Thursday, June 30, 2011

Greece is back to normal and Iceland Starts Anew

So the Greek Parliament voted 'Yes' to austerity. The markets knew last week that this was 99% sure. Gold has virtually stagnated for weeks. Not even Greece seemed to bother gold in its usual summer doldrums.

The new normal is back in Greece. We have the usual riots in Athens, the divided politicians, the large and increasing deficit plus the appeased creditors. All good and ready for another round of 'you can't make this stuff up.'

Or in the words of John McEnroe, "You can't be serious!"

Think of it this way. You haven't got any money and your mortgage payment comes up for payment next week. A 'knight in shining armour' (with the bank logo on his tin breastplate) knocks at your door and offers you a loan to cover next years payments. But you will have to cut down your costs and sell him some of your prized possessions. Your 52" TV would look good in the bank's tea-room and your pile of silver coins would be perfect collateral.

You agree; you don't really have a choice. Your kids now hate you and bust the place up and leave, taking their meagre savings, and the dog, with them. Your house is now not your own and you lose your legacy.

So with the Greeks. They have been frog marched to giving over their prized possessions. Who knows what these may be. Perhaps the odd tourist island. Perhaps national railways?

They lose their house and are now exposed to losing everything. So much for sovereignty and democracy.

But when you are in debt, you are slave to the master. You have no rights.

Unless of course you take another road. The Iceland Way.

Iceland have just voted (60% majority) to give the proverbial to the English and Netherland Banks. The same banks that bailed out the English and Dutch organizations that were exposed to Iceland's debt when it crashed in 2008. No carrot was large enough (even the prize of entry to the EU Community), for Iceland to agree to keep paying this onerous debt.

So now the taxpayers in England and the Netherlands are saddled with paying for Iceland's past stupidity; and they can do little about it.

Perhaps the way forward for Greece is to simply default (refuse to pay), leave Europe and bring back the Drachma and start all over again. They may be punished for years to come with unforgiving trade rules and other surreptitious economic penalties, but at least they would be masters of their own universe again.

Gold in New Zealand dollars: $1830.38 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $42.25 per oz
Previous all time high: $48.58
per oz

Articles of interest:


Economic crisis in Greece could reach United States, IMF warns

See article here
msnbc.com


James Turk - Summer Gold Trading Will Be One for the History Books

See article here
www.kingworldnews.com
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Wednesday, June 29, 2011

Greece wobbles at the Naked Olympics


This week is when Greece votes on so called 'austerity' measures. Measures they have been told to put in place before they are eligible for a $12 billion bridging loan from EU sources to roll over debt.

Much of the press and most euro-politicians blame the Greek people for this mess. They are 'lazy' (as compared to the Germans) they say. Wanting to retire at 54 years of age and receive 75% of their current salaries is just not Spartan enough.

But lets not be fair here and mention US public employees.  A system similar to Greece, where a Defense Department employee contributes to a federal pension that will let him/her retire at age 56, after 32 years of service. This has led to unfunded liabilities for military and civil servant retirement benefits of $4.7 trillion ($4,700,000,000,000).

So what are the Eurocrats concerned about with Greece? After all, Greece is only a country of 11 million people, how big can the coming catastrophe possibly be for such a small country?

Just print a few euros, call it something official, and get on with it.

But wait, there is more.

Naked Credit Default Swaps.

Wikipedia describes them as such:
A credit default swap (CDS) is a form of insurance that protects the lender in case of loan default. When a lender purchases a CDS from an insurance company, the loan becomes an asset that may be swapped for cash if the loan defaults. The difference between a traditional insurance policy and a CDS is that anyone can purchase one, even those who have no direct interest in the loan being repaid. This type of investor is commonly referred to as a speculator. In this case if the borrower defaults on the loan, both the lender and the speculator receive payment from the insurance company.
Naked is when a fund has no ownship of the debt they are betting against. It is just a bet. These derivatives are ruinous and should be banned. Naked CDOs amount to most of the market. They allow people to bet on Greece defaulting in the 'over the counter' market (ie off the radar market).

So when the tide goes out in Greece, we will realise who has their swimming togs on. And it won't be the boys with NCDO's. It will be the insurance companies who have underwritten the losses, who have taken the other side of the bet.

The most pressing problem with NCDOs, is that no one really knows how many of these things have been bet against Greece defaulting. No one knows what the level of insurance payouts on these things will be and which Insurers are exposed. Could a default by Greece cause an even bigger systemic failure than AIG or Lehmans?

This may be why the Eurocrats are anxious. Very anxious.

Greek men used to play in the Olympics in a naked state. Other men are now playing against them, naked, and may have stacked the odds before they arrive to play.

Gold in New Zealand dollars: $1862.73 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $54.08 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Tuesday, June 28, 2011

China Lays the Most Recent Golden Egg


Growing up in the sixties and seventies, one could not venture out to the toy store or local clothing shop, without hearing slightly derogatory remarks about 'made in Singapore' or 'made in Japan'.

Now, 40 years later, it is a different story.

The economies of Singapore and Japan grew on the back of the growing credit creation after President Nixon went off the gold standard in 1971. Historically, Singapore and Japan were probably in the right place at the right time.

But economies grow up. Spending time in Singapore, one can observe how a low paid workforce can develop into a well-educated and financed middle-class. Singapore had great ambitions and a tight Confucian society. It has reaped the rewards of growth and stability.

But Singapore and Japan are as vulnerable as any country right now. Singapore is a major finanacial and service industry hub for south east Asia. Japan manufactures sophisticated goods, mainly electronics, for the world market. The veneer of success is merely a crash in confidence away from being exposed.

