Thursday, December 29, 2011

The Future Tense: David Morgan: Gold Opportunity

The Future Tense: David Morgan: Gold Opportunity: David Morgan, probably the best analyst in the world on silver mining stocks, discusses the current gold "massacre" with Fox Business News. ...

Gold in New Zealand dollars: $2024.32 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $35.31 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, December 23, 2011

Holiday Viewing - The Crash Course

If you are wanting a relaxed educational session during the holidays, then have a look at "The Crash Course' here.
_____________________________________________________________

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, December 19, 2011

The Next Three Weeks

It has been a more than eventful year. I have enjoyed bringing you my take on the issues at hand as they relate to the precious metals sector and also financial issues in general.

I will be intermittently contributing to the blog over the next three weeks as this is Christmas holiday time here in New Zealand. Thank you for your support this year.

Merry Christmas!
_____________________________________________________________

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, December 16, 2011

The Family of Debt versus The Family of Gold

With how many members of your family would you sign a financial agreement that says; spend as much of our money you like (a blank checkbook), even borrow more if required, and if you get over your heads we'll pay out the lot.

Not this parent. How about you?

But this is kinda like Europe's problem. The kids were given free reign with cheap euros, now the parents have to step in. But the parents are balking at the consequences. The Eurobond (agreement to bail out the family) is simply not going to happen. Daddy Germany and Mummy France will not cover the kids bad debt behaviour (even if they did provide them with the checkbook).

The only way out for this family is to restructure its debt by ending the European Monetary Union, creating separate currencies again and devaluing them where necessary. Over €2 trillion euros is coming up to be refinanced in Europe next year. Are there any buyers of this debt? Remember they had problems raising a meagre €3 billion for the EFSF last month.

And the US debt situation is continuing to deteriorate. $1 - $2 trillion deficits cannot last forever. Spending $1.60 for every $1 they receive. The Europeans are in the same debt laden boat. The Planners keep coming up with plans, but the plans turn into dust and more plans are required. All a part of what should happen in a system that is broken. Can't be fixed.

Like your children and their bad spending behaviours, it is the behaviour that needs to change. Perhaps they have to sell something on Ebay or get more work to cover the bills. Perhaps countries need to sell something and produce more wealth creating jobs. I'm a parent, and, through experience, the cure for bad behaviour is not acquiessence. It is setting strict boundaries and keeping them. The Europeans had strict boundaries on debt (a limit of 3% deficits for each member country) but let the kids put their feet over the line. There are always consequences for breaking smart rules.

The fiat currency system is breaking down. The family finances are in a complete shambles. The parents and kids have run amock. If you own and have physical gold, be glad of a 5% correction. Buy more if you can. Don't be concerned that a 200 day moving average has been breached. When paper wealth is finally destroyed, what would you and your family rather own?


Gold in New Zealand dollars: $2082.020 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $38.55 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
_____________________________________________________________

Thursday, December 15, 2011

Gold and Silver: The Wobbles before the Crash?


Gold and silver have had a marked sell-off this week. Various mainstream news commentators call this the blow-off of a precious metals market too far extended. Gold commentators are saying this is a sell-off of Lehman's proportions in the markets. Investors rushing to liquefy their assets and park it in USD cash. Just like after the Lehman's event in 2008.

Markets are deeply troubled with debt. No one knows value anymore. Trust is disappearing and counter-party risk is just too great to trade. You can smell the fear.

Here is an excerpt from Franklin Sanders:

We are seeing come to pass what I have long anticipated. Paper markets are unraveling. Now the very structure of the market itself must be questioned. In the bull market that peaked in 1980, paper (futures) prices drove silver and gold market. This time around, I think it will be more important to have actual physical possession, and that will means the physical price would be driving the market as the "real price", not the futures. We already saw that happen in the 2008 panic, when paper silver prices were 33% or more below physicals prices (physical silver carried a 50% premium over the paper price). Now, if some big entity that claims to have beaucoup silver stored suddenly goes belly up like John Corzine sent MFG belly up, well, who'll want "stored" silver then?

Here's an excerpt from James Turk over at King World News. His view is that what is happening now is a Lehman's in slow motion:

"Notwithstanding the enormous fallout from Lehman’s collapse and the disruption and distortions occurring in markets from all of the government interventions with their so-called ‘bazookas,’ the market structure itself was not questioned.  Today is very different...The aftermath of the Lehman collapse was a liquidity scramble.  So precious metals prices were hit back then as people needing liquidity threw out the baby with the bath water.  They sold what they could sell, not necessarily what they wanted to sell.  It was a great buying opportunity, and largely irrelevant to all long-term holders and accumulators of the precious metals.

