Lear Capital Gold Market Update

Working closely with Lear Capital and its staff for more than 15 years, Dave Engstrom is a nationally recognized Gold Market Specialist.  Former host of the daily Gold Market Report, you will enjoy his weekly commentary on Gold, the Markets and the Economy.

Among the topics of focus in his writings to come are - Gold as an Inflation Hedge - Purchasing Gold within an IRA or other Savings and Retirement Accounts - Sharing data regarding Gold Production - Worldwide Gold Supply and Demand - The Potential for $2000 Gold and Higher - Gold Predictions of Renowned Analysts - U.S. Mint and its Supply of 1 Oz. American Gold Eagle Coins . . . and much more. 

Stay tuned as we rely on history to follow this Gold Bull Market that many say has only just begun.

It seems the Iran crisis has now taken over second position as the longest running headline, just behind the Greek crisis.  With the Greek crisis potentially - I say potentially - kicked down the road to implode another day, the Iran crisis could soon take over first place as the longest running headline in post 2008 crisis history.

More rhetoric has been passed from Iran to the world than spaghetti at an Italian wedding.  All the while, they move closer and closer to having atomic weapons.  The closer Iran gets the more rhetoric and the more rhetoric the more sanctions then more rhetoric and so on.  It's like playing chess with yourself.  You can't win, you can't lose and then finally the dog knocks the board off the table and game over.  

Few would disagree that everyday we move closer and closer to game over.  Scientists are being assassinated, diplomats bombed, threats made, warning shots fired and now reports that Iran has enough enriched uranium to make two atomic bombs.

While reports suggest there is still hope for a diplomatic solution and Iran holds to the claim they intend to use enriched uranium to fuel nuclear energy facilities, I call it all bunk.  If Iran really was going to use the fuel for nuclear energy, wouldn't you already have built the reactor and the facility and the infrastructure to integrate the new power source into the grid?  Why enrich the fuel with no place to put it once done?  Surely, if such a facility existed all that need be done is to show the world and prove your intentions.  But ...  that hasn't happened so no facility ... no good intentions!

Now that we have that settled, it's clear Iran is not going to stop their work and they've already told the world what they think about the U.S. and Israel.  I believe conflict is inevitable and concurring signs have begun to appear in the markets.  Oil prices are rising in fear of supply disruptions, gold prices are rising with rumors that Iran is now accepting gold as payment for oil and the dollar is down 3% from its January high despite Europe's debt troubles.  And as hard as the media tries to convince us the Dow has smashed through the 13,000 level on its way to 15,000, that move has stalled.

The warning signs are there - $5 gas by summer,  The world markets know what's ahead.  Another war is being baked into the cake.  Throw another war into the mix of skyrocketing deficits and soaring debt and we have our own nuclear economic explosion in the making.  An explosion of gold prices.  How will you protect your wealth when the purchasing power of our dollar is further destroyed by rising war debt?  Is it really inevitable?  I give it a 99% chance that military action against Iran will take place.

Now is the time for gold.

 

 

  

 

Whatever prompted the comments, Warren Buffett recently claimed stocks were safer than gold and bonds, "by far."  Further stating, equities "will prove to be the runaway winner."

When I hear comments like this, I immediately question the basis for making such a bold claim.  Surely, the basis for this claim must be that Berkshire Hathaway stock has done well since the collapse of Lehman and the onset of the 2008 credit crisis.  If there was ever a time when safety was foremost on the minds of investors, it would be in the days, months and years post crisis. 

Today, at the time of this writing, one share of BRK-A trades at $117,862.99.  On the day the 2008 credit crisis began, September 15, 2008, one share traded for $147,000.  So let's talk about safe.  BRK-A, today, is down 19% from its pre-crisis high.  It seems BRK-A was not a destination of choice on the itinerary of the flight to safety. 

Instead, investors headed for bonds, (despite negative real rates of return) Gold, Silver and other commodities.  In fact, Gold prices, since the Lehman collapse have doubled.  Silver is up about 80%.  Maybe Mr. Buffett meant stocks in general, not just BRK-A.  Today the S&P is up 8%, since September 2008, the Dow is up 13% and the Nasdaq, thanks to a couple big hitters like AAPL and GOOG, is up 30%,

So far I'm still not seeing a case for stocks being safer than gold or bonds.  Maybe Mr. Buffett was not just referring to periods of time when safety was a primary investor concern.  Maybe he meant in good times and bad like we've seen over the last decade.  Indeed BRK-A is up over 60% in the last 10 years while the major indexes are struggling just to be even. Then what about Gold? 

In the last decade gold is up 500% far outperforming stocks, bonds, real estate...has anything beat 500% over the last decade?  Will the trend continue?

As we move further and further into debt - debt we cannot pay - it's hard to imagine an end to printed money or government borrowing.  Surely an end to either could produce an Apocalyptic end to our financial system.  Inflation appears to be the only other alternative.  Print money, debase the dollar's value and in such a case drive the dollar price of gold to even higher highs.

Where do you want to bet your savings and retirement for the next 10 years?  

 

 

     

 

 

At a time when our economy is fighting for its life, it seems almost surreal that an IPO is about to turn a handful of people into multi-billionaires.  Facebook has definitely turned into an Internet phenomenon with some 850 million users worldwide.  Now it begs the question - will an investment of $50 billion $80 billion and perhaps as high as $100 billion, produce a return on investment for those willing to bet another Google-Like phenom is being born. 

These billions of dollars are about to be invested against a backdrop of a failing stock market and fresh warnings from the most powerful banker in the world.  Looking back to just days prior to the Lehman launch of the 2008 credit crisis, we see stocks have done nothing.  Even the great Google has fought just to recover to 2008 pre-crisis levels. 

Now as if to say, "don't blame me when it hits the fan", Ben Bernanke, today, issued a warning, "Rising federal budget deficits are posing a significant threat to the U.S. economy and are likely to cause a crisis if not brought under control."  This is especially alarming in the wake of having just raised the debt ceiling by $1.2 trillion dollars.  Does that sound like control to you?  Does this sound like an environment conducive to rising stocks is being created?

This warning is spoken like a true believer in printing money to escape economic disaster.  As though debasement of our currency is preferred over creating debt that is increasingly more difficult, if not already impossible, to repay.  This comment by the Fed Chairman suggests the Fed believes we have created too much debt and not enough printed money.  That's my take.  Either way, debt is not under control and may never be.  The economy is not recovered and is still in peril.  So what will be next.  More debt or more printed money?

In the last 3 years or so, we have gotten a combination of both printed money and rising debt.  More than $8 trillion worth.  So in my humble opinion, whichever we are about to get more of puts gold in a win-win situation.  Numbers don't lie.  Stocks have gone nowhere and the gold price has more than doubled.  Against that backdrop which investment makes more sense to you today.  Facebook or Gold?  I mean...I'm just sayin'.  The choice is always yours.     

Is the Gold Rally over?  Or, has it just begun? 