So too with China. China is the latest Asian Tiger to manufacture the world's junk consumer goods (along with Vietnam). China is mooted to be the largest economy in 20 years time.

But hold on a minute. There's something not quite sounding right.

Here's a contrary view. You may not here this view in the mainstream press. There has been much investment in China by western manufacturers and much vested interest in keeping the game going there.

But China has issues. It has pegged the Yuan to the US dollar for some years now. This causes it to import the inflation caused by the printing of the US dollar, courtesy of the Federal Reserve Bank. China complains, but it can't have the peg cake (to keep export prices low) and eat it too.

Eventually, inflation will eat away at China's huge savings nest-egg created by sales to the West.

And China is pumping money into Europe as well. Becoming the lender equivalent of the Cavalry. It has offered to stump up with the cash for Greece and any other of the PIIGS that want it. Why? Because if Europe goes, China suffers in a number of ways. It loses export markets for one and it surely does not want a contagion default causing it's savings to vanish.

But consider this issue as China's largest problem. Real Estate. Property prices in China and Hong Kong are highly inflated. Arguably more so than in the UK or USA before 2007. Their property market may be in for a huge correction; soon. Real Estate has been a major part of GDP and China's success locally. But some cities have now seen prices go from 21% rises to 5% falls in three years. If prices drop more, then the demand for raw materials, which keeps many countries afloat right now, could cause issues. Especially in Africa.

The West is running out of money. High debt levels mean that that spending on junk consumer goods is waning. The large pot of cash China has in US Bonds and other assets, may need to be used in order to keep the new middle-class at work (by boosting local consumption). A command economy like China, can't afford to have restless locals.

China is at the cross-roads. Not enough time to become militarily equivalent to the US and not enough time before the money runs out as its economy becomes starved of sales income.

Already the shift has begun to new tigers, like Bangladesh, where cheap labour is abundant.

Gold in New Zealand dollars: $1856.13 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $41.66 per oz
Previous all time high: $48.58
per oz

Articles of interest:


A Lesson from the Gold Standard

See article here
www.goldmoney.com


______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Monday, June 27, 2011

How Would Gold perform in the Next Crisis?

The world economy is a complex matrix of money flows. No one really appears to have a grip on how it all hinges together. It's unpredictable, almost life-like.

There are the Keynesian theorists who believe that fiat money is the answer. But maybe they don't factor in enough the one true variable in markets; greed. Then there are the Austrian School economists. Hard money people. Their mantra: If you don't work for it and earn it, you can't have it. Debt and market manipulation is unhealthy for the economy. Yet, don't we need to raise debt in order to produce goods and services?

A return to a gold standard has often been mooted as the elixir for our current problems. Gold would be the stable underpinning of capital growth. We wouldn't be able to print our way out of trouble, thereby misappropriating capital. Bringing forward production and consuming it now, when we cannot afford it.

So does gold have a role to play in the next monetary system? What does gold do in a deflationary scenario. Let's look at this a bit.

Over the past few decades fiat currency derivatives have grown exponentially. Money has been cheap as interest rates have been low. This artificial manipulation of the money supply has distorted the market demand and supply of capital. If the interest rates are too low, this will distort the investment demand in risk related investments. Note the 10 months from August 2010 to May 2011 when the Fed printed $600 billion and pumped that into the market; commodities, and other risk assets, went ballistic. You see, gambling with cheap money holds little downside risk when prices are going up.

The growth in paper derivatives, caused by this misallocation, flowed through the system to Mums and Dads who thought the increases in their house values would last forever. But what they didn't realize was that the value they were looking at was a paper derivative of another flow of investments by someone elses paper derivative.

This cannot last, derivative bubbles have an end. The end may be near.

Look at the bank's balance sheets. They hold property and derivatives as assets, but these 'paper' asset values don't actually exist. They record them because the regulators allow banks to record them at the value they purchased them for. But good luck with getting that money bank when it is time to sell.

If this is true, then now look at the liabilities on that same balance sheet. That's the money banks owe you through your deposits and fund investments. It is actually not there.

How can we be sure it doesn't exist. Because in September 2008, when the global financial crisis hit, the US Federal Reserve and Government bailed out the world through currency swaps. You see, people were wanting their money out from banks and institutions. The balance sheets said it was there, but it wasn't. Hence the bailouts to increase confidence.

If there is a huge sudden loss of confidence in the near future, perhaps caused by Greece, then how would gold perform?

If the above 2008 scenario repeated (if the authorities don't step in with more printing), it would probably cause massive deflation. Suddenly those 'derivative happy' balance sheets would be marked down to true value. Money would disappear in a flash. Gold though, would go up in price, or value, eventually. Why, because after all these defaults have worked through the system, the attempt to store value by investors will cause gold to rise.

This would happen even as people who had bought gold as a 'wealth preserver' or as an insurance' begin to sell in order to make up losses. Because gold will find it's true market value under any circumstance.

How this value will be measured is another discussion. But gold has traditionally purchased a similar basket of assets over time. Perhaps 1 oz of gold would buy around 2 weeks of goods and services with the average Western income (a rough estimate).

Naturally, though, the Politicians would not like a deflationary scenario and probably come up with some other hair-brained scheme to halt the decline and provide stability. This may include a new currency. Perhaps regionally based (like the Amero) or globally based.

They could extend the fiat game for a bit longer, but the pressure would still be on them to deal with the debt. Under any new currency, creditors would not want to be shafted, and would muster considerable political clout in order to be repaid the value of their investments. Remember, they bank-roll these very same politicians.

So debt will be transferred to the new system and away we go again.

How do you think gold would perform in a deflationary scenario? Let me know your thoughts.
Gold in New Zealand dollars: $1869.96 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $42.5 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Friday, June 24, 2011

Gold and Silver take a Hit; For Now.

