Gold Predictions

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.


 

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.   





     

  

The great debate is on!  Is the gold market a bull or a bear?  To answer we must first settle on the issue of whether or not anything has changed over the last 3 years.  Let's start with jobs.  Are we adding or losing?  Today, we learn Wall Street jobs are now on the chopping block.  In a place where the bottom line is all that matters, the need for a higher one is about to supersede the need for employees.  The contagion is spreading.

Reports suggest, Bank of America alone is considering the elimination of 40,000 jobs.  In March of this year Wells Fargo announced its own intentions to cut jobs.  Goldman Sachs, HSBC, Barclays have all followed suit with announcements of their own. 

Last week jobless claims rose an unexpected 11,000. Although the official unemployment rate of 9.1% did not change, skepticism over economic recovery grows as the official numbers are believed to fall short of actual numbers.  By failing to count those who are now deemed discouraged workers - someone whose unemployment benefits have expired - the data remains unreflective of the actual number of people out of work.  That number is growing.

How about housing?  Sorry, yesterday August housing starts came in down 5%.  Other reports show a wave of foreclosures may be about to roll over banks with a potential loan loss of over $1 trillion.  Some believe Bernanke is about to address this situation specifically by driving down interest rates even further.  Is a 2% 30 year fixed rate mortgage in the offing?  We'll see!

Finally, let's look at the markets over the last 3 years.  The Dow - flat!  The S&P - flat!  NASDAQ - Up 18% with 15% of that increase coming in the last 30 days.   Thank goodness for Apple and Google, up 25% and 15% respectively, over the last 3 months.  Let's face it, the outlook for declining jobs does not bode well for the future profitability of the markets.

Finally, let's take a look at precious metals.  Over the last 3 years gold has doubled and in just the last 12 months silver is up 80%.  As gold has fallen from its recent high of $1923 an ounce, it's as though the whole world is in limbo waiting for the next sign that the bull market in metals is still intact.  As I see it, the evidence is overwhelming that it is! 

Nothing has changed except that the national debt is higher, deficits are growing, global defaults of some sort seem imminent and the future of the dollar as the world's reserve currency is in serious question.  Meanwhile, back at the ranch, the call has gone out for a return to the gold standard.  Steve Forbes, Congressman Ron Paul and China all seem to be beating the same drum.  Yes, China is said to be amassing huge gold reserves in an effort to back its own currency and begin replacing the dollar as the world's reserve currency.  

Gold price predictions are flying, with some of the most conservative calling for gold above $2000 by year-end.  However, the entire world seems to be sitting on a debt time bomb.  All eyes are on Europe as it struggles to free Greece from its shackles of cold hard debt.  That situation is about to explode.  You'll recall at the outset of the Greek crisis, and long before gold even surpassed $1500 an ounce, the Greeks were buying gold at an equivalent $1700 U.S. Dollars per ounce.  The Greeks were panic gold buying months ago.  It looks like they knew then what's about to happen now. 

Clearly, the only way out of this global financial crisis is to keep printing money and inflate our way out of debt.  The Fed seems headed in that direction.  With Gold prices significantly off recents highs, now may be a great time to consider adding gold to your savings and retirement accounts.  For the latest real time prices on bullion and all your favorite coins visit LearCapital.com today.

     

Today the story hit, Swiss Investment Bank, UBS, has raised its gold forecast for 2012 to $2075 an ounce.  This represents a 50% increase over its prior prediction of $1380.  Wow!  They really went out on a limb on that one.  Given the Gold price passed the $1380 mark about 9 months ago and has since topped $1923 an ounce. 

Talk about doing a 180.  It was just this last July when managing director Peter Hickson, at least according to China Business News, said gold had peaked and was set to plunge to $1000 an ounce.  My question is, what happened in the last 2 months to so drastically revise these claims?

If I were to speculate, which is all I can do since my crystal ball cracked, I would say, either UBS had an awakening and actually sees the price headed much higher.  Or, that the earlier comments were some kind of effort to suppress the gold price and create a buying opportunity.  Why create a buying opportunity? 