September 15, 2008 - The U.S. credit crisis erupted with the failure of Lehman Brothers.  Overnight, $600 billion vanished in the largest bankruptcy in American History.  Panic set in to the already beleaguered markets.  In just 3 weeks the Dow lost 2,937 points, the S&P lost 356 and the NASDAQ  624.  It is said, we were just minutes away from economic Armageddon. 

By October 3, with seemingly no choice, the Troubled Asset Relief Program (TARP) was signed into law.  It provided $700 billion be used to purchase toxic assets from banks deemed too big to fail.  However, that alone wasn't enough to halt a market freefall.  Not until late November, when the Fed announced its infamous $600 billion round of Quantitative Easing (QE1), did market stability return.  

By March 2, 2009, as the last of the $600 billion was spent, it became apparent QE1 wasn't enough as the markets teetered on the brink of total meltdown.  The DOW had fallen from record highs above 14,000 to just 6,626, the S&P 500 fell from a record high above 1,500 to 683 - the NASDAQ fell from 2,810 to 1,293.

Then, in the markets' darkest hour, the Fed once again came to the rescue with an extension of QE1.  On March 18, 2009, it announced another trillion dollars would be committed to easing.  Immediately, markets reacted positively and proceeded to rebound. 

The rebound was strong seeing a steady rise over the next 12 months.  Then, in anticipation of March 31, 2010 (the end of QE1), the markets began to crash.  The four months to follow saw the S&P fall 16% creating fear of another wholesale collapse back to March 2009 lows. 

By August 23, 2010, yielding to market pressures, the Fed, during  Jackson Hole, hinted at another round of easing.  The markets immediately sent a signal of approval and edged higher.  On November 3, 2010 the Fed confirmed another $600 - $900 billion for the purchase of treasuries.  QE2 would now run to June 30, 2011. 

In the time between Jackson Hole and the expiration of QE2, markets soared.  The S&P climbed 28%.  Then QE2 ended and the markets threatened another crash.   Printed money had become to the markets what a drug is to an addict.  Take away the drug and a crash is inevitable.  Again the Fed was cornered.   

In response, the Fed made an August 9, 2011 announcement of plans to hold interest rates at already  historic  lows.  Shortly after, on September 21, it announced the Twist - a fancy term for "refi".  The quick successive moves were intended to produce similar rescuing effects on the markets as quantitative easing without having to print more money.   Instead, confidence failed to be restored as today's markets flounder in volatility.  Hence, rumors of QE3 have surfaced. 

It's clear, past stimulus efforts have had only a temporary effect.  Numbers don't lie.  Since Lehman, the markets have produced Zero Gains.  This is especially troubling when you consider an additional $5.2 trillion of national debt incurred for government's own stimulus and bailout programs.  That's $8 trillion dollars or more spent with zero results. 

One investment, however, has been a consistent winner.  GOLD! 

Since Lehman, gold prices have doubled as rising demand suggests that, with or without stimulus Gold is in a win-win situation.  Without stimulus it's believed markets will crash leaving gold as the safe haven investment that's never been worth zero.  And, with stimulus and higher deficits, paper currencies lose value, inflation sets in and gold prices rise as the purchasing power of paper money falls. 

Will QE3 become a reality?  Will deficits continue to climb?  According to a special report released by Lear Capital that deals with the question, Is Gold still the answer for investors?,  "The Fed may have no choice but to print more money."  And, when we asked Kevin DeMeritt, President of Lear Capital what that would mean for the gold price, DeMeritt responded, "More stimulus would set the stage for gold to repeat its performance of the last 3 years.  That would mean another 30% rise in 2012." 

He quickly added however, "But more stimulus and rising debt are just 2 of the 7 reasons we've identified that could send gold prices 30% higher this year.  If a combination of 3 or more play out at the same time, gold could go much higher than that."   

Lear Capital is not alone in its call for higher gold prices ahead.   In December, Citi Bank released its report The 12 Charts of Christmas wherein Citi projects gold at $2400 an ounce in 2012 and $3400 in 2013.  That's a 50% rise in 2012 and more than 100% by 2013.  Morgan Stanley joins the chorus with a $2200 projection and a 35% rise this year.  Merrill Lynch and Goldman Sachs, while less aggressive, are also bullish on gold projecting 33% and 23% gains respectively.  

As revealed in Lear's report, many factors are driving these bullish outlooks on gold.  The report delves deeply into the global debt crisis and its effect on gold prices, geopolitical tensions surrounding Iran and the now insatiable demand for gold by the Central Banks of the world.  Last year, for the first time in 20 years, Central Banks turned from being net sellers of gold to net buyers.  As Lear points out, it is especially intriguing when those who have the power to print more paper money are demanding gold.  

Perhaps it's time for a little self-examination.  How many 30% winners are in your portfolio right now?  No one has a crystal ball, but the case for rising gold is making a lot of people wonder if the gold rally is over or just beginning. 

 

Just when you think gold was down for the count, as so many news reports would influence you to believe, the gold atmosphere changed and has people now leaning again toward more gold in their portfolio.

The pummeling gold took in 4Q 2011 was like a tornado hitting a tent.  As clearly, one of the top performing investments going into 4Q, the gold price was beaten down by profit-taking, multiple increases in contract margin requirements and repeated claims that gold was another bursting bubble.  Had anyone known what gold was headed for prior to its 4Q beating, $1000 gold predictions would have appeared certain. 

Instead, gold hung in there like Ali vs. Foreman and now appears to want to move back toward record highs.  With all the negativity for gold potentially behind it, we now look forward and see that a global debt bomb could go off any minute, world currencies are getting weaker by the second and central banks are buying gold like it's the last chance investment before Financial Armageddon. 

Now the question, if all the negative forces in play last quarter only resulted in what could be called a normal bull market pullback, what will the positive forces now in favor of gold do to the gold price?  To answer that, I refer you to a recent Citi report that projects the gold price to reach $2400 an ounce in 2012 and $3400 by 2013.  The report even hints of the potential for gold at $6000 an ounce, a price you expect to hear uttered only by the most fervent of gold bugs. 

If these predictions are true, this could be the last chance for investors to own gold CHEAP!  But then again, what's cheap?  The real question of how high can the gold price go is really a question of how far can currency values fall.  The more you print the less they are worth. 

And print they will, at least according to a report today from Morgan Stanley, who says the economy will slow dramatically in early 2012 thus prompting the Fed to engage in more easing.  More easing means more printing and less dollar value.

Game on!   

Where is the gold price headed from here?  As we wound down 2011, gold prices slipped to multi-week lows.  As prices slipped, reports again flooded the airwaves extolling the death of the gold bull market.  As the New Year now rolls in, and year-end profit taking concludes, prices are ticking higher along with the price of silver, palladium and platinum.  I personally think the death of the gold bull market has been greatly exaggerated.  Perhaps you will agree.

