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Gold: The King of Currencies
The following is an
excerpt from our FREE Special Report on the current bull market in Gold titled, How to Buy Gold for $350 Per Ounce. Enjoy!
Do you own gold yet?
As I’m sure you’re aware, starting in July 2007, the
financial markets entered one of the most severe crises in history. In response
to this, the Feds (Federal Reserve, Treasury Department, etc.) have tried to
prop up the financial system with endless money printing and stealth bailouts.
And that’s a BRIEF recap (I’m sure I left something out).
At some point (and I cannot tell you when), the money
printing and bailouts will result in a horrific wave of inflation similar to
the one this country saw in the early ‘70s. No central bank in the history of
mankind has ever been able to print money ad nauseum without devaluing its
currency. And the US central bank is currently producing TRILLIONS of dollars
to aid their friends on Wall Street.
Indeed, inflation is actually already here as the headlines
attest:
Global Food-Price Index Hits Record
China
has raised interest rates twice in recent months to combat inflation. Euro-zone
inflation jumped past the bloc's target rate for the first time in more than
two years, data released this week showed, and economists said the rise was
likely due to higher food and energy prices.
UN body warns of ‘food price shock’
The
world faces a “food price shock”, the Food and Agricultural Organisation has
warned after its benchmark index of agricultural commodities prices shot up to
a nominal record last month, surpassing the levels of the 2007-08 food crisis.
The
warning from the UN body comes as inflation is becoming an increasing economic
and political challenge in developing countries, including China and India, and
is starting to emerge as a potential problem even in developed countries,
including the UK and the eurozone.
China Acts To Prevent Collusion On Prices
China's
economic planning agency unveiled regulations to prevent price collusion and
monopolistic pricing practices, giving the government more tools to rein in
inflation pressures… Under the new rules, competitors will be banned from
reaching agreements to fix prices, while business partners will be barred from
agreeing to minimum resale prices, the NDRC said.
China PBOC: To Give Higher Priority To Curbing Inflation
China's
central bank will give a higher priority to curbing inflation in 2011, the
People's Bank of China said Thursday, boosting expectations that it will adopt
more tightening measures, such as raising interest rates.
China
has adopted various measures in the past few months in a bid to rein in
inflation. The PBOC hiked benchmark interest rates on Dec. 25, the second time
since Oct. 19, which was the first rate hike in nearly three years.
Brazil pledges to stop US 'melting the dollar'
Brazil
has sounded a new note of warning in the international "currency war"
by pledging not to allow the United States to "melt the dollar".
Guido Mantega, the Brazilian finance minister, raised the prospect of
introducing greater controls on short-term flows of speculative capital into
his country.
All of these come from major media outlets (not exactly at
the forefront of investigative journalism). At this point I actually wonder if
Ben Bernanke can even read. I realize
that sounds harsh, but how on earth can he claim inflation is under control? I
mean, does this guy even bother reading anymore? He’s an academic right? Isn’t
his entire job supposed to consist of reading and thinking?
Let’s be clear here, inflation has already begun to rear its
head around the world, especially in food prices. This is a MAJOR problem for
emerging market economies where food comprises a higher percentage of consumer
spending than in the US. So expect to see food riots and greater civil unrest
in many emerging markets.
And you BETTER prepare for inflation in the US.
Indeed, We’ve already seen commodity prices spike across the
board in the US in the last year:
The next stage is the paper currency collapse: the stage at
which inflation accelerates as the US Dollar collapses, destroying purchasing
power while inflation hedges EXPLODE higher.
So it’s no surprise that the smart money (investing legends
like Jim Rogers, David Winters, and the like) have been preparing in advance
buying inflation hedges and companies that profit during periods of high inflation.
And nothing protects against inflation like GOLD.
Gold was, is, and always
will be THE ultimate storehouse of value. Mankind was prizing this stuff during
the prehistoric period, long before the concept of stocks, mutual funds, or
paper money even existed.
Today, with world central
bank’s printing paper money day and night it is no surprise that Gold is now
emerging as the ultimate currency: one that cannot be printed. Small wonder
then that it has recently hit new all-time highs against ALL major world
currencies.
And despite its historic
rally Gold is still cheap on historic standards.
Indeed, while a lot of commentators have noted that gold is
already trading above its 1980 high ($850 an ounce) they failed to note is that
thanks to inflation, $1 in the ‘70s has a heck of a LOT MORE purchasing power
than $1 today.
For gold to hit a new all time high adjusted for inflation,
it would have to clear at least $2,193 per ounce. If you go by 1970 dollars
(when gold started its last bull market) it’d have to hit $4,666 per ounce.
Now the question is, should you buy physical Gold or invest
in one of the paper-based Gold ETFs (GLD and the like)?