So , Mr Obama is in need of a vote boost, oil prices are high, hence the cost of the gas you put in your car is high. Hmm, what to do?

Sell some oil and get those dumb computer trading algorithms to hit their sell signals? Great idea. 'Tis done.

So there we have it. Last night, the US sold more than 30 million barrels of oil into the market (from their strategic reserves). Down went the oil price and down went gas prices. But algorithm alert! Not smart enough to know an oil commodity from a gold or silver commodity (and one could argue that gold isn't a commodity), all the prices head to the hills.

Gold down US$27.00 and silver down US$1.00.

But don't tell anyone that 30 million barrels of oil will only last for two days in the US alone. So when humans come back to life and look at the figures, they may see bargains and begin to buy gold and silver at goodish prices. Support for gold appears to be around where it now lies, US$1520 per oz.

Let us look at some fundamentals. The US will need to borrow another $2 trillion (2,000,000,000,000) this next year. (It is good to see all the zeros because it helps keep you awake). Mr Bernanke will stop the current program of Quantitative Easing on June 30. From here he will use the proceeds of maturing bonds (created from thin air last year?) to pay for more Treasury purchases.

But this won't be nearly enough to cover $2 trillion. Not even close. So what about the Russians, nope already selling their US bonds and buying gold. China, sorry, doing the same thing and not only buying gold but other strategic commodities and foreign farmland to boot. Europe? One word..Greece. So that leaves Japan. Can you hear the wind blow and tumble-weeds roll.

There ain't nobody out there (except aliens) who will want to purchase US bonds. Mr Bernanke has already stated more 'stimulus' may be required to boost the economy. He may have no other option. Politicians will demand he 'do something' for them to remain in power. QE3 will happen. It may be called a fancy name like 'The People and Government Partnership and Job Support Fund' (I made that up), but it will still look and smell like 'money printing'.

Gold and silver and commodities take a hit. Watch them bounce back when the real action starts.

Gold in New Zealand dollars: $1867.72 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $43.37 per oz
Previous all time high: $48.58
per oz

Articles of interest:


All The Things That Ben Bernanke Avoided During His Press Conference

See article here
www.bloomberg.com


Federal Reserve admits US economy is struggling

See article here
The Telegraph
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Thursday, June 23, 2011

Its Weight in Gold: The Real Prices of Things

Here is a link to an article by Casey Research analyst Charles Vollum. It is a sobering indication of the way currencies are losing value. While the New Zealand Dollar is remaining high, others are low.
Fiat currencies the world over are being manipulated by central banks, which is distorting asset and commodity prices. Successful investing requires that investors have a good idea of what things cost and what they are really worth – and using the world's oldest and most stable form of money, gold, to compare prices is one way to get that insight.

To that end, below is a sampling of current prices measured in grams or milligrams of gold. Price comparisons are against prices as of June 10 (see here for the remaining article)

Gold in New Zealand dollars: $1899.88 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.57 per oz
Previous all time high: $48.58
per oz

Articles of interest:


Greek Savers Rush for Gold

See article here
gata.org


Euro Crises: Greek Austerity

See article here
cnbc.com
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Wednesday, June 22, 2011

Your House May Be Owned by A Foreign Piece of Paper

It was reported recently, that New Zealand banks have been raising billions of dollars by issuing bonds to European Banks and Institutions in order to raise capital for the local market.

The collateral for these bonds are cash flows from a bundle of mortgages or other loans. Mortgages and loans that the Banks here hold as assets on their balance sheets.

In other words, your mortgage and your loan.

If a default on these bonds occurs by the borrowing bank here in New Zealand, then the bond holders can claim the assets backing the bonds as payment.

These are quite high-powered bonds and hence the reason why the Reserve Bank of New Zealand has limits on their issuance.

The good news is that Banks here are slowing down their issuance of these bonds. Banks don't want to borrow from Europe at the moment, the Greeks have spooked them. This means that money markets will be tight, and borrowing costs (interest rates) will rise.

Who then owns your mortgage? Which European Bank owns that piece of paper you thought the ANZ or the ASB etc owned?

The recent scandal of robo-signing home loans in the USA, has made people aware that when Banks use loan assets on their balance sheets as collateral, all sorts of legal nasties rear their heads.

For example, who actually has title to the house you own? With these bonds, is it the local bank or some Financier in Monaco? And when is he going to want his money (your house) back?

This may be another good reason to get those ownership papers from your bank when you have paid the last cent of your mortgage. You don't want any weird claims to pop up over your property. When one realises that your property is owned by the lender until the last cent is paid and the papers are in your hand, then you may want to get out of these mortgage contracts asap.

It seems odd that a bank can borrow against your mortgage in order to fund new mortgages. A strange tale indeed.

Please comment if you have something to add or you disagree with the reasoning.
Gold in New Zealand dollars: $1906 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.73 per oz
Previous all time high: $48.58
per oz

Articles of interest:


Sinclair, Norcini interviewed by King World News on undervaluation of mining shares

See article here
King World News


Where Did All of the QE2 Money Go?

See article here
The Business Insider
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Tuesday, June 21, 2011

Gold and Silver Manipulation


From the beginning of my journey in precious metals (about 6 years ago) until now, there have been many commentators that are adamant about there being manipulation in the silver market.

When you analyse a lot of what is written about gold and silver on the internet and elsewhere, one can find it difficult to sift out the 'vested interest' commentary. Those with agendas not holy pure are always out to distort facts in order to feather their own nests.