This time I have been expecting a ‘fear event,’ with money rushing into the precious metals for safety, to avoid counterparty risk.  Therefore, higher metal prices will be the result. [The Precious metals] price may go down, but the price of everything else would go down even more, so you would still be better off owning the precious metals.  And even more importantly, physical gold and silver do not have a counterparty risk, so you never need to worry about the precious metals defaulting on some promise."

No matter what the price fluctuations, precious metals are the ultimate monetary asset and it looks like higher prices are coming. After all, can you imagine Ben Bernanke letting these defalting prices last too long before he calls in the QE?


Gold in New Zealand dollars: $2098.37 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $38.55 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
_____________________________________________________________

Wednesday, December 14, 2011

Debt is the Money of Slaves


Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants - but debt is the money of slaves -Norm Franz, "Money and Wealth in the New Millenium"

So, then, who doesn't have any debt? Not many, if any. The generation born in 1970s and who began work in the 1990s have always had credit readily available. Debt wasn't seen as an issue for most back then, just put it on the credit card and pay it back later. Even houses were 'affordable' with long-term debt. Debt was your friend and always repayable in the future.

But sometimes friends turn nasty and sometimes those you love can hurt you the most.

Norm Franz is correct. Debt is the money of slaves. Take the position of most middle-income earners. Prices are moving upwards, the result of large macro-economic debt forces. Too much money printed with not enough production to support it. Money printed in order to pay back debt used by politicians to keep their social games going and their power intact. Plus these earners are caught in their own debt traps. Too much on the credit card and continual use of the house as an ATM. OK, there is some responsibility for those caught here, they can step out of the norm and do something crazy, like, sell their house, pay off all debt and rent for a while. Put the balance in hard asset investments perhaps.

But this is as difficult to do for most people as it is to wear pink at an All Blacks rugby game. You stand out, you may get ridiculed.

But back to debt. Here's a statemnet by Frank Guistra, founder of Silver Wheaton:

"The bottom line is that the money needed to bail out Europe and to fund America’s spiraling debt and future unfunded obligations is in the ten of trillions. IT DOES NOT EXIST. It has to be created by printing money in massive quantities, and despite all the rhetoric you will hear against such policies, in the end it’s the path of least resistance. Printing money is an invisible tax on savings, much easier to initiate, than, say, raising taxes or cutting back on services and entitlements."

Those who think for a minute that the problems in Europe have been solved will need to think again in my view. What is being communicated is a restatement of the same confidence trick that has been desperately peddled to the masses for the last 40 years. The bottom line is, the mountain of debt will not be paid unless money is conjured out of thin air or it is repudiated (but don't hang out for that one).

To back this up, look at the update from Ben Bernanke over at the Federal Reserve this morning. This from Yahoo Finance; "Many observers believe the Fed will step in to take steps to stimulate growth in 2012, first through communications measures that drive home their expectation that interest rates will not rise for along time, and then through more bond buying."

First through 'communications measures'! Read: trying desperately to talk up the positives about the system to keep us all buying more stuff on debt. Don't fall for it. Also, 'more bond buying'. Read: money printing. Debt is increasing and it is just too darn large to pay back. New money will be created. You will have your wealth stolen.

Slavery could be your future.


Gold in New Zealand dollars: $2156.45 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $40.42 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, December 12, 2011

Buying Gold: A Financial Transaction

A report from stuff.co.nz on the weekend stated that some NZ$64 million worth of gold had been imported into New Zealand. This was only reported as it was an a large amount and therefore an unusual discrepancy on the normal gold flows into NZ.

There are a number of take-away issues stemming from this report.

Firstly, the reported way in which our Statistics Department treats gold. If gold, in any form; bars or coins, is 99.9% pure then it is classed as a financial transaction. In other words, our government officially defines gold at this purity as money. Now I already knew this and have stated it previously, but to hear the official line in a major newspaper is heartening for those of us trying to get the message across that gold is defined this way and is the ulitmate monetary asset.