Two Golds: One Paper &
One REAL
Gold is somewhat unique amongst investments in that it
trades both in physical form (bullion, or the actual metal) and a “paper” form
(the Gold ETF (GLD) and COMEX). The differences between the two are striking:
To my way of thinking, you only own Gold if you OWN Gold. By
this I mean you have REAL ACTUAL GOLD in your hands, NOT a claim on Gold that
someone else CLAIMS is exists. After all, the paper-based Gold ETFs are all run
by large banks that claim to have enormous warehouses of Gold. Seeing as these
institutions are all lying about the toxic debts, off-balance sheet assets, and
more… what’s to stop them from lying about their bullion reserves?
So when it comes to buying Gold, you HAVE to own some actual
physical Gold. And regardless or whether you’re investing in gold as an
inflationary hedge, a backup source of wealth should the world’s financial
markets collapse, or because gold remains one of the few means of hiding one’s
wealth from unwanted attention, there are several key rules you should always
follow:
Only buy from a dealer you know and trust. And buy bullion
that is liquid enough that you can buy or sell it quickly.
How much you purchase is up to you. But you should have
several months’ worth of expenses in gold and silver bullion. Why Gold AND
Silver? Because if the banks are closed or if paper money is worthless, you
don’t want to be walking around with an ounce of gold (worth $1k+) to buy
groceries. No, you will want some precious metals of smaller denomination to
purchase/ barter with, hence the need for some silver.
In terms of actual gold coins, there are three coins that
comprise the bulk of the bullion market. They are Kruggerands, Canadian Maple
Leafs, and American Gold Eagles. I’ve been told to avoid Maple Leafs by both a
trader and a bullion dealer as they can easily be scratched which damages the
gold and reduces the coin’s value.
In terms of silver, the easiest way to get it is in pre-1965
coins (often termed “junk” silver). The bullion dealer I spoke to prices them
at 50 cents over spot. However, you can also get silver one-ounce rounds
(coin-like medallions) and 10 ounce bars both of which can be bought at 95
cents over spot. Finally, you can buy Silver Eagles at $2.50 over spot.
Again, I cannot tell you which dealer to go with, but look
for someone who’s been dealing for years (not a newbie). You should also ALWAYS ask for
references from the dealer (former clients you can talk to about their
purchases/ experiences).
Some warning signs to avoid are dealers who try to store
your bullion. NEVER, I repeat, NEVER store your bullion with someone else.
ALWAYS store it yourself. Also, be sure to talk to the dealer for some time and
ask him or her numerous questions about the industry, the coins, etc. If they
can answer everything you ask in a knowledgeable fashion, their references
check out, and you verify everything they say with a 3rd party, you
should be OK.
In terms of storing your bullion, you can store it in a safe
deposit box or buy a decent home safe from Target or Wal-Mart (or a specific safe
store). If you go the safe deposit box route, make sure it’s with a bank that
has as little exposure to derivatives as possible.
To continue with the rest of our FREE report on Gold swing
by http://www.gainspainscapital.com
and click on FREE REPORTS. This 17-page report details not only what’s likely
to come, but how to prepare for it. And it’s all 100% FREE.
Good Investing!
Graham Summers
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Right, they're going to be sending people door to door, every household, with a metal detector? I think not.
+++ Lord Koos
I think it was RockyRacoon himself who mentioned an interesting statistic, namely that something like 90% of gold owners ALSO own guns. But not the other way around.
There are 80,000,000 gun owners in America who have some 200,000,000 guns total (average 2.5 each!). But only 2% - 3% of Americans own non-jewelry gold. Let's do some quickie math for fun:
-- Call it 2.5% who own gold and 90% of them own guns as well.
-- PERHAPS 10% of gun owners (hey wingin' it here) own gold.
MEANS
Only a tiny percentage of Americans own BOTH! OK, the above two do not yield the same number owning both, but are close enough for government work... WE are OK...
And do they think that .gov will be able to confiscate the gold? Or the guns? Nope, too many armed to the teeth gold & gun owners, WE THE GUARANTORS of American liberty will keep that from happening... Too many ARs and AKs out there...
Obama would have NO BETTER LUCK than FDR had trying to get our gold.
You know what happens when commodities go up? Food prices go up. Who controls the food supply? The guvment and their troops, organized through a command system that won't be shut down like common people's phones and internet (look to Egypt for example).
Guess how Stalin smoked the Soviet gold out? People had to have vouchers to buy food at specific stores. Most were kept to stores that habitually ran empty. The only way for them to secure food was to use their gold and buy at the foreigner's stores which were always well stocked and willing to accept the hard stuff, no questions asked.
Once you have your guns and gold you also need numbers of like thinking individuals because you're fighting a well-fed guvment police force that has the ability to concentrate force and communicate even when everyone else's Iphone crashes.
