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…


Reuters: Higher Inflation on the Way for Americans in 2013

October 25, 2012

For quite some time, we’ve been warning that America‘s fiscal and monetary policies would eventually result in higher inflation.

Now the mainstream media has finally caught on. Reuters is warning of tough times for Americans in 2013 due to higher prices for many items. In other words, higher inflation is on its way:

Consumers will have to dig deeper into their pockets next year to pay for costlier healthcare, more expensive grocery bills and higher taxes, an extra drag on the country’s already slow-moving economy.

Rises in the prices of corn and soybeans and other field crops as a result of drought this year in the U.S. Midwest are expected to feed through into food prices late this year and in early 2013.

U.S. soybean prices jumped 40 percent over the summer, while wheat shot up about 50 percent. Prices have eased a bit since then, but the increases are expected to filter down to consumers.

The arrival of higher inflation also has serious implications for investors. Historically, periods of high inflation have been unfriendly for the stock and bond markets. On the other hand, gold investments tend to lead the way during periods of high inflation. This is true of a broad array of gold investments, not just gold bullion.

For example, rare gold coins tend to outperform gold bullion due to their added scarcity. They also offer security and privacy advantages over other forms of gold investment.

Gold Soars to $37 to 6-month High on News of QE3

September 13, 2012

Against a backdrop of turmoil and violence in the Middle East, the Federal Reserve today announced a new round of monetary stimulus to jump start the stagnant US economy.

As a result of this announcement the price of gold shot up $37 per ounce to a six-month high, closing at just under $1,770 per ounce.

Stocks also soared in response to the announcement in hopes that the new Fed policy would succeed better than QE and QE2 in getting the US economy humming along again. The Dow finished higher by over 206 points.

The nature of QE3 amounts to the Fed going out in the open market and buying $40 billion worth of Treasury bonds every month, thus increasing demand for US Treasury securities and injecting more dollars into circulation.

We are not at all sure that this will result in a healthier US economy, but we are sure that it will result in a weaker dollar and higher inflation. Because of that, we expect that the current bullishness in stocks will eventually expire and the bullishness in gold investments will continue. A weaker dollar and higher inflation have historically been bearish for the stock market and bullish for gold.

Flooding the world with more dollars can only mean a weaker dollar and such stimulative monetary policies have historically led to higher inflation. We expect that inflation will make itself felt in the form of higher oil and gasoline prices in the short term and in other areas down the road.

All of this should prompt investors to buy gold investments now because it appears that gold has a ways to run. And the best way to take advantage of higher gold prices is to buy rare gold coins, which have added profit potential due to their scarcity.

Gold Soars as Stocks Come Down

June 26, 2012

Worries about came back to haunt stock markets on Monday as the price of gold soared due to safe haven buying.

Fresh concerns that the economic and financial situation in Europe is deteriorating slammed world stock markets on Monday. Stock markets in China, Japan, Germany and London were all down sharply. The Euro Stoxx 50, an index of European blue chips, fell by 2.6% during the day’s session.

The carnage washed up on American shores as well. The Dow Jones Industrial Average fell 138 points, or 1.1%, the Standard & Poor’s 500 finished 21 points lower, or 1.6% and the NASDAQ was down 56 points, or a full 2%, at the close.

Gold was decidedly higher amidst all the chaos, rising more than $15 per ounce to $1,588.00.

This was classic safe haven buying of gold. Despite the fact that the dollar was higher against the euro, one of its chief rivals, and despite the fact that one of the key indicators of inflation, the price of oil, has been declining precipitously, gold still rallied.

When investors have seemingly no place to turn, gold always stands out as the clear choice.

This vividly demonstrates the true independence of the gold market, and why gold has been considered a safe haven for 5,000 years. Against the continued backdrop of uncertainty and crisis in Europe, gold is once again providing vital security, rising while stocks are falling.

To learn more about the benefits of owning gold, contact Coin Trader today at (866) 603-1938.

Goldman Sachs: The Fed is about to restart the money pump

June 20, 2012

Goldman Sachs is a lot of things to a lot of people. The Wall Street firm is certainly not without controversy.

But one thing critics and fans alike will admit about Goldman Sachs is that the firm has insider knowledge of the Federal Reserve. That’s because for years there has been a revolving door between Goldman Sachs and the Treasury Department.

