This page has been archived and commenting is disabled.
It’s Time to Hold More Cash and Buy Gold
It’s Time to Hold More Cash and Buy Gold
- Bank of America advises owning gold
- Markets in “Twilight Zone” transition period
- Fed policy normalisation poses risks
- Own gold and cash to protect against “cleansing drop in asset prices”
- Data show markets disconnected from reality
- Fragile system vulnerable to shock
- Gold is hedge against systemic risks
Gold is a regarded as a hedge against market turbulence by Bank of America who, in a note to clients, advised holding gold and paper currency at this time.
Bloomberg report that Bank of America Merrill Lynch describe the markets as being in a “Twilight Zone” - the zone between the end of QE and the Fed beginning to raise rates to try to bring normality back into the markets.
The note highlights two problems with raising rates which are prolonging this sojourn in the Twilight Zone. The first is that the real economy in the U.S. is not currently strong enough to withstand a rise in interest rates.
The second is that raising rates could cause a shock to the markets and the economy as the practically free money juicing the markets comes at a more realistic cost and some government, corporate and household debts become unserviceable.
For these reasons, Bank of America believe that the Fed is far from taking action to return the markets to normality and “the investment backdrop will likely continue to be cursed by mediocre returns, volatile trading rotation, correlation breakdowns and flash crashes.”
To deal with this they advocate adding gold to one’s portfolio along with higher levels of cash. Citing factors such as liquidity, profits, technological disruption, regulation, and income inequality they say there exists a potential for a “cleansing drop in asset prices.”
The note also indicates that data shows that the stock markets in the U.S. are somewhat disconnected from reality. While investors are apparently optimistic there is a large amount of cash “on the sidelines”. Their chart shows that the high levels of cash currently in reserve actually correspond to periods of extreme pessimism in recent years.
They note the anomaly of near record high stock prices while equity funds haemorrhage cash. “U.S. equity funds have suffered $100 billion of outflows in 2015 while the S&P 500 is near all-time highs”. They put the outflow down to U.S. investors putting cash into European and Japanese equities.
On the other hand, “buying from those not captured in flow data (sovereign wealth funds, pension funds and central banks) could be what's giving U.S. equity indices a boost.”
The note concludes that the outlook for the markets over the summer is not favorable,
“The summer months offer a lose-lose proposition for risk assets: either the macro improves and the Fed gets to hike, which will at least temporarily cause volatility; or more ominously for consensus positioning, the macro does not recover, in which case EPS downgrades drag risk-assets lower.”
For a host of disparate reasons we cover here consistently - ranging from geopolitical tensions and currency wars to gargantuan unpayable debt and other macro-economic fundamentals - we believe the entire interconnected global economic, financial and monetary systems to be extremely fragile.
As policy makers lurch from crisis to crisis it seems certain that, at some point, their ability to control the outcome of a particular shock will be wanting. History shows that crises usually spring from seemingly minor events. A correction in the stock markets - should it occur - may turn out to be a “cleansing”. But it may precipitate a larger, unforeseen crisis given the fragile state of the system.
In the event of such a crisis - and given the insane levels of debt now extant across the globe there is potential for a serious crisis - physical gold stored outside of the banking system will perform its time-honored function of protecting wealth.
We offer clients fully, segregated accounts with the most reliable vaults in the world in safe jurisdictions such as Switzerland and Singapore.
Read the storage guides below:
Essential Guide to Gold Storage in Switzerland
Essential Guide to Gold Storage in Singapore
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,206.75, EUR 1,085.33 and GBP 777.57 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,219.65, EUR 1,090.24 and GBP 785.31 per ounce.
Gold fell $17.40 or 1.4 percent to $1,208.20 an ounce on yesterday, and silver slid $0.56 or 3.17 percent to $17.12 an ounce.
Yesterday, the gold price slipped for the first time in five days after an upside surprise in US housing data bolstered the U.S. dollar.
April building permits came in at 1.14 million surpassing the estimate 1.06 million and housing starts also beat expectations at 1.135 million versus the analyst forecast of 1.02 million. In addition to the housing data the U.S. dollar was also strengthened on the news that the EU is going to ramp up their QE to buy more bonds in the next two months.
