Monday, October 31, 2011

Gold Investment Worldwide is Tiny


This is an telling graphic of the distribution of investor global holdings by asset class as a percentage of total. As at December, 2010 there was an estimated US$146 trillion of investments worldwide. Only 1% of this was in gold.



There are a number of conclusions you could make. One is that gold isn't seen as a very worthwhile investment as it doesn't produce an income, therefore, investors steer clear of it. In other words, it's just a fairly useless lump of shiny yellow metal. Looks good on ladies necks and fingers; good for nothing much else.

But as you know, I tend to differ. Read past blogs here about the wealth preservation value of gold and you will see that we may have a wee ways to go before gold is anywhere near catching the eye of the full investment community. If Joe Sixpack from Main Street enters the ring, then look out for the third manic stage of the gold bull market to begin. It is possible. After all, in the late 1970s, gold was over 20% of the graph as shown above.

It is still underowned. When people get to see that the games being played by our leaders and bankers are just that, games, then maybe the rush to preserve value will look like a stampede.

Gold in New Zealand dollars: $2125.32 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.02 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Friday, October 28, 2011

Rejoice! Europe's Problems are Fixed.


Looks like everyone is happy and the prospects for growth are now rosy. Rejoice, for the Europeans have seen sense and we can now party.

Well, maybe.

I know I'm a pessimist, but I think that's founded on good sense. The situation in Europe hasn't been fixed, but papered over (literally). How can using more debt solve the problem of debt? The only thing this plan has done is placate the speculators and enabled them to fire those parked dollars into risk assets and make a buck or two; quickly.

But tell me if I'm wrong with my schoolboy logic. If someone cannot pay their debts then isn't that technically a default if they don't? It seems now it's called a 'haircut'. Perhaps they've run out of names for the old meanings and this was last on the list. Or a whole lot of old balding Eurocrats are thinking lovingly of the old days.

The banks that lent Greece will take a loss of around 50% of all the debt owing to them. Default. Greece cannot pay the money lent to them. At least this has finally been acknowledged after 18 months of fudging and media manipulation.

Behind the scenes though, the banks will be able to re-capitalise themselves with fresh funds from the EFSF. More debt, more printed money. Remember that all countries in Europe are in deficit and have high debt to GDP ratios. This $1.2 trillion dollars doesn't exist. This bailout is new money.

Gold is now telling us that inflation is hurtling don't the tracks. More money in the system, the higher asset prices will go.


Gold in New Zealand dollars: $2120.37 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $42.89 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Thursday, October 27, 2011

Political and Economic Forecasting and Gold?


Right now the news on most economies isn't that hot.

But it is election season here in New Zealand and we wouldn't want a bad set of world ecomonic and local data to get in the way of voter sentiment would we?

Interest.co.nz reports: Yesterday’s PREFU release forecasted a government operating deficit before investment gains and losses of NZ$943 million in the 2013/14 year, before a NZ$1.450 billion surplus in 2014/15.

It may have been easier for Governments in the 2000 - 2006 era to forecast surpluses. Money was easy to obtain, tax takes were on the boil.

Forcasting deficits any further out than a couple of years leaves so much room to manouever so Governments, and their 'paid' economists, can cover their butts by mentioning the old 'it depends how the World economy goes' mantra. Tails we win, heads we win.

Who can really take the forecast above seriously? Investors, probably not, it's their money they are careful about. Government, perhaps, it's your money they are not careful about.

NZ and every western economy will be in increasingly crippling debt unless this debt is dealt with. Interest payments alone will wreak havoc with positive forcasts. If we are relying on the old model of debt for growth, we are spitting in the wind. This model is broken.

This from The Daily Reckoning recently. "The core problem is that debt-financed growth is no longer real growth. The world's huge debt loads need to be extinguished. And then savings can become the basis of new credit, dealt out prudently by banks to enterprises that create real value and real returns for investors."

Gold (and silver) are reflecting the confidence that people have in Governments. They are looking at Merkel, Cameron and Sarkozy, and their divergent agendas, and not seeing much peace. They are protecting themselves with the oldest and most stable wealth preservers in history.

The NZ Government, and others around the world, predict growth in their economies based on forecasts as good as any Oracle in a Greek tragedy. Political games are played with figures. And your money and wealth.


Gold in New Zealand dollars: $2155.53 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $41.69 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Wednesday, October 26, 2011

Are Gold and Silver Prices telling Us Anything?