Employees go back and forth between the Wall Street firm and government service at the Treasury Department in general and the Federal Reserve in particular.

That’s why when Goldman Sachs makes a statement about Federal Reserve monetary policy, investors need to listen carefully.

This week Goldman Sachs has issued an advisory forecasting that the Federal Reserve will soon resume an accommodative monetary policy designed to spur economic activity. The method Goldman Sachs says the Fed will use to do this will be to go out in the open market and buy US Treasuries as well as US mortgage-backed securities, such as bonds issues by GNMA, FNMA and Freddie Mac.

The idea is to inject cash into the economy and attempt to keep interest rates on Treasury and mortgage-backed issues down.

It is a theory that looks good on paper, but one which has not really worked all that well in practice. The Fed has been priming its money pump over and over for some time now and yet the US economy has remained anemic.

These types of monetary policy moves are much more likely to undermine the value of the US dollar and create new bubbles than they are to actually stimulate real economic activity.

The world is already awash in dollars. Adding more dollars at this point should meet squarely with the law of diminishing returns. All injecting more dollars into the system will do at this point is further undermine the value of the existing dollars.

It is simple supply and demand at work. If the supply of an item is increased with no corresponding increase in demand for that item, the value of that item falls.

And make no mistake, there is no increasing demand for dollars. If there was, the Fed wouldn’t have to go out on the open market and buy US Treasuries in the first place. If demand for US Treasuries was already robust, the Fed would be seeking other means to stimulate economic activity.

No doubt the markets will cheer this move by the Fed because more money swashing around in the system over the short term means more money available to invest in the stock market. And low interest rates on Treasuries means that there is less competition for those stocks from what were formerly thought of as “risk-free” government bonds. (Is it any wonder why S&P downgraded the USA‘s credit rating 10 months ago?)

But the real play here is gold. Because gold will not only benefit from the low interest rate policies over the short-term, but, unlike stocks, will also benefit from the undermining of our dollar over the long-term.

Gold serves as a counterweight to the US dollar because the US dollar is the world’s reserve currency of choice and also because gold is priced in dollars. Any decrease in the value of the dollar is usually met with an increase in the price of gold.

This week, at least according to Goldman Sachs, the Federal Reserve is planting the seeds for rising gold prices down the road.

Get your gold now while the price is still low.

Stagflation: The Worst Case Scenario

June 14, 2012

Ed Butowsky has an important article over on the Fox Business web site about a phenomenon that investors should be concerned about: Stagflation.

Butowsky is one of America’s foremost wealth managers. He only provides services for the top 1% of Americans in terms of assets and income. He counts among his clients some of the wealthiest professional athletes in America.

Now some background on the topic of Butowsky’s article: Stagflation is the combination of a rising cost of living and stagnant economic growth. It was a term introduced in the 1970s when the phenomenon first appeared. The most important thing to know about stagflation is that it is terrible for stocks and bonds and very good for hard assets.

During the stagflation of the 1970s, the S&P 500 fell 45%, while the price of gold tripled, sending rare gold coins even higher.

Butowsky says that inflation is coming back and makes the case for that forecast in an article entitled “Ready or Not, Stagflation is Here.”

How Do You Spell “PANIC” in Greek?

June 13, 2012

This Sunday Greek voters will go to the polls to decide the economic and financial future of their country. Or so they think.

Their economic and financial future was already decided for them long ago with misguided, irresponsible fiscal policies which have placed their country upside down and deeply underwater in debt.

That’s why Greece has been the focal point of the ongoing–and still evolving–crisis in Europe for several months now.

There is a real fear that Greece could exit the euro, the common currency of the European Union, and send the region into true economic financial and even political chaos.

In response, should Greece take that step, the European Union is planning on closing its borders, cutting off money flows into Greece and even limiting ATM withdrawals in Europe to prevent a stampede of assets out of European banks.

These types of draconian policies are just the kinds of things that undermine public confidence in banks and other financial institutions–not to mention governments. It’s the stuff crisis is made of.

And we’re seeing a preview of the chaos in a very subtle but important form right now: Greeks are removing a billion dollars per day from banks. In olden days that would be called a “bank run:”

It is naive to believe that this crisis can be limited to Greece, or even contained in Europe. There is too much counterparty risk between banks and other institutions around the world. The Domino Effect is alive and well in the financial markets. Gold is the best protection.