First, I don't believe Central Banks of the world have been increasing their stockpiles of gold because they expect the price to go down.  Think about it.  Those who have the ability to print money and indeed are likely to be called on to do so, are buying gold.  Let's face it, even a report that a major bank is considering printing more money can affect the markets.  Conversely, so can a report that says more printed money is not an option.  Yes, this suggests short term manipulation of the markets is possible.  However, that's exactly what it is - short term! 

Incidentally, it also makes better news to report from one extreme to the other.  I recall, when gold hit the $1900 per ounce level, reports of $5,000 gold made TV headlines.  Not two months later, those reports were replaced with reports of $1200 gold ahead.  It's always curious to me how, regardless of what the prediction of the day may be, the TV anchors, or their special guests always seem to be able to make sense of it.  Let me ask, how many times you have heard in the mainstream media that central banks are buying gold by the hundreds of tonnes.  Need I say more?   

Secondly, all the metals are moving in unison.  It makes no sense that an anticipation of better economic times or a stronger dollar would drive all precious metals prices down.  If economic recovery really is in motion, the industrial metals should be moving higher in anticipation of increased industrial activity and demand for those metals.  It's one thing to say gold has lost its safe haven status but to the extent that status is lost, it would be because true economic recovery is underway.  In that case, industrial metals would separate themselves from gold and rise accordingly.  That was not occurring at the end of 2011 and it is not the case as we launch into the new year.  

Finally, geopolitical unrest is reaching a new crescendo.  Iran is just begging for conflict.  If they do not follow through with their threat to close down the Straits, they still flirt with retaliation for their nuclear activity.  Either way the world oil supply is held hostage and any disruption in the power base in Iran is sure to bear on the world economy.

I'm often asked, why then has the price of gold dipped to these current lows?  You have to admit, gold has had a great run and it is hard to maintain that momentum when all the news points to some kind of recovery.  As the saying goes, repeat something often enough and it becomes truth.  

So, as I have said numerous times, if you believe there will be no more money printing, that we are in economic recovery, that 2012 will see world peace then don't buy into any story that suggests gold prices will resume their march higher.  If you believe the greatest challenges this country has ever seen still lie ahead, equip yourself with the means to protect against failing currencies, inflation and an amount of debt that can never be repaid.  Information is key and it costs nothing to visit LearCapital.com for the latest breaking news on gold, silver and the economy. 

Gold has always been the hedge against this kind of uncertainty and I doubt 5000 years of history will be wiped out with a few news reports that everything is going to be OK!  Frankly, if gold were half the price it is now it would only be for the reason that millions more of my friends and neighbors would have jobs, real estate prices would be in recovery and my kids would not be stuck with the consequences of repaying a debt that looks more and more like it will never be repaid.   

Today, one faithful reader named Clay said it would be nice if he could get a comment from us on the recent wild price action in precious metals.  It is crazy isn't it?

Let me first reiterate prior expressed beliefs, those being, nothing has changed.  Since 2008 not one - I mean not one single issue related to the financial crisis that erupted has been resolved.  In fact it's gotten worse. 

Despite reports that unemployment has declined, the true data show that when you consider the discouraged worker, expired unemployment benefits, shorter work weeks, pay cuts and the conversion of full time jobs to part time, the employment situation in this country is worse than ever.

And, not to Grinch the Christmas spirit, but once the holidays are over, thousands of seasonal jobs will vanish and the jobs picture will change dramatically.  Let me give you some examples.  UPS reported hiring 55,000 additional workers for the holidays.  Fed Ex - another 20,000.  Retailers hired hundreds more thousands of seasonal workers as did certain manufacturers and distributors.  Unfortunately for these workers, when the holidays end so do the paychecks.

Granted some of these jobs are held by students and full time workers taking on temporary part time work.  But to think all this hiring had no short term effect on the jobs picture is just head-in-the-sand logic. 

Then there's housing.  In November a Bloomberg article called the Housing double dip one of the "scariest business stories of 2011."  So, no improvement there either. 

Then there's debt.  Since 2008 our debt crisis has reached gargantuan levels.  Even worse, it is planned to grow by trillions more over the next 10 years.  All this Super-Committee talk is just that - Talk!  They speak of $400 billion a year cuts in spending but only after they agreed to increase deficit spending each year by more than $1 trillion.  So, in reality, the cuts they discuss are really cuts to exorbitant increases already penciled into the budget picture over the next decade.

They say the real crisis in 2008 was averted.  That being a total collapse of the American financial system, one that could have driven us to third-world status in a matter of months, weeks or even days.  Subsequent actions by the Fed and government to print money saved us.  But, from what?  Enter gold . . .

As the crisis unfolded, gold prices really began to soar, more than doubling.  Governments started buying it, central banks turned from net sellers of gold to net buyers for the first time in 20 years and Gold ETFs sprung up to accommodate the paper gold investor.  In other words, much of the world failed to buy into the "crisis averted" story. 

To the extent gold prices have dipped now to levels below $1600 an ounce, they are still more than double where they were when stocks were at pre-crisis highs.  So begins the cry that the gold bull market is finally over.  Meanwhile, what have stocks done?  The Dow is down 15% from its pre-crisis high, the S&P is down 19% and the NASDAQ fairing slightly better, is down just 5%.  With a recovery like this, who needs a crash? 

The markets have been crumbling right before our eyes but never did we hear from the TV geniuses that the stock rally is over and it's time to get out.  What we have heard is the perpetual recovery in motion chant.  The louder the chant the steeper the drop in stocks.   Almost as often as we have heard the recovery chant, we have heard the claim the gold rally is over.  Yet, each time the gold price pulled back, during this undeniable gold bull Market, the pull backs proved to be nothing more than normal periods of consolidation and profit taking.  Imagine that!  The gold bull market has now spanned more than a decade and more than once someone was compelled to take a profit.  The nerve!    

Now look!  As we exit our trance, it's clear we should have believed the opposite of what we heard.  We shouldn't have bought more stocks and we shouldn't have sold our gold.  Now the chants have reached a crescendo.  Enter Europe . . .

Given our own debt crisis has only been a futile exercise in kicking the can down the road, the end of the road is getting closer and closer.  What that means seems to remain a mystery to most, except those like central banks who are buying gold.  It means, some day our debts will be so large that we simply cannot pay them.  It means default or print more money.  If we default, the dollar becomes worthless as do your dollar denominated investments.  It would happen fast. (My opinion) 

If we print more money to pay debts, as we have been doing, inflation begins to steal dollar value.  While it may be a slower death, the end is inevitable and the same as default.  Eventually, the dollar becomes worthless as do your dollar denominated assets. 

If you remain in denial and believe debt is something we will forever be able to deal with tomorrow, then what I have to say about Europe won't matter.  If you believe or perhaps are starting to believe the end of the debt road is approaching, the truth about the European debt crisis will scare you out of your mind.  Caution you may be compelled to do as central banks are doing and buy more gold.  Don't say I didn't warn you.

Here's some fun facts about the European Debt Crisis and your money.