The U.S. FOMC meeting minutes from the April 28-29 meeting will be released this evening at 1800 GMT. Investors will be looking for any clues on the timing of the Fed’s first interest rate hike in nearly ten years.
Gold in Singapore near the end of trading fell 0.3 percent to $1,204 an ounce.
Greece’s next deadline is June 5th for a 305 million payment due to the IMF. They will not be able to meet the deadline without a cash for reform deal with their European Union counterparts and the IMF.
In late morning European trading gold is at $1,208.30 an ounce down 0.10%. Silver is off slightly 0.01 percent at $17.12, an ounce, while platinum is up 0.10 percent at $1,154.50 an ounce.
Breaking News and Research Here
»
- GoldCore's blog
- 14346 reads
- Printer-friendly version
- Send to friend
- advertisements -
Really GC... I thought you would have learned your lesson after the 'September surge' you told us about. Right before the market plummeted. What is it with you jokers anyway... pretending that you have some sort of insight into market fundamentals. I will tell you the same thing now I told you then. The only fundamental involved in the PM market is soverign and CB manipulation... your prognostications are just so much farting in the wind... to coin a somewhat vulgar phrase.
Really buddy... take your wisdom elsewhere.
And before the PM crowd jumps on me... I believe in the metals... they are a true store of wealth. I just don't believe this character has anything intelligent to say about them.
I guess it has been a long day...
Just like my guitar amplification, I like my silver stacked high.
People really are on glue, they really think Apple Pay is nifty. But these are the same people that own game consoles, talk about superhero movies, think NPR is real, and fear the deadly serpentine arm of ISIS.
Most of my teath are gold. I also have a hollowed out watermellon in the fridge where I also keep a lot of gold. Gold Mellon...may be the making of a Jame Bond 007 thriller.
Bitcoin? Paper metals? Not for me - ever. If I can't physically hold it or see it - then is it really mine?
I have a cousin that married a nice young fellow that just happened to have gotten an "education" and became a licensed Certified Financial Adviser. A CFA, highly regarded in the community and rightly so because the advice that he relayed from Charles Schwab has given them a fairly reasonable annual return on their money. But I have a little problem with him, one that restricts our conversations to nothing more than idle banter...
About fifteen years ago, as he was just getting started in his career and gold was just starting to rise above $300, I inquired what they were advising clients put their $$$'s into. He replied, "Oh, good solid blue chip stocks, bonds; we've got several funds we recommend, depending on your risk tolerance, etc..." I asked if they did not advise putting even a small percentage in gold? His immediate response was, "oh, no, no; gold is risky". It was then that I told my parents to take his "advice" with a grain of salt. As I continued acquiring bullion, his "advice" never wavered. Gold remained "risky" at $600, even more "risky" at $900... $1,200/oz even more "risky"!
I've not "heard" any of his "advice" recently, but according to Schwab, cash is probably just as Verbotten as gold...
I tell you, they are brainwashed beyond belief, no?
They are brainwashed, for the most part. I gave up on advising close family to stick a little money into metals and other tangibles. I got the same reaction every time I brought it up, the "what the hell for?" look. I was even teased, in good nature, a few times when it went from it's highs a few years ago and has been lingering at present levels. All they can do is point to the markets and say "look, that is a much better investment"
Then in the same breath they complain about how the cost of living keeps rising. I don't know how many times I have tried the "a silver dime bought this is 1967 and still does today(or comes close) but it falls on deaf ears. If they don't see it as "making money" they won't touch it.
The heck with it, I tried and life is too short.
Most people I know, or frequent at the bar, don't have a clue you can even buy gold. This is the 30-50 yr old range of people. 1 guy buys precious metals. The rest look at me like I'm stupid, or from another planet. Well, I warned them. If you're that stupid, then I don't feel bad when their paper money turns worthless. If our society is really this mentally retarded, and so easily distracted, do we really deserve to have this paper crap to be worth anything?
Ha! Yeah, I've got the snarky brother-in-law that's looking forward to the convenience of Gov't-managed digital money, oh boy! You just swipe the "smart"phone at the register and move on... We can drink Scotch Whiskey while watching football, get high, listen to tunes, etc. I just say NOTHING about politics!
As you say, life is too short.
