Having replaced savings with debt on both the national and individual levels, I think it's well past time for Westerners to take a few lessons from our creditors in the East. Many Americans consider gold a "barbarous relic," but in Asia, the yellow metal remains the bedrock of individual savings plans. This means that either greater than half of the world's population are barbarians, or they've held onto an important tradition that our culture has forgotten.
A Culture of Gold
One of the most important elements of Eastern gold demand is that it is not limited to educated investors or the higher classes, as often seems to be the case in the West. Throughout Asia, no matter one's social status, precious metals are the first assets people choose to protect their wealth. There is not even a glimmer of doubt about the enduring value of hard money.
A recent Bloomberg article quotes a Chinese woman, "I don't know anything about the stock market and I don't have enough money to buy property, so I figured gold is the safest choice."
Some might write off this philosophy as naïve, but her logic is founded in centuries of tradition, borne of hard-won experience. The same goes in India and across South Asia, where gold is an essential part of local religious customs. From wedding dowries to temple offerings, gold carries a cache in Asia that most Westerners can't fathom. ...
Americans may have to start paying to keep money in the bank. Retail banks have warned they might need to start charging customers and companies for deposits if the US Federal Reserve cuts interest it pays on bank reserves.
The message from the US banks comes as fears grow the Fed could start tapering its $85 billion monthly bond purchases, the Financial Times reports. Less money injected could mean the US authorities will start using alternative tools to boost the economy, like cutting interest rates.
The US Fed took the drastic decision to cut interest rates to near-zero to help stabilize the economy after the 2008 financial collapse and the following recession. This allowed banks to pay less for the money they borrow. ...
Almost a quarter of Greece’s 11 million people are at risk of poverty, the highest such percentage among European Union countries, according to recent statistics from the Hellenic Statistical Authority (HSA).
The HSA said 23.1 percent of Greeks were at risk of falling into poverty in 2012, up from 19.7 percent in 2009. That’s equivalent to more than 900,000 households, which could soon earn less than about 11,900 euros ($16,000) for a household with two adults and two children under 14 years.
Those hardest hit include single parents with children and unemployed men. Over 50 percent of men without jobs risk poverty. Single mother households and homes with seniors are also vulnerable. ...
had the chance recently to reconnect with John Rubino, CFA Institute contributor, blog publisher, and author of a number of financial books.
It was a particularly interesting conversation, as John has written a number of prophetic books warning of growing asset bubbles, and currently produces editorial research for CFA designated fund managers worldwide. As the subject of discussion, was a recent piece published by John, entitled,“Inflation is Raging – If You Know Where to Look“.
In discussing his research on global markets, John notes that frightening asset bubbles are developing all over the world, and as a case in point, “Bitcoin…was about a dollar per Bitcoin a couple of years ago. Now it’s $1000…A painting by Francis Bacon called ‘Three Studies of Lucian Freud’ [just] sold for $142 million, which was the highest price ever paid for a painting at an auction….[A] diamond [just] sold for $83 million which is the highest price ever paid at auction for a diamond, and trophy real estate in Manhattan, London, Singapore and Hong Kong have all blown through previous records…So there are asset bubbles [occurring] all over the world.” ..,
This reference is to Janet Yellen’s testimony in her Senate confirmation hearing as the chairman-to-be cited the benefits of the Fed’s policy of über low rates for the average household. While many Senators challenged the negative effects of the Fed’s policy for savers–financial repression in the words of Carmen Reinhart–Yellen noted that people were not just savers but also consumers. Thus, Fed policy may harm the return on savings, but households may receive the benefit of lower home and auto loans and the Fed’s QE policy may have had the ripple effects of getting their college graduate a job. So financial repression was a very difficult outcome to measure against the broad economic outcomes.
Well, Ms. Yellen, the same will also hold for the Federal Court that ruled Detroit’s bankruptcy is allowed to continue, which may enable a significant hit to the public sector pensions. However, pension restructurings are a form of financial repression that will have positive “ripple effects” for many participants in the Detroit economy and maybe even Illinois. Financial repression can come clothed in various forms and the restructuring of public liabilities may be an outcome that salvage states and cities for the greater good. Political payoffs resulting in State Constitutional protections do not hold sway over Federal bankruptcy law. Now, about those ripple effects. ....
Today a legendary value investor warned King World News that there are tremendous risks facing global markets which have put the financial world in an incredibly precarious position. Jean-Marie Eveillard, who oversees more than $65 billion, also spoke about gold and other key markets. Below is what the legendary investor had to say.
Eveillard: “I just returned from Europe, where I was mostly in France, and the mood was not good there because the economy is not doing well. And since the economy is not doing well, there are political developments on the far-right and on the far-left.
“Some people, and I cannot blame them, believe that the establishment has failed them in the sense that the economy continues to do poorly.” ...
Click through for the full interview. He is voicing a sense I'm also getting from things.
Moscow is ready to resume talks in Bali on Tuesday and hopefully sign a landmark Asia-Pacific region free trade zone deal, which would cheapen import goods worldwide and boost global trade by $1 trillion, Aleksey Uluykaev told in interview to RT.
The inflationists and gold-haters have been able to drive gold down to a new low. The P&F chart of gold below looks scary, but as I see it, what we are looking at is an ever-larger and growing base for gold. The base has been forming ever since July of last year. It's been practically begging speculators to short gold. The more shorts, the better. I also think there's been a lot of tax-loss selling by fund managers in gold and particularly the gold miners. ...