Secondly, the report states that New Zealand is a safe place to park gold bullion because of its stable government. While, relatively speaking, it is safer then say, Libya, there is still risk. The rule of thumb with bullion is to try and diversify physical holdings in a number of jurisdictions to reduce risk of theft and confiscation.  As an aside, also remember that storing gold in bank vault is not wise as banks have counter-party risk attached to any holdings in a their vaults. Try storing it in private vaults.

Thirdly, there is mention of the Reserve Bank of New Zealand. It states, "The Reserve Bank says it did not import gold". Now that doesn't mean that our Reserve Bank doesn't buy gold, it just doesn't import it. However, they don't actually buy it either. Even though it would be prudent to diversify our foreign reserves out of paper assets and derivatives thereof. Perhaps the Reserve Bank could take a leaf out of the books of Central Banks like Russia, South Korea, Thailand etc who are scrambling to get their hands on as much gold bullion as possible to protect their wealth in light of the coming monetary event out of Europe.

Some individual or organisation in NZ is seeing a need to import this large amount of gold (nearly 29,000 ounces). Their reasons for doing so I can only guess at. But I think I know why...

And briefly, on the topic of Europe. Last week we were told by "Merkozy" that the leadership of Europe needed to have a plan in place to solve the debt crisis by Saturday. Well, the plan arrived, the solution didn't. The '26' have three months to decide on a second tier pact which includes giving away National fiscal controls to Eurocrats in order to stem the debt problems going forward. Will local constituents agree to give away sovereignty to what amounts as a German dominated Europe with France as its mistress?

Also, the money promised to fix the banking solvency issues are not enough. Already, quantitative easing (money printing) is happening to bail out large French banks (note the three Central Banks intervening ten days ago with swap lines). This will continue exponentially, because that is how maths works. The only options are still debt forgiveness or QE to hyperinflation. Period.


Gold in New Zealand dollars: $2207.56 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $41.58 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, December 8, 2011

Is Europe's Banking System About to Fail?

There are signs that the banking system in Europe is now under huge stress. Stress that could see it break very soon unless massive intervention is undertaken. As mentioned a few weeks ago, the Bank of England Governor warned that Britain on the brink of second credit crunch. The latest headlines just tell us that a slow train-wreck (as Turk describes it) is occuring before our eyes. Tim Geithner just happens to be in Europe also.

This is why failure is close. The balance sheets of large banks are supposed to have asset values that at least match the amount of money deposited. But with so much money having gone into derivatives and bond purchasing over the last few years, these asset values are dropping to a point where to sell them would mean massive losses. Banks would not be solvent enough to cover their liabilities. Simply put: they would owe more than they own.

This from James Turk over at King World News:

“You know I have been traveling around Europe quite a bit and there is one common trait, regardless which country I am in, people are really frightened about the possibility of a collapse of the euro.  Money continues to move out of the European banking system, which explains why central banks stepped in with some money printing last week.”

The story goes that a large French bank could not obtain funding and was on the verge of collapse.  When a depositor withdraws money from a bank, the bank has to turn to other sources of funding or reduce its assets.  Given the nervousness about insolvency concerns at many banks today, banks have few funding alternatives.  Consequently, last week’s stop gap measure by the central banks is probably going to be short-lived.

Things aren’t any better on the other side of the Atlantic.  I see that the US government debt increased $310 billion in the first 2 months of this fiscal year.  This is approximately a $1.9 trillion increase.  Clearly these kinds of numbers are not sustainable.  Something has to give as we watch this slow motion train wreck, and in my view it will be more problems for the world’s currencies as confidence in governments and central banks continues to erode.

The collapse of the system are very real because governments have not yet come to grips with the fact that their capacity to borrow is limited.  History has shown that over-indebted countries always destroy their currency.  When it comes to the future we can only make informed choices and in my view physical gold and silver are the right place to be to weather this worsening storm...."

Marc Faber states he is ready to look at pruchasing hard assets again as in times of money printing, hard assets are the only insurance against a fast devaluing paper dollar. Gold and silver being the best hard assets to preserve value.

As Jim Sinclair recently said, "Slowly gold creeps back to its historic position as money in the public eye."


Gold in New Zealand dollars: $2232.47 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $41.66 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, December 7, 2011

China About to Fail

Italy kicked Sicily, slipped on Greece and broke China.

This is a saying we used as kids. You know, thinking we were clever and funny at the same time.

China has been on a huge growth journey for the past 10 years. Using up the world's resources at a phenomenal rate. However, all this is about to end in tears. China has mistakenly seen paper as wealth and not only that, has misallocated the wealth it has accumulated.

