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Friday 20 January 2012
Wednesday 2 November 2011
Officially registered as GCP Dealer
Dengan rasminya saya kini telah bergelar Pengedar Emas kepada Syarikat Goldcrest Pavilion Sdn Bhd. (GCP) dengan ID Pengedar ad2518....alhamdulillah....
Sunday 16 October 2011
Gold could go lower than anyone expects but then set for incredible opportunity
QE3 is going to make QE1 and QE2 seem like a little prelude and will set up a moon shot for precious metals and junior mining companies says Edward Karr. Gold Report interview.
Author: Brian SylvesterPosted: Sunday , 16 Oct 2011
The Gold Report: RAMPartners is based in Geneva, Switzerland, a country that made economic news a month ago when the Swiss National Bank capped the Swiss franc at 1.20 francs per euro, slashed interest rates and flooded the market with Swiss francs. Did you agree with those moves and what impact do you think they had on the gold price?
Edward Karr: I emphatically disagree with the move by the Swiss National Bank. To me it makes no sense to peg the Swiss franc at 1.20 to the euro. Switzerland is, in effect, backstopping Greece and all of the other indebted countries in Europe. This is lunacy. Greece or anyone can just hit the Swiss National Bank's bid at 1.20 and convert into Swiss francs, which it would probably rather have than its euro position.
Since this policy, we've seen a psychological shift in markets. People have been rethinking the Swiss franc as a safe-haven currency. The Norwegian kroner looks more like a safe-haven currency now than the Swiss franc. I'm just happy Switzerland is not part of the European Union and not part of the euro. I hope it will understand the foolishness of the 1.20 peg and get rid of it soon.
As to the current effect on the gold price, right around when this happened gold topped and started to sell off. I don't think they are directly related, but I think it is psychological. If the Swiss franc holds at 1.20 to the euro, if a hedge fund or a corporation hits the Swiss National Bank with a billion euros, it is no big deal. But what about 10 billion, 100 billion, even a trillion? Then it starts becoming a big deal. At some point does Switzerland have to start selling its gold reserves to continue this lunacy? Switzerland now has 1,146 tons of gold. Maybe people are worried that if that gold starts to come out it could put downward pressure on the bullion price; hence, we have seen a little sell off in the overall market.
TGR: Just a few years ago, the Swiss Central Bank had more than 2,000 tons of gold in its reserves. What is your view on the sale of so much of its reserves?
EK: I think it was extremely shortsighted. Switzerland has a long history of fiscal stability and gold has been a very important part of that stability.
Right now, Switzerland has the world's eighth largest gold reserve, which is quite impressive for such a small country. But, the 1,146 tons of gold it has at current market values is really only about $60 billion. That might seem like a big number, but it is minuscule in comparison to the trillions that global governments are going to have to print to combat this increasing financial crisis.
TRG: Gold has fallen steadily since reaching about $1,900/ounce (oz.) in August. It now sits at about $1,670/oz. Why has it fallen recently?
EK: I think the logical explanation for falling prices is that gold is a relatively liquid asset. Governments, hedge fund managers, bankers and individuals are all facing a severe cash crisis. In that environment you have forced liquidations. Governments are doing all they can to put a positive spin on a terrible environment. But, if you're a global macro hedge fund manager who has heavy redemptions, you have to sell your liquid assets to raise cash.
Man Investments is one of the biggest hedge fund groups. Last month it announced record redemptions of $7 billion. The firm has to raise cash, so what is it going to do? There are no bids out there for Greek debt, no bids for mortgage-backed securities, no bids for countless other OTC financial derivatives. Gold is liquid; it is easily tradable and has been part of the massive global scramble to cash that we've seen in the last two to three months.
TRG: How low could gold go?
EK: That's a great question. The only credible answer is that gold can go a lot lower than anyone expects. A lot of Johnny-come-latelies have bought into gold in the last few years. A big downdraft will shake out a lot of loose hands.
Europe is on the edge of a cliff. Dexia Bank might fall any day. UniCredit in Italy is right behind. I think we will see a severe domino effect that will make 2008 seem like a walk in the park. If Dexia or UniCredit or the European Central Bank itself had a big major gold position and it had forced liquidation, it will have to sell and the price could go down pretty dramatically.
TRG: Are you willing to be more specific on the price?
