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Gold vs Stocks

May 12th, 2011 by admin

Gold Return vs. The Stock Market – Which investment would have netted a better return?

“Where should I put my money to get the best return on investment?” This is a question investors from novice to expert ponder with regularity. The choices can be mind-boggling. When considering investment options, the numbers should speak for themselves. Let’s take a look at gold.

Just as food for thought, let’s look at the performance of gold versus the stock market since 1998. This is a trend that most of us are aware of, but it is still shocking to see visually:

Yes, a lot of people have made a lot of money in the stock market. Those that are active traders and have guessed right (buying and selling continually as opposed to buying and holding), have done just fine. Particularly if you’re Goldman Sachs, which continued to push fraudulently rated sub-prime mortgage bundles to their clients while simultaneously selling the real estate market short. This is either pure brilliance or abhorrently unethical; I guess you can decide. Most of the country, however, has a relatively stagnant 401(k) portfolio and are dependent on the overall trends.

Had you put all of your money into gold near the lows between 1998 and 2001, you would have cashed in on a 410% return on investment; during a span which included a major terrorist attack on 9/11 and the worst economic crisis since the Great Depression. Over in stock market-land, the S&P 500 would have yielded a whopping 29% return, hardly enough to keep up with inflation.


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The Truth About Investing in Gold

Jun 17th, 2011 by admin

To fully understand gold’s role in an investment portfolio, we need to adopt a new mindset, a gold mindset which is, simply put: gold is not a bad investment, and gold is not a good investment. Gold is not an investment at all – gold is money.

While many people believe gold is an archaic relic that has no role in today’s sophisticated, computerized, paper-based monetary system, three facts contradict this popular misconception:

1. Gold, silver and platinum are traded on the currency desks of the major banks and brokerage houses, not the commodity desks. Traders understand gold is money to be traded against paper currencies.

2. The world’s central banks hold about 30,000 tonnes of gold in reserves. While there has been a lot of media attention given to central bank sales in the past, gold holdings have only declined by about 2,000 tonnes since 1980. Central banks have become net buyers since 2009 and have been adding gold to their currency reserves. Central bankers understand gold is money.

3. The turnover rate between members of the London Bullion Market Association is over US$20 billion per day, with volume estimated at five to seven times that amount. Clearly, this has nothing to do with jewelry sales and everything to do with the exchange of money.

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Investing Gold ETFs and Silver ETFs

Jun 16th, 2011 by admin

You may want to look at gold and silver right now if you are looking to get out of pure stocks. That might not be a bad idea given the current situation. There aren’t many good stocks to buy around, especially with all of the stuff going on around the world.

Gold has been the safe play for the last two years. In fact, it has really been the world’s currency for the last 4,000 years. The prices really shot up when the financial crisis hit and investors started to look for a safe place to put their money, so they bought gold.

Even those who saw the financial crisis coming and were shorting everything are currently buying precious metals. The reason they are doing this is because they see another crisis coming, one that will be much worse than the last one.

If you want to invest in gold or silver, there are ETF’s out there that will do the trick. For gold, you can look at the SPDR Gold Trust, or ZKB Gold ETF. For silver, you might want to consider the iShares Silver Trust.
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ECB could Stop Buying Italy’s Bonds

Nov 11th, 2011 by admin

The European Central Bank (ECB) could stop buying Italian debt if the country does not follow through on financial reform, a member of its governing council has warned.

Yves Mersch, the governor of the Central Bank of Luxembourg, told yesterday’s La Stampa that that he believes the ECB’s bond-buying programme should not be used to “remedy the errors of policy”.

Mersch also said the bank would consider ending the programme if its efforts are “undermined by the lack of efforts by national governments”.

When asked whether this meant the bank would stop buying Italian bonds if the promised reforms are not completed, the governor told the newspaper: “If the board of the ECB comes to the conclusion that the conditions that led it to make a decision no longer exist, it is free to change this decision at any time. This is the perennial content of our discussions.”

Last Wednesday, Italy agreed on a limited package of budget reforms with the European Union. Italy has nearly €1.6 trillion (£1.4 trillion) of outstanding bonds, making the country Europe’s largest bond market.

Yields on Italian ten-year bonds hit a euro-era high earlier this morning, Bloomberg reports, after rising nine basis points to 6.46%.

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The Euro Crackup

Nov 11th, 2011 by admin

Watching the euro melt has been like watching a train wreck in slow motion. You knew it was coming. You know which cars on the train are next line to be mashed. There is nothing you can do to stop it. You can only watch as it happens, with one car after another compressing like a tin can, and all you can do is say, “I told you so,” the entire time.

The whole European currency scheme was both brilliant and crazy. It was brilliant because Europe should have a united currency. In fact, the whole world should have a united currency. Once upon a time, it did. It was called the gold standard. National currencies were just another name for the same core thing — a nationalist spin on a global consensus. If some country had waved around an unbacked piece of paper and called it money, no one would have taken it seriously.

And the gold standard was internally policing. If one country debauched the currency, gold would flow out, the thing would lose credibility and capital would flee to places that took sound finance seriously. Governments were restrained, the hands of politicians were tied (they could only spend what they could overtly steal) and markets ruled the day. The politicians hated it, but markets were free, stable and growing.
So yes, there is a case for single currencies in regions, or even the entire world. Truly, why should people and multinational commercial institutions have to go through the ridiculous headache of changing currencies at the border? This is just pointless. Imagine if an inch meant something different in every country, and you had to come to a new understanding of its meaning in order to build on this, versus on that side of the border? Markets don’t like this kind of pointless exercise. The natural market tendency is toward unity in what matters (money) and disunity where it matters (competition and entrepreneurship).