Just two days ago the Swiss National Bank announced it intends to make moves to devalue the Swiss Franc.  I think I get it.  It's more expensive to buy gold after you devalue your currency than before.  That's what happens here when we print more money - gold goes up in dollar terms.

This recent Swiss move adds more evidence to the theory that there is an international race to debase in order to inflate away debt.  A strong currency hinders exports and the ability to repay debts, public or private.  I think we all look forward to being able to repay today's debt with tomorrow's cheaper dollar.

Once you come to the realization that a weak currency is preferable to everyone, it's easy to see how and why gold could keep rising well beyond this recent UBS prediction.

The Swiss are very shrewd business people and I can't help but think there exists an ulterior motive to such a ridiculous about face.  In September '02, the SNB announced plans to sell 283 tonnes of gold by September '03 as part of a plan to rid itself of 1,300 tonnes of "unneeded reserves" by 2005.  Wonder what they think about that move today?  And, why make the announcement ahead of time when you know such news could inhibit a trend of rising gold prices?

Today, the World Gold Council reports that indeed Switzerland has reduced its physical gold holdings from 2590 tonnes in 1999 to 1040 tonnes by August 2011.  However, I came across a curious report that indicates the SNB, may have, once the planned sale of physical gold was complete, embarked on a plan to acquire paper gold.

Check out this report on SNB reserves.  The entry found at "Gold (including gold deposits and if appropriate, gold swaps) and you see that purchases of gold via vehicles that carry maturity dates, has skyrocketed since 2005.  At the same time, the entry shown as "Gold (including gold deposits and if appropriate, gold swaps): Weight in thousand fine ounces" appears reflective of the SNBs 60% reduction of physical gold holdings since 1999.

Keep in mind, paper gold could be shares of an ETF that holds physical gold.  Has the SNB cleverly disguised its accumulation of gold?  If this is true, another UBS Gold Price Prediction could fall well short of its recent public announcement.  Stay tuned here and if you don't yet own gold you getter get some before the Swiss corner the market. 





 

One minute, gold is being bashed by a parade of experts across the TV screen proclaiming the gold bull market is over.  The next minute, Gold is deserving of its own TV Special and cleverly disguised ads for Gold Stocks, Gold ETFs . . . in general, paper gold.

To see gold cast in such a brilliant light in the media causes me to pause and wonder.  Has the media finally capitulated?  As I write, a giant headline appeared on TV, "The New Gold Rush!"  Talk about an about face from a hundred references to a "Gold Bubble."  Something is different. 

Perhaps the media is just finally tired of being chumped by gold's resilience and unstoppable climb higher.  Personally, I think it's a little bit of that but with a little twist.  Believe it or not, TV is in the business of TV to sell advertising.  Where once, monster banks and gigantic publicly held companies could spend millions building image, budgets for branding aren't quite so fat anymore. 

If gold is going to be the new investor darling, constant reminders that gold prices could be crashing do not make for a very conducive environment for gold advertising.  Hence, a slight change in attitude.  We could be seeing a case where the cheerleaders have quit their team and gone to the other side of the field.

What's next?  A Gold ETF reality show?  A sweepstakes to win a FREE trip to a gold mine?  In China, citizens are instructed to buy a little gold to protect against uncertainties in the markets and the economy.  What do you think would happen here, if anyone -- I mean ANYONE in any official capacity, came out and said, "hey folks, in case you haven't noticed, we're having a little technical difficulty in our economy and our markets, maybe you should own a few pieces of gold and silver?"

I doubt we'll ever hear that exactly.  You're going to have to read between the lines to get the message.  Unless, of course, you just believe me when I tell you go get a few pieces of gold and silver because, in case you haven't noticed, things are a little rough in Mudville. 