The meetings in Europe discussing the planned plan for a plan are not going well. Mr Sarkozy and Ms Merkel are not being friendly to each other.

Apparently there are reports of Sarkozy making snide remarks about Merkel eating cheese when she was supposed to be on a diet.

But, the Europeans kinda work this way. Full of emotion and memories of conflicts past, they find it difficult to let go of their national superiority complexes for the good of the euro-dream.

Gold up $50 and silver up $1.50 per ounce. Are we to make anything of this today? Is this a result of markets getting fed-up with the squabbling and lack of finality to the debt crisis in Europe? Are these jumps in prices signalling the end of the euro-dream?

Bottom line. It looks like it. Will it happen and when? Who knows.

Nobody wants to lose money when Greece defaults. Banks may agree to a 40% loss but the politicians want 60%. Even the prospect of a $1,200,000,000,000 (that's 1.2 million million) EFSF Fund doesn't appear to be able to calm the markets.

Then there is that contagion problem. There was chatter this week that the reason why Bank of America moved it's enormous derivative numbers to it's depositor's trading accounts was to protect itself from the coming decimation of European banks. BOA apparently has massive CDS exposure to Europe from it's Merrill Lynch merger. It wants to slap that European bank exposure onto the US taxpayer. You see, structuring their derivatives this way means BOA is now insured by the FDIC, the US Government funded insurance company.

How would the 'Occupy' movement react to bailing out Europe? Not well I would think.

The other issues in the wind, are talk of another US Debt downgrade in a few weeks (good for gold as the US dollar will take a hit) and talk of the Federal Reserve itching to do some more Quantitative Easing (printing).

And let's not forget US State debt, now estimated to be over $4 trillion. Any one State defaulting could be a Lehman's moment.

The world economic system is on a precipice. It seems like he Europeans are arguing while the house crumbles around them.

Will gold and silver prices head up from here? Probably, but even if they don't, this volatility is like a spinning top winding down (remember the movie 'Inception'). It slows and wobbles violently. Then falls.

A good read for you today is from James Turk over at King World News. It is a worthwhile view on where the gold price should be. Will it reach this price? I wouldn't like to see the state of the world economy if it did.


Gold in New Zealand dollars: $2140.52 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $41.76 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Tuesday, October 25, 2011

Value Questioning


Today, I am pointing you to an article written by the President of Anglo Far-East Company, Philip Judge. In these days of volatile markets, it's good to get some sense of how to measure value. Governments are distorting value with too much interference in markets. There appears to be no way through this debt cycle without a major restructuring of the worldwide monetary system. Europe appears doomed as a single currency and the US needing radical changes to it's fiscal and monetary policy.

Here is the article:

"But what really is true value?" asked my caller.

As a 'tangible asset' company, this is a question that we are used to hearing and being asked.

Questions about 'value' will mean different things to different people at different times.

Just a few short years ago, a big share portfolio of popular dot com companies sitting in a retirement account would have held a high 'value' in many people's minds and given them the expectation of an early, comfortable and long retirement. Today that same portfolio could be lucky to buy that person a modest meal in a nice restaurant.

A high-rise beachfront condo might be valued at some highly treasured amount today, but tomorrow the same owner may question that value as a category 5 hurricane beats ashore, while the electricity and phones are out, and the local petrol stations and the shelves of supermarkets are empty.

Going to the Oxford dictionary doesn't necessarily help those seeking the true meaning of value; "Value / 'valju' : the equivalent of a thing; what represents or is represented by or may be substituted for a thing, or, the utility of a thing".

"We are entering a period of 'value questioning'," writes my friend Franklin Sanders.

It seems that in the past few decades, in the developed western-world at least, few people have had the need to question value. Why would they? They have had their financial 'education' provided free of charge and free of risk. Conventional wisdom dictated they borrow money, buy a house and invest in a highly recommended, 'pre-approved' investment portfolio. Property and share prices have gone up as the cost of borrowed money has come down.

"Life is all about seasons," writes my colleague Simon Heapes, "and the Economic Season is changing."

The Oxford reads on; "Value / 'valju' :, the ability of a thing to serve a purpose or cause an effect." Maybe this description helps more? May be 'true value' can be found in something that "serves a purpose" or "causes and effect"?