I agree, but from the talk of several high profile economists, they want to ban cash. Banning cash and implementing negative rates would be such a windfall to PM's that they would be inclined to impose capital controls. That said, cash and gold over the next 36 months is probably a good place to be.
Are you asserting that "they" have not already imposed capital controls?
Yes there are some capital controls but not too rough. I was talking about making the ownership of gold illegal and making capital flight pretty much impossible.
Capital Controls are impossible with bitcoin.
btw , bitcoin enables capital flight , anytime , anywhere.. Cannot be detected by metal detector , X-Ray or Radar , cannot be smelt by dogs , it can be sent as quickly as an email or as slow as a snail mail.
Well, you need energy (electricity), a functioning internet, storage for the bitcoin and some gadget (pc, laptop, mobile, tablet or whatever).
>>> Well, you need energy (electricity), a functioning internet, storage for the bitcoin and some gadget (pc, laptop, mobile, tablet or whatever).
Pardon my ignorance, but sincere question, is it strictly true that you need a functioning internet to pay someone in bitcoin?
Could we do a payment on an IP protocol intranet that is not connected to the internet at all. Or throughly firewalled off from the internet? If that is not posible then the DNS root (USA) can turn off bitcoin anytime it chooses. The people don't lose their coins in that scenario, but they become unable to spend any of them.
bitcoin does not use DNS servers. It is purely peer-2-peer over IP. The only way to stop it would be to shut down the internet itself.
Some of the Trolls and Flat-Earthers on here think that is what they will actually do when it becomes successful , but they are also schitzophrenic because at the same time the same Trolls tell us it is actually built by the government who want us to use it.
But, let us be clear, you are saying that Bitcoin needs a functioning Internet. The Internet. That bitcoin will not function on a private network that uses IP (internet protocol) as its backbone. A so-called (bad terminology) intranet.
Turning off "The Internet" and replacing it with a "New Internet" that uses only IPv7 (or IPv7+) is what I do expect to happen.
IPv5 will end overnight and everyone will have to buy new firmware. If they are individually approved to buy new firmware that is.
The lesson then is clear - don't put more than 5% of your wealth in bitcoin or similar schemes.
bitcoin itself is a protocol. It can run over any version of IP , people have demontrated the bitcoin protocol running betrween CB radios. The transport layer itself is irrelevent to the bitcoin protocol.
I'm having a problem understanding that.
Here is the issue - if bitcoin can be run on private networks then what prevents me from spending the same bitcoin twice on two different private networks at the same time?
I do think that, at some point, the Internet will be attacked and disabled - a false flag attack by government. Which is why some countries have run exercises to ensure they can have a working national IP protocol network if/when they are disconnected from Internet.
Shutting down the internet would mean shutting down all global communications. That would affect absolutely everything from global supply chains to air traffic control. We live in a globalised world now , there are no borders when it comes to the internet. North Korea is the best example of a country which has tried to balkanise itself from the internet , how long would that be sustainable for any western country ? Hackers and engineers would use anything available to create new gateways. Think how much revenue would be lost by governments by shutting down trade ? The Internet (and the power grid as well btw) should be hardened from interference whether black hat , natural disaster or political.
That raises more questions than it answers.
The internet will be shut down at some point, at least from natural causes (a Carrington event, like the solar storm of 1858).
But also quite possibly as a political act, basically an act of war by the USA and/or its then enemies.
Human life will not end when the internet comes down for a few weeks or months. But quite possibly Bitcoin will end.
For some reason those who don't believe in bitcoin will not be convinced otherwise and vice versa for believers. I think it is interesting technology but am not nearly as convinced as our friend above. I just have a hard time trusting something that was thought up by the NSA in the 90's, read more here.
Who fucking cares who built the fucking thing ? It's here to stay. Diversification is the first rule of any good investor. One bitcoin ? Is that really going to break you ? If it is then fuck off , eejit.
It's an interesting technology - yeah , just like the Internet was in 1989 , Microsoft in 1994 , Apple in 1996 , Google in 1997 ,
Bitcoin is far more interesting. Do some fucking research.
Otherwise just keep looking at those Flat Earth maps , they may lead you somewhere ... eventually.....
So the fact that the NSA was involved with the development of bitcoin doesn't concern you in the least? I agree Bitcoin could offer protection, and I own some, but I'm simply not going to trust it with a significant portion of my wealth.