I suspect what will ensue in the media, is the classic Physical Gold vs. Gold Stocks or ETFs arguments.  Suffice it to say, I have my opinions and you'll hear plenty of them.  Aside from that, however, I see all gold investors benefiting from the added attention now being given to Gold.  I see the time has arrived when gold is revered not reviled, respected not rejected.

No longer will gold investors be only those who constantly predict doom and gloom but those who accept the reality that we are in debt so deep, the only way out is through printing of massive amounts of money.  I believe the goal is to inflate our way out of debt.  I have shown the markets want it, the Fed supports it and the administration demands it.  This all creates an environment where gold thrives and the price booms. 

Is it too late to own gold?  Not in my opinion.  To me it looks like the time has come to embrace the hero that has come to rescue savings and retirement accounts from the disintegrating effects inflation can have on the purchasing power of your savings and retirement accounts.  So what if you've saved a few hundred thousand dollars if it takes a wheelbarrow full of cash to buy a loaf of bread.  The time has come to develop your own strategy for diversifying at least a portion of your assets into gold. 






 

The cheerleaders are at it again.  "Wow look at that S&P soar.  It's about to break through 1200!"  Then there's gold.  "Gold has fallen $73 from its high - is it set to drop like a rock?"

These are headlines and comments made this morning by some of the talking heads.  The suggestion is clear, now is the time to own stocks and bail out of gold.  What's your call?

Before we even attempt to answer let's ad a little perspective to the issue of stocks versus gold.  Less than a month ago the S&P traded at 1345.  As it trades now it has fallen 11.5% from that level.  Gold on the other hand is up 8.7% in the same period.  That's after the $73 drop from its recent new record high.  

Now let's look at why the S&P is trading so far off its recent high.  Generally, I believe stocks are off because the risk of losing stimulus, (printed money) has risen.  In my recent article, the charts tell the story.  When the supply of printed money has been threatened, markets have dropped.  Since June, the threat has come from two fronts.  First, with the expiration of QE2 and then with the potential that the debt ceiling would not be raised.  All of this has left the S&P down more than 5% for the year.

Will the S&P recover some value as more stimulus programs are announced?  Probably!  But, do you see it as anything more than a short-term play?

Gold, on the other hand, is up 24% on the year as the act of printing money, in the long term, destroys the purchasing power of the dollar.  In this regard, both stocks and gold prices respond favorably to printed money.  But, here's what separates the two.  When you threaten to cut off the supply of printed money, gold still keeps rising as the potential for debt default now enters the scene. 

If you listen to the media, it seems, no matter what, it's always a good time to buy stocks and gold prices are always on the brink of dropping like a rock.  We've been hearing it for 10 years as we watched gold rise 500% and stocks barely hang on to zero gain. 

That's ZERO gain in 10 years for stocks, even less when you add some inflation into the formula!!

Now, take a look at all the conditions under which gold has risen and stocks have fallen over the last decade and project 3 years, 5 years or even 10 years ahead.   Do you see anything different than we have seen over the last 10 years?

If you see more of the same, why should we believe stocks are a good long term bet for your money and gold is not?  At the very least, the performance of stocks over the last decade, as it compares to gold, should be the best argument for diversification into precious metals.  Don't sell all your stocks.  Don't give up on America.  This is not the message.  The message is diversify.  Do the math.  A stock portfolio diversified into just 10% precious metals 10 years ago could be up 50% right now.  That's right!  Up 50%!!  Follow along.

Let's take a $10,000 self directed IRA.  In 2001 if you had $9,000 in stocks and $1,000 in gold bullion, the portfolio today, on the stock side, could still be worth about $9,000 but on the gold side your gold bullion (Yes you can own physical gold in your IRA click here for details) could be worth in the neighborhood of $6,000 depending on the exact type of bullion or bullion coin held. 

Is gold set to drop like a rock?  JP Morgan says $2500 by year-end, Deutsche Bank called for $2000 by year-end, and now Bank of America has raised its gold price prediction to $2,000 in 12 months.  So, if gold does drop like a rock watch out out cause it could turn around and rise like a rocket!