"Ultimately value is relative to survival," continues Simon, "the value is not in the land, it's what comes from the land. True 'value' comes from the production of the essential. People can always throw off their wants but they can't get rid of their needs!"


Gold in New Zealand dollars: $2056.27 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $39.31 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Friday, October 21, 2011

Gold Accumulation: The Best Way to Save?

Jesse Livermore, the famous Wall Street trader, believed that in bull markets you need to sit tight and be right. This is what he said, "In a bull market the game is to buy and hold until you believe the bull market is near its end."

You can go through a lot of volatility in markets, short term, if you know the fundamentals of that market and look two or maybe five years down the line. The short term fluctuations which may flush out speculators are just noise in a long term bull (rising) market.

Since 2000, gold has been steadily rising in price. If you had understood the fundamentals back then and accumulated gold steadily at regular intervals, you would have taken best advantage of this bull run over the past ten years.

So, probably the best way to take advantage of a long term bull market is to invest in it regularly. This is called dollar-cost averaging and it takes away the need to look at the market on a daily basis to try and decide the best time to invest. With dollar-cost averaging, you win some and you lose some, but over the time of the bull market, you invest close to the uptrending line.

I hear often of people waiting for the price of gold or silver to drop before they jump in. Some waited when gold was $1000 per oz for a drop, then thought that the drop would continue and waited again. The price shot above $1000 quickly and they lost their chance to buy (according to that thinking) and gave up. If they had just put in amounts regularly, they wouldn't go through this mental and emotional turmoil.

There are many gold and silver savings programs around. YOUnique are a good option. As a disclosure, I have been involved with this company for nearly four years in a savings and ownership capacity. You can save for physical gold and silver grams each month starting from US$25 per month. You are also able to redeem these grams in USD whenever you wish.

If we do continue this phase of economic downturn, then the value of paper assets on banks balance sheets will decrease further. Banks worldwide are in trouble because of their high leverage. In fact, the end for banks could come sooner than we think. Eric Sprott recently mentioned the example of Dexia Bank in Belgium. Just three months ago it passed the European Bank stress tests. It was seen as extemely well capitalised. Today it has been taken over by France and Belgium because deposits were flying out the door and Dexia was running out of money.

This is why one day soon, people may prefer to own gold and silver rather than have money in a bank. Money in a bank is subject to great counter-party risk. Counter-party risk kicks in when people want their money back and the dominos begin falling. This is the contagion effect the world 's leaders are so concerned about.

The paper you had confidence in may not be worth the paper it's not written on.


Gold in New Zealand dollars: $2043.13 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $38.56 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Thursday, October 20, 2011

Problems with Kiwisaver

The talk in New Zealand over the past few days is whether we should make our national Kiwisaver program compulsory.

There are a number of comments I would like to make.

Firstly, if you want people to save, then how about making the incentive juicy. Currently the incentive to save isn't there. The economy is between a rock and a hard place. The economy needs growth, read increased consumerism and debt, to keep it sustainable. Growth is required for the whole system to keep working. Therefore, interest rates are kept artificially low so that people will borrow. On the other side of the coin, inflation rates are high. Low interest rates plus a high inflation rate equals negative interest rates. Negative interest rates are not the cure for low savings. Instead it's a cure for more debt and consumerism. Negative interest rates mean your money is losing value.

Remember too, that with negative interest rates government debt is devalued away over time. Great for the boys and girls in politics doing the spending, but stink for your wealth over time.

Secondly, the Kiwisaver scheme is a bad idea. Yes, it helps people forget about saving and might provide income for retirement, but try telling politicians to keep their spending little hands off your money? Already we have had changes to the scheme here and people are getting nervous. Already we are seeing local governments and large banks producing bond programs that may require kiwisaver fund managers to invest your funds. Do you really want your money going into that new bridge, or local park. Good luck with getting a decent return on investment with that.

Thirdly, Kiwisaver is arguably quite deceitful in it's promotion. The government gives the punter a $1000 kick start and further tax incentives on contributions which can add up to over $1000 per year. This the carrot. That's all it takes to separate millions from their wealth. How many realise that they then lose almost total control of their wealth for up to 40 years.

Fourthly, let's mention the fact that each year your fund manager gets commissions for investing your money. Whether you win or lose, they get paid. Others decide, with largely good intent where your money best goes.

The incumbent governing party here appear to have some sense in waiting until the country's books are in surplus before making Kiwisaver compulsory. This is an admission that the scheme is unsustainable in it's present form and will require changes. A recognition that borrowing overseas to pay government kiwisaver contributions is shear madness.

