Wednesday, November 30, 2011

Gold and Silver Versus the Rest


"In this edition of the AFE Global Insider, Duncan does an excellent job of assessing the Geo-political spectrum. He covers the topics of MF Global, Golds performance versus other currencies, his view on the Sydney Gold Symposium which includes an interesting entry on the “Moses Principle”, as well as the evolving situation in the Eurozone."

You can download the latest GI from this link: http://www.anglofareast.com/downloads/global-insider/afe_november_2011.pdf


Gold in New Zealand dollars: $2257.32 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.02 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
_____________________________________________________________

Tuesday, November 29, 2011

The World is Owing


So what happens when there is no one left to pay? Did the bankers not foresee a time when they didn't have anyone left to take money from? Are aliens coming to the rescue? Will they be fleeced next?

It all started with private debt, the Mums and Dads lending to start a business or buy a house. Low interest rates and a stable money supply built on gold. Governments then got into the fray seeing a path to power built on borrowing to bribe voters. The gold standard was ditched and the politicians couldn't help themsleves. Printing money by the boat-load and laying all the costs on their non-the-wiser constituents.

Now those sovereign entities are going bust. Euroland is a basket case of debt. But look not to the discipline of austerity, but look to the last saviour on earth. The world banking cartels last option; the IMF.

The last stand of the bankers has arrived. The last stand of the working classes is here. The IMF has announced a US$600 billion bailout for Italy and Spain. Now just how stupid is that? I'm usually a little conservative on who I call stupid, but I make an exception today. The bankers are now running the world into the abyss. Headlong into a time of turmoil and disruption not before seen. The money system is now a gonner.

If we had had stand out leadership, we could have progressed an orderly reset to the fiat currency system. If politicians were honest with their people, and the bankers had been willing to take losses for the good of all, then maybe we could have preserved the wealth of the worlds middle-classes.

Now this seems doomed. New money is going straight to the top and will flow down through the system as inflation and a wealth distroyer. The middle-class worldwide is being blatantly stolen from. But the sad thing is, they don't know it. Yet.


Gold in New Zealand dollars: $2267.45 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.54 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, November 28, 2011

What Happens When Fiat Currencies Die?

The Bank Run

What happens when the system goes into wild panic mode and everyone wants their money back? What is a bank run?

A bank run isn't a sponsored half-marathon run by your local bank as an advertising stunt. No, a bank run is something far more negative for the banks profile. A bank run is when a whole bunch of depositors get so anxious that their bank is about to go out of business that they start to all try to take out their money in a short period of time.

I say, 'try' because banks are required by law to only have a around 5% of deposits available in cash. This means that they are leveraged 20:1 with actual capital available. They have been able to, legally, lend out 20x the amount deposited. Therefore, it only takes a 5% drop in the value of the assets for there to be absolutely no money left in that bank.

Bank run at Northern Rock, England, 2008.
The UK Governemnt had to step in and guarantee
deposits as there was no money available to depositors.

If you go down to the bank today and ask for your money, they would probably give it to you. They may make it difficult if it is a large amount of you want to send it to another country, but you could get it. But if all the depositors tried this they would have to shut the bank down

By the way, some in the business world are seeing a market niche to start banks that always keep your deposits as ready cash (or backed by gold) and just make their money by charging a fee. A good idea?

The Europeans are waking up big-time to the fact that their money may not exist anymore in their banking system. The 'smart money' shifted their cash out of Europe many months ago. All that is left is highly leveraged banks with figures on their balance sheets that don't exist in reality; and hard working people who think their money still exists.

This whole banking mess is another reason to buy physical gold. It is money, and you can touch it. Gold is the ultimate insurance against bad banks and bad government.


Gold in New Zealand dollars: $2269.14 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $41.84 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, November 24, 2011

The Survival Period is Upon Us


The quote below is from Richard Russell, a respected member of the investment community. He has been around this business for over 60 years. He's experienced just about every turn of events a market can through at us.

Richard Russell's comments:
 
"My advice: We are moving closer and closer to what I call "survival period" -- the period where the magic of compounding turns into what will be the poison of compounding. This isn't a time for timing. This is a time for action. Reduce your exposure to bonds and all items that provide fixed interest rates. Similarly, reduce your exposure to stocks except the gold miners. Look to expand your positions in inflation-protected assets, especially gold.

Those who are holding stocks in the hopes of the usual rebound are going to be terribly disappointed in the years ahead. This bear market is going to be unlike anything we've ever seen before. In the end my survival vehicle will be gold. I say again, timing is hopeless. Gold will have purchasing power and true wealth as almost everything else is destroyed by this unprecedented bear market. The US Government is now so loaded with ever-growing debt that it has become a mathematical freak. We return to different times, when rising interest rates will eat up the US government. With $55 trillion in assorted debts, the US is in no shape to deal with rising interest rates. We are in a state of reverse compounding, leading to inevitable bankruptcy on a massive scale."