So who in the manipulation camp is right? On the one side, there are those who absolutely adhere to the idea that the big bullion banks and the likes of JP Morgan are using their financial firepower to manipulate the price of silver downwards, thereby profiting from large short positions. Others don't see any manipulation and see the large price swings, when these banks enter and exit, as being normal.

Perhaps though, there is middle ground to be had. Markets do not tollerate manipulation in the long-term. So any short-term manipulation can affect price and, if the fundamentals for that commodity are in place, then eventually a true (ish) price will be found. It's the basic law of demand and supply.

With precious metals, the secular bull market has been running for around 11 years now and the fundamentals are still in place.

During these 11 years, some institutions have undoubtedly used their size to manipulate price. If the regulators see this and deal with it, all the better. But these movements shouldn't really shake a long term investor out of their positions. If they have done their homework and the fundamentals are in place, then they will be relaxed about short term trading gyrations.

The market will reveal true price eventually, even with the fear and greed that goes on in-between.

Gold in New Zealand dollars: $1903.20 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.29 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Monday, June 20, 2011

Greece Poised to Default; Lehmans Round Two


It appears that the Greek crisis is coming to a head this week. Which way will it tilt? Will this be a Lehman Brothers type disaster or will the EU come up with a package to keep the wolf from the door for another few months?

The Greeks are short US$242 billion for next year and beyond. The proposal to 'fix' this is US$64 billion of loans, US$81 billion in money left over from last year's bailout, US$43 billion in asset-sales and US$43 billion from creditors (the haircut) (figures courtesy of The NZ Herald)

Angela Merkel, the German Chancellor, seemed a little 'down in the mouth' today when she said,
"policy makers must make sure the Greek crisis didn't infect the rest of the euro region and spark a new global financial crisis. We all lived through Lehman Brothers, I don't want another such threat to emanate from Europe. We wouldn't be able to control an insolvency."
When the Germans worry, Europe should be fearful. Germany is the biggest economy in Europe and appears to have little stomach for another bailout of a Greek nation that appears to have no idea or will on how to extricate itself from this mess.

The EU leaders and Bankers are scrambling to fix this. The options are default, partial default (read: default) or a 'kick the can down the road' bailout package of more debt to pay the debt.

Another method proposed is for creditors to take a 'haircut'. That is they suffer losses of up to 50% on the amount of euros invested. This is spin language for 'default' anyway. If creditors don't get their money back, the debtor has defaulted, even if only partially.

Markets are not stupid, they will see this and may begin to call in their loans from other distressed European countries. They may also begin to look further afield for their cash. Maybe asking New Zealand to stump up with some borrowings. Or halting new lending altogether.

This would leave New Zealand, and other nations reliant on more debt to pay debt, in a precarious position. Interest rates will skyrocket as the cost of capital goes beserk. This occurs when the demand for money increases and supply decreases.

This could happen in a matter of days. It was mentioned a few days ago in this blog, that computer programs deal in milliseconds and the market could tumble violently very quickly.

But you could look at this situation another way. Is this a failure of the EU experiment? Will it all revert back to individual currencies and nation states?

Or is this a stepping stone to greater EU power by the European elite Bankers and Politocos.  The end game for democracy and self-rule is a consequence of debt that none of us like to ponder. Note that Greece is being asked to sell assets to fund their debt. Some of their strategic assets will soon be owned by these elite from Germany and France.

Perhaps this is what the riots are really about?

Gold in New Zealand dollars: $1899.68 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.60 per oz
Previous all time high: $48.58
per oz

Articles of interest:


Crisis Hour: Europe May Withhold Half Of €12 Billion Greek Aid As No Emergency Meeting Decision Reached

See article here
www.zerohedge.com


Boris Johnson: let Greece go bankrupt and leave the euro

See article here
The Telegraph
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Friday, June 17, 2011

The Flight from Dollars to Gold


QE2 (quantitative easing, or money printing) is finishing on June 30. There is increasing uncertainty in the markets about how the US will fund its massive deficit, which is growing by $1 trillion ($1,000,000,000,000) per year.

Because of the risk of holding dollars and other currencies, Central Banks around the globe are swapping their dollar assets for gold as fast as they can. Some of this is recorded and verifiable, and some is deduced by intelligent deduction, especially the buying out of China.

Mexico reported to the IMF that it acquired 14.8 and 78.5 tonnes of gold in February and March, respectively. The Mexican Central Bank stated the reason they were buying gold was because the US dollars that flow into the country are depreciating in value, and they wanted to preserve value with gold.

Other countries Central Banks no doubt buy gold for the same reasons.

Thailand purchased gold between January and March 2011. Thailand reported an increase in its gold reserves of 9.3 tonnes taking its total gold holdings to 108.9 tonnes. This follows an acquisition of 15 tonnes in July of last year.

Russia continues buy gold to add to its reserves. It added 22.5 tonnes between January and March. Not to mention India, who purchased 200 tonnes in 2009 and the BIS (Bank of International Settlements) who recently bought nearly 5 million ounces. Also, Saudi Arabia and China.

Gold is a currency and a measure of value. Mexico has stated the obvious. Gold is a store of wealth. They and other Central Banks are ridding themselves of the dollar...it is official.

If gold is now acting as the true currency of choice and the true measure of value for Central Banks, then individuals who don't own at least some ounces, will soon find it difficult to measure the value of their wealth.

Wealth will soon be measured in the number of ounces of gold (and/or silver) that you possess.

The folly of being out of gold and silver is becoming higher.

Gold in New Zealand dollars: $1895.08 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.03 per oz
Previous all time high: $48.58
per oz

Articles of interest:


What if Greeks Decide They Don't Want to be Rescued?