The current world market volatility is causing a great disruption to all markets. Now is not the time to be bold. Fund managers look good in their suits and ties, they give off an air of confidence, but in these times, no one really knows where best to invest. They are simply playing games with your Kiwisaver contributions; your wealth.


Gold in New Zealand dollars: $2074.81 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $39.33 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Wednesday, October 19, 2011

Why Buy Gold Now?

Does gold provide protection for your money? In other words, can you sleep at night knowing that when you want to use the wealth you have stored (savings), it's going to be available?

In my experience, gold and silver go up and down in price quite violently at times. You need to have an iron-clad philosophy and will if you are going to survive these market palpatations.

You see, when the USD goes up in value, gold and commodities go down in price. You would expect this to happen though with the USD being the reserve currency. But generally commodities, and especially gold, will maintain their value, even when sometimes they can become overvalued or undervalued. If you look at this ten year chart of gold, you can see that at times (recently) gold is very volatile. But overall, the trend is still up.


The main reason that Martin Armstrong says gold must be owned is for political protection. Fund manager Harris Kupperman says “You don’t own gold because you expect it to do remarkable things – you own it because you are scared of your government doing remarkable things.”

Confidence in Government is what really has waned over the past ten years. Politicians ability to fix the debt problems (as stated yesterday) lacks credibility and when credibility is lost confidence is lost and that sends confidence in fiat money, controlled by governments, shooting into negative.

The only place left to insure yourself against loss of confidence in fiat money, is gold and silver. Gold being the primary monetary commodity over history. Just take the example of when Jews fled Nazi Germany during the second world war. What did they sew into their jacket pockets to use as money as they travelled to safe-havens? German Marks? English Pounds; no, gold.

Ok, so that is an extreme example, but the the idea is a sound one. Having gold outside the current banking system is imperative to protect yourself from politicians. Politicians who will protect themselves and their cronies when the financial system gets to breaking point. This is already happening and the middle-classes who have done everything asked of them, are suffering.

Gold in New Zealand dollars: $2079.60 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $40.18 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Tuesday, October 18, 2011

Too Much Debt Occupies Us


The one idea that the current 'Occupy' movement needs to grasp is that of debt.

It's all very well to jump on a Marxist or Liberal bandwagon, but unless the fundamental reason for the current crisis is understood, then the message will be mixed and no real positive outcomes will ensue.

The problem isn't so much private debt levels, although these are high, but public debt levels. Governments always end up spending more than they receive. Historically this is evident in most empires. The empire gets stretched as politicians strive to up their power and resource base. Eventually they overreach themselves and go into debt and an inflationary spiral.

Just look at the figure below which shows the devaluation of the Roman monetary unit over some 200 years. The decline in the silver content debased the face value of the coins and yet the Romans somehow thought this wouldn't affect the purchasing power of that monetary unit. But people cotton on fast to the wiles of the governing classes. They quickly pick up where value and investing needs to shift in order to make money and preserve wealth. This Roman debasement saw the destruction of that system and the same will probably happen today.





There is no way that the current problem of debt can be fixed by creating more debt to pay. The spiral of debt increase now is exponential and cannot be covered with new debt. Politicians are calling for fancy named funds like EFSF or QE or Bank Recapitalisation. Under any name this is money printing (debt creation) to pay for the past maturing debt. It will not work and the time is coming very soon when the system will simply not function. A time when interest payments consume all income.

This is the story the 'Occupy' people must understand and offer constructive opinion on. They have made their feelings known, now perhaps they need to make their practical answers known before revolution spirals into disintegration.



Gold in New Zealand dollars: $2110.94 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $40.17 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Monday, October 17, 2011

The Occupy Drum-beat and Gold

Over the past year or two, I have been reading and agreeing with comentators who predicted a spread of the riots that occurred across the Middle-East to the West. The reasons for the riots in the Middle-East haven't yet been fully determined and, like the riots in Rome this weekend, there are factions who high-jack the message to push their own insane violent or anarchic agendas.

Were the middle-eastern riots about power, corruption, democracy, freedom or food?

So to which drum the 'Occupy' movement is marching to is still moot. We are seeing a small marxist element muscling their way in. These dangerous people tend to jump on anything vaguely resembling a protest movement, let alone one that purports to criticise capitalism. Students who have too much time on their hands to discuss the ills of the world. With heads filled with utopian marxist nonsense, some student movements have always participated in protests to play politics on their guitars.