Are you insured? Have you considered gold as wealth insurance? Anyone investing in money markets right now had best have their wits about them.


Gold in New Zealand dollars: $2282.36 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.62 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, November 23, 2011

Does the Rule of Law Exist Anymore?

I have heard, and read, a number of pieces recently about the state of the US legal system in regards to how it has reacted (or not) to the financial crisis..

With all that has gone on with the financial crisis, it is surprising and perplexing that no one has been prosecuted in the US.

One difficulty is that you need to be quite well heeled to even entertain the idea of suing a delinquent counter-party to a contract in the US. You need very good securities lawyers who do not come cheap. The costs of prosecuting someone can just make anyone who loses less than, say, $1 million throw up their hands in despair and just take their losses on the chin. This is by no means ideal of course, and those in large financial firms know they have this protection and use it accordingly. Think of all those people caught in the MF Global thievery. Their money was stolen, and they are stuck without access to justice.

Another facet of all this is that the financial system can just 'up and change the rules' anytime they wish. This, of course, is a two-edged sword. Investors don't like this type of volatility which cause business to drop for the Financiers.

Markets like stability and the way small investors are being treated right now is going to cause huge disruptions as confidence is lost.

Erik Townsend recently said on The Financial Sense Newshour (not verbatim): We may have come to a point in our society for Governments to say that they need to take extreme measures, and those extreme measures include things like abrogation of contract law. If they had allowed the CDS (on Greek debt) to be triggered, that would have potentially set of a  domino effect of counter-party risk to banks that didn't have the capital reserves against it. So Governments reward this bad behaviour because they won't allow the system to crash.

This means that you can't count on anything. What if gold investing triggers the anti-American Act and you can't have the gains on your gold investment because someone decided it didn't suit the country's best interests. This is not anymore ridiculous than having your collateral with MF Global literally stolen by John Corzine who don't seem to be subject to any criminal culpability. If you stole $500 down at the local Store, you'd be held accountable.

Because the system cannot be allowed to falter, certain institutions are literally above the law.

New Zealand has probably fared a bit better than some other jurisdictions. There have been prosecutions here for corrupt Directors involved in Finance Companies that went bust after 2008. There doesn't appear to be the tight cronyism that exists amongst corporate America and the Government here in New Zealand.

Once a trusted system like the US financial and legal system loses its mandate, then what happens? Perhaps the Occupy movement is the beginning of stronger winds of change to come.

The rule of law does exist. But does justice depend on the greater good as Regulators appear to be signalling? And who decides the 'greater good'? If it is those in charge right now, they are getting it wrong.


Gold in New Zealand dollars: $2273.75 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $43.85 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, November 22, 2011

House Prices and Gold: Latest Figures

Here are the October figures for the median house price to gold ounces ratio. It now takes seven gold ounces less to buy a house in Auckland in October (213) than it did in September (220). Since the highs in New Zealand of 2005, it takes 422 ounces less to buy a house in Auckland, New Zealand (635 down to 213).




Gold in New Zealand dollars: $2240.28 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.11 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, November 21, 2011

Why is Gold Money?

There is much debate in the finance world about the role that gold used to play, and may play, in our monetary system.

One of the common questions about gold is why it should be classed as a monetary asset. Why should people think of gold (and silver) as being 'money'.

It's not an easy question to get one's head around. We don't normally give much thought to what money is. We work, we get some folding stuff, or digits credited in the bank, and then we whittle that down by buying the necessities of life and perhaps a few luxuries. This allows us to live normal lives, hopefully in freedom, to be able to better ourselves, our families and those around us. We seek a strong society based on peace and freedom.

The issue with money is value. If we place value on fiat paper money, then all well and good. As long as we all agree on its value and that value remains constant, or pegged to some identifying standard, (like stable, trustworthy government) then we are happy with that scenario and forget about what money is and just live.

So money could be anything. It could be bits of shells or cattle or whatever. So long as value is swapped with that medium of exchange and both parties to the contract are in agreement, then a change of ownership will occur.

Here again are the main six attributes of money:

1. A store of value. ie. rare. It must have value on its own merits.
2. Fungible. Each unit of weight is equal to another equal unit of weight.
3. Divisible. It must be divisible into smaller parts and easily tradeable.
4. Act as a medium of exchange.
5. Easily recognizable and difficult to counterfeit.
6. It must be easily transportable to be money.

It is evident, by what is occurring in the markets now, that people are losing confidence in the paper money they have used for 40 years now (since Nixon walked away from the last remnant of a gold standard). People are noticing that the work they do is not being rewarded with a store of value that is constant and trustworthy. They are noticing that their past value of labor (savings) is being stolen from them also.