I did do some research and it ran me strait into an NSA project done at MIT. Not some libertarian techie trying to free us from monetary chains. You don't care at all that your savior from oppression of the US government is...the US Government?
Out of curiosity how much of your portfolio is in bitcoin?
NSA invented SHA256 that is a matter of record.bitcoin uses SHA256 but bitcoin itself was not built by the NSA. It was DARPA who built the Internet Protocol which you are typing into this web-site , all of your online banking also uses encryption built by the NSA , so will you now stop using online banking , secure web-sites , credit cards , and the Internet in gereral because that too was built by DARPA / NSA ?
bitcoin , like the internet , is what YOU make it.
Point taken, and it is a good one. I just don't know the extent to which the government is still involved and their ultimate goals. This is not a good enough reason to own no bitcoin. I do own some as I mentioned, but it is enough to be wary.
Do you share any of these concerns or is it full steam ahead?
As a software electronics engineer and industrial robotics technician I see this technology as being nothing short of absolutely revolutionary. I beleive bitcoin's blockchain (the globally distributed de-centralised consensus ledger) technology will totally change the world of fiat money and finance within 1 - 2 decades. It will absorb the entire FOREX market , the stock markets , the bond markets , the commodites markets and property / asset and land registration. It will create a singularity for all global financial transactions. And that is just for starters. Whoever created this system was a genius operating on multiple levels with multiple cutting-edge technological and financial disciplines. I don't give a flying fuck who it was that invented it , it works and that is all there is to it.
That's some interesting info regarding the "E-Dollar", Captain! Thanks for that MIT link! I've been suspicious about the Bitcoin. Now that you've opened my eyes, I see that suspicion has been justified!
Diversify. Bitcoin. StartCoin. Gold. Silver. Land. All have their stengths and weaknesses as a storage of wealth. Just keep away from 'pape'/fiat (the Ponzi scheme).
Agree.
I know there's lots of chatter lately about "banning cash", but it's absurd to think that would happen in the U.S. in our lifetime. Hell, we can't even get rid of the damn penny!
It's usage will continue to be incrementally restricted, though. I remember when I used to use all my spare change at the post office to purchase stamps, and then they replaced the machines with ones that only took credit cards...
There is no significant benefit to the banks and government for banning the penny, the same can not be said for cash. The list of benefits for banning cash goes on and on.
"I know there's lots of chatter lately about "banning cash", but it's absurd to think that would happen in the U.S. in our lifetime"
I'd guess you would get the same reaction from someone in 1928 if you were to tell them the government was going to ban the ownership of gold.
I'm not saying they WILL ban cash, but looking at the monetary landscape it's a pretty good guess. This might make things more clear.
Dump your debt , get yourself a couple of bitcoin's and sleep well.
Bitcoin , BTChezzz....
Good luck with your bitcoin.
Same thing could have been said about gold ca. 1980. Then again, I recall the price of milk and gasoline falling around the same time. If gold and btc falls along with other assets/commodities, is it really a loss?
I wouldn't be surprised in the least if they tried to both ban cash and gold at the same time in many countries but the key there is even that will fail since after a while when you rig the game that badly people just stop playing altogether (ie massive asset price swings followed by huge crash/deflation events). This is worse than gradeschool because the people in charge are so financially dumb they have ablsolutely no clue why this wouldn't work.
I've been buying shiny for awhile now and have always liked cash for quick trades on Craigslist etc., but it needs to be more broad based if you plan on riding the storm out....
Canned goods and bullets outrank BITCOIN anyday! Can't eat or beutify oneself with digital currency. I believe the govt's will start there own cryptocurrency and Bitcoin will be outlawed. Good luck trading it in when the masses are finally awoken.
Don't forget to keep hold of that map of the flat earth you have , after the SHTF and you climb out of your shelter you will need some directions so you can top up on that 30 years old prepper food and get a hold of some diving gear so you can unbury your stash at the lake. BTW , how will you locate it without a GPS signal ?
A well diversified portfolio would also include atleast 1 bitcoin held in a personal digital wallet , encryped and with a couple of off-site or remote backups of that wallet. Not held on an exchange or with a 3rd party.
A Warren Buffet asset advocating owning gold?! WTF! Holy Munger Fuck!