EK: It would not surprise me at all if I came in tomorrow and gold was at $1,000/oz., a 60% decline from the current levels. If gold were to fall that dramatically, to $900/oz. or $1,000/oz., it would represent an incredible buying opportunity. That's when you would want to go all in and buy all you could, because it will snap back like a bungee jump.
When you buy gold, you want to buy it and take physical possession. Owning gold isn't about the price paid. You shouldn't look at the price every single day. By the time this crisis is over, it's going to be about how many ounces you actually have in your possession-under your mattress, in your safe, not in your bank, I hope.
TRG: Your fund holds bullion and junior precious metal equities. How have you changed the way you manage the fund in the midst of this volatility?
EK: We have adjusted our portfolios and we are managing money a little differently. Volatility has certainly increased. In the last month, junior mining stocks are down 40%, 50%. When you get into these high volatility ranges, liquidity drives up as well, delivering a one-two punch. Selling 10,000 or 20,000 shares on a junior mining stock can take it down 25%.
You have to be nimble and you have to be able to stay the course. You don't want to over-leverage. You want to keep a decent percentage of cash and have some dry gunpowder to take advantage of big sell-off opportunities.
TRG: When I look at my investment portfolio, which consists largely of junior gold explorers, I see nothing but red. I want to sell everything and wait for opportunities. Do you believe that is prudent or do you have better advice?
EK: The investment game is 99% psychological, and it is you against yourself. In my experience, when you feel it is the right time to sell it is exactly the wrong time to sell. I sincerely believe that investors who sell out now are going to miss out on one of the greatest rides of their lives.
Central banks around the world are going to have to put together trillions of dollars. Quantitative Easing (QE) 3 is going to make QE1 and QE2 seem like a little prelude. The Fed is going to have to team up with the European Central Bank and print an incredible amount of money to recapitalize the whole financial system. When they do that, it will set up a moon shot for precious metals and junior mining companies.
This party is just getting started. You can see the house, you can hear the music and see people, but you have not even walked in the front door. Wait for the party; don't leave before it even begins!
TRG: What are some rules of thumb for investing in junior resource companies during uncertain times?
EK: I like to own good companies with solid management teams and great assets. And then, it all comes down to the timing. The current markets are fantastic for finding attractive entry points. As a general rule, when it feels the worst is usually the best time to buy.
When people get scared, markets and stock prices get way out of line. That is when you need to have the courage to really step in and accumulate. Worst case, if the banks collapse and the ATMs actually do stop working, those who own physical gold will be better off than 99% of the other people out there. But it is more likely that the markets will rebound quickly as QE3 comes in and the ECB and the Fed turbo charge the printing presses. Then, the junior mining stocks and bullion will be off to the races.
TGR: You talked about having some powder dry for when you're ready to strike. What striking opportunities do you see in the market at this point?
EK: I like Nevada, as I mentioned. Another location that I really like is Colombia, which I think is setting itself up to be one of the hottest mining destinations of the future. Colombia is doing all of the right things from a political and economic standpoint. It has incredible undiscovered resources.
TGR: Edward, can you leave our readers with some sage Karr wisdom that they can lean on in these unprecedented economic times?
EK: I truly believe that we are heading into a very, very challenging time for humanity in general. The ultimate goal in the financial markets is like the ultimate goal in life-to survive. But you also want to be happy and to prosper. You need to keep it all in perspective.
Your readers are in the top 1% of the global population. And if they own physical gold, they may be in the top one-tenth of the top 1%. A lot of people in the world live hand-to-mouth every day and they remain relatively happy.
I think it is really important to tap into that happiness. Take some time out to be grateful for all you have in life. Enjoy time with your friends and with your family. Spend time on what is important to you. Help people who are less fortunate than you are.
At the end of the day, we're here for a good time, not for a long time. It is important to enjoy the journey each and every day. Don't get so worried about the downdraft of your gold position or your junior mining stock. Keep it all in perspective.
TGR: Very wise words. Thank you for talking with us today, Edward.