This is why gold is now coming to the fore in this period of crisis. Society is losing faith with governments, politicians and financiers because they see them meddling with the value of the paper medium of exchange they trust in. Paper printing, bailouts and huge debt mountains are a tipping point. A light is being shone on this current system and a niggling fear is being aroused in the minds of the masses. This fear is leading to a lack of confidence in their fiat money system which could easily build into a stampede. All it takes is the right tipping point now.

Gold (and silver) are the best 'things' to fulfil the definition of money as described above. People have recognised this for over 5000 years.  Occasionally, other systems come (and go) but every time people ditch them and yearn for a stable store of value. Just how gold can be re-incorporated into a modern, complex financial system is moot. But it must be done, especially right at the start of the coming reset.


Gold in New Zealand dollars: $2280.58 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.85 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, November 18, 2011

Lock up in Financial Markets


It appears from some of the main stream press and some of the chatter on the internet that the situation in Europe is about to get ugly. If it isn't already.

This from The Telegraph yesterday : "Sir Mervyn King: Britain on the brink of second credit crunch, Bank of England Governor warns. The eurozone crisis has left UK banks unable to raise the funding they need to make loans to businesses, evoking the spectre of the crunch that followed the collapse of Lehman Brothers."

This from Pragmatic Capitalism: "This is getting more interesting with every day.   As the ECB is increasingly pressured to stop the Eurozone crisis with massive bond buying, the yield blowout is starting to spread to the core countries.  The surge in Italian bond yields is taking all the media glory in recent weeks, but the surge in French, Belgian, Austrian and Spanish yields is equally alarming.    Spain’s 10 year yield is now sitting well above 6% with Belgium fast approaching the 5% level."

And from The Future Tense: "The contagion is spreading so rapidly through Europe now that is is almost impossible to keep up with.  Rates are now rising across the board in Portugal, Italy, and Spain.  In addition, the markets have now turned on France."

Gonzalo Lira says: "We’re In The Middle Of A Run On Europe—And It’s Gonna Get Worse."

What appears to be occurring is money markets are seizing up. It is beginning to look like the period just after the Lehman Brothers collapse where banks stopped lending. For two reasons banks stopped lending, then and now. They have no liquidity (they have leveraged their deposits and now they are gone) and they cannot get new funding to keep their businesses going. Banks and other Financial Institutions don't trust each other. Risk is deemed too high.

Gold and all commodities (including oil) took a hit today. May be this is a result of people selling some of their holdings in the speculative markets in order to meet their funding requirements. After all, they cannot get it from anyone else. This would make sense as the USD has risen against other currencies. Yes, the high-frequency traders probably went all milisecond on us and sold speculative positions in minutes, but it's not their fault. This is a problem of confidence in paper.

Recall too, that New Zealand banks need to go regulary to these money markets to borrow funds. This could very well see the leap in interest rates for our banks that was expected. Bad for home-owners and the recovery and the NZ dollar. Temporarily good for exporters. But on what value terms? With the NZ dollar moving down 10 cents against the USD recently, gold in NZ dollars is still near record levels. Deflation in value seems to be upon us. If you hold gold, you are OK.

Europe is freezing up, even as winter approaches. Serious riots today in Greece, Spain, and Italy. When these sovereign bond interest rates move up to these levels so quickly, it means the buyers are drying up. Interest rates go up because no one is showing interest in buying bonds and the risk is too great. Contagion is spreading quickly to France. When France goes, then the winter of discontent will truly be upon us.

Are you prepared?


Gold in New Zealand dollars: $2272.01 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $41.86 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, November 17, 2011

The March of the Technocrats

Oh no, not another new term to try to confuse us. OK, so it may have been around a while, but it's fairly new to me. 'Politician' or 'Eurocrat' or even 'Banker' doesn't seem to do it now. All of those have lost credibility. Step up to the plate Oh New Saviors of the World.

The Technocrat.

Impressed? Going to now lay down all those large sums of money you have been keeping safe in gold and US dollars and with joyous abandon invest in every risky thing you can buy?

Well, they are here. Be scared, very scared. Notice the pictures of  new Italian Prime Minister, Mario Monti, with of all his wise old men, looking experienced and trustworthy and serious. Ready to fix the Italian debt problems. Ready to calm the fears of eurozone frailty. The last throw of the dice, the March of the Technocrats.

The headlines further descibe Monti as a 'distinguished liberal economist, ex European Commissioner etc. A man for the occassion if ever there was one.

Europe is losing the plot. It is desperate days. The Germans are increasing their influence over the 'bad' boys of debt. Increasingly walking over their democratic rights. Greece tried to ask it's people about the bailout. No go sorry, you are in debt to us, you do what we say. European advisors are already crawling all over Greece controlling spending and looking at assets to grab.