See article here
The Wall Street Journal


______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Thursday, June 16, 2011

Greece and the Golden Fleece

The Greek legend of the Golden Fleece is the tale of Jason and his band of Argonauts, who set out on a quest by order of King Pelias for the fleece, in order to place Jason rightfully on the throne of Iolcus in Thessaly. Jason found the fleece.

The ram whose fleece this fleece was fleeced from, was the offspring of the god Poseidon.
Jason returns with the Golden Fleece
(courtesy of Wikipedia)
Greece now needs gods and it now needs gold. Where is Jason when they need him?

The rioting in Greece today has escalated the problems this bankrupt country faces. Nobody wants to take the cuts proposed by the Greek Government, forced on them by the Germans and the French. The people are demanding their entitlements are maintained. The Greek people still don't get it. The entitlements were never there. It was debt and now, nobody lends to a CCC rated country. Especially to pay for retirement at age 55.

As a result of this situation, three of the largest French Banks had their credit rating downgraded today. A contagion effecting the financial and political systems in Europe may be beginning.

The situation is volatile, fluid and dangerous for the world financial system already on the precipice.

Consumer confidence is already at an all-time low and an escalation in Greece, and perhaps a default, could cause widespread panic in the EU and spread to Asia and America. Investment Fund Giants and their market algorithms would be going beserk on the sell-side.

The world doesn't get a run on Banks by mobs turning up in hours, it gets a run on Banks in micro-seconds. You think watching 1929 from an armcahir may have been interesting, with the next crash, you won't even have time to blink an eye and it will be over. Wealth destruction in milliseconds.

Scary, yes, but not desperate. There is time to protect your wealth.

But back to the Fleeced Greeks.

You see it isn't all the Greeks fault. The EU had rules that ensured sovereign debt would not get out of hand in individual EU member countries. But this was 'kinda overlooked' in the happy-go-lucky days of bubbles and froth from 2000 to 2007. Banks were making money from Greece and Greece was borrowing happily. The French and German Banks and Governments turned a blind-eye. They were making a killing.

Now the golden ram has been killed and the fleeced Greeks are unhappy they were somewhat duped and their wealth is coming under the control of the Germans and French. This is the stuff of anger and war.

Not good.

This next crisis could involve Central Banks. These banks assumed risk from 2008. When Central Banks cannot maintain solvency and confidence, there will be a shutdown in Government. This may start in Greece and flow to other Sovereign nations.

Many will say in jest that a Government shutdown would be great news! They steal and spend our money in wildly inapproriate ways. However, you would agree, that chaos is never a pretty sight. Look at the violence in Greece.

Greece is headed for shutdown. Could the world be headed for a northern summer of chaos? Hopefully not.


Gold in New Zealand dollars: $1897.15 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.06 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Wednesday, June 15, 2011

How to Buy Gold and Silver for the Novice


I was reminded today of how difficult it can be for a person, new to the world of gold and silver, to go about the process of buying it.

Which company do I buy from? Are they legitimate (ie will some dodgy guy run off with my money)? Is the gold or silver pure? What does 'pure' mean anyway? How much should I buy? Why is the metal so much more than the spot price? Do I buy physical gold or silver and have it delivered or stored? When should I buy?

Here is my take on this and some recommended companies you can use. I recommend these companies because I have used them. I trust them, have always received the metal and also know them personnally (I have been to the Company offices in Panama for a visit).

For large buyers of bullion I recommend The Anglo Far-East Company. Go to their website and look over the information there. They are a private company who provide 'white glove' treatment to clients. They have your privacy in mind always.

Here is a paragraph from the website:
"AFE Clients are typically sophisticated, affluent individuals, families, and institutions that require a high level of discretion, expertise, and security when selecting a custodian for their bullion assets."

If this is you, then I would be honoured to help you discuss with them what you require. Your reference is AN-001.

The second recommendation is a company formed under Anglo Far-East called YOUnique. With YOUnique, you can purchase small physical amounts of bullion including bars and coins. You can see the range of products here. You can purchase immediately or start a savings program and receive your metal when your desired savings product is paid for. I use this saving method and have always received my metal.

A further recommendation is Mom's Silver Shop in California. They are easy to deal with. They are good for purchases of silver rounds. The 'Mom' is the mother of Jason Hommel, a well known silver expert.

The gold and silver purchased with both Anglo Far-East and YOUnique is LBMA certified (see explanation here). It is .9999 pure.

With Anglo Far-East, the minimum required is $50,000 (in USD). However, there can be some negotiation.

With YOUnique, you can buy and save what you like.

Gold and silver is always more expensive to buy than the spot price. The more you buy in ozs, the closer to the spot price you can get. For example it is cheaper to buy a 400oz bar of gold per oz than a 1 gram bar per oz. The premium is higher as it is more expensive to fabricate smaller bars. A good example is, it is cheaper to buy a whole cattle beast for meat than to buy a small, gourmet cut.

How much physical gold and silver you have in your actual possession is up to you. But remember the security issues. I would recommend a little that is easily accessible but with larger amounts you use Anglo Far-East.

When you buy is up to you, but the mistake I think many people make is they wait for the price to come down before they buy. Using a dollar cost average is the best method, that is you buy when you can and regularly. Sometimes you may lose with the spot price and sometimes you may win. That is why it is called a dollar cost average. This is why the YOUnique savings programme is beneficial.

Let me know if you have any further questions. Place them in the comments section.

Gold in New Zealand dollars: $1866.66 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $43.44 per oz
Previous all time high: $48.58
per oz

Articles of interest:


The value of Gold

See article here
www.bmgbullion.com
 

Debt repudiation by hyperinflation

See article here
King World News
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Tuesday, June 14, 2011

The Risk of Conflict and Debt

As you can see by the graph below, from the Reserve Bank of New Zealand, our corporate debt since the Global Financial Crisis in September 2008, has decreased from 126% of GDP to 110% The Government debt has increased from 10% of GDP to nearly 17%.