Edward Karr is the founder of RAMPartners SA-an investment management and investment banking firm based in Geneva. Since 2005, RAMPartners has helped raise more than $100 million for small capitalization companies in fields such as natural resources, high technology, health care and clean energy. Prior to founding RAMPartners, Karr worked for a private Swiss asset management, investment banking and trading firm based in Geneva for six years. At the firm, he was responsible for all of the capital market transactions, investment and marketing activities. Prior to moving to Europe, Karr worked for Prudential Securities in the United States and has been in the financial services industry for 20 years. Before his entry into the financial services arena, Karr was affiliated with the United States Antarctic Program and spent 13 consecutive months working in the Antarctic, receiving the Antarctic Service Medal for his contributions of courage, sacrifice and devotion. Karr studied at Embry-Riddle Aeronautical University and Lansdowne College in London, England, and received a B.S. in economics/finance with Honors from Southern New Hampshire University. He is a licensed pilot and certified master scuba diver as well as a current board member and vice president of the American International Club of Geneva and co-chairman of Republican's Abroad Switzerland.
source : http://www.mineweb.com/mineweb/view/mineweb/en/page103855?oid=137615&sn=Detail
Friday 14 October 2011
Gold to Top $2,000 on Central Bank Buying: Chart of the Day
Gold is marginally higher in most currencies today and continues to consolidate at the upper end of the range between $1,600 and $1,700/oz. Physical demand for coins and bars remains very strong with GoldCore experiencing a notable increase in demand this week.
Gold in USD – 30 Day (Tick)
Gold is up nearly 3% on the week and looks set to post its biggest weekly gain in more than a month. Markets remain nervous about the risk of contagion ahead of a G20 meeting whose agenda will be dominated by the euro zone debt crisis and steps to tackle the contagion.
Gold should be supported by global inflation data this morning which remains stubbornly high particularly in emerging markets.
Inflation in China and India remains very high. In India, inflation exceeded 9% for the 10th month in a row and in China inflation is at 6.1% but the key food component of inflation rose 13.4% year-on-year in September.
European inflation accelerated the fastest in almost three years in September on soaring energy costs, complicating the European Central Bank’s task as it combats the region’s sovereign-debt crisis. The euro-area inflation rate jumped to 3 percent last month from 2.5 percent in August. Inflation in Germany also surprised to the upside this week.
Gold is up nearly 3% on the week and looks set to post its biggest weekly gain in more than a month. Markets remain nervous about the risk of contagion ahead of a G20 meeting whose agenda will be dominated by the euro zone debt crisis and steps to tackle the contagion.
Gold should be supported by global inflation data this morning which remains stubbornly high particularly in emerging markets.
Inflation in China and India remains very high. In India, inflation exceeded 9% for the 10th month in a row and in China inflation is at 6.1% but the key food component of inflation rose 13.4% year-on-year in September.
European inflation accelerated the fastest in almost three years in September on soaring energy costs, complicating the European Central Bank’s task as it combats the region’s sovereign-debt crisis. The euro-area inflation rate jumped to 3 percent last month from 2.5 percent in August. Inflation in Germany also surprised to the upside this week.
The Bloomberg ‘Chart of the Day’ shows the proportion of gold in the international reserves of India, Russia, China and Mexico is significantly lower than the rates in the U.S., Germany and France, based on data compiled from the World Gold Council. The lower panel tracks central bank holdings in metric tons and the bullion price since March 2008.
Central banks last year were net gold purchasers for the first time in two decades.
Central banks last year were net gold purchasers for the first time in two decades.
“I certainly expect international central bank gold buying to continue, especially in emerging economies where foreign reserves are growing,” said Gavin Wendt, founder and senior analyst at Sydney-based Mine Life, which publishes reports on the metals industry. “It’s the safest option for them.”
Central banks, the biggest gold holders, have expanded reserves due to the international financial crisis. Central bank and government-institution buying totaled 192.3 metric tons in the first half of 2011, World Gold Council data show. Gold accounts for 75.4% of the U.S.’s reserves and 72.7% of Germany’s.
The ratio is just 1.6% for China and 8.2% for Russia, WGC data show.
The ratio is just 1.6% for China and 8.2% for Russia, WGC data show.
“Governments in many places like Asia and South America are rapidly embracing gold as a security mechanism,” said Wendt, who expects gold at $2,500 in 2013. “The value of their U.S. dollar foreign reserves has drastically fallen over the past decade.” Thailand, Bolivia and Tajikistan raised reserves in August, according to the International Monetary Fund.
China's foreign exchange reserves, the world's largest stockpile, rose by $4.2 billion in the third quarter to $3.2 trillion, the People’s Bank of China said on Friday.
Central bank demand due to concerns about currency debasement and contagion remains a primary driver of gold’s bull market and means that the foundations of the bull market are very sound.
Central bank demand is strategic leading to gradual accumulation and it is long term meaning that official sector demand will provide support to prices for the foreseeable future.