An example of this misallocation of capital is in Ordos, Inner Mongolia. Here we have a new town full of brand new offices, apartments and shopping malls. There's just one problem. There are no people to be seen. Even in China with such a massive population, this is the result of too much cheap credit and some bad ideas.

China has tried to catch up to the western economies and has tried to do this in a matter of a generation. It has used its new found paper wealth to build roads and cities to rival the west. But the problem is, little of this new wealth has gone into real assets and innovation for long term wealth creation. It has been squandered on real estate.

China is touted to become the premier economy in the next 20 years or so. But this simply won't happen. Demographically, China has a predicament. The one child policy has caused distortions in the male/female ratio an the rate of replacement numbers that are needed to ensure the population survives has plummeted. Too many males, as is now the case, historically leads to war. Not a good outcome. Like most things, when the State thinks it knows best, the worst it becomes.

The other issues China has is a sparce population with little cohesion. And they are now getting a bit upset. The State authoriies fret about disgruntled inhabitants and their growing discontent within a failing socialist system. It seems discontent with socialism isn't a particulary Western issue.

When China's real estate bubble bursts, and it’s beginning to pop big-time right now, the West will also suffer. Commodity prices are likely to deflate affecting economies such as New Zealand and particularly Australia. Already the Reserve Bank in Australia is lowering interest rates to cope with a lower economic outlook.

The old saying above may be a little flippant and funny, but it tells of the interconnectedness of the world economy. It use to be when the US economy sneezed we all caught a cold, now it includes when China breaks, we all have to clean up the shards.


Gold in New Zealand dollars: $2213.44 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.01 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, December 6, 2011

Chris Martenson and James Turk talk about Europe and the Global Economy



Gold in New Zealand dollars: $2211.37 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $41.17 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, December 5, 2011

We Are All Italian Now

When my daughter and I were in Italy last year, she introduced me to a Bed and Breakfast host. Funnily, she used the incorrect word for 'father'; she called me "The Pope".

But I for one am not ready to be Pope, or for that matter so close to the Italians that I want to give freely of my time and money to help them out of this current debt crisis.

But this is exactly what is about to happen it seems. And not only me, but my children and grandchildren are being called upon to help as well.

You see, the IMF (International Monetary Fund) is asking New Zealand to contribute $1.3 billion to a fund to bail-out Italy.

Now Italy is a lovely place, it has beautiful architecture and art and a wonderful history. In many ways, we owe  much to the Roman Empire. You will recall the very first treaty that began the current European experiment was called The Treaty of Rome. Many Italians emigrated all over the world and gave much flavour to cities like New York and  Melbourne, Australia.

So what are we to do? Give the IMF and the Italians the big ‘whato’ and tell them to go fish or do we just play the game? The game with  the rules we don't make because we don't have a voice or a choice?

It appears we will not have our democratic right to vote on this huge proposal. As I've said before, the borrower is slave to the lender. Democratic rights are first to go when you borrow money. Most other rights follow.

New Zealand borrowed $20 billion to June 30th, 2011 and will borrow 'only' $8 billion this year. John English, the Finance Minister, is confident we can ride out this period of European instability because we don't require so much new debt. Hmm, you gotta love the spin. Borrowing is at an all-time mega-high, but we will survive shocks as we have borrowed so much previously. In other words, we can keep the spending going that people expect, on social welfare, health spending and large government agencies. Nothing to see here folks, move along.

Then we keep hearing that our banks are in better shape than in the days of the Lehman's collapse in 2008. Yet those days were full of easy, cheap money. Now, re-financing costs are going to soar with risk gathering pace in world money markets.

But back to Italy. Here we are, at a point of bailing out a first-world economy. The little old New Zealand taxpayer is going to be on the hook for $1.3 billion. All of it we will never see as roads, hospitals, power stations etc. Yet you and I, our children and their children will have to pay it back. I'm not going to be too harsh on the Italians, but why should we pay for their lavish overspending? Overspending from  a government who created words like bunga-bunga. Perhaps we asked the same questions when we sent our finest young men to die in Italy over 70 years ago? But we still went and helped, and I guess we will help again this time.

I hope Italy remembers little old New Zealand at the bottom of the world when we need them.

Ciao


Gold in New Zealand dollars: $2246.20 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.01 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, December 2, 2011

Does Your Backyard Look Tidy?