Added to this, we see the ECB being increasingly pressured to monetise Italy's debt; that is to print money to buy Italy's bonds to bring down the interest rates from over 7% (death spiral material) to at least 5%. The ECB is under pressure to go the whole hog and blitz the debt of Europe with newly printed money. Half-hearted measures are not working. Moreover, the new EFSF fund turned out to be a complete joke. It couldn't even raise €3 Billion of it's €1.2 trillion. The ECB has to step in to help the first auction.

The new scheme isn't going to work. You can bring in Technocrats, Aristocrats, Eurocrats or Bereaucrats in, but none will be able to magically blast away the debt.

Remember the suffx "crat" means to "rule". So does this mean we now have technocracy instead of a democracy. Yes, correct. The old sayings are always true. "The debtor is slave to the master". Owe money, owe your very rights to existence. The technocrats, like the martians in 'The War of the Worlds' are coming to a country near you.


Gold in New Zealand dollars: $2303.90 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $44.08 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, November 16, 2011

Getting Used to the Noise

There's so much 'noise' in the markets at present. The problem is, there so much that we could now be attuned to it and actually be adapting to it in order to survive.

Dan Norcini is harsh critic of the current market mechanisms. He decries the way markets are now reacting to news and events rather than to fundamentals. But this type of reaction is born out of disfunctional market forces. Noise that isn't worth listening to usually, but now has markets all abuzz.

The strange thing about noise, whether wierd or loud, or sudden, is that humans can get used to it. They adapt to survive.

Perhaps this is what we are seeing in these crazy times. Volatility is becoming the investor's friend. For example, if you admit that the COMEX is rigged and manipulated, then you look for the signs and trade accordingly. You may have more of a chance of losing your shirt, but what's a trader to do? Just buy gold? Probably not, as most traders don't get the commissions they need to survive from those yellow bricks.

Here is some of the noise:

European Crisis Accelerating
Fear Over Eurozone Future
Bank of England set to downgrade UK growth
IMF says Chinese banks face risks
etc, there are just too many to list

Noise this may all be, but the silent, quiet-type, the one that always seems to get it right, almost eerily so, just happily, knowingly sits and waits for it's time to come.

When the noise is switched off, gold will be the last one sounding out. It is best preserver of value, it is money, the best money, and historically proven to be so. All the listed noises in the markets are good for the price of gold. There may be a small correction coming (according to some), but looking at the long term trend is always a good idea. And the trend is quietly upwards.

Note: gold is still showing record prices in New Zealand dollars today.


Gold in New Zealand dollars: $2309.22 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $44.78 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, November 15, 2011

Worst Hour Since World War Two?

This from Angela Merkel today, "Europe is in one of its toughest, perhaps the toughest hour since World War Two," Merkel told her conservative party in Leipzig, saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.

This sort of language portends a not too bright future. When leaders of large economies make statements like this, something is up.

This from Eric DeGroot:

"Confidence in the exist leaders and the system they represent and support is crumbling. Large European banks are rushing to announce their reduced exposure to Italy, because they know confidence is failing. Revolving leadership is not helping confidence.

Depositors have a tendency to withdrawal their money as confidence declines. Banks simply do not have enough reserves to handle concentrated withdrawals. Bank runs despite today's centralized insurance are not a relic of the past."

Confidence is the biggest building block of our political and economic system.  We rely on confidence and trust in each other to trade and to go about our lives in peace. When confidence goes and fear overtakes us, we resort to 'looking after ourselves'.

If countries go back to mis-trusting each other and looking to their own interests for survival, then the world will a volatile and unsafe place. Just like World War Two.

Note that, on all this volatility, gold is at record highs in most currencies other than the US dollar. It is hitting record prices in NZ dollars today.


Gold in New Zealand dollars: $2284.45 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.94 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, November 14, 2011

Underwater and Sinking: Debt is Drowning Us

Continuing on the 'water' theme from Friday, I thought I would comment on the average man and how he is faring in the debt crisis. How is Joe Sixpack getting on? Is he making headway with reducing his debt?

Let's look at people that begin their working lives by studying for that dream job. Students. In New Zealand student debt has now passed NZ$10 billion (US$ 8 billion). 14% of all New Zealanders have a student loan of around $17,000. These people are indebted to the New Zealand Government. Their lives are, too a large extent, restricted by this debt around their necks. This debt has huge consequences

And this not only applies to New Zealand. Student debt in the USA is approaching US$1 trillion. Moreover, as in NZ, wages for the middle classes have dropped in real terms over the past ten years. More debt, less money and jobs to pay means debt slavery for some time.