So the European elites who cobbled together the euro after many decades of planning played to that sense, and developed a reasonable expectation of a wonderful Europe united with peace and free trade, all with a single currency. It seemed like a recreation of an older, freer, more-wonderful world. So why not?

Here’s why not: The gold standard no longer exists. It hasn’t existed since the politicians destroyed the last remnants of it in the early 1970s. And it was in 1970 that the idea of a single currency for Europe went from the dream stage to the planning stage. At the end of the gold standard, the idea should have been dropped, but it was not. The planning elites had it in their heads that this was the only way forward, and nothing would stop them.

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Silver Demand Will Remain Strong 2011 Year’s End

Nov 11th, 2011 by admin

Strong silver demand is here to stay. According to Thomson Reuters GFMS, silver demand on a net basis across the world will reach the highest point of all time: a demand valued at $10 billion!

Back in 2010, silver soared to a then-record-high of $6 billion in net demand – equivalent to 296.2 million ounces back then. Compared to other uses for silver, the investment demand contributed to 29% of silver’s overall demand.

Just four years ago in 2007, silver demand looked quite differently. Prior to the Lehman collapse, silver investment demand only made up 6% of total silver demand – with 57.2 million silver ounces attributed to investment demands for a net investment demand value of $800 million.

From the sounds of it 2011 will end as an epic year for silver demand. Take a look at this visual documenting silver’s ups and downs for the past year:

“A strong first and final quarter performance should be only marginally offset by a subdued outcome during the middle six months,” the report said. “However, investors’ commitment in value terms will post a fresh record total, with world investment…likely to reach $10 billion on a net basis for the first time.”

Thomson Reuters GFMS said there was a significant amount of unwinding of positions by institutional investors in the first half of 2011, then a fall toward the end of September to around $26 an ounce. As fears of a double-digit recession grew, silver “assumed its industrial mantle” and followed platinum group metals lower, the report said.

“In spite of these developments, a number of factors remain supportive of silver investment demand, both for the remainder of 2011, as well as into 2012,” the report said. “First, the outlook for silver prices remains bullish, with the potential of prices nearing, if not exceeding…$40, a realistic prospect as the fourth quarter develops. This is in part based on our forecast for gold to target the $1,900 level.”

Silver, as well as gold, has received a consistent boost as investors see both the precious metals as safe-havens. And China and India aren’t only interested in gold this year; they’re very attracted to silver too.

India has invested in over 45 million ounces of silver this year alone after investing in only about 29 million ounces last year. Chinese demand is growing exponentially and it is believed that it will “grow by 25% to over 8 million ounces.”

Moreover, the report indicates that exchange-traded funds now play an important role in the market and have for the past few years. The very first ETF emerged five years ago in 2006. In just four years (2010), global ETFs took in 600.3 million ounces of silver and then peaked at 621 million ounces in April. At the end of this past October, that number was right at 577 million ounces.

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Italian Bond Margin Hike, Worldwide Markets Fall

Nov 9th, 2011 by admin

The much dreaded LCH margin hike came and went and while initially the market thought it was just a joke as nothing bad is ever allowed to happen anymore in these neverneverland markets, a few hours later the realization that this is all too real has finally dawned. The result is an epic bloodbath everywhere, but nowhere more so than in Europe, where one can kiss Italian bonds goodbye, and shortly French too, as the bond vigilantes demand that the ECB print now or else. Visually this is presented as follows: a 30 point drop in the ES, an unseen collapse in Italian bonds, and an explosion in the French-Bund spread. And since nobody can demonize CDS any more, we expect Europe to make selling sovereign bonds illegal next.

The Italians (Romans) have seen a lot of bs tax collectors/laws in their time. Who knows Italian history better than Italians? They are doing what Americans should be doing. Pay in cash, avoid banks that pay zippo interest on savings.

At one point the Roman Empire made it illegal for Romans to renounce their citizenship to avoid confiscatory taxes. Wage and price controls were tried long ago. Modern Italians know how their taxes are wasted and have been wasted for a couple of thousand years.


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U.S Economy Deliberately Allowed to Fail?

Nov 9th, 2011 by admin

The state of the American economy to some is no accident. There have been many key factors that have taken place to bring the American economy to where it is today. According to Donald Goldmacher, co-producer for the documentary Heist, it all started falling apart with a deliberate dismantling of middle-class prosperity, ramped deregulation and jobs being outsourced. Goldmacher joins us and gives us his take on who stole the American dream.

Profiteer’s apply their private for profit ponzi schemes to EVERYTHING– profits before people is their motto– and they’ve used their corporate media to coach the people to blame each other, instead of the profiteers, for the cannibalization & devastation of their local economies, communities & future prosperity. Meanwhile, the profiteer’s bank accounts are bursting & their gated communities & exclusive schools are thriving off the massive plunder they’ve leached from our very flawed system.

The unimpeded flood of illegal immigrants to this country has been an important component of the elite’s plan to drive down wages and destroy the American middle class. Yes, this collapse is not an accident, and as the host said, there are many dots to be connected. I wonder if this film will connect them all the way to the true power structure behind the corporation, or whether it will just be another tired treatise on “corporate greed.” It is lust for power, not money, that drives this.

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