It appears the New Zealand Government has taken on the role of 'keeping the ship' afloat. The increase in deleveraging by the corporate sector could be an indication of the nervousness to borrow to create and expand business opportunities.

New Zealand has large assets to back its increasing debt load. We can sell things (like land). These assets are called collateral. Recently, the Government signaled sales of some of these assets (but not controlling interests) to fund debt repayment. Having collateral is what creditors look for. This never changes.

So what would it look like if the debt situation deteriorates to a point where 'da boyz' start wanting their money back; their collateral. How would we feel if 'da boyz' had a newish looking aircraft carrier, with a red flag and a yellow star on it, and parked it off our coast for 'exercises'. Oh, don't worry, you say, NZ is in an alliance with the USA, China wouldn't dare.

Maybe, but maybe the US will have already consolidated its military resources to protect its main interests. More likely, the stomach for a confrontation in a South Pacific backwater would not make great political capital on Capitol Hill.

And what about the USA?

The USA has huge assets in order to back its current debt. It also has a huge military to protect those assets. However, the USA would not want to get into a position where it's currency becomes so devalued that it constricts its ability to pay for it's military.

Therefore, the rest of the world hopes that the US doesn't get into a position of having to 'pull out the military card' to protect its interests from creditors who demand payment. Another term for this is war.

What excuse is made to a start this said war is moot. Maybe Iran or a skirmish in the South China Sea? Who knows.

War is a bad option, but politicians usually fall back on bad options after exhausting the least bad ones in order to remain in power. Why we listen to these self-serving masters of their own universe, is beyond belief.

The alternative? A sound monetary system devoid of political manipulation based on sound monetary assets. A unit of account of univesal recognition with the best wealth preserving qualities. This has always been gold.

It is now not acceptable enough to say 'a gold standard won't work'. Anyway, the people that say this are usually the ones with the most to lose. The consequences of 'living beyond our means' are too dire to contemplate.

Politicians may well be taking us to an inevitable conflict for resources. We have all borrowed those resources with 'paper promises' and soon the Piper will come-a-calling.

We can stand and fight or do the right thing and pay them back.

Gold in New Zealand dollars: $1857.25 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $42.70 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Monday, June 13, 2011

Gold v Paper Politicians


The USA is reeling under the weight of nearly $60 trillion of debt and unfunded obligations. There is no fiscal policy on this planet that can fund these obligations.

The maths is not credible. Printing money is the only answer remaining. The US Government wants results, quick, and will pass the buck to the federal reserve to be the fall-guy. Things will look up for a while, just long enough to get re-elected in 2012.

New Zealand isn't much better. The politicians are unwilling to tackle the debt. In fact, the good old National party is now on the debt grab while the NZ dollar is on a high. Pay down debt, nope, get some more, yes sirree. Like the power junkies they are, they look to gain votes, not credibility.

It has been said that the way societies organise themselves go from chaos to autocratic rule to democracy and back to chaos. Guess where the West is in that cycle? Short term thinking is setting us up for a breakdown in the way we govern ourselves.

Today, this silly writer gave into temptation and went to a Starbucks on the Harbour Front here in Singapore. Silly, because the coffee was terrifyingly bad. But the newspaper was interesting. It had an article outlining where people could invest money.

The average Singaporean racks up large savings and debt in order to house themselves and pay for their children's education. No wonder the birth rate here is 1.16. It is just too darn expensive to have this lifestyle and kids.

The investment advice was to buy bonds (corporate), Aussie dollars (stay out of US dollars), property (ouch) and term deposits (to keep cash handy).

OK, so most of this is paper backed by balance sheets that look good. But in this business climate, those balance sheets must be very suspect. And term deposits? If you are happy with negative interest rates, go for it.

Commodities got a mention as 'an alternative' investment. Gold and silver, well you could hear the wind blowing and the tumble-weed rolling. Not a mention. So the best this rich and prosperous nation can advise is to buy paper.

No gold or silver.

Then again, perhaps the gold and silver community do actually belong to the "tin-hat, bible thumping, anti-government, irrational plebs club" after all? Have they been duped by the allure of the yellow stuff. Do they get a sort of salivating fever coming over them when gold is mentioned?

Not sure, hope not. But when you look at this prosperous island nation of 4 million people, and see that it is basically a service provider to the region, then the modern veneer of wealth looks decidedly shaky.

In the height of the GFC in 2008, the German Chancellor called up the head of Duestche Bank and pleaded with him to buy out a German bank that was headed for insolvency. He did, and became a hero, and all was 'well'. What we didn't know was that Ms Merkel was worried that if the Asian markets had opened before the crisis had been averted, Asia would have panicked. If that had happened, Singapore and the rest of Asia could now look decidely different.

Politicians are hopeless people drugged on power at any cost. Are we headed for chaos because of this democratic expediency. As individuals, should we bury our heads in the sand and just buy paper?

Where's that tin-hat...

Gold in New Zealand dollars: $1865.46 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.08 per oz
Previous all time high: $48.58
per oz

Articles of interest:


The Von NotHaus’ Question
See article here
The New York Sun

______________________________________________________________________

Friday, June 10, 2011

Anyone see Gold Here?


Where is the world at right now? What, if any, is the progress to get us out of this international debt bubble?

New Zealand's Reserve Bank has kept the interest rate charged on its money unchanged. Unlike many countries who are fighting inflation with increased interest rates, New Zealand has seen it prudent to remain at the status quo.

