Inflation Takes Surprise Jump in Europe

September 28, 2012

The chickens may already be coming home to roost in Europe.

For some time Europe has had a very loose, inflationary monetary policy, so it should come as no surprise perhaps that inflation rates are already higher than expected.

Europe may very well be the “canary in the mineshaft.” Other regions of the world, including the USA, have adopted very similar monetary policies. Investors should take notice and invest in assets that not only protect them from high inflation, but actually benefit from high inflation.

Gold investments, rare gold coins in particular, are ideally suited for just such a purpose. They have historically outperformed paper investments during periods of high inflation. But the time to buy is now–before inflation shows up in earnest in US inflation gauges.

Note that in the article linked below, several of the European Union nations are in recession at the same time that these inflation numbers have surfaced. The combination of inflation with recession is known as stagflation, an economic affliction that is particularly damaging to paper assets and positive for gold investments.

Inflation in the 17 countries that use the euro rose unexpectedly to a six-month high in September…

No reasons for the increase were provided by Eurostat, as the figure was only a preliminary estimate, though higher energy costs are likely to blame.

http://hosted.ap.org/dynamic/stories/E/EU_EUROPE_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-09-28-06-46-37


Middle East Expert Walid Phares Explains the Economic Ramifications of an Iran Armed with a Nuclear Bomb

September 27, 2012

Fox Business Channel did a short segment on the potential for an Iran armed with a nuclear bomb to disrupt the world economy. This is an often overlooked aspect of the issue of Iran and its nuclear program. It is well worth a look…See the link below.

Investors need to keep in mind that in any scenario in which the world economy is disrupted, world financial markets will be disrupted as well. In the event of a crisis, investors need to turn to the “crisis commodity”–gold.

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Gold Sharply Higher on News from China, Spain

September 27, 2012

The price of gold surged higher by over $25 per ounce to just under $1,780 on a double dose of news that the market regarded as bullish.

First came the news that China was further embarking on a monetary stimulus plan of its own to try to jump-start its slowing economy. With Europe, the US, China and Japan all printing money at the same time, traders are very bullish on the outlook for gold.

At the same time, Spain announced that it would meet budget deficit targets, an indication that perhaps the worst is over for the Spanish depression.

 


Marc Faber Issues a Warning to Investors on QE3, the Global Economy, Stocks and Bonds

September 27, 2012

Marc Faber is one of the most respected investment analysts and has for many years published the Gloom, Boom, & Doom Report. Faber is also a frequent guest on TV financial news networks.

Recently, Faber issued a warning that investors should pay close attention to…

On the QE3 program recently started by the US Federal Reserve:

“It is difficult to tell what will happen. I happen to believe that eventually we will have a systemic crisis and everything will collapse. But the question is really between here and then. Will everything collapse with Dow Jones 20,000 or 50,000 or 10 million? Mr. Bernanke is a money printer and, believe me, if Mr. Romney wins the election the next Fed chairman will also be a money printer. And so it will go on. The Europeans will print money. The Chinese will print money. Everybody will print money and the purchasing power of paper money will go down. And I don’t like bonds. I don’t particularly like equities, but I think equities are a better space to be in than bonds.”

“The fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won’t. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols…Very happy. Very good for the Fed. Congratulations, Mr. Bernanke. I’m happy. My asset values go up but as a responsible citizen I have to say the monetary policies of the U.S. will destroy the world.”“I think there is a huge misconception and fallacy that money printing can actually improve the rate of employment because the money flows down into the system. It goes first into the banking system and into financial institutions, into the pockets of well-to-do people. If you drop money into my pockets and you have at the same time increased government involvement in the economy and we have the government growing with its regulation and legislation that stifles economic development. I don’t want to build a new business. But what I may do is look around the world, where are the distressed assets. So I will go and buy existing assets, takeovers. But takeovers don’t add to employment. They destroy employment.Secondly, I would just like to mention one thing. This money printing business, they have been saying that for the last 15 years that bailing out LTCM were necessary. Then they say the NASDAQ collapsed after March of 2000. We need to create another bubble, print money. They created a gigantic credit bubble and the misery that we have today.”

“I think there is a huge misconception and fallacy that money printing can actually improve the rate of employment because the money flows down into the system. It goes first into the banking system and into financial institutions, into the pockets of well-to-do people. If you drop money into my pockets and you have at the same time increased government involvement in the economy and we have the government growing with its regulation and legislation that stifles economic development. I don’t want to build a new business. But what I may do is look around the world, where are the distressed assets. So I will go and buy existing assets, takeovers. But takeovers don’t add to employment. They destroy employment.

“I think that the trend for gold prices will be steady, but the trend for the dollar and other currencies will be down. In other words, in dollar terms the price of gold will trend higher.How high it will go, you have to call Mr. Bernanke and at the Fed, there are other people actually that make Mr. Bernanke look like a hawk. So they are going to print money. And they have done it for ages already and where has it led? To record high unemployment essentially since the Great Depression and structural unemployment. Unemployment goes among low paying jobs, not high paying jobs. So, you ought to own some gold, but don’t store it in the U.S. because the Fed will take it away from you one day.”

