Wednesday, April 24, 2013

Golden Undervaluation

A very useful report from Ben Davies over at Hinde Capital.

"I want to scream and shout".

Gold in New Zealand dollars: $1676.27 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $27.20 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
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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 when you order: an-001
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Raw food can be interesting, satisfying and taste fantastic. The big bonus is the
optimum nutrition in raw food. For seven days you can put raw food to the test
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Thursday, April 18, 2013

Physical Gold in Great Demand

Since the large decrease in the price of gold this week, gold physical demand has been very large.

In Australia there are pictures of people queuing at bullion shops. In Thailand, demand has surged. In the US, gold and silver eagle sales are at all-time records. Savvy buyers are seeing a bargain price. And believe it or not, reports (as below) of large Asian Central banks on the bid for physical gold as the market crashed downwards. Now, that is interesting.

Add to this the recent 'default' by ABN Amro bullion custodians (they settled gold they should have had for cash and closed) and the recent seven year delivery time for German gold, then you have the dots beginning to form for a run on physical gold. Now when gold is leveraged by 100 paper ounces to every 1 physical gold ounce, watch this space, the leveraged paper market could very well be in trouble.

This from Murray Dawes of the Daily Reckoning today:



I was chatting with a mate of mine on Tuesday who took the opportunity presented by the collapse in precious metals to buy some for himself.

He wandered down to his friendly local metals dealer and was confronted by a huge line going out the door.  He took the opportunity to ask those in the queue (apparently made up predominantly of Asians and Indians) whether they were there to sell or to buy and every single person said they were there to buy.

This was on a day when prices had had their biggest collapse in 30 years…



Shouldn’t there have been panic in the streets, with investors doing all in their power to get rid of their gold at all costs? No. Quite the opposite in fact.

Another contact at a large bank told me Asian central banks were on the bid (lining up to buy) all day on Tuesday. A collapse like the one we’ve seen will bring a lot of latent demand to the fore. In fact my expectations are that we’ll see a vicious bounce in the gold price, sooner rather than later.

I think it’s a bit like jumping on an inflated ball in the pool.  The further you push it down the quicker it will whip back in your face.

The rumours are swirling around the internet about the reasons for the take down. Ben Bernanke and his cohorts are at the top of the conspiracy list of course. I wouldn’t be surprised at all if that was the case.

It appears that the bulk of the selling is in the paper gold market. But the fact is that the failure of multi-year support around US$1,530 would have led to a cascade of stop losses that would have fed on each other.
Throw in the margin calls for leveraged positions and suddenly you had traders eyeing off the window ledge nearest their desk. 

Any trader worth his salt would have known that a big fall was on the cards below those lows, so if the big boys did want to set off the avalanche all they had to do was give it a nudge at the top, then sit back and watch the mayhem ensue while covering their shorts on the way down.

Easy money.


Gold in New Zealand dollars: $1614.59 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $27.44 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
_____________________________________________________________

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 when you order: an-001
_____________________________________________________________

Go More Raw Seven Day Raw Food Program

Raw food can be interesting, satisfying and taste fantastic. The big bonus is the
optimum nutrition in raw food. For seven days you can put raw food to the test
and you could be pleasantly surprised.
_____________________________________________________________

Wednesday, April 17, 2013

Gold - Nothing Changed

By Dan Denning of The Daily Reckoning:

"Ask yourself whether you think paper money will gain or lose value over the next ten years. And then ask yourself if you would rather have money in the bank or precious metals in your hands. The answers will tell you all you need to know.

Besides, speaking from experience, this is the first time in almost ten years we can remember gold being a hated asset. It was hated in the early part of the decade for all the same reasons: it had no real economic use...it produced no yield but held storage costs...it didn't do anything other than sit there and look pretty in a cold dark room.

But if you bought gold any time in the last ten years because it's a real asset and people having being using it as a means of exchange and store of value for 5,000 years, not much has changed in the last week except the price of an ounce of gold. As a monetary asset, gold will be around long after the Yen, the Euro, and the Dollar are being used for toilet paper."

Gold in New Zealand dollars: $1613.03 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $27.50 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
_____________________________________________________________

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 when you order: an-001
_____________________________________________________________

Go More Raw Seven Day Raw Food Program

Raw food can be interesting, satisfying and taste fantastic. The big bonus is the
optimum nutrition in raw food. For seven days you can put raw food to the test
and you could be pleasantly surprised.
_____________________________________________________________

Monday, April 15, 2013

Gold and Silver Prices Plummet. Now What?

So what more can be said about the largish decreases in gold and silver last Friday? Can I add anymore from what you have already gleaned about the reasons we lost 5% and 6% respectively in the PMs on one day?

I too have read with interest (as you do when the savings of your hard earned work are at stake) the many and varied views from the shrill to the rude and uncivil on this latest massacre. From the bankers are demons to the goldbugs are stupid. Every troll on earth seems to have hit the PM blogoshere with all they had.

So what's happening?

Dan Norcini was the most level-headed commentator on this issue during the weekend. Here's my summary of where we are at.

In 2008, the system was on a brink of a complete deflationary catastophe. Deflation is the worst case scenario for a system geared only for growth. As we know, large amounts of QE was injected into the system to keep liquidity flowing. This had the effect of inflationary expectations rising as punters assumed the economy would pick up and the money base increase in proportion to hard assets. The PMs shot too the moon at $50 silver and $1900 gold.

But in the following years, as the economy did not pick up and growth turned negative, expectations turned deflationary once again. Banks were not lending the newly created money. How could they, their balance sheets were abysmal and people didn't have the increased incomes to borrow that money.