Thus, continuous suggestions that gold is a bubble today and in recent years and of a gold bubble bursting and prices falling sharply as seen in 1980 is uninformed and misguided.
The world of 2011 is very different to that of 1980.
In 1980, the US was the world’s largest creditor nation. Today, it is the world’s largest debtor nation – the largest debtor nation the world has ever seen.
In 1980, China was a communist country whose citizens were banned from owning gold. Today, there are 1.3 billion Chinese people and a growing middle class who can buy gold.
The Chinese central bank did not have any currency reserves in 1980, today they have $3.2 trillion in foreign exchange reserves.
Similarly, India, China, Brazil and other emerging markets were debtor nations in 1980 today they are creditor nations with massive foreign exchange reserves denominated primarily in dollars.
In 1980, the much of the world was coming out of a period recession and stagflation. Today, we appear to be on the verge of a recession or Depression possibly involving stagflation again.
In 1980, there was no banking or sovereign debt crisis and no risk of global financial and economic contagion.
China's foreign exchange reserves, the world's largest stockpile, rose by $4.2 billion in the third quarter to $3.2 trillion, the People’s Bank of China said on Friday.
Central bank demand due to concerns about currency debasement and contagion remains a primary driver of gold’s bull market and means that the foundations of the bull market are very sound.
Central bank demand is strategic leading to gradual accumulation and it is long term meaning that official sector demand will provide support to prices for the foreseeable future.
Thus, continuous suggestions that gold is a bubble today and in recent years and of a gold bubble bursting and prices falling sharply as seen in 1980 is uninformed and misguided.
The world of 2011 is very different to that of 1980.
In 1980, the US was the world’s largest creditor nation. Today, it is the world’s largest debtor nation – the largest debtor nation the world has ever seen.
In 1980, China was a communist country whose citizens were banned from owning gold. Today, there are 1.3 billion Chinese people and a growing middle class who can buy gold.
The Chinese central bank did not have any currency reserves in 1980, today they have $3.2 trillion in foreign exchange reserves.
Similarly, India, China, Brazil and other emerging markets were debtor nations in 1980 today they are creditor nations with massive foreign exchange reserves denominated primarily in dollars.
In 1980, the much of the world was coming out of a period recession and stagflation. Today, we appear to be on the verge of a recession or Depression possibly involving stagflation again.
In 1980, there was no banking or sovereign debt crisis and no risk of global financial and economic contagion.
Thursday 13 October 2011
Gold is not in a Bubble: It’s on its way to $10,000 an ounce
By Nick Barisheff
The recent correction in gold has once again led, to financial commentators warning of a bubble—just as they have incessantly since it first passed $400 an ounce. A bubble usually ends with day after day of speculative higher highs, not corrections like we have just seen or as we saw in August where a $200 fall was followed by the resumption of its decade long rise. That gold continues to climb a wall of worry, and that so many are even calling it a bubble, is actually an extremely bullish indicator since financial bubbles burst only after sustained periods of exuberance. We are far from the days when people lined up for blocks each day to buy gold, as they did in Toronto in 1980.
A simple rebuttal, however, is never enough when discussing gold. It will continue to be subjected to the most aggressive “perception management” assault of any asset class, because it is a direct challenge to all the world’s fiat currencies. Since no paper currency is convertible to gold at this time, this is some challenge.
The warnings of bubbles and the many other reasons for not owning gold will continue unabated as gold persists to $10,000 an ounce, or higher. Independent study of the underlying causes of gold’s rising price, in my opinion, is the best way to gain sufficient confidence to buy and hold gold long enough to protect one’s wealth through the turbulent years ahead.
This is the premise of my upcoming book, $10,000 Gold—Why it will get there sooner than you may expect. In this article, we will look at three of the most significant reasons why gold is not in a bubble and will continue rising in value for years to come.
There are two ways of looking at gold. The first is the Western way, viewing gold through the lens of fiat currency training. This approach sees gold as a wealth-gaining asset that can be traded like any other asset class or commodity for currency gains. The second way is how the world’s major gold buyers at this time see gold.
The Chinese, Indians and Middle Easterners see gold as a wealth-preserving asset that serves the purpose of money. The second group will ultimately be responsible for driving gold into the five-digit range. Many of these people have had direct experience of the damage to one’s wealth a currency crisis can cause. The most aggressive buyers, the Chinese, experienced 4,000 percent inflation per month between 1947 and 1949.