But it's all spitting in the wind. Yes, it is easy to be negative in this climate, but we are seeing the major flaws of Central Banking manifesting itself.

The demand and supply of money cannot be controlled by one entity. Yes, we have heard the arguments that an independent central bank is apolitical. But look at what is coming soon in the USA and New Zealand. Elections.

Keeping the politicians out of manipulating the Central Banks (and they have ways of doing this) is like keeping this writer from walking past the door of a cafe.

The Federal Reserve and the NZ Reserve Bank are seeing their respective economies roll over. The Fed will stop QE2 on June 30. Wall Street is nearing critical levels signalling a large sell off.

New Zealand's low interest rate has rewarded those who still want to consume (import costs down and cheap interest rates causing the housing bubble to continue).

Who, on this planet, would want to save money when the difference between inflation and deposit rates are negative. And why aren't more people complaining about this?

Now with the share/stock markets beginning to tank, all the 401Ks and the Kiwisavers in this world will fall in value. This will hurt those coming into retirement.

So basically the new Great Idea from the Wise Ones is this: to cure the debt bubble, you pump more debt into it. Like curing my cold by standing in a snow storm.

You simply cannot produce wealth by printing credit (creating debt). Money supply needs to run free and the market needs to take it to its natural level. This intervention by Reserve Banks will destroy our economies.

The answer is a monetary system that is independent from conniving politicians, and is based on a finite, tradable, fungible, divisible and universally recognised asset.

Gold anyone?

Gold in New Zealand dollars: $1868.99 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $45.29 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Thursday, June 9, 2011

Gold This Week

Here is a great quote from Bill Buckler:
"In truth, there is no "alternative" reserve currency to the US Dollar. For almost 40 years, there has been no circulating currency in the world worthy of the name because ALL are paper and ALL are backed by nothing more than the future promises of governments to make good on their debts.. That simply isn't going to happen. It never has in past history. And for most of past history, currencies were either gold itself or paper that was lawfully redeemable in Gold. - Bill Buckler...Gold This Week...Saturday, June 4, 2011"
Gold in New Zealand dollars: $1882.39 per oz
Previous all time high: $1955.10 per oz
Silver in New Zealand dollars: $44.57 per oz
Previous all time high: $48.58
 per oz

______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Wednesday, June 8, 2011

Gold and Currencies Revisited

Here is a chart of how gold has performed against other currencies over the last 10 years against a the most traded currencies.

Gold's percentage change against 9 major currencies (courtesy of goldmoney.com)
This is a visual reminder of how gold preserves the purchasing power of whatever currency you happen to earn from your hard labour.

Gold in New Zealand dollars: $1882.27 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $45.47 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Tuesday, June 7, 2011

Silver. A Monetary Metal


Silver is historically a monetary metal and, more lately, an industrial metal.

In industry, silver is a wonderful conductor of electricity. It is in most of the electrical gadgets that you have in your home and business. Gold is a better conductor, but obviously not used as much because of its value. For example, there is a new silver/zinc battery in use which may replace lithium ion batteries. These types of developments increase the demand for silver significantly.

Silver is also a great biocide. It is no wonder the higher classes in old England used silver ot eat off. It not only looked great but helped keep those little darling bugs away and hence disease. More and more uses for silver are being found in the medical world such as an ingredient in bandages and in medical devices.

Silver also has the attributes of money. Not as 'perfect' as gold, but a close second throughout history. Remember it has only been in the last 40 odd years that the fiat money system as we have it now, has been in place.

Here's a reminder of what the important attributes of money are:

  • Divisibility - into small units without destroying its value. Try cutting up a cow to act as money.
  • Fungibility - one unit or piece must be equivalent to another. Cows come with different quality meat!
  • Specific weight, or measure, or size to be verified and counted. 
  • Store of value
    - long lasting, durable, not be perishable.
    - it should be difficult to counterfeit.

Utah has just agreed to recognise silver as money again. You can see why.

As stated earlier, silver has taken a bit of a hit since early May. Some called the the sudden large percentage fall in price on May 2 to be a 'drive by shooting'. An attempt by the large bullion banks to suppress the price.

However, does it really matter if the 'big boys' are manipulating the silver market? It seems that these types of manipulations always end badly for the manipulators. If you are long pyhsical silver, the fundamentals will be what guides you. An it will remove the emotion from the decision.

Silver prices have gone up by 300% since this writer began a steady accumulation. And that is after the latest knockdown since May 2

So, the fundamentals then?

Falling mine supply and stored supply.
Increased industrial and investment demand
Silvers use as a monetary metal.

Gold in New Zealand dollars: $1895.65 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $54.08 per oz
Previous all time high: $45.45
 per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Friday, June 3, 2011

Gold and Silver Chart News


Here is the latest post from Dan Norcini. Dan is always excellent in his analysis.

"Gold has met the initial upside target of $1,550 based on the breakout above $1,530. It is displaying this strength in the face of widespread commodity selling by the hedgies as they run from risk once again and unload long positions cross the entirety of the complex. Only the markets with the strongest fundamentals have been able to shrug off this huge algorithm-generated selling.

I am now looking for a solid close in gold ABOVE the $1,550 level to signal a run back towards the recent all time high near $1575. If gold fails to extend its gains above $1,550 it will set back some and dip towards $1,530 where it should encounter some decent sized buying, particularly if strength in both Euro-gold and British Pound-gold continues.

Risk trades are being yanked off in droves today but in spite of that, the Dollar, while higher, is not getting that much of a bid. That is most interesting and bears watching. This is the 4th consecutive close by the Dollar below the 50 day moving average, not particularly inspiring if you are a Dollar bull. A failure by the Dollar to extend its gains will be positive for the metals, gold in particular, which is trading as a hard currency against the paper currencies right now.