The years from 2000-2007 saw Governments encourage students into tertiary study. Money was easy to come by, it could be borrowed cheaply and lent out for profit. Tertiary education was a game worth playing for Governments. However, as in any interference in a market by Governments, this has caused massive distortions. Graduating with a student loan with an accounting or engineering degree, as opposed to graduating with a diploma in a skill that is almost useless to produce a future income, is poles apart in market usefulness.

The proliferation, in less than productive courses, has entrapped a generation of young people into debt. Even before they can produce anything. Now they find it difficult to buy houses or start a family. The very future of the West could be compromised. All because of this slavery to debt.

This has analogies to the easy money schemes dreamt up by US Banks in order to lend out easy cash to people who couldn't afford mortgages. The so-called sub-prime debacle.

Other figures on debt for Joe show that up to 40% of people 35 and younger hold no wealth or are in negative territory. That is, if lendors came to their door and asked for their money back, these people would need to sell everything they own, and most would still owe some. How is this good for society? For mental health and hope for the future? How does this produce a spirit of entrepreneurship and motivation to work harder?

The wealth gap between this generation and the baby boomers (50 years of age plus) is increasing. Over history, this sort of disparity in wealth has caused much friction and anger. How do we begin to solve such large issues?

Perhaps, the only way out is a forgiveness of debt and a reset of the economy which would include less Government and a monetary system that provides consistent value over time. If that includes gold, then great. To me, gold must be there in the mix and Governments must get out of the ability to influence monetary policy for poitical gain.

But don't hold your breath on that one.


Gold in New Zealand dollars: $2277.76 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $44.14 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, November 11, 2011

Stay on the Boat, Sharks Are In The Water

The more I look at what is going on around the globe, the more I see the results of corruption and greed on this beautiful planet.

Sharks are circling and they are after your wealth.

Call me a one-eyed gold-bug if you will, but watching the shameless acts of men as they pillage the hard earned wealth of the middle-classes, is something I read about in Old Testament Bible passages. Proverbs says; "the treacherous are caught by their own greed" and in Jeremiah; "everyone is greedy for gain".

Sharks they may be, but soon they will be eating themselves. That is after they've had a go at your savings and even gold.

Look at how the principles at MF Global sent out nice juicy commission payments to their London partners the day before they went bust. Perhaps they didn't know their liquidity was drying up? Yeah, right.

Remember the Enron, Madoff, Bear Sterns, Lehman and AIG debacles. Rotten goings on to the core.

See how the next step may be for our government here in New Zealand (and maybe yours) to steal your retirement savings. Using the 'unacceptable' losses made on these funds, in the current market situation, as an excuse to pass laws requiring, say, 25% of all kiwisaver or Cullen Fund money to be placed in safe Government Bonds. When no one else will lend to them, as the funding markets dry up, they'll come for yours.

Hungary, Ireland and France have all passed laws recently allowing them to use retirement savings to pay off debt. The US Treasury 'borrowed' savings temporarily to help with their budget crisis recently. I hope they paid that back... If you still can, take control of your own retirement funds.

Gold holdings may also be in their sights. Demonise the gold bugs and make it illegal to hold gold. Confiscate it even. It has happened before and Governments can do anything. Where is your gold? In a safe place, diversified jurisdictionally?

It appears the sharks are disregarding the rule of law and decency as things get sticky. Meat is hard to come by and you are looking increasingly juicy.

Have a good weekend.


Gold in New Zealand dollars: $2266.46 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.74 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, November 10, 2011

Italy is Coming Out of the Shadows

So Italy is finally coming out of the shadows. After being an extra in the Greek patomime, Italy comes out and shows it can really act. Its performance shocking some. However, some of us knew all along that is was a talented debtor, one to surpass even the Greeks.

Here is the deal. There is no way that Italy can survive a 7% interest rate on its debt and there is no way that Italy can be bailed out. It's debt is too big. What happens now? At this point, the euro looks doomed as the currency that we know it. The ECB could print trillions and keep the game going for another few months, but the likes of Germany will never accept this. The Eurocrats talk a lot, talk is cheap. Events will overwhelm them.

On  'lighter' note, here's an explanation (from an Australian viewpoint) of the European debt situation. Not quite a pantomime but perhaps a tragedy?

Here's a line from the video:
"How can broke economies lend money to other broke economies who haven't got any money because they can't pay back the money the broke economy lent to the other broke economy and shouldn't have lent it to them in the first place because the broke economy can't pay it back!"




Finally, gold is back up to its all-time high in New Zealand dollars, yet the gold price is still US$150 off it's all-time highs in US dollars. A combination of risk-off trades selling the NZ dollar and heading into 'safe' (choke) US dollars and some into wealth insurance; gold. Gold is showing record pricing levels now in most currencies.  The canary in the gold-mine is suffocating. Time to go.