If gold were a commodity it would be in a bubble, but it is not. Gold has been money for over 3,000 years, and still is today. Although never officially recognized as such, gold trades on the currency desks of all the banks and brokerages, and is held by central banks. Since 2009, central banks have become net buyers of gold. Pension fund manager Shane McGuire makes the point in his book, Hard Money: Taking Gold to a Higher Investment Level , that gold and silver are really the newest asset class, not the oldest, since until 40 years ago they were money. Many readers will remember a time when silver dollars were exchanged in stores at face value.
To step outside a fiat mindset, we encourage our clients to think in terms of ounces of gold rather than dollars—a task that is much easier to do when one owns gold. We encourage them to ask questions like, “What is the risk in ounces of an investment?” and “How many ounces can I expect to gain in return?”
This perspective gives us the single most important insight into gold’s true behaviour, as it tells us that gold is not rising in value—currencies are losing value against gold. This means that gold, as money, can appear to rise in value as far as currencies can fall. In light of this, we can look at three features of gold’s rise that tell us it is not only not in a bubble, but unless current monetary policy is drastically changed, it will almost certainly rise to $10,000 an ounce and beyond.
These features are:
Central banks were net sellers for nearly two decades until 2009, when they officially became net buyers. We can expect this trend to last two decades as well. During the gold “bull” market of the late 1970s, the Chinese public was not allowed to own gold. Today, their government encourages gold ownership, and has even made several significant innovations to facilitate this goal. The Chinese government has also led by example, with China’s central bank publicly stating it would like to increase its reserves from 1,100 to 6,000 tonnes. Unofficially, they have stated a target of 10,000 tonnes.
There can be little doubt that a race to exit the dollar is underway, as governments feel the US has no choice but to continue debasing their currency just to meet existing obligations. Peak gold, like peak oil, occurs when gold miners fail to increase production or discovery despite the rising price of the underlying commodity. Gold production has fallen since 2005, and is only slightly higher in 2010. To quote a recent exhaustive Standard Chartered Bank report:
“In our study of 375 global gold mines and projects, we note that after 10 years of a bull market, the gold mining industry has done little to bring on new supply. Our base-case scenario puts gold production growth at only 3.6 percent CAGR over the next five years .”
With pension funds holding less than 1.5 percent of their assets under management (AUM) in gold bullion, they will have little choice but to increase their position as gold continues to outperform all other asset classes.
These trends are significant, but they are all capable of being changed, however unlikely that may be. What cannot be changed are the “irreversible trends.” These have an indirect impact on the price of gold; they are causing growth to slow, and are therefore creating the need for governments to compensate through ever-increasing currency creation.
Three of the most significant “irreversible” trends are:
With the advent of globalization and outsourcing, politicians and multi-national corporations have let the genie out of the bottle; this has resulted in the decimation of the manufacturing base in Western economies. This will manifest as systemically high unemployment, reduced GDP, higher government deficits and further currency debasement. Again, this will lead to higher gold prices.
In September 2010, a German military think tank reported the German government was taking the threat of peak oil seriously and preparing accordingly. Numerous studies around the world have concluded that we are very close to peak oil production, which will be accelerated due to Gulf drilling bans. This will lead to higher price inflation for most goods, reduced GDP, higher trade deficits, and higher budget deficits. More monetization will result, thereby debasing currencies. Higher price inflation together with further currency debasement will again be a driver for higher gold prices.
Like a spinning top must continue spinning or fall, our modern economic debt-based fiat system depends on perpetual growth. It is disturbingly similar to a classic Ponzi scheme, which requires new borrowers to bring currency into existence that can be used to pay the interest on the previous loans. The greatest threat to its health is slowing growth or deflation. With interest rates near zero, central banks have only one tool left to combat slowing growth—currency creation, which means inflation.
These irreversible trends, therefore, virtually ensure gold will continue rising in value for years to come.
In conclusion, I know many readers are hesitant to buy as they feel they have “missed the boat.” Perhaps this Chinese proverb will help:
as published in Resource World Magazine, October 2011
“Gold is not a financial asset to be compared with dot-com stocks or Miami condos and it is not a commodity like pork bellies or crude oil. It is the ultimate currency for the truly sophisticated wealth holder in a time of substantial unreserved credit promotion.”
--Paul Brodsky (Fund Manager)
A simple rebuttal, however, is never enough when discussing gold. It will continue to be subjected to the most aggressive “perception management” assault of any asset class, because it is a direct challenge to all the world’s fiat currencies. Since no paper currency is convertible to gold at this time, this is some challenge.