In New Zealand, we cherish our little plots of land with our modest houses that we can buy freehold. We like to own land for our security in retirement. We enjoy a tidy backyard, for aesthetic value as well as for practical purposes. Growing food in vegetable gardens and fruit trees.

We kinda look sideways at messy backyards. They make the neighbourhood look untidy.

Using this metaphor to describe how we should be reacting to this current financial crisis is apt. Have we got our financial backyard in order? Because the signs of destruction are creeping upon us, perhaps ready to pounce.

Here are some disturbing statements.

Nicolas Sarkovsy calls for a 'new economic age' where debt and public spending are reduced, claiming that 'those that lend to us no longer want to lend to us'. Is the real message here that Eurpoe is in such a predicament that no plan now will work. A reset is the only option. remember, politicians are good at hidden meanings in positve statements. Also, Germany is encouraged to 'use its power'.

The Governor of the Bank of England has released a dire warning today. Mervyn King: the eurozone crisis is 'systemic, he says, and urges banks to brace themselves for a potential eurozone collapse amid fears that Britain is caught in a second credit crunch.

Another negative warning here from Olli Rehn, The Economic and Monetary Affairs Commissioner of Europe: He warns that Europe faces a crucial 10 days to save the eurozone and halt the two-year sovereign debt crisis.

Furthermore, the concerted effort by central banks this week to increase liquidity for banks means one thing. There is no money to keep the game going. Economies simply will not grow at the rates required to pay the debt mountain back. Resources are scarce an money growth is exponential. That is a function of charging interest on money, it's just a mathematical fact. The system must reset.

Whether it's ten days or ten months, who knows, but the statements and actions coming out from major leaders of the developed world point to sooner, real 'sooner', than later.

So it may be time to ensure your backyard is tidy and in order, ready for the coming reset. It's time to make sure yourself, your family and friends are prepared.


Gold in New Zealand dollars: $2243.16 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $42.14 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
_____________________________________________________________

Thursday, December 1, 2011

Gold and Silver Shoot Upwards

Or do they?

Again, it's all about scarcity and value. The amount of physical gold and silver didn't decrease in supply overnight, so what happened to give the price a fright?

Firstly, the risk trade is back on. Those dollars once parked are now let lose as fund managers feel the glow of excitement once again. They bought everything they could lay their hands on in the commodity sector.

This is a reaction to the big news overnight of the concerted effort made by six of the worlds largest central banks for the Federal Reserve to provide dollar swap lines to banks in Europe. Apparently what this does is halt the liquidity crisis that banks are in at present. It allows them to 'swap' US dollars for their local currencies and begin lending out again. The banks are in a solvency crisis, that is they don't any money or don't want to lend it out as they don't trust the prospective counter-parties. This line of credit from the central banks allows money to begin flowing for a wee while to keep economies moving.

Swap lines work like this. A foreign central bank draws down on its swap line from the Federal Reserve Bank. It sells a specified quantity of its own currency (say euros) to the Fed in exchange for dollars at the prevailing market exchange rate.

At the same time, the Fed and the foreign central bank enter into an agreement that obligates the foreign central bank to buy back its currency at a future date at the same exchange rate. Because the exchange rate for the second transaction was set at the time of the first, there is no exchange rate risk associated with the swaps.The foreign central bank then lends the borrowed dollars to banks etc in its jurisdiction through a variety of methods.

At the conclusion of the swap, the foreign central bank pays the Fed an amount of interest on the dollars borrowed that was equal to the amount the central bank earned on its dollar lending operations (edited from source

But it hasn't solved anything long term. The structural issues of sovereign debt are still there and still need to be dealt with. Perhaps this new lifeline will get us through Christmas.

So who benefits? Obviously the people who hold commodities and especially precious metals have preserved their wealth. In New Zealand dollars, for example, the value of gold has virtually remained the same as yesterday, even though the spot price of gold has gone up US$50 per ounce. So the effect here isn't that marked, especially as the NZ dollar is seen as a 'commodity' sector beast anyway.

This is a short term solution and one that simply cannot be continued. Markets cannot continue to function sensibly with this form of massive intervention. Risk on, risk off.

Own precious metals and turn off the news and rest happily.

Finally I urge you to watch this recent seminar by Chris Martenson. Show it to your children as well.


Gold in New Zealand dollars: $2237.96 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
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