Gold in New Zealand dollars: $2268.39 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.57 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, November 9, 2011

Are Central Banks the Ultimate Gold Bugs?

Well, what have we here then? The Germans being asked to put up their gold as collateral for more EU bailout funds. Guess what happened to the middle finger of the German hand as it was raised in defiance?

"German gold reserves must remain untouchable," Roesler, who is head of the Free Democrats (FDP), a junior partner in Chancellor Angela Merkel's coalition, told ARD television

It's OK to try and hobble together an EFSF fund of $450 billion and expect other countries to contribute to it and leverage it up to $1.2 trillion. It's OK to try and convince the market that investing your debt in debt makes debt more valuable. But, as an investor, it is NOT OK to ask the Germans to put up a real asset as backing for the EFSF. No sirree!

Anyway, did not Ben Bernanke sit in his congressional committee chair and look thoughfully to the side as he said (without even a smirk), the gold is not money. Hmm, it appears the Chinese don't believe him, since the smackdown in gold prices in the past three months, they have been buying record amounts of the yellow shiny stuff. The Financial Times reports:

"The buying spree follows a sharp drop in the price of the precious metal. After hitting a nominal all-time high of $1,920.30 a troy ounce in September, gold fell to a three-month low of $1,534 an ounce later in the month. Chinese investors snapped up the metal as prices fell. Data from the Hong Kong government showed that China imported a record 56.9 tonnes in September, a sixfold increase from 2010."

Thailand, Indonesia, South Korea and many others have also joined the gold buyers club.

As already stated this week, the system backed by fiat money is coming to a crashing halt. When confidence in a big fat nothing is seen for what it is, confidence in nothing, then gold will come rapidly in the line of sight for Mum and Dad investors. They will stampede out of paper so fast, the gold and silver price could go to the moon.


Gold in New Zealand dollars: $2234.69 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.76 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, November 8, 2011

Paradigm Shift: Gold and Silver


When our normal lives are disrupted we can react in a myriad of ways. What we tend to do most though is try to go back to what is normal, what worked before and what is safe.

The world is changing rapidly. The old paradigms are collapsing in a way that some of us have seen for some time. The old fiat/debt money based ystem is in a bubble and about to burst. New norms are about to shape the way we do business and go about our ordinary lives.

But will people recognise this in time and have the willingness to change or will they try to head back into what is normal? Trying to protect themselves before the wolf knocks on the door.

It isn't easy to shift your thinking. After all, you have been taught one set of principles all your life and so far these have seen you through and you they will see you through till you shuffle off this mortal coil. But what if all you have been told isn't going to pan out as explained. You aren't going to get those funds you saved for your retirement. The money in your bank account may not actually be there, The house you invested in will go down in price instead of always going up.

Is now a time for your life to undergo a paradigm shift. A total rethink of where you actually stand, especially financially. Time for an out-of-body experience where you look objectively at your future needs and perhaps ask the question: Do I need a radical turn-around?

Big events should encourage us into big changes. It's a little more difficult if the changes are subtle and small in nature. No one event in the context that we live may be big enough to commit to radical change.

Can I encourage you to look at the current world economic events and ask yourself some difficult questions? Perhaps your paradigm shift may include gold and silver?


Gold in New Zealand dollars: $2254.87 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.76 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
_____________________________________________________________

Monday, November 7, 2011

MF Global: A Portender of Doom? A Lesson In Greed.

MF Global is a sad case of human greed and corruption. A lesson on the 'dark side' of human endeavour.

This is why. Customer trading accounts are sacrosanct in an organisation such as MF Global. When customers deposit money to cover the minimum amount they need to trade with (stocks, bonds, commodities etc), then this money cannot be touched. It cannot be used for any other purpose.

But sometimes companies get desperate and can see a large stash of cash and convince themselves that it's probably OK to borrow this juicing looking pile, if only for a little while. It's a bit like a gambler with an addiction just borrowing the housekeeping money until he wins big time. But it never happens.

And it never happened for MFG. They seemed to have 'borrowed' up to $600 million of 'no go' customer funds. It seems the 'bets' they made on Greek debt turned to custard. Now the money they used to bet with has disappeared. The customers have lost. Someone needs to go to jail.

Jail? Well, perhaps a $12 million bonus and a new boat or car and a house upgrade? Sounds better than jail and it looks like crooks such as Jon Corzine, CEO of MFG, may just get that sort of 'punishment'. After all, how many Wall Street bankers have been prosecuted since September 2008? Zip.

And it gets worse. When some customers got wind of trouble at MFG, they began to request their money back. But instead of using an electronic bank transfer for those funds,  MFG sent them each a cheque. Now we all know how long it takes to write, send, deposit and clear a cheque. And yes, you guessed it, the cheques bounced. Deceit only gets worse once it is in motion.