The warnings of bubbles and the many other reasons for not owning gold will continue unabated as gold persists to $10,000 an ounce, or higher. Independent study of the underlying causes of gold’s rising price, in my opinion, is the best way to gain sufficient confidence to buy and hold gold long enough to protect one’s wealth through the turbulent years ahead.
This is the premise of my upcoming book, $10,000 Gold—Why it will get there sooner than you may expect. In this article, we will look at three of the most significant reasons why gold is not in a bubble and will continue rising in value for years to come.
There are two ways of looking at gold. The first is the Western way, viewing gold through the lens of fiat currency training. This approach sees gold as a wealth-gaining asset that can be traded like any other asset class or commodity for currency gains. The second way is how the world’s major gold buyers at this time see gold.
The Chinese, Indians and Middle Easterners see gold as a wealth-preserving asset that serves the purpose of money. The second group will ultimately be responsible for driving gold into the five-digit range. Many of these people have had direct experience of the damage to one’s wealth a currency crisis can cause. The most aggressive buyers, the Chinese, experienced 4,000 percent inflation per month between 1947 and 1949.
If gold were a commodity it would be in a bubble, but it is not. Gold has been money for over 3,000 years, and still is today. Although never officially recognized as such, gold trades on the currency desks of all the banks and brokerages, and is held by central banks. Since 2009, central banks have become net buyers of gold. Pension fund manager Shane McGuire makes the point in his book, Hard Money: Taking Gold to a Higher Investment Level , that gold and silver are really the newest asset class, not the oldest, since until 40 years ago they were money. Many readers will remember a time when silver dollars were exchanged in stores at face value.
To step outside a fiat mindset, we encourage our clients to think in terms of ounces of gold rather than dollars—a task that is much easier to do when one owns gold. We encourage them to ask questions like, “What is the risk in ounces of an investment?” and “How many ounces can I expect to gain in return?”
This perspective gives us the single most important insight into gold’s true behaviour, as it tells us that gold is not rising in value—currencies are losing value against gold. This means that gold, as money, can appear to rise in value as far as currencies can fall. In light of this, we can look at three features of gold’s rise that tell us it is not only not in a bubble, but unless current monetary policy is drastically changed, it will almost certainly rise to $10,000 an ounce and beyond.
These features are:
- The loss of purchasing power of global currencies
- The inflationary effects of money creation
- Irreversible trends will continue to cause gold to rise
1. Loss of Purchasing Power
A basket of goods that cost $100 in 1800 would have cost $102 in 1900. During this time, the dollar was pegged to gold. Today that same basket would cost over $4,000. This is what we mean by loss of purchasing power. Over the past decade, the Canadian dollar, the euro and the Japanese yen have lost over 70 percent of their purchasing power against gold (Figure 1). The US dollar and the British pound have lost over 80 percent.
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| The next chart (Figure 2) takes a longer view. It shows how the same currencies, including the venerable Swiss franc, have performed against gold since President Nixon closed the gold window in 1971. |
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| What is the cause of this loss of purchasing power, and will it continue? Currencies lose purchasing power against gold for one simple reason: Currency supplies are expanding faster than gold supplies. Bullion is the one form of money governments cannot artificially multiply. Since 1980, above-ground gold bullion supplies have risen, on average, about 3 percent per year. We can see in the next chart (Figure 3) a comparison with the much more rapid rate of currency creation provided by MZM, one of the most reliable indicators of currency supply. |
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| Another way to understand this loss of purchasing power is by looking at the number of ounces it would have taken at different periods to buy a house, a car or the Dow. In 1971, an average car cost 66 ounces of gold; an average house cost 703 ounces of gold and the Dow cost 25 ounces of gold. Today, 66 ounces of gold would buy nearly four cars, 703 ounces of gold would buy two houses and only 6.5 ounces of gold would be needed to buy the Dow (Figure 4). |
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2. The inflationary effects of currency creationIn 1983 Webster’s Dictionary defined inflation as: “Inflation is an increase in the amount of money, resulting in a fall in its value and a rise in prices of goods and services.” Currency debasement (a term derived from the Roman practice of hollowing out gold and silver coins and filling them with base metals), leads directly to inflation. In the few dozen hyperinflations that have occurred throughout history, all have been the direct result of governments attempting to compensate for slowing growth through currency creation, which is exactly what we see happening today. Figure 5 shows that this currency creation has already turned exponential. |