The ADP number has taken the wind out of the equity bulls' sails and has left the chart of the S&P looking quite ugly and very disconcerting for any future prospects regarding the US economy overall. It had managed to claw its way back above the 50 day moving average but completely broke down in today's session. It looks heavy and feels like it wants to go back down and retest 1300. If it fails there, it is going to get ugly in equityville.

The long bond bubble is beginning to form once again and it will take another round of QE to pop it. While the Fed loves the low interest rate environment being created by this mad rush into low yielding bonds, they do not love the ACCOMPANYING market behavior of the equities and many of the commodity markets because that is signaling deflation. What the Fed wants, and is NOT GOING TO GET, is a low interest rate environment accompanied by RISING stock prices and gradually rising commodity prices. They will not get that either. If they push in another round of stimulus, they are going to get a collapse in bond prices alongside a surge in equities and commodities. If they fail to stimulate, they are going to get their dreaded deflation bubble in bonds."

Gold in New Zealand dollars: $1884.44 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $43.86 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

The Rush for Value in Currencies: A Rock and a Hard Place.


The Rush for Value. Where do I put my Money?

USD going down NZD up...the race, to maintain the value of wealth, is getting faster.

But with currencies it is a race to the bottom. How could it possibly be anything else? The credit creation by all nations is going exponential. This to cover the repayment of current debt and interest.

Credit creation is also called 'inflation' and it debases the value of a currency in order to ease the load on debt repayment.

The US is debasing their currency by around 1 trillion dollars per year, and growing. The Chinese have pegged their yuan to the dollar, so they too get the benefits of a decreasing US dollar currency.

But China also imports the biggest disadvantage, high inflation. For a country like China, where people spend a larger proportion of their income on food, it is s high-wire act to keep rebellion at bay.

Nations try to gain an export edge through devaluation. New Zealand on the other hand needs to borrow an exorbitant amount of money in the next twelve months, so the current record high exchange rate against the US dollar, works in their advantage. But when they start to repay this debt, look out. It will be debase or die.

In this environment, a move into hard assets offers a sensible way to protect wealth. Precious metals is the best save haven asset for protection. Today the US dollar went down and gold went up. Protection right there for all to see.

The sands of time may be running out. It may take one last 'black swann' event to cause a hyperinfaltionary panic.

Gold in New Zealand dollars: $1892.22 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $45.41 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Thursday, June 2, 2011

Gold and Silver : To Buy, Sell or Hold?


This is a worthwhile piece received from YOUnique (a division of Anglo-Far East Bullion Company). It is very useful and is partly edited.

"There is currently much Gold and Silver price speculation in the media. This wide and varied market 'noise' may influence our emotions causing us to take our eye off the initial purpose or desired set goal.

Here are some suggested tips to ensure your destined plan maintains its GPS settings to YOUR desired goal:

  • Know your plan 
  • Why do you own Gold or Silver?
  • What percent of savings per month are you diversifying 'risk money' into 'real money'?
  • Are you diversifying your Gold and Silver 50 - 50 or are you biased towards one based on speculation?
  • Is the percent of income diversified into Gold and Silver in balance with your financial obligations?
  • What is the fundamental reasoning behind your plan? 
  • Short-term market price speculation or Long-term fundamental reasoning  
  • What is the source of your information to base your decisions upon? 
  • Is the information you receive that influences your decision from people who are qualified and have a PROVEN history in this field?

Is the sourced information based on short-term technical trading or long-term fundamental analysis?

Some recent commentaries have resonated with us, and we would like to share them with you:

"People should be saying to themselves that they don't care what the Gold price is doing today. If this is the day of the month they are scheduled to buy, then buy it.  Continue on with their dollar cost averaging plan. The same goes for Silver. "Too many people who are new to the precious metals markets attempt to trade them.  Non-professionals are attracted to trading like moths to a flame, and both are very dangerous."

"The bottom line is to focus on accumulating physical Gold and Silver, because at the end of this bull market, what will matter is not how many dollars you have but how many ounces of Gold and Silver you own."

"The Mexican Peso in circulation for 25 years (1920-1945), of which 458 million were minted, contained Silver which fell in value sharply during the Depression; yet not one of those

Pesos was ever returned for PAPER. Gresham's Law, you know."

"No one ever exchanges better money for worse money."

Bill Rowell
Director
YOUniqueTM"

Gold in New Zealand dollars: $1862.70 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $46.10 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________

Wednesday, June 1, 2011

Singapore's Gold Standard: Stable Government

As in many nations, cue the recent uprisings in the middle east and soon to be in Europe, the internet has played a part in the opening of the minds of people to divergent views. Views they could not expound openly in the old forums of printed media.

The internet has also allowed 'cyber-communities' to be formed that have great power for change.

Singapore is the latest such manifestation of this internet phenomenon. The rhetoric around the recent elections could not be controlled by the State. It took place on Facebook and Twitter and open forums. The incumbent system took a huge beating in the latest elections. The swing in sentiment, for Singapore, was massive.

This in a country, where by most Western standards, journalists are not free to write what they like. If they write negative comments they must 'balance' this with positive comments. The internet is making such rules redundant.

The new generation seem restless for change from the old ways. Where this leads, who knows. But this is likely to be a peaceful and measured transition from one order to another. It appears Singaporeans are built this way.

Singapore is a major service industry provider to the Asia/Pacific region and it would be critical to keep a stable business environment here.

Gold in New Zealand dollars: $1866.44 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $46.71 per oz
Previous all time high: $48.58
per oz
______________________________________________________________________

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001
______________________________________________________________________