   




    



 

Yesterday, my daily research returned me to a January 7, 2011 article titled Debt Crisis Will Hit Home In Second Half of the Year.  The article referenced the growing number of states and cities joining the ranks of the bankrupt.  This, of course, being just one more bushel of straws on the camel's back.

At the time of this writing, the debt ceiling debate had not yet reached the levels of desperation now faced.  We were in the midst of executing QE2 which was believed to be the end-all to printing money.  

That writing joined a chorus of predictions on when the credit crisis would finish off the economy and the markets.  It said, ". . .it is, in effect, around October 2011 . .  that this explosive situation will be fully revealed." 

As I look back through my reference material, I recall most predictions were confined to claims that we will keep kicking the can down the road until "someday."  Now, someday may be right around the corner.  What amazes me is how there is nearly total consensus that someday will arrive.  Yet, so many remain unprepared and vulnerable.  Words like "default", "catastrophic consequences", "apocalypse" are all falling on deaf ears.  My greatest fear is that we will wake up one day to someday.  The day we finally learn the real meaning of those threatening words.  Will that day come in October 2011?

Another important day approaches, that being August 2, 2011.  The day the U.S. runs out of money.  Is Tim Geithner once again just crying wolf?  Are Republicans right? - Democrats?  The choices are clear.  Either raise the debt limit or default.  Either way gold wins.  If we raise the debt ceiling that means we print more money and debase the dollar further.  If we default, well - that's just the end of the dollar, your savings and retirement accounts and our standard of living.

Now here's the real scary part.  What if someday arrives and there is catastrophic failure an apocalypse?  What will you do when government says, "I told you so.  Now there is nothing we can do to save you.  It's too late?"  

When will gold break out to new highs?  . . . Someday!

Last week I expressed suspicion over the fact that the gold price had pulled back for no real apparent reason.  As the entire world seems to be lining up to confront the "default or print" options for ending credit crises, gold dropped to a level $95 below it's recent high.

In examining the charts and trading activity over the last couple long holiday weekends, a trend emerged that could offer some explanation.  As domestic markets slow down, in anticipation of coming holidays, opportunities present themselves.

I'll just cut right to it.  I think China watches for these opportunities like a hawk.  It's no secret China wants more gold.  They often downplay just how great their desire to accumulate is, but make no mistake, they are buying gold like there is no tomorrow.  Hence, the theory was espoused, just last Tuesday (see story here) to be exact, that China was waiting till our domestic markets took eyes off gold trading, to pounce on as much "gold for sale" as they could find.

Then just as predicted, as markets re-opened Tuesday, gold prices rose from $1486 last Friday to a quick $1510 and then $1516 in the aftermarket.  Then, no sooner did gold make a not-so-stealth $29 move higher than reports begin to circulate, predicting gold at $1800 between now and December.

As budget deadlines approach, rest assured, debt is on the rise and with it the potential for more printed money a weaker dollar and higher metals prices.  (At least in my humble opinion.)  And while Greece's on again off again bailout seems to be on again, others wait in the wings to make headlines of their own.  Spain, Portugal, Ireland . . . next!

What I see, is that after Europe goes through a series of bailouts, via printed money, the U.S. will resume with some other new and humongous QE equivalent as the race to debase continues.  I don't see gold prices going anywhere but up and I don't see gold demand falling off - not by one ounce.  In fact all evidence suggests, there just isn't going to be enough gold to go around.

So next time you think of selling low because you're bored and you begin to believe all the rhetoric about the gold rally being over, know this.  Nothing has changed except the level of our debt.  And, for every ounce you are willing to sell there is someone waiting to buy two.

$1800 by December?  This may be a little light.

How soon they forget.  It wasn't but a few weeks ago when headlines screamed, "the gold rush is over!"  Now they dare prance experts past the camera that make the solid case for gold at $5,000 an ounce.  Who are they kidding?  I know how TV works.  At any given time there are a hundred press releases or expert profiles in front of producers, all including claims of this expert or that expert. 