So the new and existing money went elsewhere looking for positive yield. To specific sections of the economy like stocks and bonds. Even at 0.5%, 10 year bonds looked cool. Even the little old NZ dollar looked better than even the euro.

So here we are, QE being regarded as ineffectual, commodities dropping fast on deflationary expectations and bubble mania in certain areas. Today, the only way huge hedge funds can get yield is on the stock market and in bonds (just). This is why they are liquidating the PMs faster than pig runs to mud and running elsewhere.

So what next. A few views have come out that are worth mentioning. My thinking is we could still see some downside. Maybe quite a bit more. After all, who really knows the value of 'things' in this new deflation anyway. Maybe the old ways of value setting are coming to and end and new ones will occur. If I read him correctly, this is one of Jim Rickards ideas. His view is the Fed simply cannot allow this deflation to continue. The sole reason they exist is to keep inflation in the system in order for banks to make money and own assets. The only tool left for them at the end of the game will be gold revaluation. Since QE is having less effect, they will announce and deploy a method of quickly driving the price of gold to a level that will naturally create the inflation they require. Maybe this will hit $5000 or $7000 per ounce. You see, if gold does this, then all assets will then rise in price to meet the new base.

Maybe. But the kicker in all this is public confidence in currencies. The more the central banks play with QE etc, the closer the public come to walking away from paper and causing a systemic collapse. The Fed will need some of this mayhem anyway to do the gold revaluation scheme. But they will need it in a measured way. Measured mayhem, hmm...

Anyway, there's some thoughts.

Gold in New Zealand dollars: $1708.56 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $29.21 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
_____________________________________________________________

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 when you order: an-001
_____________________________________________________________

Go More Raw Seven Day Raw Food Program

Raw food can be interesting, satisfying and taste fantastic. The big bonus is the
optimum nutrition in raw food. For seven days you can put raw food to the test
and you could be pleasantly surprised.
_____________________________________________________________

Saturday, April 13, 2013

Gold or Bitcoin?


Your choice. Stack gold or bitcoin.
_____________________________________________________________

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 when you order: an-001
_____________________________________________________________

Go More Raw Seven Day Raw Food Program

Raw food can be interesting, satisfying and taste fantastic. The big bonus is the
optimum nutrition in raw food. For seven days you can put raw food to the test
and you could be pleasantly surprised.
_____________________________________________________________

Friday, April 12, 2013

House Prices in New Zealand v Gold, March 2013

In March, 2013, the gold ounce to house price ratio has moved in favour of property. It now takes 13 gold ounces more to buy the median priced Auckland house than it did in February, and 9 ounces more to buy a median priced house in New Zealand.





This leaves the ratio back to where it was at the end of 2008 and the end of 1994.

Gold in New Zealand dollars: $1808.81 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $32.05 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
_____________________________________________________________

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 when you order: an-001
_____________________________________________________________

Go More Raw Seven Day Raw Food Program

Raw food can be interesting, satisfying and taste fantastic. The big bonus is the
optimum nutrition in raw food. For seven days you can put raw food to the test
and you could be pleasantly surprised.
_____________________________________________________________

Tuesday, April 2, 2013

Gold Price Defying Logic?

"Logic (from the Greek λογική, logikē) refers to both the study of modes of reasoning (which are valid, and which are fallacious) and the use of valid reasoning."

I heard it said last week that there are reasons why smart people believe stupid things. We humans are complex beasts, we can find comfort in seeing hope where there is none, and then comfort where there is only darkness and nothing. Smart as we think we are, we are all prone to deception.

Are we who swap our paper for gold deceived by those with vested interests? Are they laughing at us while they take our wealth from us?

Maybe.

But not likely. So let's be logical about this. Come, let us reason together.

The case to own gold is one fraught with contrary argument. Buy gold as an inflation hedge (rising prices that is) or don't buy gold, it's headed for the door. Price is going to $1000 per oz.

Here's why I think we all need to hold some gold.

1. It's shiny and nice to look at (nah, just kidding)

2. It protects you from governments. This is the main reason. Forget the price. Gold is a store of wealth with no counter-party risk. That is if you own the physical stuff in LBMA form outside the banking system. Gold has seen civilisations come and go, fiat money systems come and go, but remains the best store of wealth. It may not even be money...hmm but that's too deep a thought for today.

Just look at depositors theft in Cyprus and soon New Zealand and Canada with the list growing daily as governments salivate over the success of the Cyprus bail-in and want in on the scam.

3. Gold is a hedge against inflation. OK, so studies have proven otherwise, but really, look at the gold price graph since 2001. Seems to follow the money printing quite nicely. But, I hear you say, what about the printing of $85 billion per month by the Fed and the gold price heading down? Well, history shows that when sovereign debt levels get to 90% of GDP then inflation goes haywire. Remember, inflation is only the money supply increase. Right now the Fed are printing like crazy and when this money supply reaches 'the scary point' and there's a wee push from an unknown event (war?) then the price genie is let lose.

By the way, the US debt to GDP will be 120% next year.

4. Peace of mind.

So there are a few reasons to hold gold. Be smart and not stupid, or be smart and stupid. I don't care, but own physical gold anyway.

Gold in New Zealand dollars: $1910.42 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $33.46 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
_____________________________________________________________

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 when you order: an-001
_____________________________________________________________

Go More Raw Seven Day Raw Food Program

Raw food can be interesting, satisfying and taste fantastic. The big bonus is the
optimum nutrition in raw food. For seven days you can put raw food to the test
and you could be pleasantly surprised.
_____________________________________________________________