1.  U.S. exposure to bad European debt is as high as $4 trillion, more than 6 times what vanished in the Lehman Bankruptcy.  A bankruptcy that almost crumbled the entire global financial system.

2.   A Greek default alone, could wipe out $1.6 trillion of U.S. wealth.

3.   Fitch Ratings, a premier credit ratings agency, reports that," About half of the assets in the 10 largest U.S. prime money-market funds are invested in European bank debt."  That means the cash in your money market checking account could be at risk of vanishing in a European Debt Default. 

4.   Certificates of Deposit and savings accounts are FDIC insured.  Money Market Funds are not. 

5.   If the Euro crashes, billions of dollars in U.S. pension funds could be wiped out.  Does your pension Fund own European Debt. 


6.  Three of our largest U.S. banks have an estimated total of more than $60 billion of exposure to European debt.  Citigroup, JP Morgan and Bank Of America. 


This is all just the beginning of the story on the European Debt Crisis and your money. 

Ironically, it could be the default of Europe that crashes our own dollar.  I'm only speculating, but if Europe falls and takes the Euro with it, the Fed could be compelled to launch the mother of all QE programs.  Maybe this is why one analyst predicts the end of the dollar by 2013. 

Now, all this said, do you believe for a second the gold rally is over?  ---------  I didn't think so.  If you feel so compelled as to request more information on Gold and the global debt crisis, visit LearCapital.com today and request our latest special reports and world gold guide.

And if you have yet to receive your FREE End of the Dollar Video from Lear Capital, click here to get your free video today.


 

It's like the calm before the storm.  Not much lately is being said about gold.  The anti-gold crowd is mostly quiet as the gold price has been hovering the last couple months just above the $1700 an ounce mark. Do they know something?  Maybe they agree, gold prices are about to explode but they need to put some time between their claim that the gold rally is over and the imminent explosion in price.

The gold bugs are only slightly more vocal as the Euro-Crisis unfolds.  Even the announcement by our Fed that it was going to join with five other world banks to print money to facilitate a currency swap with Europe, got barely a whisper from the major news sources.  That should be the only proof anyone needs to get gold and get it now but somehow the news never struck a nerve.

And when Treasury Secretary Geithner, announced that this Fed move was not going to come at the expense of taxpayers, and that, "Americans will not get hurt," it's as though everyone just shrugged their shoulders and said "whew"!

So let me get this straight.  The Fed can print money to bail out Europe without putting the American taxpayer at risk.  But if there is no risk, why can't they just print money to bail us out?

Are we really that dumb to believe all this nonsense?

Meanwhile -- while we sit on our hands waiting for everything to just get better, what are the central banks of the world doing?  Guess what?  They're buying gold and doing so by the tonne.   From a recent WSJ article, "Total central-bank gold purchases in the third quarter more than doubled from the second quarter and were almost seven times higher than a year earlier as countries continued to diversify reserves, according to a World Gold Council report."  

You tell me!  If there is no risk to printing money why does a central bank - any central bank - need to buy gold?  Herein lies the single best reason to own gold.  Real wealth can't be printed on paper.  So, go ahead!  I dare you.  Visit LearCapital.com and check out our online pricing for gold.  Then get some.

 

Today, the markets are expressing exuberance as Europe speaks of printing more money in order to bail itself out of a debt crisis.  Here we go again.  As soon as it appears Europe is on the brink of collapse, some encouraging news makes its way through the airwaves and for a few days hence, all seems well in Mudville.

Really?

Let's be honest, whatever is known today by European officials, regarding the financial state of Europe, was known a month ago, a year ago and maybe even a decade ago.  In my opinion the U.S. has knowingly been kicking the can down the road for over twenty years.  Loose money policies have been in place since the advent of the Home Equity Loan (HEL) whereby consumers were duped into sacrificing home equity in favor of temporarily elevating their lifestyle.  I will submit, without the "equity-for-debt-trade," the economy would have died a long time ago. 

Here in the U.S. warning bells of a credit crisis have been sounding for decades.  Trust me!  Europe heard them too.  Don't try to tell me policy makers, here in the U.S. did not see the dangers that came with the creation of liquidity out of thin air.  And, whatever Europe's plan may be for digging the world out of this crisis now, that plan was made long ago.

I've always believed that the "fix" to the crisis, here or in Europe, will be to continue to find ways of creating more liquidity.  Printing more money, if you will.  In the old days it was accomplished through the seduction of the consumer.  We traded our equity for debt and there was no need for government intervention, per se.  Now trillions of our dollars in equity are gone.  What we had, going into 2008, was wiped out overnight as some $7.7 trillion was lost to instantaneous deleveraging of derivative assets by major banks.

That leaves Central banks and governments as our only source for new liquidity/printed money.  Can we expect it?  If printed money, either by the consumer, central banks or governments, has been what's bailed us out for more than two decades now, what makes you think this practice will now cease?  

The world is faced with two choices.  Either print more money and continue to destroy the value of all paper currencies, or, default on debt.  Since default would lead to flat out depression and a digression in standard of living back to depression-like standards, I suspect, the world will continue to print more money.  Since the U.S. has already printed trillions, it is Europe's turn at bailing out the global markets.

And why not?  If we take turns with Europe in printing more money, the vanishing purchasing power of our money will be masked by an equal drop in purchasing power of the Euro and the Pound Sterling.  China may become the biggest victim of our printed money as the more we print the less profitable their massive exports become.  That will force higher prices and now we begin to see how inflation takes seed and grows.

This also goes far to explain why central banks have become net buyers of gold.  If printing money is going to destroy the value of currency, then a counter move to buy gold with some of the money printed, makes perfect sense.  The more currency you print the less valuable it becomes.  Conversely, the gold price moves higher as valued in currency thus preserving purchasing power.  How much gold would you buy if you needed only to print the cash with which to pay for it?  It's brilliant!  Print more currency to buy more real money - GOLD!

And if Europe fails to print more money?  According to Peter Mirici, in a recent New York Post article, "the Euro's death will send gold soaring."  Essentially, the death of the Euro would destroy all faith in paper money and drive investors to gold.  

So, you see, it appears gold is in a win win situation.  If Europe prints more money, then inflation strikes hard and the migration of investor money to gold will continue for many years to come.  If the Euro crashes the flight to gold will leave within the hour.  Either way it is difficult to see why gold prices would collapse or why gold would all of a sudden become irrelevant as a safe haven investment.

How will you protect your hard-earned savings.  To learn more watch this free video and see why gold prices could double even triple where they are today. 

 

        

    

As reports begin to stream in, it appears the Christmas retail season is off to a fast start.  Some suggest this is a positive sign of things to come as, for many retailers, a strong holiday selling season could make the difference between earning a profit for the year or not.

However, caution is in order!  A strong start to the season could also be a signal that the beleaguered consumer is going to buy at a bargain or not buy at all.  One analyst suggested we could see a strong start, as consumers rush to take advantage of big discounts, followed by a long lull until just a few days before Christmas.  That's when the credit cards come out in an effort to delay the pay date as long as possible.