But, while these Western movements are seemingly populated with unsophiscated looking lower and middle-class marchers, this doesn't mean that the ideas they gripe about are less important and, more worringly, less destabilising. They are shouting because they are frustrated and want to be heard. As in the Middle-East, a lot of these people have lost everything and are genuinely angry at how they perceive they have been treated and at how the elite bankers appear to have been given priority.

As Gerald Celente keeps saying, when the money stops flowing to the people in the street, the blood starts flowing on the street.

Whether this will be a violent revolution type movement that will cause massive change is yet to be seen. My thinking is that unless politicians get to the source of the issues soon and make structural changes to the financial system, then 'Occupy' may spiral out of their control. Politicians cannot keep spending money they do not have. We are on the brink of that philosophy ending badly. What a new system will consist of is up to the International Community to decide. We need another Bretton Woods. Going to a gold standard is not necessarily the best option. But options we need, and fast.

But be sure to hold gold. It is an insurance against bad government and the coming disruption.

This is a moment in history that matters. We have reached a point in the credit cycle where too much debt has been misallocated. Too much money has flowed to too few areas of investment and greed has taken hold. The debt has to be delt with. It has to be 'forgiven' and we need to start again.

Soon.

Gold in New Zealand dollars: $2086.45 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $39.95 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Thursday, October 13, 2011

Big Trouble Brewing


This is a piece out today from Chris Martenson. Chris is a very thoughtful analyst and, as he says, not given to hyperbole. Also, tomorrow I will be travelling, so I may not get to post. Have a good weekend.

"I do not toss around the idea of a market crash lightly.  If you've been following me long enough, you know that only in very rare instances do I issue a cautionary Alert (I've only issued four since my website launched in 2008), and I am generally not given to hyperbole.

Let's be clear: I'm not issuing an Alert at this time. But I am concerned that a materially adverse disruption to the financial markets is increasingly likely in the near future.

Perhaps a definition will be helpful as we begin. A 'market crash' is an event where there are no bids to meet a wall of selling. The actual amount of the percentage decline is less important to note than the amount of chaos, or loss of control, that a given market experiences. Some like to say that a market downdraft requires a decline of 10%, or maybe even 15% or 20% (or more), in order to qualify as a 'crash.' For me, the key factor is not so much the amount of the decline, but the pace of the decline...more"

Gold in New Zealand dollars: $1862.73 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $54.08 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Wednesday, October 12, 2011

One Plan; Gold.


The Merkel/Sarkozy and euro plan-fest continues it's laughable way to inevitable failure.

Each day we hear of another half-hearted plan by euro leaders to stem the increasing lack of confidence in the European banking system as news continues to be negative. QE is announced by the Bank of England, Dexia Bank in Belgium is partly nationalised, Erste group is exposed to too many credit default swaps and is tottering on the brink...and so it goes on.

Banks in Europe are exposed to too many bad assets. Assets invested in during the good times using easy money. When banks rushed into the ponzi schemes of sovereign debt not thinking of the risks. After all, money was always going to be cheap and central banks will always bail them out. Or so they thought.

Now that the tide is going out, we are seeing who is swimming naked. Dexia and Erste are insolvent. Not that the balance sheets of these banks would give you a clue. Apparently, most of the assets lodged there are still at the values they were when purchased. Are Greek mortgages even worth the the paper they are not written on? No.

So the plan to plan a new plan is paraded onto the news wires only to be sucked up by traders and market-makers and away goes the share markets and commodity prices again. Up on the new found wave of some ethereal hope of all being fixed and growth to come.

But it's spitting in the wind. The goal is only to try to have an orderly unwinding of debt and a orderly injection and stabilisation of bank capital. Perhap the leaders think we'll all get sick of it and just carry on.

Well, the growing protest movement is putting paid to that plan. People are catching on fast that an insolvent bank means their wealth is gone and that new cash to re-capitalise (print money) that same bank means their wealth will be further eroded through an increase in the money supply; inflation.

In times like these timing is of the essence if you want to preserve your wealth. The options are few, but, if gold is the ultimate money and has a history of being so, then perhaps a plan to own some is fast becoming the best option.

Or just trust Merkel and Sarkozy.