At beckon call, there is a bull or bear waiting to make his or her case on TV.  Whether it be about the gold market, stocks, real estate, bonds or coconuts in Peru, there is always someone bullish or bearish.  When gold made its last run to $1580 an ounce, it seemed to provide an excellent ratings backdrop to put experts on that said it was now ready to crash.  Same with Silver.  Silver approached $50 an ounce and retreated to $33 and the story was, silver is off 30% and not that silver was still up 100% over the last year.

So what about this $5,000 gold claim?  Today CNBC made a big deal out of Standard Chartered's prediction that gold was headed for $5,000 an ounce.  In the article, it says the London-based firm is among "the first to focus on the supply-side of the gold equation" to provide basis for this bold prediction.  I beg to differ.  Lear Capital has been talking about a gold shortage for years in these articles, on radio and in special reports.  It's only recently that the U.S. mint resumed sales of American Gold Eagles after its well-publicized shortage of gold blanks used in the minting process.

I can't even imagine a more blatant warning that gold supplies are shrinking, than the U.S. Mint running out of gold.  Yet, somehow, this is now breaking news.  Be assured, gold supply and demand forces have always affected the gold price.  It only makes sense.  There is never an infinite supply of any natural resource.  Now add to this colossal increases in demand by foreign countries and central banks and it's easy to see why gold prices may be reaching a tipping point that could cause the price to explode. 

Signs are everywhere.  One I find most intriguing comes again from the U.S. Mint.  Finally, American Gold Eagles are for sale again.  However, pricing seems whacked.  It used to be the "Proof" coins carried a significant collector premium.  Now the "uncirculated" Gold Eagle carries near the same premium as a proof coin.  Today, as I checked the U.S. Mint web site, the uncirculated one ounce Gold Eagle was $1778 per coin while spot was $1530.  Incidentally, at the same time, Lear Capital's online price for a one ounce gold eagle was $1598.75.  

So, what makes the mint believe it can demand such a premium.  I believe the gold shortage is real and has been for months - maybe years now.  It's as though the mint is saying, we still don't have enough to go around so if you want some you have to pay the premium.  I don't think they want to sell them at all.  I think they would rather build inventory and save it for a time when gold prices explode and hit $5,000 an ounce. 

Got Gold?



 





 

Gold is in a bubble and Silver has gone parabolic!  This is some of the commentary I am seeing and hearing as both metals breach all-time highs.  Notice, this occurred over a long holiday weekend when U.S. traders were inactive. It's as though someone was saying, "Now watch!  When those stupid Americans see both metals reached record levels, the experts will tell them it's time to sell.  Then we can buy more! Hahahahaaaa!

I think back to a time when I sat with the CFO of a very large university at a college football game.  I learned who he was and what he did after a brief introductory conversation.  When I learned he managed the endowment fund of the university, he explained that they like income-producing property.  As I always have, most of my adult life, I casually commented, "you should own some gold."  He kind of snickered and said, "What's it at now?  $450?  Where can it go from here?"  I just smiled.

Now, everyone has heard the story about the University of Texas and their purchase of $1 billion in gold.  [Note:  It was not the University of Texas CFO with whom I sat with at the game.]  The point is, most Wall Street experts and other recognized financial experts, have never really recommended gold.  And, each time gold has made a significant move above a psychological point of resistance, the naysayers always raise the question, "Is the gold rally over?" 

Meanwhile, back at the Capitol, both sides of the aisle are predicting economic Armageddon if they each do not get their way.  Every impetus that has driven gold to these levels, and now silver, still exists.  Rising debt, soaring deficits, inflation fears, and a weak dollar - just to name the big ones.  I will acknowledge one major change.  All of these situations have grown increasingly more critical with no relief in sight.  Finally, the politicians agree! . . . well sort of!

If you just look at all this with an ounce of logic, it seems there is no reason for gold and silver to reverse course.  If the situation is becoming more dire, then why would gold and silver demand and their respective prices drop? 