There are also quite a number of large Asset Management companies that have funds with MFG. The likes of Blackrock and Sheffield Asset Management. Depending on how their investments are structured, these big funds managers also stand to lose. The question is, how long can they stand the stress?

So there may well be a contagion effect with MFG going down. Companies that are already on the margins because of the European debt crisis will be under severe stress. For example, Jefferies Group has had to release information about its European debt holdings to try an settle the nerves of its cutomers.

The regulatory agencies such as the SEC and the CFTC seem to be asleep at the wheel or plain dragging their regulatory feet. CFTC Commissioner, Bart Chilton, admitted this week that the CFTC investigation into silver manipulation, which he thinks probably occured, has been ongoing since 2008 and will continue. I know these things are complex, but the longer they go on, the more room they leave for talk of these agencies being in the pockets of Wall Street bankers. I don't think they are though.

People can get really self-serving when their pride is at stake. Greed can make them justify any action, even stealing funds from widows and orphans. MFG is just another sad spoke in the wheel of greed that has intoxicated Wall Street for years now. It must be cleaned up before any trust can come back into markets.

This all reminds me of a saying that things hidden in darkness will eventually be brought to the light of truth. This is in the process of happening, but we also need justice to be done as well.

If you are willing to trade in this environment, then good luck, otherwise the only protection I see right now is owning physical gold and silver.


Gold in New Zealand dollars: $2201.86 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $42.84 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, November 4, 2011

Banks Making Huge Profits; For Now

Did anyone else wonder how the large banks in New Zealand and Australia are reporting such huge profits? In a time of economic shrinkage and supposed debt deleveraging, banks are making money hand-over-fist.

How? Banks make money by selling money; loans and fees. They raise money and pay interest, cheaply, and you loan that money and pay the bank interest. Only you pay more interest to them than they pay to their lenders. The difference is profit. ANZ had $1 billion dollars of difference last year. Not bad, I wish I was a bank.

So who's still borrowing money from banks? People who are paying off existing mortgages, businesses who want to access short and long term funding and people using their credit cards, plus other methods.

At the moment, banks are making huge profits because they have increased their margins taking advantage of cheaper funding available to them off-shore. But this will not continue, neither will the ability for people here to borrow more money. Customers are deleveraging, paying back debt, which will impinge on future profits.

The concerning aspect of banking leverage here is the over-weighting of real estate perched on their balance sheets, and the continuing lending going on in that area. A large portion of bank funding is not going into building economic activity. It is still fueling the misguided dream that Mum and Dad investors have that their house is their nest-egg.

That house prices are dropping, both here and in Australia, there is no doubt. The unemployment rate in Australasia is still somewhat low and perhaps those with jobs have a bit of a 'head in sand' mentality, that all will be OK. The world's leaders will fix this debt problem. So there is still a steady stream of borrowers. But when the turmoil in Europe reaches a crescendo, this stream of borrowers will dry up.

I think, when that 'fly in the ointment', Greece, has a catastrophic default, interest rates will rise. Institutions will not want to lend as easily as before, even if they continue to get cheap money from their Central Banks. New Zealand banks raise around 30% of their funds overseas and will need to head there again, soon, to raise capital. Unlike China or Japan, we aren't great savers down here and rely on overseas markets to fill funding gaps.

The CEOs of ANZ and ASB said yesterday that their banks had very little exposure to Europe. So what does this mean? If European sovereigns go down or banks go bust, then ANZ will survive quite nicely? Can't see it myself. If their is no counter-party risk for Australasian banks to a large European default, then perhaps gold really is  large lump of metal and we should use it as a door stopper

In my opinion, when real estate bombs completely, when jobs dry up and when Sovereigns around the world default, where will the money come from to cover customers deposits? MF Global was caught using customers deposits to pay down bets they had on European debt. Illegal? Seems not. MF Global is bust, but the CEO is still in line for a $12 million bonus.

Can we still trust the old banking model?


Gold in New Zealand dollars: $2217.40 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.41 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, November 3, 2011

Low Interest Rates Benefit Savers Too

Here is an article I picked up from "The Golden Truth". In it, Dave in Denver discusses a statement made today by Ben Bernanke. Yes, the very same Chairman of the Federal Reserve of the US.

I'll leave Dave to explain why the phrase, "Low Interest Rates Benefit Savers Too" is completely non-sensical and amazing to hear coming from such an intellectual as Ben.

"Has Bernanke Lost His MInd?