Pay particular attention to the last line in Faber’s warning. He is predicting that the US Treasury will once again confiscate privately owned gold. He recommends owning gold outside the USA, but this is obviously both impractical and unwise. The better solution is to own gold in a manner that protects your wealth from gold confiscation laws.

Rare gold coins fall outside the provisions in the gold confiscation regulations.

 

A Chinese Economic Crisis: A Threat to World Financial Markets

September 27, 2012

As the US looks inward in advance of the upcoming presidential election, another factor largely beyond our control is looming on the horizon–or perhaps OVER the horizon.

While economists and political pundits in America debate the health and outlook of the US economy, the Chinese economy is quietly falling into crisis. Because the Chinese economy has been an engine of growth for the global economy, a severe slowdown in China poses a serious threat to world financial markets. Many companies whose stocks trade publicly on exchanges from Shanghai to Sydney to Tokyo to New York to London have major interests in China. A recession in China will severely impact those companies and thus world stock markets.

During such a scenario, at the outset, gold may be temporarily hurt by interrupted Chinese demand, but over the long-term, gold investments tend to move independently of stocks, making them an ideal way to hedge your portfolio from any scenario that threatens world stock markets.

http://www.businessinsider.com/chinese-hard-landing-2012-9


Gold Bulls Extend Streak as Prices Jump on Fed’s QE3 Program

September 20, 2012

Gold traders extended their bullish streak as analysts from Bank of America Corp. to Deutsche Bank AG forecast record prices by next year after central banks pledged more action to bolster economic growth.

The Federal Reserve announced a third round of debt-buying Sept. 13 and the Bank of Japan said two days ago it will add 10 trillion yen ($128 billion) to a fund that buys assets. The European Central Bank announced an unlimited bond-purchase program Sept. 6 and China approved a $158 billion subways-to- roads construction plan. Gold rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011.

“Gold is one of the commodities that will benefit most from quantitative easing,” said Kamal Naqvi, the head of commodities sales in Europe, Middle East and Africa for Credit Suisse Group AG in London. “Everyone is talking about gold at $2,000 an ounce and I still think we’ll get to at least that.”

Gold rose 13 percent to $1,765.35 an ounce in London this year, reaching a six-month high on Sept. 19 and extending 11 consecutive annual gains. 

Gold will climb to $2,000 by the second quarter and will reach $2,400 by the end of 2014 if the Fed’s latest easing lasts until then, Bank of America said in a Sept. 18 report. Prices will exceed $2,000 in the first half of next year, Deutsche Bank wrote that day. Morgan Stanley expects gold to average $1,816 next year and Standard Chartered predicts a second-quarter average of $1,900. Both would be the highest ever.

http://finance.yahoo.com/news/gold-bulls-extend-streak-prices-230100001.html


Investors Beware: Counterfeit Gold Bars Surface in New York

September 19, 2012

Hard asset investors must beware: counterfeit gold bars have surfaced in New York. Fox News has the story linked below…

…but investors need to know that the best way to avoid the risk of counterfeiting in hard asset investing is to buy gold in the form of PCGS– and NGC-certified gold coins. These two respected grading services guarantee the authenticity of the coins that they certify and encapsulate in sonically sealed “slabs,” thus removing the risk of counterfeiting for individual investors…

Fool’s gold: Counterfeit bars turn up in New York

A jeweler in Manhattan’s Diamond District learned the hard way that all that glitters is not gold.

Ibrahim Fadl, a chemical engineer who owns a business near 47th Street and Fifth Avenue, bought four 10-ounce gold bars and decided to check them out further since he heard counterfeits were making the rounds, MyFoxNY.com reports.

Fadl, who paid $100,000 for the merchandise, drilled into several of the bars and found gray tungsten, which has nearly the same density as gold, making it difficult to detect. The same thing reportedly happened in Great Britain earlier this year, and finance blog ZeroHedge.com reported that in 2010 German refiner W.C. Heraeus claimed to have received a 500-gram bar from an unnamed bank that proved to be filled with tungsten.

The scheme purportedly involves a genuine gold bar that is purchased with serial numbers and authentic documents and is then hollowed out to be replaced with tungsten. The bar is then closed up to finalize the sophisticated operation, the website reports.

Manfra, Tordell & Brookes, the Swiss manufacturer of the gold bars, warned customers to only buy from reputable dealers. Raymond Nessim, the company’s CEO, said he has reported the incident to the FBI and the Secret Service.

Secret Service officials, meanwhile, told FoxNews.com an investigation is ongoing, declining further comment.

Fadl, who could not be reached for comment, told NY1.com that the shell of the gold was sold to him by a customer at his gold refinery business and peeled off like foil on a candy bar.

“It’s got to be somebody really, really professional,” Fadl told the website. “When I analyzed them, it showed they were tungsten.”

Fadl said a colleague tipped him off to the scam, prompting him to further inspect the gold bars.

“Sick to my stomach, but thank God we didn’t sell this to somebody,” he said when asked how he felt. “People are selling their homes to buy gold, it’s a big issue.”

http://www.foxnews.com/us/2012/09/19/new-york-jeweler-duped-into-buying-100g-worth-fake-gold-bars/?test=latestnews