I will agree, nothing goes straight up and there will be those who need and want to take some profit along the way.  That's what it's all about.  You make a strategy, set targets and stick to the plan.  For those who own silver at prices that allow them to take a little profit off the table, good for you.  But, if you sell because your resident financial expert says the party is over, just look at that person and ask, "at what point were you recommending gold and silver for my savings and retirement accounts?"

To learn more about adding gold to your savings and retirement accounts visit LearCapital.com.



    

After finishing Q1 '11 up 32% in just one quarter, it's hard to believe that just one year ago silver traded under $18 an ounce.  Where once big news was an anticipated breakout over $20 an ounce, now the $40 an ounce level seems inevitable.  Enter the geniuses again.

Now that silver has begun to capture a few headlines, the experts are all over the white metal with words of doubt and near disdain.  No way is silver supposed to play the role of alternative investment to dollar based assets.

Not so fast, though, says the silver institute.  Silver's industrial demand is skyrocketing while supplies are dwindling.  Many times I have referred to the U.S. Mint web site that tells the story of short supply.  Definitely, something is happening in the world of silver as more and more people take note. 

So why silver - why now?  Around the world, silver is growing in popularity as a monetary metal.  Some speculate that some day both gold and silver will be used again to support a currency or multiple currencies.  Herein lies a speculative element that may be contributing to a rise in price. 

Historically, silver has been tied to gold as being worth 1/15th the value of gold.  As gold began to reclaim its role as a monetary metal, the gold price rose and skewed the ratio way out of historical proportion.  Just months ago the ratio was 83 ounces silver to 1 ounce gold.  That appears to mark a moment in time when investors said, "wait a minute" it may be time to shift some emphasis away from gold and into silver.  Looks like they had good cause.

As more people paid attention to silver more information was sought.  News of a real silver shortage has began to surface as industrial demand skyrockets.  In the old days, when 35mm cameras were state of the art, silver was used extensively in photography.  Now, that process is viewed as something the Flintstones used as the process has gone digital.

With the advent of the digital camera, some viewed that as a death knell for silver.  In reality it was just the opposite.  It was the beginning of a new age in silver. 

Now, silver uses are exploding.  As each day passes, more evidence of silver's lacking supply surfaces.  Some predict silver could become more rare than gold as many of its uses prohibit recycling or reclamation. 

Let me share with you some statistics of usage as provided by the Silver Institute.

In 2010...

• Cell phones used 404.35 tonnes of silver;
• Computers consumed 684.29 tonnes;
• Thick film PV consumed 1,461.90 tonnes;
• Automobiles which used 1,119.75 tonnes;
• Electrical and electronics demand for silver reached an all-time high of 7,555.21 tonnes;
• Solar power demand in 2011 is expected to reach 2,177.29 tonnes, up 40% from 2010;
• RFID tags in 2010 reached between 31 and 62 tonnes with a long way to go before reaching full market;
• Water purification used 62 tonnes, and is set to grow to 74.65 tonnes;
• Medical applications may grow strongly to reach 93.3 tonnes by 2015;
• The use of nano-silver in goods packaging and hygiene combined would consume 124.4 tonnes of silver over the next five years.

With now one third of the world's population in India and China, entering the middle class and age of technology, it seems demand for silver will forever increase.  Add to this a growing need for alternative energy and speculation that silver will turn once again to money, and it's easy to see how we may be looking ahead to many new quarters made of pure silver. 

According to a recent Newsmax article, "a record number of Americans now say they doubt they'll be able to afford a comfortable retirement."  And for those depending on Social Security to assist in retirement survival, current reports indicate, "social security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037."

Doubts arise largely from the fear that inflation will slowly eat away the value of current retirement accounts.  Inflation is now an all but foregone conclusion.  The National Inflation Association has published 12 Warning Signs of U.S. Hyperinflation.  Frankly, signs are everywhere and they are just plain scary. 