With a real unemployment/underemployment number estimated to be closer to 16% than the reported 9%, one really has to question where the money could come from to bolster a strong retail season.  More than one analyst has attributed recent gold sales to an effort to offset losses in other investments.  We are near year-end, a time when many stock and investment transactions are tax motivated.  I may suggest another reason for selling gold at this time of year. 

The experts, in talking about gold, seem to forget that gold is up more than 21% on the year.  What better motivation for a an average gold investor to sell off a piece of gold in order to ensure a gift-laden Holiday season for the family.  According to a recent Gallup Poll, the average family plans to spend $712 this year on Christmas gifts.  More specifically, per the poll, "about one-quarter of Americans plan to spend at least $1,000 on gifts, another quarter say they will spend between $500 and $999, and about one-third will spend between $100 and $499. Very few plan to spend less than $100 while 14% are unsure."

These numbers illustrate how far an ounce of gold could go toward covering an entire season of gift buying, especially considering an ounce, which currently sells for more than $1700, when sold would produce about $360 of investment return over the last 11 months.  In this regard, gold may not only be bailing out losing portfolios, it could also be bailing out Christmas.

Considering these motivations for selling gold along with a general sentiment that gold prices have peaked, it's a wonder the gold price is holding up as strong as it is.  It seems every ounce that comes on the market is being grabbed up quickly by those who do not trust the theory of our own recovery or Europe's ability to solve its debt crisis. 

Lost in the Holiday commotion and forced selling of gold is the fact that central bank gold buying is skyrocketing.  China alone seems willing to buy every ounce put on the market.  Let's not forget that dollar strength and the resultant downward price pressure on gold, is like a giant Christmas gift to foreign buyers who hold dollars in their reserves.  What better opportunity to off dollars than when the dollar is showing relative strength against just about every other major currency in the world.  Even today as the gold price dipped on negative news from Europe, we were reminded that the gold price, in Euro terms, went up.

It's long been reported that China has begun to bail out of its dollar reserves.  Estimated now, to be near $3 trillion, China couldn't ask for a better gold buying situation.  It may be the irony of all ironies.  We are selling gold for dollars to pay for our Christmas gifts while China thinks the real gift is the opportunity to get rid of more dollars to buy our gold.

Now that's what I call a bailout.



   





   

  

Central banks are buying more than ever and producers claim it is more costly than ever to get out of the ground, yet the gold price continues to slip lower. 

According to World Gold Council Reports, "central-bank gold purchases in the third quarter more than doubled from the second quarter and were almost seven times higher than a year earlier as countries continued to diversify reserves."  Last June, Standard Chartered released results of a survey of more than 300 producers, and determined that future supply of gold would fall well short of levels previously anticipated. 

These facts alone should be enough to drive gold prices to even higher highs.  Instead, it appears the gold price is headed toward lower levels of support.  Some suggest a level around the 150 day moving average of $1605 an ounce, will be reached. 

So, how do we explain the recent gold price action?  First, realize gold prices, even at $1605 an ounce, would still represent a 20% gain on the year.  Stocks, on the other hand, are negative for the year with the S&P leading the way down with more than a 6% loss at today's current trading level.  Adding this to the equation may explain one reason gold is selling off.  It's one of very few assets that can be sold for a profit.  

Let me give you an uber simple example of what could be taking place.  Let's use a $100,000 portfolio to make it easy to illustrate.  Then, let's say I started the year with 80% of my portfolio in stocks and 20% diversified into gold.  That's $80,000 and $20,000 respectively.  If my stocks are down 5%, and I see a further decline ahead and sell, I have lost $4000 on the year.  My gold, on the other hand, up at least 20%, would provide me with a $4,000 gain.  This means I can sell my gold for perhaps zero tax consequence as gold gains offset my stock losses.

Yes, this is a very simple illustration with many variables.  So simple it may seem inconsequential but when you multiply the amounts in play and consider trillions of dollar in invested money, you can see how important it could be for many investors to sell metals, essentially tax free now, to offset other losses. 

This would be especially true if stock investors see even greater losses ahead.  Why wait around when losses could mount to levels so high, a complete tax write-off may never take place.  

Are greater market losses coming?  In a November 17, article, Jim Cramer, warns us that Europe could be a total disaster, driving the Dow down to 8000.  Now, I believe things get a little clearer.  If everyone who owns stocks and gold is compelled to sell, first to avoid further market losses and secondly, to effectively take tax-free metals profits, that could explain a joint sell-off.

If this be the case, the next question is, how long can this go on.  It is estimated that of the total of investable money out there, still only 1% of that amount is held in gold or precious metals.  There just isn't enough precious metals in portfolios to facilitate a prolonged sell-off in stocks even if every ounce of gold had to be sold to cover stock losses. 

I'm not suggesting this is the only reason people are selling off precious metals.  I do think much of the selling, though, is profit motivated and voluntary.  But, let's face it, others are being forced to sell.  It could be to cover margin calls or simply because times are tough and money is needed.  I don't think I need to remind you, but we are still in the midst of a recession and Christmas is coming.  

Whatever reasons exist for selling, the reasons for owning should be equally as strong, perhaps more so.  Central banks aren't buying tonnes of gold because they think the price is going down.  It's a currency play.  I mean how much can you love anyone's currency when all you have to do is print more when it runs out?  

If you are one of the few that is fortunate enough to have money to invest, now may be the last best chance you have to add some gold to your savings and retirement accounts.  Remember you can add gold or silver to an IRA.  When it is held in an IRA it is treated, tax-wise, the same way as any other investment.

And if you want to track where the gold price is headed from here, get the blockbuster video, The End Of The Dollar to learn more.  Does this all make sense now?  I welcome your comments. 

 

    



       

 



 

Our own Fed started it, the Bank of England followed and now the European Central Bank is likely on the verge of joining in.  PRINTING MONEY!

Am I the only one sick of hearing about Europe and its on-again-off-again fixes to debt crises?  If there was a reasonable fix, don't you think they would just get on with it?

I think the message is clear.  Europe is about to embark on its own shock and awe QE initiative.  According to a recent Reuters report, the ECB, albeit reluctantly, has been buying bonds issued by its troubled states in order to stave off threats of default.  However, of the 300 billion Euros available for deployment toward this effort, only 115 billion remain. 

According to Elwin de Groot, senior market economist at Rabobank, "If you look at the past two months, they have bought about 5.5 billion euros each week, so continuing that trend actually would mean that they run out of fuel somewhere around the first quarter of next year." 

Italy has been the most recent beneficiary of the ECB's bond buying spree.  Who's next?  It appears the dominoes are starting to fall.  And, what happens when the 115 billion euro cushion expires?  Is that when the ECB finally joins in the money printing parade? 

