A Graphic That Needs No Explanation

December 11, 2012

America’s fiscal health is becoming unsustainable. Sooner or later there will be negative economic and financial market ramifications from this situation. When that occurs, only gold investments will provide safety for investors.

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Gold American Eagle Sales Are Soaring Due to Fiscal Cliff Threat

December 10, 2012

Demand for gold coins among American investors has soared since the presidential election, as investors are growing increasingly worried about the lack of action to address America’s debt problems.

The US Mint’s sales of American Eagles, the most popular bullion coin, soared 131 per cent in November, hitting the highest level in over two years. November was also the strongest month in 2012 for gold Maple Leaf coin sales for the Royal Canadian Mint.

The political gridlock in Washington and the prospect of further quantitative easing when the Federal Reserve’s “Operation Twist” expires at the end of 2012 have fuelled demand for gold investments among investors.

While the jump in gold bullion coin sales highlights gold’s role as the preferred safe haven for investors, investors should realize that bullion coins make up a relatively minor sector of the investment market for gold coins.

Rare gold coins, for example, offer security, privacy and performance advantages over gold bullion coins. They are immune from possible government restrictions on private gold ownership. They are anonymous and, because of their scarcity, they can appreciate even when the price of gold is falling.

The experts at Coin Trader can help you select the gold investments that are right for you.

2% “fabrication premium”  we have today for bullion coins like American Eagles is similar to jewelry premiums in Asia.


BIG STOCK SELL-OFF IN YEAR END FINALE?

December 10, 2012

The approaching fiscal cliff and the probability of higher taxes could prompt an end of year sell-off in the stock market. Investors should prepare by diversifying into assets which are not positively correlated with stocks. Gold investments in particular are well-suited for this purpose…

Wall St Week Ahead: “Cliff” worries may drive tax selling

Investors typically sell stocks to cut their losses at year end. But worries about the “fiscal cliff” – and the possibility of higher taxes in 2013 – may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-related selling even more appealing than usual.

 

http://ca.news.yahoo.com/wall-st-week-ahead-cliff-worries-may-drive-171035415–sector.html

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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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Mitsui Precious Metals: Gold to Move Higher During 2013

December 4, 2012

Mitsui Precious Metals is one of the world’s largest and leading precious metals trading conglomerates. Their Strategic Analyst, David Jollie, sees the price of gold averaging $1,920 during 2013, which is more than 13% higher than its current level.

Note that Jollie says gold will average $1,920 during the year. This suggests the real possibility of sharply higher gold prices at the peak during the course of the year.

Jollie elaborates in an interview on Seeking Alpha…

http://seekingalpha.com/article/1035971-mitsui-precious-metals-jollie-gold-will-average-1920-in-2013

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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%