Gold in New Zealand dollars: $2132.03 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $41.20 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Tuesday, October 11, 2011

Gold and Unjust Weights and Measures


The Bible has a phrase in it that goes something like this: "God hates unjust weights and measures". Now whether you are a christian or not, you probably couldn't disagree with a statement like this? It makes sense. Weights and measures are involved in finding true value in commercial transactions. When our weights and measures are secretly adjusted, our trust of value disappears. So does our trust in each other.

Some of the weights and measures used were scales or pure pieces of gold or silver. In older times, to undertake commerce one took goods to traders where these goods were weighed and traded for fair value in gold and silver or some agreed barter. Alternatively, you could take your gold and silver to a trader and buy goods. The trader would weigh out the goods and give you an equivalent value.

But how was value measured? That's the difficult bit. It can be argued that over time goods and services find their natural value. Markets forces of demand and supply are the primary ways that economists describe this value seeking process. Too much of a good or service supplied and the price goes down. Demand for a good goes up, price goes up.

It is when these market froces of demand and supply are tampered with is when we get into a mess. When dishonesty creeps into a system and eventually runs amock. Unjust weights and measures become paramount for the fraud to work. In history, the weight was adjusted to greater or lesser amount to diceive the seller or buyer. Today, the value of your wealth, as measured in paper money is adjusted to distort real value.

As we may be nearing the end of the monetary system as we know it, some of us wonder how we got here. Unjust weights and measures are surely a factor.


Gold in New Zealand dollars: $2147.98 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $40.97 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Friday, October 7, 2011

The Answer is More Debt - Really?

Sorry to keep banging on about debt. Perhaps you already get it and don't need my tirades about the stupidity of creating more debt to plaster over more debt. Perhaps politicians are just trapped. Austerity = no votes; stimulus = we might have a chance.

The new plan in Europe today is to, yes, wait for it, provide more stimulus and pull back on austerity. After all, austerity means negative growth, stimulus means, um, 'positive' growth. Let's see now, same debt constraints, same resource scarcity problems, so where is the positive growth going to come from? Right, squeezing the last ounce wealth out of peoples life-savings by increasing credit and inflation. Sounds real sensible.

If this isn't the end-game for this monetary system, what is?

And 'mums and dad's are being encouraged toward more debt too.

An article in Interest.co.nz yesterday had this to say about debt:

"money is cheap these days - so why not borrow it and then borrow some more at every chance while low interest rates last?"

Ok, so house prices are dropping and the equity in your home is approaching zero and debt amounts are drawing closer to the value of homes. Negative equity is just over the horizon, so why not borrow while you can?

Hmm.

And banks too are getting into more debt, and taking your mortgage as collateral. The ASB Bank, here in New Zealand, has announced a NZ$12.3 billion covered bond programme.

"Covered bonds are senior debt instruments backed by a dedicated group of home loans assigned to provide security for the debt known as a “cover pool.” Popular in Europe, they are usually issued for terms of five to 10 years. The way they're structured means if the issuing bank defaults, the assets in the cover pool are carved off - or ring fenced - from the bank issuer’s other assets solely for the benefit of the covered bondholders."

Who are the secured creditors? Yes some big overseas fund. If the ASB defaults, other nationalities may own your mortgage. Do you think they will care where you live when they want your house to sell? At that stage, the game becomes political and a big bailout from the NZ government will save us...and produce more debt.

This debt sickness is destroying the western financial system. We are seeing governments and individuals grabbing more of it and advising us to do so. No one is showing true leadership to get us out of this death spiral.

As mentioned before, with more debt comes less trust that you will pay this back. Governments across the globe, including New Zealand recently, are being downgraded by debt rating agencies and finding their costs of borrowing (interest) increasing. This will undoubtedly flow through to higher taxes for all.

Here's more detail of the news from Europe.

"Conducting his last press conference as head of the European Central Bank (ECB), President Jean Claude Trichet announced a further round of covered asset purchases, a sort of QE (or money printing).

The Bank of England has just announced an extra £75 billion QE."

Thanks guys; punish savers and reward the misappropriation of capital. Yeah, that makes sense.

And people think gold is in a bubble? Try Debt is in a bubble.

This new round of stimulus, or money printing, will be positve for gold and silver prices.

Gold in New Zealand dollars: $2140.80 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $41.46 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Thursday, October 6, 2011

Why the Fuss Over Gold and Central Banks?

