission of fractional reserve silver banking, and it's fraud. (Recently, the $203 billion number was revised down to $107 billion, after I began publishing links to their report!)
This BIS report is perhaps the best evidence of the biggest admitted fraud in the entire world. No conspiracy "theory" is needed. This is what the big boys themselves admit freely in their own reports!
Here is the BIS report (they change the location frequently):
Start here:
http://www.bis.org/statistics/derstats.htm
Click here:
http://www.bis.org/statistics/otcder/dt21c22a.pdf
There are two tables. See the second one, Table 22A.
Table 22A: Amounts outstanding of OTC equity-linked and commodity derivatives
By instrument and counterparty
In billions of US dollars
"Other Precious Metals" (IE, mostly silver, but also platinum and palladium, both tiny markets)
Notional amounts outstanding:
$123 Billion, as of Dec., 2010.
This silver debt cannot be paid back easily, if ever. As I mentioned, the world only mines 700 million oz. per year, which, at $40/oz., is only $28 billion. The world banks owe many years of world production of silver, more than could be obtained on the world markets.
Again, it will be very difficult to acquire $1 billion worth of silver, let alone up to $123 billion to $200 billion that the bankers owe.
Good luck trying to outperform silver!
Against this backdrop of the excellent fundamentals of silver, the United States is printing money like crazy, and the rest of the world is racing to print even more.
Last month, when the news was covering the potential government shutdown, while Democrats and Republican budgets were bickering over a mere $30 billion, while the US government is actually spending a whopping $1,600 billion more than they are taking in, the public woke up.
Many of our customers at www.jhmint.com said, "They are not remotely close to fixing the problem, and there will be inflation for years to come." People are waking up.
When horrible inflation hits, there are very few things to actually buy to protect your money. See the empty shelves after a currency crisis in Belarus, on May 23, 2011, three days ago, here:
http://www.stevequayle.com/News.alert/11_Photo_of_Day/110524.photo.of.day.html
Most things in the world have a horrible price spread, that is, a wide price between the buy and sell prices.
Silver and gold are the things to buy. What else is there? Copper? Plastic forks? Laptop computers that will be obsolete in a year or two? Food? No. No. No. And yes, maybe $10,000 for food, or enough for a year or so, enough to protect your life, but it won't protect your wealth.
Silver and gold are real money, even if they are not currently being used as a medium of exchange. In fact, their lack of use as a medium of exchange make them an even better store of value, because you are buying them prior to when the price goes much higher in value when everyone else will need to buy them to protect from inflation.
Soon, the government will need to discuss raising the debt ceiling. That debate will be in the news for a few weeks. People will, again, flock to silver.
Soon, the government will need to discuss a quantitative easing III, because QEII will run out in June, 2011, if it has not run out already. People, again, will flock to silver.
You will not beat the public to the punch, you are already a bit late to the party, and you will be lucky to get silver below $100/oz.
Why? Because the tipping point has already been reached.
Good luck!
Oh, by the way, this email is going out to 82,000 emails, and to the top 25 billionaires in the world. The 82,000 email recipients have an estimated combined net worth of over $10 billion.
=====
I strongly advise you to take possession of real gold and silver, at anywhere near today's prices, while you still can. The fundamentals indicate rising prices for decades to come, and a major price spike can happen at any time.
Follow me on facebook I have 3500 friends, and I hear there is a limit of 5000!
http://www.facebook.com/jason.hommel
Sincerely,
Jason Hommel
http://news.silverseek.com
Subscribe to:
Posts (Atom)