Leading Inflation Indicator: Food

February 28, 2011
Food for Life distributes food on an internati...

Image via Wikipedia

As in past posts on this blog, inflation numbers seldom are what they seem. Most major economic powers have taken to under reporting on items like food & energy. This keeps the inflation numbers artificially low.

Today, reporter Jeff Cox once again steps into the inflation fray. He showed that major food costs have inflated by almost 13% cumulatively in the last 12 months. The average household is  spending upwards to 12% of their income on food & energy.  These numbers are real inflation that hit everyone, rich and poor. It is one of the reasons when inflation is reported at an anemic 1% to 2% that gold & silver out-perform the rest of the markets.

Gold & silver will continue to reflect true inflation numbers & have the added bonus of increased demand to keep driving the prices forward. Check out the numbers on food inflation here: NetNet: No Inflation? That’s Not What Food Prices Are Saying


Decline in US Economy to Third by 2050

February 28, 2011

Chief Economist at Citigroup Williem Buiter

In the next 4o years, the two largest emerging economies ChinaIndia will overtake the US as the number one & number two economies, respectively.  China should over-take the US by 2020 & India by 2050.

Willem Buiter, chief economist at Citigroup, was quoted in a CNBC article as saying,We expect strong growth in the world economy until 2050, with average real GDP growth rates of 4.6 percent per annum until 2030 and 3.8 percent per annum between 2030 and 2050.

This once again adds further fuel to the pressure these economies will make on precious metals for the next 40 years. Buiter also noted this will not all be a smooth transition, Expect booms and busts. Occasionally, there will be growth disasters, driven by poor policy, conflicts, or natural disasters.

When there is this type of change domestically & globally the smart investor acquires gold & silver to insure wealth preservation. A diversified portfolio in physical gold & silver is key to providing this much needed protection. To see more on Buiter’s report: CNBC – US vs China, US Will be the Worlds 3rd Largest Economy: Citi

Investing Against Inflation

February 24, 2011

Keith Springer, president of Springer Advisory Services

Is inflation real? Was the question asked today by CNBC’s Jeff Cox. The answer is: Yes! Inflation is real, it is inevitable, no matter what Governments do to adjust inflation numbers inflation is part of the natural economic cycle.

Since this is going to happen, what is the best strategy to manage your net worth?    Keith Springer, president of Springer Advisory Services told CNBC today, Gold and silver would do poorly in deflation. However, they would hedge you for inflation. More importantly, they act as a third currency. As the world evaluates the developed world currencies, gold becomes more valuable. It’s also a crisis hedge. There’s no better place to hide.

We don’t advocate hiding but we absolutely recommend using your tangible assets portfolio as a  protection against losses in your net worth.  Holding 10% to 20% of your net worth in physical gold & silver will provide the protection needed when all the rest fails.  Read more here: CNBC: What Should Investors Do if Inflation is Real!

China, India & Russia are Consuming Gold at Record Levels

February 24, 2011

REUTERS/Krishnendu Halder (INDIA)

Gold demand is reoccurring theme on this blog but here is the surprising truth: the spike in gold demand is due to Love.  Not the love of gold, but love, true love, amour, kärlek, любовь, szerelem, you get the picture.

The ring you bought your sweetheart, the gold bracelet & gold earrings.   All of these have contributed to 2010 being one of the biggest years in gold for the last 50 years.

India, China, & Russia had the largest increases for demand of gold, about 54% of that increased demand went directly to jewelry. This demand is expected to increase as gold goes up in price. Many in these emerging markets are using jewelry as part of their physical ownership of gold. This is one way to take possession of gold, we recommend a diversified portfolio of bullion, certified better date & rare coins. Read more on the romantic side of gold: Jewelry Drives the Gold Love Trade

Goldman Sachs Strategy: Buy Gold

February 23, 2011
Goldman Sachs New World Headquarters

Image via Wikipedia Goldman Sachs New World Headquarters

Goldman Sachs Commodities and Research team recommends commodities across the board. They are calling for a conservative jump in gold to $1,690 an ounce. This jump would represent a 20% increase from the current $1,400 an ounce.   If you bought during the January retraction in price you would realize almost 30% for the year.

These estimates are coming from the same Goldman Sachs that is not recommending gold long-term for its big money private clientele. So who is right? Decide for yourself. Goldman Sachs is calling for a 20% increase in gold with the international turmoil, foreign demand for physical gold & the devaluing of the U.S. Dollar wouldn’t a 20% increase in your tangible asset portfolio be the best gain of the year? Check out more from Cullen Roche, Pragmatic Capitalism

The Dollar Down 40% vs Gold

February 23, 2011

The Dollar has dropper over 20% of its purchasing power in the last 48 months, even more alarming is the 40% decline against gold during the same period. This according to Forbes is being driven by the Fed’s monetary policy & global inflation.

When the US completely went off the gold standard under Nixon we saw similar events as we have today. It was one of the worst inflationary periods of the 20th century. There are so many similarities it should have you running to purchase gold to keep from further devaluation of your net worth.  See more details here – Forbes: Higher Inflation is On the Way

Warning: Fiat Currencies Will Fail

February 22, 2011

We discuss the dangers of fiat currency directly and often indirectly here at The Coin Trader Blog. For those not familiar with the term Fiat Currency it is simply stated: Legal tender that is only backed by a governments word of having value. It is a governments way of saying trust me we know how to run the economy.

Since, none of these fiat currencies are tied to tangible assets like gold or silver, as was the tradition for many millenia. They inevitably are left open to manipulation, hyper-inflation & total collapse. All major currencies today fall under this category, so at some point it is guaranteed to fail. This is what makes holding physical gold & silver in your portfolio so much more imperative.

It gives you the peace of mind knowing that when the collapse happens you will have the real currency to provide you & your families basic needs.  To bring this into sharper focus Eric Fry recalls a conversation from 2005 with Henry Hackel the president of R.F. Lafferty, a broker-dealer specializing in options trading and resource stocks. Henry’s position on gold is long term acquisition.  Read more in:  Box of Money