Hurricane Sandy Intermission Review

October 29, 2012

The markets closed early today due to Hurricane Sandy and trading in gold was subdued due to so many New York traders and investment houses hunkering down for the storm.

So, rather than review today’s inconsequential market results, we decided to look in our archives for articles that we might have overlooked that are particularly relevant to hard asset investors.

We think we found two from just under two weeks ago that everyone should stop and take a closer look at.

First, recently, Pimco, the parent company of the largest bond fund in the world, warned that a further downgrade of America‘s sovereign credit rating is in the cards. They think it’s inevitable and will probably happen just after the first of the year…

http://www.bloomberg.com/news/2012-10-17/u-s-to-get-downgraded-amid-fiscal-theater-pimco-says.html

Second, Mark Hulbert, esteemed editor of the Hulbert Financial Digest, one of the oldest and most respected investment newsletters out there, has pointed out that extensive academic research indicates that a 1987-like stock market crash is “inevitable.”

http://www.marketwatch.com/story/another-stock-crash-like-1987s-is-inevitable-2012-10-17?dist=afterbell

Both of these articles are relevant for investors because they should both serve as warnings that paper assets that might seem secure today, may not actually be so secure tomorrow. If US Treasuries are no longer rock solid and the stock market crashes, gold investments will likely be the most secure assets that an investor can own.

 


HERE WE GO AGAIN: MOODY’S WARNS: US CREDIT RATING COULD BE CUT

September 11, 2012

Moody’s Expects To Cut US Rating Without Deal To Lower Debt/GDP Ratio

If budget talks do not produce downward trend in debt-to-GDP ratio, rating likely to be lowered to AA1.

Another downgrade would threaten the gains experienced in the US stock market in recent months. This would be a case of “the emperor has no clothes.”

http://www.forexlive.com/blog/2012/09/11/moodys-text-to-downgrade-us-if-no-deal-to-cut-debtgdp-ratio/


The Contagion Set to Hit Germany–Hard

July 24, 2012

Germany is viewed as the bulwark for European economic health. While the rest of Europe, particularly Greece, Spain, Italy, Portugal and Ireland, has set the continent on a path to ruin through irresponsible welfare state policies, Germany has largely been viewed as the one responsible nation in the European Union.

Unfortunately, with that responsibility comes a heavy burden. Germany is increasingly being asked to provide the bailout money in the vain attempts to fix what ails Europe. Now, international investment and credit rating firms are beginning to see the impact of that burden. Not even Germany can carry all of Europe’s load by itself.

And, as a result, Moody’s Investor Services has changed its outlook for Germany to “negative,” the first step toward a credit downgrade. This is not to be taken lightly. AAA-rated investment nations are dropping like flies because they are in the uncomfortable position of having to save their irresponsible neighbors.

This situation is unsustainable and will eventually result in an unprecedented financial and economic crisis for which investors must be prepared.

Historically, gold investments have provided the most effective safe haven for investors in times of crisis. Today’s investors have the benefit of being able to act pro-actively and to begin accumulating gold investments before the crisis reaches a dangerous peak. Contact CoinTrader and find out more about the various alternatives available to gold investors.


MARKETS HIT HARD BY MOODY’S BANK DOWNGRADES

June 21, 2012

Today the financial markets were hit hard by the announcement that Moody’s Investors Service had downgraded its ratings of 15 major investment banks, including all of the world’s top 10 investment banks.

Household names like Bank of America, Citigroup, J.P. Morgan Chase, Goldman Sachs and Morgan Stanley were among the financial institutions downgraded because Moody’s sees them as vulnerable to downturns in global investment markets and the world economy.

It was no surprise the US stock markets took the news hard, falling over 2% on the day, but many investors are no doubt bewildered by gold’s reaction to the news, since the yellow metal fell as well.

Gold’s reaction was actually in keeping with its cyclical role in such crises. Often at the outset of a financial crisis, the price of gold will fall as investors use their gold holdings as a certain source of liquidity to cover losses in other parts of their portfolio. This is exactly what happened in 2008 when the US financial system nearly melted down. Gold fell at first, but eventually rebounded sharply and finished the year in positive territory, while the Dow was down 33% for the year.

We expect a similar reaction this time and recommend that our clients view current levels as exceptional buying opportunities for physical gold investments of all types.