Game Theory is the study of mathematical models of conflict and cooperation between rational strategic decision makers, which is essentially a fancy way of saying “Think about something from the standpoint of your opponent, and try to figure out what their most logical move is”. So I started thinking, which is admittedly a dangerous thing, about Game Theory in relation to China’s now considerable gold hoard. What follows is merely my attempt to stimulate a conversation on one of the most significant potential economic shifts any of us are likely to see. Please be warned that I claim no special training in or understanding of international currency flows, monetary policy strategy or implementation, or pretty much anything else. But since the financial press and others within the mainstream investing world seem intent on pretending that none of this is happening, well… somebody should talk about it.
Let’s do some crude, back-of-the-napkin calculations and see where this train of thought leads:
There are 35,274 ounces in a metric ton of gold. Let’s say that China’s actual total gold holdings are now around 5,000mt as reported in this Reuters article. Five thousand metric tons would be about 176 million ounces. As I type, the price of gold is roughly $1,250 per oz, meaning that China’s 176 million ounces would have a current market value in US Dollars of $220 billion dollars. Meh. No biggie.
But what would happen if the Chinese prominently announced their gold holdings publicly? ...
To: Developed country governmentsCc: Developed country central bankers
Dear Vote Seekers,
I was born during half way through the cold war. That was the insane period of time when the superpower governments of the USA and the Soviet Union, and their allies, entered into a massive nuclear arms race.
By 1961 there were already enough nuclear bombs to wipe out the entire world. Yet nuclear proliferation continued for more than two more decades. At the time, no one questioned the logic of the ability to destroy the enemy several times over. Once was not enough.
Today a new kind of policy insanity grips the world: the vast proliferation of your fiat currency units. Hardly anyone questions it. Those that do are treated like outcasts.
That’s fine by us: we have thick skins here at OfWealth. We’re used to being outcasts. But that doesn’t make your policy any more sane. ...
Click through for the rest. I have to pause and give a nod to the idea of Fiat Currency being a weapon of mass destruction.
Fed Chair Bernanke vehemently denies Fed “monetizes the debt,” but our research shows the Fed may be increasingly doing so. We explain why and what the implications may be for the dollar, gold and currencies.
What is debt monetization? A central bank is said to monetize a government’s debt if it helps to finance its deficit. The buying of Treasuries by the Federal Reserve is a clear indication that the Fed is doing just that, except that Bernanke argues the motivation behind Treasury purchases is to help the economy, not the government. ...
Various propaganda attempts are being made to air-brush lackluster holiday spending into a happy story of strong "growth," but the over-all picture is of stagnation, not "growth."
The propaganda will soon shift to predicting "strong after-Christmas sales" and gift card redemptions in January; if after-Christmas sales are the foundation of "growth" and earnings, the U.S. economy is in real trouble. ...
Click through for the rest of his thoughts and a video.
Boston University Economics Professor, Laurence Kotlikoff, says, “The country is in worse fiscal shape by many miles than Detroit. So, the country is essentially bankrupt.” Dr. Kotlikoff estimates the long term debt and liabilities of America are more than $200 trillion! He is spearheading a bill in Congress called The Inform Act. It is an attempt to wake up the nation to our dire financial situation so something can be done to fix this enormous problem. Dr. Kotlikoff explains, “The bill has been endorsed by over 1,000 economists, including 15 Nobel Prize winners in economics . . .Never in the history of this country have this many top economists from all political persuasions endorsed a piece of legislation like this.” Dr. Kotlikoff and his fellow economists all contend, “The country needs to do honest accounting.” The professor charges the government is “disguising the true problem.” Dr. Kotlikoff says, “The government is printing mountains of money to pay its bills. The Fed is printing 29 cents of every dollar that Uncle Sam is spending.” What happens if this continues? Dr. Kotlikoff says, “Eventually somebody recognizes this and starts dumping the bonds, and interest rates go up, and inflation takes off, and were off to the races.” In closing, Dr. Kotlikoff warns, “This is going to crash, but there are different ways for cancer to kill you. It can be very gradual . . . or it can attack some organ and you can die overnight. Either of those outcomes can happen.” Join Greg Hunter as he goes One-on-One with Professor Laurence Kotlikoff. ...
Gold's price has fallen by more than a third since its 2011 high. The downturn exceeds the 2008 waterfall selloff. Many technical analysts are saying that the "damage" on the charts is too great for gold to recover. The rout is so bad, even hardened goldbugs have grown quiet lately.
Is it time for gold investors to admit defeat?
Well, if it were true that "damage" on a chart such as we've seen signals the end of a bull market, perhaps it might be. But is it so? Or is this just a correction?
One of the greatest bull markets in modern times was the Nasdaq in the 1990s. The Nasdaq composite rose a whopping 1,150% over the span of a decade. But did you know it had a major correction in the middle of that run? ...
Click through for the rest of the post with all the charts.
One of the most highly respected fund managers in Singapore spoke with King World News about a stunning event that is about to completely alter the war on gold. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also discussed how this war will ultimately end as well as what all of this means for investors in gold. Below is what Williams had to say in his powerful interview below.
Williams: “You have 5 banks that set the price of gold every day in London. They literally do it over the telephone. And this process takes anywhere from a few minutes to over an hour. Amazingly enough, in this day and age, during that ‘fixing’ time the participants on that call are allowed to trade the metal (gold) and they are allowed to trade derivatives on that metal during the phone call....
What is truly remarkable is the collapse in gold and silver prices continues to take place against the backdrop of technical hyperinflation in other hard assets such as the fine art, antique cars, watches and diamond markets.
People who have been big believers in gold and silver have been giving up recently. The only thing I can say in response to that is this is the best opportunity to buy this stuff in history. Don’t give in because this is what the central planners want you to do. Central planners in the West want people to throw in the towel because they want your metal. ...