Is gold money or is it just a commodity? What part do Central Banks play in the gold market? Important questions for you and your present and future wealth.

Ok, so let us stand back from all the noise of 'gold being in a bubble' and 'gold bugs are weird' and 'gold is just a lump of metal' and calmly look at a few factors that make gold and silver important right now.

What is actually happening to gold and to a lesser extent silver (as silver is an industrial metal as well as precious)? Silver has it's own issues. It is a very tiny market and price swings are often dramatic. Silver is not for the fainthearted, but in a secular (long-term) bull (going up) market nevertheless. One owns silver for the extra leverage it may provide.

Do Central Banks manipulate the price of gold? According to Ben Bernanke, gold is held by Central Banks as collateral because of 'traditon' and 'gold is not money'. I would disagree. Do I know more than Ben Bernanke? No, not by far, but I have an alternative view. Does this view stack up with reality or is Ben's view going to become reality. That's the big question.

Or are simple money printing and innocent buying and selling of Central Bank physical gold the only causes of gold price movements? Yes, this obviously happens, but it may not be the full story. If you have that much influence (print at will, sell, buy at will), then innocent buying and selling becomes less of a factor.

I see gold as ultimate money (see a description of gold as money at the bottom of this page). Primarily because it best describes the qualities that money needs to be classed as such; especially scarcity. Fiat paper money is not scarce. Ever typed a 1 followed by a bunch of zeros on a computer? That is how easy it is for Central Bnaks to 'print' your money. Scarce it isn't. Infinite it can be.

The other side of this is that gold reflects the mismanagement of the fiat money system. Now Ben isn't going to admit to mismanagement. He may not genuinely know that it is occurring. Let's assume he has good intentions. You see, gold reflects mismanagement in its price. As more dollars chase the same amount of this scarce resource its price increases. Gold also reflects people's fear of losing their wealth. They see it as an insurance.

If you don't think Central Banks have a stake in keeping a lid on the gold price then read this:

"That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."

Paul Volcker, Nikkei Weekly 2004

So there it is, Central Banks do make joint interventions in the gold market. How? Now that's complex, but here's a simple explanation. They lease (lend for a rental) some of their gold into the market to primary bullion market dealers who then sell it. (GATA describes this better.) This massive sellin,g in one hit, can cause huge price down trends. The reason this is done is to control an actual or impending uptrend in the gold price as huge amounts of money printing is, or about to, occur. Perhaps the recent large gold and silver price decreases were caused by Central Banks planning to devalue their currencies via printing to prepare for the large bailouts of European Banks. Save the system and sacrifice wealth.

This behaviour by Central Banks is quite understandable if you accept the premise of gold as ultimate money. Otherwise, it's just another fuss being made by the gold bug conspiracists. Decisions we make on the basis of information received is how we go forward (or not) in life. Certainly, in this blog, there is not enough information to make life changing decisions. But is does exists out there.

It's always up to you? Don't leave it to your financial advisors alone.

Gold in New Zealand dollars: $2142.50 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $39.89 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Wednesday, October 5, 2011

Banks in Trouble

Banks are getting to look like bloated cattle. Seemingly fat, but full of air.

Dexia of Belgium is the largest worry amongst world banks at present. It seems likely they will require nationalisation to honor their creditors claims. Nationalisation means is that if a bank is insolvent (no cash to pay depositors) then a government can step in to guarantee the cash required. There is talk that France may even help with this bailout. As if France needs this right now with their own debt issues.

Considering that the debt of Belgium already exceeds 100% of their GDP, then just think how this bailout will make their debt situation look. Scary.

Bank of America is also in trouble. I have been to Charlotte, North Carolina, the headquarters of this bank,  many times, and believe me this bank is huge for that region and the US economy. For it to even be in the pantheon of bad banks is basis for concern about the whole banking system. Just look at it's OTC derivative exposure below. And this is only an estimate as no one really knows the full extent of the amount of these instruments of financial destruction on any banks balance sheet.

Four Biggest Banks in America have huge leverage (USA watchdog)

 1. JP MORGAN CHASE BANK $78.1 trillion OTC derivatives
 2. CITIBANK $56.1 trillion OTC derivatives
 3. BANK OF AMERICA $53.15 trillion OTC derivatives
 4. GOLDMAN SACHS $47.7 trillion OTC derivatives

USA Watchdog says, "Considering that the total assets of these four banks are a little more than $5 trillion, I see a frightening amount of risk with a total derivative exposure of $235 trillion!  This is nearly 50 to 1 leverage."