I, for one, believe the entire world will embark on some variation of Quantitative Easing.  That spells global inflation.  Some are of the opinion that when Europe prints money, the resultant appearance of dollar strength will drive down the gold price.  The charts beg to differ. 

Prior to the most recent Bank of England's printing of 75 billion pounds in early October, the gold price rested below the $1600 per ounce level.  Today, even after the retracement of the last two days, the gold price sits near $1750 an ounce.  It is hard to make a case that foreign printed currency somehow erodes the gold price.  Inflation is inflation and if it's foreign inflation (through new QE measures) that drives the dollar higher, then gold becomes cheaper to foreign investors who hold dollar reserves.  

Like they say, it's always midnight somewhere.  So it is with gold.  Somewhere in some currency it is cheap.  Cheaper gold means higher demand which then leads to less supply and more upward price pressure.  And the parade marches on.

Is the gold price about to break loose to the upside?  Is the dollar's recent strength just smoke and mirrors?  Check out this FREE Video and see for yourself.     

   

In recent days, newsletter writer Dennis Gartman, reversed his call on gold saying,  "The authorities have no choice but to inflate their way out of the morass that they’ve found themselves falling into and that shall mean the diminution of currencies generally and the advancement of gold as the only currency not diminished." 

Not to be outdone, James Turk, renowned gold market analyst and fellow newsletter writer, recently joined the chorus making a case for gold at $11,000 an ounce.  Turk is hardy alone in his lofty predictions as numerous well-known writers and analysts agree with the prospect of gold at $10,000 an ounce or higher. 

Is this possible?  Is this why you should own gold? 

Let's put things into perspective.  Since the credit crisis began, gold prices have more than doubled, up 125% even after today's pullback.  Custom Chart Maker  Meanwhile, the Dow is down 16%, the S&P is down 21% and the NASDAQ is down 6%.  To arrive at these current standings, $11 trillion of printed money has been pumped into the economy.  Oh, and by the way, that was 7 million jobs ago.  

Basically, we're in worse shape now than we were pre-crisis which begs the question.  Do we pull the plug on any further stimulus and risk depression or do we print more money.  Either way gold is in a win win situation.  We know what gold can do if we stimulate.  What we can only imagine is how high gold will go if we don't.  Stocks on the other hand appear to be in a lose lose position.  We stimulate and they lose a little.  We don't stimulate and they crash.  

Do the math.  A stock portfolio diversified with 20% gold at the outset of this crisis could have been rescued from negative returns.  So while it may be exciting to speculate about $11,000 an ounce gold, the real reason to own gold is to be diversified into something that has potential to rescue your other investments if the worst comes to pass. 

FREE Video - Wake Up America!
Just about a month ago, the gold price tanked in after market trading, dropping all the way down to $1535 an ounce.  This occurred right after the parade of experts past the TV screen, began to make the most wild predictions of much higher gold prices to come.  Even the words $5,000 an ounce were uttered, some saying it could occur by the end of the year. 

As gold prices pulled back, the enthusiasts jumped off the band wagon so fast you would think someone had thrown a bee hive, full of killer bees, into their midst.  Few bothered to look at the charts and see what really happened.  The bottom line is, in this bull market of more than 10 years now, this latest pull-back is normal.  And, as markets open today, gold is up more than 29% on the year.  If gold made no further move higher, it's performance for the year would be considered stellar.

But that's not what we hear.  When gold came off its last record high, we heard - AGAIN - the rally is over!  The portion of the story we did not hear was that, gold at its lowest point after this last pull-back, was still up 16% on the year.  The S&P however, was down 9% but it was the tale of the golden disaster that was told.   

Then, last week, to widespread cheers, the markets broke out of the red zone into the black - Barely!  Yay!  We're even!  I think this is a clear sign we have arrived at a momentous point in the markets and the economy.  Presently, the sentiment is so negative on gold, even mention of the word causes people to scoff, as though you're an idiot for even thinking about owning it.  One gentleman commented to me personally, "See I told ya!"  That was 30 days ago.  Since then, gold is up 12% even after some morning profit-taking.  And, even though gold is up 29% on the year, the story goes untold and the story line on gold remains, "The Gold Rally Is Over!"   

When we find ourselves cheering break even and jeering 29% gains, I believe that is a dangerous sign.  Yesterday, a friend cited some statistics he read about the economy.  He informed me that total GDP is higher today than it was pre-crisis.  He added that we have reached this level with 7 million fewer workers in the workforce.  The comment was followed by the question, "do you think this indicates some kind of recovery?"  I then reminded him that, between government bailouts and Fed stimulus, there has been some $11 trillion spent and invested to avoid economic collapse and bring about recovery.  See Bailout Tracker here.  So I ask, "if $11 trillion of stimulus could not save 7 million jobs, how many more trillions of stimulus will it take to bring them back and start growing the economy?" 

Of course the GDP has grown but not without an equal but opposite reaction.  More Debt!  Here's the staggering reality.  For every job lost since the crisis began, we spent a staggering $1.57 million.  Put another way, we spent $37,000 per man woman and child in this country on recovery.  We printed money, we borrowed money and we're spending our savings to get nowhere.  Our savings and retirement accounts are being gutted right before our eyes yet we continue to be force fed the recovery story.

Will you survive further recovery efforts?  Wake up America.  Get this FREE Wake Up America Video and get the facts about recovery and take steps now to protect what's left of your savings and retirement.   





     

  

FREE Video - End Of The Dollar!

Where did gold get its inherent tangible value?  Why has it been so pursued throughout history by kings and kingdoms and those who would serve the realm?

To find gold's origin as money, at least as it relates to those who recognize the Holy Bible as God's word, we find that God wasted no time in conveying the importance of Gold.  It's "goodness" if you will.  The first reference to gold is found in Genesis, right after an account was given of the creation of Heaven and Earth, of man and then the garden within which man would reside.

Here we are given detail about the river that flowed from the Garden of Eden.  As it flowed from the garden, the river divided into four headwaters, the first of which flowed through the land of Havilah where there was gold.  And God said, "The Gold of that land is good."  -  Genesis 2:12.

The premise God set here, that gold was “good,” served to direct man in the creation of a system of fair weights and measure. Because God said gold was good, gold became the foundation of that system. God’s word made it valuable.  And so has it been for 5,000 years, that gold is money.  You can't print it, it does not represent debts owed, nor can it be debased through inflation.  You can trust it.  IT IS MONEY!

Now the dollar. 

As evidenced by the volatility of today's markets, there is a growing sentiment that all is not well with the economy and the dollar that fuels it.  As each week passes, we lose more jobs, we inch closer to the outbreak of the Euro plague and we realize that relief from inflation is only transitory. 

It's like a giant screw going into the ground.  We lose jobs, the markets decline and as markets decline we lose more jobs.  All the while, rising inflation takes another bite out of our purchasing power, housing takes another hit, which in turn shrinks the economy and puts more downward pressure on stocks.  One more turn of the screw.   

