American Consumers Turn Sour on Economic Outlook

December 7, 2012

Just in time for Christmas, consumer sentiment in America is taking a nosedive.

Americans are increasingly worried about the outlook for the economy, largely due to the fiscal cliff which is only about a month away.

This decline in morale has implications for the financial markets. It is difficult to see positive action in the stock market with Americans so worried about their futures.

In contrast, historically, hard assets, particularly gold investments, have appreciated during periods when Americans are worried, providing a degree of protection against bad times.

http://www.marketwatch.com/story/consumer-sentiment-nose-dives-in-december-2012-12-07

 

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Greece Downgraded AGAIN

December 6, 2012

Greece is the crisis that won’t go away. The hapless nation’s economic and fiscal woes are really just a microcosm of what is facing the entire European Union. Debt levels are unsustainable, spending continues to be out of control and politicians attempt to place band aids on the problems, which will only make them worse in the long run.

Somewhere at the end of all this, Europe is going to be hit hard with an unprecedented economic and fiscal crisis.

Will it be touched off by a Greek default? Some observers think so. S&P has now downgraded the country’s credit rating to “selective default,” from the already lowly CCC rating.

A Greek default will not be kind to the financial markets. This is yet another crisis from which investors must protect their wealth with gold investments.

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Standard & Poor’s downgrades world’s oldest bank to junk status

December 6, 2012

Evidently, the world’s oldest bank is an Italian house called  Monte dei Paschi di Siena.

MYM blog readers may recall that Italy is in bad economic and fiscal shape. Italy’s problems are overshadowed by those of Greece and Spain, but, like much of Europe, Italy is in trouble as well.

One sign of that is the announcement this week that Standard & Poor’s has downgraded  Monte dei Paschi di Siena, Italy’s–and the entire world’s–oldest bank, to junk status (BB+).

The bank has been around since 1472–20 years before Columbus voyaged to the New World.

A track record going back nearly 600 years is not enough for investors to depend on in today’s uncertain world. Investors would do better to depend upon an asset that has a track record of security and stability that is 10 times as long as that: GOLD.

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GALLUP: Unemployment rate at 8.3%…

December 6, 2012

The US economy is NOT getting better. This has serious implications for the US dollar and the financial markets. NOW is the time to stock up on hard assets as a form of financial insurance. Coin Trader can advise you on the best hard asset investments for your personal goals and needs.

U.S. Unadjusted Unemployment Shoots Back Up

U.S. unemployment, as measured by Gallup without seasonal adjustment, was 7.8% for the month of November, up significantly from 7.0% for October. Gallup’s seasonally adjusted unemployment rate is 8.3%, nearly a one-point increase over October’s rate.

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http://www.gallup.com/poll/159104/unadjusted-unemployment-shoots-back.aspx


The Fiscal Cliff: An Economic “Heart Attack”

December 4, 2012

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Bank of America/Merrill Lynch economist Ethan Harris is warning that the game politicians in Washington are playing ahead of the “fiscal cliff,” is dangerous and could amount to an “economic heart attack.”

Letting the country careen over the fiscal cliff as part of a bargaining strategy to push through fiscal reforms would serve as a dangerous game politicians would be playing with the economy, said Bank of America Merrill Lynch economist Ethan Harris.

At the end of this year, tax hikes are scheduled to kick in at the same time government spending cuts take effect, a combination known as a fiscal cliff that could tip the economy into a recession next year if left unchecked by Congress and the White House.

Some lawmakers have suggested Jan. 1 can come and go without a deal and address the issue by putting one another’s feet to the fire or punting on deadlines as tax hikes and spending cuts take root.

Even talk of such strategy can damage the economy.

“One of the most dangerous ideas circulating in Washington is that it is okay to go over the cliff temporarily,” Harris said a note to clients, according to CNBC.

“Threatening or actually going over the cliff will likely do serious damage to economic and market confidence. What some people are calling a ‘bungee jump’ could cause an economic heart attack.”

Investors, meanwhile, are growing increasingly nervous.

“The clock is ticking,” said Quincy Krosby, market strategist for Prudential Financial, Bloomberg added.

“The focus is on what goes on in Washington. The market will be volatile. You’ve got to be very well-hedged given that the market is so much headline-driven.”

The best hedge against uncertainty in the stock market has historically been gold.

 

 


No Laughing Matter

November 29, 2012

The Weekly Standard reports that Senate Minority Leader Mitch McConnell burst into laughter while he was attending a briefing by Treasury Secretary Timothy Geithner on the administration’s plan to avert the impending “fiscal cliff” that threatens the US economy and financial markets.

http://www.weeklystandard.com/blogs/mcconnell-burst-laughter-geithner-outlined-obamas-plan_664210.html

It’s disheartening for investors to hear that the two political parties are so far apart with this unprecedented set of circumstances set to converge in just one month’s time.

This is certainly no laughing matter for investors. Not only might large amounts of our wealth be taken away by higher tax rates and closures of so-called tax “loopholes,” but we are also threatened by fiscal policies that could continue the devaluation of the US dollar and even accelerate what many see as inevitable high inflation. What may be even worse is that the impact could send the US economy into another recession in the process.

That combination of recession and high inflation is called “stagflation,” a phenomenon that we have written about from time to time. The last time the US was inflicted with serious stagflation in the mid-1970s, the stock market fell 45% in 21 months, the price of gold tripled and a broad index of rare coins appreciated by some 1,000%


Another Day, Another Downgrade

November 29, 2012

Evidence continues to mount of trouble in the world economy and financial system.

The latest evidence comes in the form of yet another downgrade of a nation’s credit rating by a major international investment rating firm.

This is the type of trouble for which hard assets, such as rare gold coins, are ideally suited to protect personal wealth.

The latest trouble does not come from the USA and its impending “fiscal cliff.” Nor does it come from the European Union, whose members Greece and Spain are in deep fiscal trouble.

The latest trouble spot is Argentina. Argentina’s financial position is so poor that Fitch rating services has downgraded the country to a rating so low that default is expected soon.

The impact of this on world financial markets is yet to be seen, but in today’s interconnected world, we can be sure that it won’t be limited to Argentina…

http://www.telegraph.co.uk/finance/financialcrisis/9707546/Fitch-downgrades-Argentina-and-predicts-default.html