Some interesting thoughts to keep in mind in the coming years. Information means survival.
work for welfare. if you're gonna give people money for being unemployed, might as well give them some make-work projects to do. like counting the number of animals that are dead in a mass die-off. or mapping out buried lumps of metal with metal detectors and GPS.
If you are long gold you are dollar short by definition. You are also in aggregate playing the.dollar short trade with all the specs right now. How much debt is out there that needs to be serviced eventually and how big a margin call are we all gonna.get when we dont have enough cash and the marginal player has to dip into his gold stash, paper or otherwise, remains to be seen. Weak hands in commodities are going to cave soon, give it a couple of months.
+1 TCT
The weak hands are not the ones who will be dipping into their stash.
With everyone screaming armageddon on ZH all the time there has been a loss of perspective. This complete default and collapse that everyone expects will not happen in the immediate term. HOWEVER those dipping into their stashes of PM to start servicing their debts may have commenced.
Commodities will have some buying dip opportunities before now and the end game, just watch out for them. And every noob on here who bought SLV above US40 with the physical dealer margins included is now looking back at what the dealers will pay to sell it back and shitting themselves.
Thx for keeping some reality to the argument TCT
top, although I disagree with you re commodities caving soon, I would certainly keep a nice big chunk of cash $ (FRNs) around in case you are right.
Bearings are no good at predicting the future, but they do roll with the forces...
Your mindset is so back in the last century.
The debt isn't going to be 'serviced' ... rather it's going to be DEFAULTED.
And (self admitted) trolls such as yourself will be left with a piece of worthless paper in your hand crying ... "that's not fair".
I’ve been told to avoid Maple Leafs by both a trader and a bullion dealer as they can easily be scratched which damages the gold and reduces the coin’s value.
Call me crazy, but in a SHTF environment, are people going to be nitpicking over scratched bullion?
Philharmonics are quite popular (maybe more so than Leafs) outside of the US/Canada.
Big fan of the philharmonics. Premiums are lower than on Eagles and Krug's.
Pure gold is soft, why are Maple Leafs softer than other gold rounds?
24k gold vs 22k
Shit, I junked you by accident with ipad.
The US coins, being inferior, are basically clipped like what the Romans did to expand money supply.
A dirty rotten trick and typical
No, the US Gold Eagle has exactly 1 troy oz of gold AND it also has a little bit of copper (and silver too?) to harden it up. So, the coin itself weighs a bit more that 1 troy oz.
The Eagle is just a US clone of the Krugerrand, 22 kt gold, but with ONE FULL OZ of gold.
Ask your coin dealer or anyone else you know who buys gold.
Sheesh. The level of ignorance is stunning.
.9999 pure gold versus .9167 for american eagles : http://en.wikipedia.org/wiki/Canadian_Gold_Maple_Leaf and http://en.wikipedia.org/wiki/American_Gold_Eagle
Discriminating buyers prefer the .99999 Maple.We call it the five nine.
http://www.tulving.com/bullion/99999_gold_coins_2008_maple_leaf_$200_gold_from_canada.htm
When trading one for vital foodstuffs or ammo the "discriminating buyers" aren't so picky any more.
I love those bad boys.. got five 2009's myself in the original packaging.
Because most gold bullion coins, like the American Eagle or the SA Kruggerand are a mix of gold and something else ( like silver and copper ). They still contain one ounce of gold, but they aren't "pure" gold like the Maple Leaf. AGE, and Krugs are slightly larger in diameter also, allowing for the extra metal content.
exactly.. i left a gold bar in with a stack of silver and it got scratched up with hardly any movement so if those others don't scratch ya gotta wonder about them
Nah. Nobody cares about scratches unless it has numismatic value. Keep 'em in the tubes though.
They won't do you any good in the tubes. You need to sell them to realize their value.
All ya gotta do is buy some non-PVC flips to keep them in. They will be protected yet easy to remove for testing if needed. Maples are .9999 gold, whereas, Eagles are .9167 gold with the copper content making them harder and more durable. There is a full troy ounce of gold in either coin.
http://www.jpscorner.com/Coin_Holders.htm
Coin Flips very cheap protection.
A good, honest, long time supplies dealer.
the quality of slander has been reaching new lows.. is it time to go long slander??
Safe deposit box? Home safe from Target? I junque you.
I support your junk, and add my own.
See this for a demonstration for why not to buy a safe from discount stores. The maker here sold these cheaper safes for a while, and now has bought them back, and has designed his own safes. Don't put gold in shit safes, and don't let anyone know you have a safe.
http://www.roguesafe.com/promo.html
Put Gold in good safes?? Who wudda thunk!
Put Gold in good safes?? Who wudda thunk!