Wake up America!  Smell the dead fish!  The 2008 crisis came with little warning and wiped out trillions of dollars.  Now the warnings are everywhere.

Honestly!  Has any financial problem, arising out of the 2008 crisis been solved?  Sure we kicked the can down the road, but the real problem of uncollateralized debt has not gone away.  In fact, right now there is more of it and more keeps getting piled on.   

There are two realities that must be faced.  We either need to print more money in hopes that one of these extra trillions pumped into the economy will finally be enough to kick-start it, or, we have to default on debt and wipe some of it off the books.  Great choices, eh?

There isn't a bigger rock or a harder place to be caught between as even cursory analysis of the two realities leaves only one truth.  Default is imminent.  If we print more money that is nothing more than a default on the value of the dollar.  Printing money debases currency and when you repay loans with dollars that are worth less than those borrowed - that is default.

Realizing this helps to explain a lot.  For example, central banks, who are flooding the world economy with printed money, realize they are likely to be repaid with currency that is worth less than that which was loaned.  So, how do they hedge against that sure loss coming some time down the road?  They buy gold.  That's a pretty easy strategy to understand.  If you get paid back the loan, your gold serves as a hedge against lost currency value.  If the borrower defaults, you have the collateral used to secure the loan and gold to hedge against any lost value of the asset.

This may be the single best reason to own gold right now.  There is no end in sight to central banks' efforts to pump more money into the global economy.  It would be foolhardy to believe you can just print money knowing when you get it back it will be worth a fraction of what it was worth when it was released.    

As Europe contemplates a money-printing solution to their own looming crisis, all markets remain at a veritable standstill.  Gains one day and losses the next.  We're a giant yo yo with Europe pulling our string.  Will they print more money or default?  Given the two choices for default, I believe printing money is the slower less obvious means to default.  It appeases the global markets and the masses for a short time but the aftershocks are unavoidable.  Debt will rise and the day of reckoning will arrive with much greater vengeance . . . some day.

If Europe prints more money, that opens the door for our own Fed to print more money.  Nobody wants the strongest currency in the world.  A weak currency is key to making your own exports more profitable. . . and then there's that debt thing.  A weaker dollar makes it easier to pay off debt and, as Bill Gross of PIMCO reminds us from time to time, the true debt level of the U.S. is some $75 trillion, making the U.S. the largest debtor nation on earth. 

As exposed in a new blockbuster video, The End of The Dollar, (it's FREE) the per capita debt in the U.S. is $45,000, not considering unfunded liabilities for Social Security, federal pensions, veterans benefits and so on.  Throw that in and you get a number closer to $250,000 per citizen.  In Greece that number is only $44,000.

As jobs data, housing prices and falling consumer confidence indicates, we are at the brink of total economic failure.  That's why the Fed may have no choice but to make one final life or death trade, the life of the economy in exchange for the death of the dollar.  What will you trust to carry you through retirement?  Will you survive the End Of The Dollar?

Get this FREE Video Now.   









 

 

FREE Video!  EndOfTheDollar.com    The Beginning of Gold as Money

Are Fed Actions about to crash the dollar, gut your savings and retirement accounts and send gold to record highs?

As Europe now heads down the path of printing money and bank failures, the European currencies are sure to weaken, showing temporary strength in the dollar. 

Many believe that will be just the opening the Fed is waiting for to announce its next stimulus plan.  Most believe more stimulus is a foregone conclusion, one the Fed arrived at weeks even months ago.  But, with so much political pressure against more borrowing and more debt, the Fed has been forced to sit with hands cuffed and watch the economy and the markets deteriorate.

On October 4, 2011, during a Joint Economic Committee hearing, Bernanke tipped his hand and indicated the central bank has more bullets to fire in the battle against market and economic collapse.

Immediately the markets reacted and moved higher, as if to send a signal back to the fed approving the notion.  Let's face it!  The Fed has no choice!  Either create more fake money or watch the markets and the economy plunge into the worst depression in history.

Numbers don't lie.  There's no job growth, housing is now described as being headed for a triple dip and European banks filled with toxic assets are beginning to fail.  Are U.S. banks headed for the same fate?

A new blockbuster video shows why the Fed is preparing to make one last life and death trade.  The financial life of our economy in exchange for the death of the dollar. 

Wake up America!  The 2008 crisis came with little warning and wiped out trillions of dollars overnight.  Can you afford another wealth wipe-out?

Visit EndOfTheDollar.com.  See why the Fed has no choice but to take actions that will gut your savings and retirement accounts of their purchasing power.

Learn how to profit from a dying dollar, how to turn inflation into wealth and why the Fed may be forced to take actions that will send gold prices to record highs.  

Don't be a victim - be a survivor!  Visit EndOfTheDollar.com. 

(FREE Video "End of the Dollar" signals Beginning of Gold as Money)

While analysts vacillate back and forth over data, market direction and the economic outlook, Gold seems to be whispering, "Hey nothing has changed.  There is no evidence of an emerging bear market in precious metals."

Today, non-farm payrolls came out and it appears as though we have added 103,000 jobs.  The panel of talking heads I watched this morning, tried like heck to make it sound like this was a good number.  Was it really an improvement? 

According to some Bloomberg data gathered, this number should have investors in the markets running for the exits toward the theater now playing, The Revenge of Gold.   The Bloomberg data I refer to was released in a report dated August 1, 2011, in anticipation of a July payrolls report.  July payrolls came in at 117,000.  This number brought the average of newly created jobs to 53,000 per month for May, June and July, down significantly from the average of the three months prior of 215,000 jobs. 

At that time, this was interpreted as a bad number.  Bloomberg reported then it would take an average of 125,000 new jobs created every month to keep the total unemployment rate steady.  To shrink the unemployment rate by one full percentage point would require payrolls to rise an average of 200,000 per month for an entire year.  So, as the data today (103,000) may have been better than expected, it is still not even enough to maintain the current unemployment rate of 9.1%. 

The immediate response in the markets saw stock indexes rise along with gold and silver.  As I write, reality seems to be setting in as a sell-off is underway.  Yes, Gold is also off on the day as investors are forced once again into a profit-taking mode.  The last 2 days saw gold prices rise $56 an ounce by early trading this morning.  That's a 3.5% gain in virtually hours, a percentage gain that can easily set off a flurry of profit-taking trades by those now scrambling to show annual profits.  

Regardless of gold's recent pull back it is still up 25% from its January lows while stocks are down.  The S&P is down 10.5%, the Dow 6.7% and the NASDAQ is down 8.5%.  Time is running out for fund managers to show an annual profit if they intend to rely on stocks to report gains.  

All this begs the question, where to from here?  Where will you place your next savings and retirement bet?  With jobs on the decline, housing mired in residue mortgage scandal for the next 10 years and the markets indicating over and over again that they cannot rise without printed money, what can we reasonably anticipate for the future of our economy and the markets? 