In other words if 50 people want their money back, only one gets it. Be quick...

It seems that Bank of America will be bankrupt soon, unless they are rescued with a huge blast of cash from the Federal Reserve. But will such an injection survive the politics needed especially when the people are getting restless on the streets? Catch 22? Last Friday the Bank of America home web page failed. In fact for three days in a row, the home page has been unavailable. Is this caused by an electronic bank run? Depositors signing in, and transferring their money out asap.

The euro is losing value daily. It's losing on the news that their banks are insolvent because of bad loans made to Greece and other euro nations. Being one of those Europeans who put money into gold (at whatever price) must feel good.

Right now appears to be a good time to own gold and silver as a hedge against this bad economic news. Holding these metals outside the banking system is more sensible than ever.

Gold in New Zealand dollars: $2129.75 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $39.37 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Tuesday, October 4, 2011

The Wall Street Protests - One View

I will point you to a blog post by 'Turd' Ferguson. Despite his name, his thoughts are worth reading in regard to precious metals and politics. His views spark deabte and you may not agree, but as he says, as long as the dialogue is friendly, we may be able to work something out.

Here is one quote from the blog:
"Please understand, I know that the current system is unsustainable and must be changed. I am not, however, throwing in my lot with this first batch of "protesters". Marxist revolutions only lead to tyranny and mass graves and I won't be a party to it.  Instead, we need a revolution of personal freedom and responsibility. We must reclaim representative democracy and free enterprise. When that movement finally takes to the streets, count me in. To that movement only, I will happily pledge my life, my fortune and my sacred honor."
Read the whole blog post here.
Gold in New Zealand dollars: $2206.00 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $40.55 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________

Monday, October 3, 2011

Media Wake-up Call

Only this morning do we see the media in New Zealand reporting on the growing protests in New York.

The NZ Herald reports, "Occupy Wall Street demonstrators are railing against corporate greed, global warming and social inequality, among other grievances." Or perhaps, simply, "No job, no income, therefore angry and desperate. Listen to us, or else."

You have to wonder at what point the main stream media (MSM) are going to 'get'it' and get serious about the turmoil created by this economic crisis. Starting in Algeria and moving through the middle-east and even across to London and Manchester, people are venting their desperation in increasing intensity . Sure, there is the odd opportunist criminal element and radical group using this for their own political ends, but take a look at the New York 'mob'. Some old grey haired ladies and mothers with children. Interesting.

Only in the last few weeks has the local MSM here been asking some hard questions of the government and the system. The debt downgrade by Fitch and S&P last week has brough this to a crescendo (in MSM terms anyway). An example is an article today in the NZ Herald talking of "Mountains of cash not enough to save US". Yes, this reporter sounding like someone they used to call 'gold bug' or' right wing radical'. 

Perhaps the questions about the fiat money system are finally being asked. You cannot print wealth. Sure, as stated, the US dollar is looking stronger in the last few weeks. Measure this against gold though and you see another story. The MSM hasn't gone that far into analysis; yet.

On the New Zealand TV Breakfast Show this morning the interviewer was asking a Banker why the recent debt downgrade in New Zealand occurred. The Banker goes on to blame the debt orgy on the populous. Message to interviewer, why didn't you ask the Banker why his banking industry dished out ship loads of money to people in the first place. Profits perhaps?

If we analyse the media a bit, we could come to the conclusion that it's all a bit airy-fairy. For years, the blogosphere has been rampant with alternative news sites and individuals warning of this growing calamity. The MSM largely ignored these views. To your peril because their silence has affected your wealth.

It is now getting late in the day to switch your views to reality. But as the protests and unrest grow worldwide, and undoubtedly to New Zealand, the media will wake up and report on real life not the sham that has been the economy over the last 40 years.

Gold in New Zealand dollars: $2134.80 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $39.38 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)
_____________________________________________________________

YOUnique Gold and Silver

Buy small, affordable physical gold and silver or start a savings program towards
physical gold or silver grams for as little as US$25 per month.

_____________________________________________________________

The Anglo-Far East Company
AFE is the gold bullion custodial provider of choice for the sophisticated investor,
families, and institutions that require the highest level of discretion, competence,
safety, and service.
Your reference: an-001
_____________________________________________________________