I just saw this headline come across the tape:   "Low interest rates benefit savers too:  Bernanke."  He goes on to explain that low interest rates are stimulating economic growth and savers won't get decent returns on their savings until the economy strengthens.  Here's the LINK  The dude lost me on that one.  In fact, that has to be one of the most insanely idiotic statements I have ever heard - and everyone who heard and believed it is dumber for having done so." Link

Also, adding to yesterdays post, Greece has agreed to go ahead with a referendum on the bailout offered to them. But this won't occur until January 2012. It looks as though neither the markets or the Germans and French are willing to wait that long. What will be said during the meeting between Sarkozy, Merkel and Papandreou today will likely determine the fate of Greece's European membership and even the euro itself. Also, threats are coming Greece's way from other entities such as the IMF.

Make no mistake, this is the most serious threat to the world financial system since the Lehman's collapse in 2008. Italy will be exposed and the cards will begin to fall. Be prepared.


Gold in New Zealand dollars: $2197.55 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.35 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, November 2, 2011

Greece Flexing It's Historical Muscle

So pretend you are Greek. You have this 3500 year history from the Minoan and Mycenaeans to classical Greece with people like Herodotus and the legendary Spartans. Not to speak of the beginnings of so-called democracy.

Now you are being bullied by lesser national entities, nations and peoples that kinda contributed to history, but not merely as much as you; at least in the intellectual, commercial and philisophical realms.

So in late 2011, you have Germany and France wanting to sit down with your democratically elected leader and dictate to him terms for control of your financial and national future. Who do they think they are, you say.

The European Union is a mish-mash of nation states. With race and history clouding the ability to create a coherent union, especially fiscal. From the outset, giving each country the ablility to borrow funds without fiscal control from the EU leadership, was doomed to failure. Greece was one country that saw an opportuinity to get drunk on debt and to heck with the consequences. In some ways, Greece was allowed to fail through the shear mismanagement and compromise shown in the terms of the creation of the European Union.

No single nation state wanted to let a supra-entity that lived in Brussels to have control over their people But  Brussels may have always intended to desire more control, and maybe saw debt as being the method to do it. And Greece, and others fell into the trap.

So now the Union is wanting more fiscal control over Greece's economy in order to pull it back from the brink of default. But the Greeks have awakened and are thumbing their noses at Sarkozy and Merkel et al. This is not going to end well. The debtor is a slave to the lender. Greece has no choice but to pay up and impoverish itself for some time to come. It could do an 'Iceland' and refuse to pay, but this will have dire consequences for all of Europe and indeed the world. Banks could forgive all Greece's debt, but again, dire consequences for us all would follow.

This next play in the history of Europe will be fascinating to watch. Will the European Union dream die or will there be a way out? Greece is using it's historical and philsophical ideals and going all democratic on us and asking it's people if they want the EU to control them. That's within their rights, but this course of action may just end up being Sparta against the Persians; and we know how that ended.


Gold in New Zealand dollars: $2165.01 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $41.95 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
_____________________________________________________________

Tuesday, November 1, 2011

Financial Repression and Your Money


The concept of financial repression may be important for you to understand. Important for your outlook on how the system is currently geared and how your investments and savings are set to perform in the current environment and going forward.

When countries get into severe debt problems, their ability to repay that debt gets more difficult. That's obvious. One of the more subtle ways of dealing with too much debt is inflating it away. Now a country could overtly print money, thereby making the debt less valuable, or use other methods. In the US at present the preferred method is the stealth method of financial repression.

Financial repression (FR) includes direct lending to the government through banks and domestic pension funds or insurance companies and at the same time capping interest rates. To facilitate this, government brings in tighter controls and regulations between government and funds and banks. This leads to coercing these entities into buying government bonds. For this to work, the bond buying needs to occur when interest rates obtainable on those bonds are way below the inflation rate.

Or to put it another way and to use a New Zealand analogy, kiwisaver funds, and other money market funds, will be forced, through regulation, into purchasing low interest rate government bonds (in order to keep their debt and power orgy going) while the inflation rate is high. High inflation coupled with low interest rates equals negative relative returns. These 'returns' could be as low as negative 4% per year. Enough to wipe out diligent savers. People who listened to the advice of governments regarding kiwisaver and the like and trusted them with their funds

So the government gains with being able to borrow at low rates (say 2% and below) while their debt is whittled away with higher inflation (at around 4 - 5%).

Remember too, that the inflation rate is probably not as low as it reported. If you use the method that inflation was reported way back in the 1980s, inflation could well be around 9 to 12%. The reported inflation rate is around 4%. Even better for FR to work.

If FR was to occur in New Zealand (and it is moot as to whether it may be happening even now) then kiwisaver will be right in the line of sight as funds available to buy government bonds. And most people will not understand what is occuring.

Bottom line, the people lose their wealth; government gains it.


Gold in New Zealand dollars: $2128.34 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $42.34 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
_____________________________________________________________