Some statistics suggest inflation is increasing at a 92% clip, every 3 months.  Yikes!  Just to put things in perspective, 2% inflation rate today could reach double digits in just 7 or 8 months.  Translated into terms near and dear to us all, inflation of just 10% means your savings and retirement will have to grow at about 15% a year just to stay even.  Why 15%?  Don't forget State and Federal income taxes. 

Even the experts don't predict those kind of returns from stocks as inflation directly affects disposable income and investable income.  The more we must spend on food and energy the less we have to spend, save and invest. 

Every day it becomes more critical to invest in things that increase in value at a pace greater than the inflation rate.  Right now rising oil prices are a major culprit in the theft of savings and retirement account value.  If only you could store a thousand barrels of oil.  Housing may also present some opportunity as today's home prices are so low one has to believe there is only one way for those prices to go and that is up.  

Housing, however, may be decades away from recovery as some expect another massive wave of foreclosures in 2011.  Plus, how many homes can you put away for retirement.  There are limits to liquidity in owning multiple homes for investment.  Even today, according to a CNNMoney report, 13% of all homes in U.S. are vacant.  That's more than 1 of every 8 homes.  It's definitely a buyers market but there just aren't enough buyers to fill up all the homes we have.  And, that number may still be growing.

So, what's the alternative?  Through all of this, gold has been a consistent winner.  Rising over 400% over the last decade, gold seems to be one of a very elite group of investments that can outpace inflation.  Even today's biggest brokerages and investment banks are driving gold demand by recommending at least a portion of your savings and retirement be put into gold.  

Can you retire without a few gold coins in your savings and retirement accounts? 







  

Here's a little quiz for you.  When was the last time we had a Federal Budget Deficit under $500 billion?  In 2008 the budget deficit came in at a mere $438 billion.  Since then we have been running deficits in excess of $1 trillion each year.  In 2009 - $1.4 trillion, 2010 - $1.3 trillion, $1.5 trillion is written in for 2011 and now 2012 projects $1.1 trillion.

At the outset of 2009, increased deficit spending was said to be needed in order to stimulate the economy.  That said, it is safe to conclude hundreds of billions more stimulus has been built into each subsequent year at least through 2012. 

Yet, today, recovery is still uncertain.  Were it not so, the Fed would not have pledged, last November, to buy $600 billion in Treasuries through June of 2011.  That amounts to about $85 billion per month spent by the Fed to buy our own debt.  Were there no other buyers?  And, who will the buyers be once the program ends?

With $1 trillion plus annual deficits built into the budget through at least 2012, it looks to me like someone has to step in to continue what the Fed started.  Even if we believe the deficit will be cut in half before this Presidential term is over, we're still talking hundreds of billions in deficits.  

I just saw the statistic this morning that 16.2% of workers are still unemployed or underemployed.  And let's not forget those who are now discouraged and have somehow escaped count once their unemployment benefits ran out.  Throw in the self-employed who are out of work but not elligible to collect unemployment and the number of people still not earning full wages or any wages, is staggering.

In 2010,  a record number of foreclosure filings were recorded.  Weighing in at 2.9 million homes, that number is expected to rise in 2011. 

Can we really look at data like this and say recovery is underway?  Are we really just a few months away from completing our last round of quantitative easing/stimulus?  Time always tells and time never lies. 

The data suggests we are still a long way from recovery and more stimulus will be needed well beyond June when QE2 is supposed to come to an end.  Should that be the case, inflation concerns heighten.  Even today, Eric Bolen of Fox News and Fox Business Network, warns of inflation in clothing prices to set in this spring.  Food prices are also inflating as are energy costs.  

Historically, inflation and gold have walked hand in hand, as gold is used to hedge against it.  This may explain why the predicted dip in gold prices, down to as low as $1225 per ounce, has yet to come to pass.  Instead, gold bounced off the $1310 level and has quietly moved back near the $1400 an ounce level.

If stimulus does end, perhaps even more dire consequences await.  If the Fed is currently printing enough money to, in effect, pay the bills, what happens when they stop?  Who pays the bills then?  Got gold?