The Fed has already indicated its willingness to print more money if economic data remains weak.  There's that little voice again, "nothing has changed."  As we head toward election year, we can reasonably anticipate some measures to be taken to stimulate the economy.  Printing money is at the top of the list.  Whether it be called quantitative easing or "measured dollar default" my bet is that Europe's economic troubles will translate into more printed European currencies.  This will indicate dollar strength in the short term and open wide the door for the Fed to print its guts out.  How dare anyone try to foil the Fed's plan to inflate our debt away.  While this may be bullish for stocks in the short term, it is explosively bullish for precious metals.

But, don't take my word for it, there are some pretty high-powered analysts that also see much higher gold prices ahead.  In another Bloomberg report just this morning,  we read, “Gold and silver are our top commodity picks heading into 2012.”  Targeting gold as high as $2464 and silver at $50 an ounce in 2012, analysts credit the European Debt Crisis as being a major catalyst driving both gold and silver prices higher.  

There's that little voice again, "nothing has changed."  Still, investors remain paralyzed.  Even as we watch stocks disintegrate, and real estate implode even further, it is hard to put faith in anything.  Do I believe Morgan Stanley, who sees another 35% rise in gold over the next 12 months?  Do I trust the data that no matter how you look at it screams, "own some gold."  Or, do I yield to the emotions invoked by the parade of media experts that cling to the stock promise and never broach the subject of total financial collapse. 

I would submit, not knowing is dangerous.  It can only lead to another 2008-like surprise.  I say dig dig dig until you have enough information and enough data to feel like you can make an informed decision instead of an emotional one.  Now is not the time to stick your head in the sand.  Open wide your eyes and dig up the data on gold demand, see that it is rising.  Find evidence yourself that indicates whether the Fed is about to print more money.  Then answer for yourself the question, "Is inflation more or less of a risk than we are led to believe?

At LearCapital.com  you can find hundreds of articles and special reports that can put you in touch with data provided by dozens of experts.  A brand new FREE video is also now available at the EndOfTheDollar.com that shows why our dollar may be breathing its dying breath as inflation destroys the purchasing power of our paycheck and our savings and retirement accounts. 

Listen to the little voice, "Nothing has changed."



       

Do you believe that for a second?  Do you think I do?  Absolutely not.  But, what if it was?  What would that mean?  It's often suggested that I am just the eternal optimist when it comes to gold - a true gold bug, if you will.  However, as I have said on a number of occasions, I long for the days prior to the 2008 credit crisis.  Yes, those were the days.  Credit was cheap, real estate offered many opportunities to buy, build, sell, rent . . . you name it.  And stocks!  A monkey with a dart board could pick 'em.  Even gold was on the move as those wary of inflating bubbles were not totally buying into the Shangri la theory that most investors embraced.  It was hard to be in the wrong business.

Then BAM!  Seemingly, overnight, home values were cut in half.  Commercial and residential construction sites were abandoned leaving half-done jobs standing as though aliens abducted all the workers.  Perhaps worst hit were stocks as we watched them fall from all-time highs.  Investors realized, much of their wealth was borrowed and the time had come to cover margin calls.  Sell sell sell was the cry!  Then the crying.  

And what about gold?  Even gold got hammered.  Right in the middle of a bull market that saw gold prices rise above $1000 for the first time ever, gold prices dropped more than 20%.  If only the Mayans could have left October of 2008 off the calendar, maybe the devastation could have been avoided.

Then, to the rescue came the Fed and government with printed money to fuel a rebound.  This was a crucial time for all of us as we scrambled to find an investment we could rely on to take us the rest of the way to retirement.  Some went back into stocks and stocks moved higher.  Others stuck with gold and were vastly rewarded as the gold price, since that major pull-back, has doubled, far outperforming any rebound in stocks.

Now, as the economy and the markets come down off their printed money high, Gold and precious metals prices have once again pulled back.  This would be the fourth major pullback since the bull market started in 2002.  A bull market in gold that has seen prices, even at today's levels, rise more than six-fold in less than 10 years.  So Really!  Is the Gold rally over?  Or may this be the opportunity of a lifetime to take advantage of what may well be just another routine pull back in metals prices?

Fast forward!  What do you see?  Do you see $15 trillion of debt vanishing overnight?  Do you see job growth, a housing rebound and economic recovery without more printed money being injected into every arm of our economy?  Or, do you see the birth of inflation, perhaps hyperinflation, brought on by massive printing of world currencies and especially the dollar? 

It does not take an economic genius to recognize the death of the dollar, as chronicled in a new video at EndOfTheDollar.com, is occurring right before our eyes.  Do yourself a favor and take a close look at how monetary policies have affected the markets, the dollar and gold over the last 10 years, then decide where to place your bets to protect the future purchasing power of your savings and retirement accounts. 




 

 

From its lowest Sunday night depths, at $1535 an ounce, the gold price has now risen $130.  Silver, which touched $26 an ounce, has risen $6.75.  That's 8.4% and 25% respectively with prices quoted as of the time of this writing. 

As I alluded to yesterday, it seems the best times to buy or to sell, gold or silver, come when most of America sleeps and has no chance to take advantage.  With New York often referred to as the financial capitol of the world, you wonder how the financial suburbs can create so much price volatility.  All I know is that I spoke with a number of people who would have liked a shot at adding metals to their portfolios at the lows reached late Sunday night. 

Now the question, will we have another shot at buying low or are prices on the rebound?  This morning Bertha Coombs, reporting from the commodities trading floor, gave us some trader insight.  She said the sentiment on the floor is that nothing has really changed from last week to this week.  She specifically referred to the debasement of global currencies still underway.  If domestic traders saw no reason for the price drop, I think we can conclude they were not the ones selling off.

Certainly, throughout the world, there remains a number of triggers, that could set off a buying spree tantamount in magnitude to this recent sell-off.  Greece is still not settled as more and more experts speak of imminent default.  Such an event could send another wave of investors to the safe haven of precious metals.

Continued weak economic data could also renew discussion of additional quantitative easing - something Fed Governor Sarah Bloom Raskin alluded to yesterday in her comment that such could be warranted.  A new video speaks of the potential for a double dip in our economy to destroy the dollar as the world's reserve currency.  To learn more watch The End of The Dollar Video now.

Then there's always the surprise announcement from some central bank that they just bought tonnes of gold.  I would not be surprised to hear that it was happening now, right before our very eyes.

As I continue to assert, nothing has changed.  Nothing can change overnight.  We are years away, maybe more than a decade, from a housing recovery, jobs are not being created, earnings are dwindling as the positive effect of job elimination on corporate bottom lines is beginning to wear off and consumer sentiment is in decline.  

All the events that have influenced a rise in precious metals prices over the last decade are beginning to intensify.  I expect global gold demand to continue rising.  As prices rise along with demand, there will always be periods where the metal is overbought and oversold.  The pendulum swings both ways.

It's more important now than ever to stay in tune with the economic conditions that surround you and hold your savings and retirement hostage.  LearCapital.com