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| Fortunately, one economist, John Williams of ShadowStats (Figure 6) continues to track the original basket of goods governments used to track inflation prior to the early 1990s. His data shows inflation running at a much higher rate than is publicly acknowledged. His CPI is at 12 percent, over eight points higher than the “official” inflation reports. |
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| Eventually, we will have to admit the truth about inflation, the truth that anyone who eats, drives or sends their children to college already knows. Figure 7 shows what gold and silver would trade at if we were to accept Mr. Williams’ CPI numbers. |
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3. Irreversible Trends Will Continue to Cause Gold to Rise
Finally, there are many independent trends that are having a direct impact on the price of gold. The most prominent are central bank buying, Chinese and Indian buying, the movement away from the US dollar, peak gold and under-investment in gold by pension funds.Central banks were net sellers for nearly two decades until 2009, when they officially became net buyers. We can expect this trend to last two decades as well. During the gold “bull” market of the late 1970s, the Chinese public was not allowed to own gold. Today, their government encourages gold ownership, and has even made several significant innovations to facilitate this goal. The Chinese government has also led by example, with China’s central bank publicly stating it would like to increase its reserves from 1,100 to 6,000 tonnes. Unofficially, they have stated a target of 10,000 tonnes.
There can be little doubt that a race to exit the dollar is underway, as governments feel the US has no choice but to continue debasing their currency just to meet existing obligations. Peak gold, like peak oil, occurs when gold miners fail to increase production or discovery despite the rising price of the underlying commodity. Gold production has fallen since 2005, and is only slightly higher in 2010. To quote a recent exhaustive Standard Chartered Bank report:
“In our study of 375 global gold mines and projects, we note that after 10 years of a bull market, the gold mining industry has done little to bring on new supply. Our base-case scenario puts gold production growth at only 3.6 percent CAGR over the next five years .”
With pension funds holding less than 1.5 percent of their assets under management (AUM) in gold bullion, they will have little choice but to increase their position as gold continues to outperform all other asset classes.
These trends are significant, but they are all capable of being changed, however unlikely that may be. What cannot be changed are the “irreversible trends.” These have an indirect impact on the price of gold; they are causing growth to slow, and are therefore creating the need for governments to compensate through ever-increasing currency creation.
Three of the most significant “irreversible” trends are:
- The aging population
- Outsourcing
- Peak oil
With the advent of globalization and outsourcing, politicians and multi-national corporations have let the genie out of the bottle; this has resulted in the decimation of the manufacturing base in Western economies. This will manifest as systemically high unemployment, reduced GDP, higher government deficits and further currency debasement. Again, this will lead to higher gold prices.
In September 2010, a German military think tank reported the German government was taking the threat of peak oil seriously and preparing accordingly. Numerous studies around the world have concluded that we are very close to peak oil production, which will be accelerated due to Gulf drilling bans. This will lead to higher price inflation for most goods, reduced GDP, higher trade deficits, and higher budget deficits. More monetization will result, thereby debasing currencies. Higher price inflation together with further currency debasement will again be a driver for higher gold prices.
Like a spinning top must continue spinning or fall, our modern economic debt-based fiat system depends on perpetual growth. It is disturbingly similar to a classic Ponzi scheme, which requires new borrowers to bring currency into existence that can be used to pay the interest on the previous loans. The greatest threat to its health is slowing growth or deflation. With interest rates near zero, central banks have only one tool left to combat slowing growth—currency creation, which means inflation.
These irreversible trends, therefore, virtually ensure gold will continue rising in value for years to come.
In conclusion, I know many readers are hesitant to buy as they feel they have “missed the boat.” Perhaps this Chinese proverb will help:
The best time to plant a tree is twenty years ago.
The second best time is today.
The second best time is today.
Tuesday 11 October 2011
Hedging With Gold Against Imminent Economic Collapse
http://goldsilver.com/
After leaving the securities brokerage industry in 2009, Ian Gordon founded Longwave Analytics and Longwave Strategies to focus on protecting investors from what he believes is a global macroeconomic meltdown that is already underway. Gordon proposes that physical gold and certain gold stocks will be investors' best hedge and overall solution to the worst financial crisis the world has seen. In this exclusive interview with The Gold Report, Gordon shares his thoughts on the current economic mess and how investors can take action now.
The Gold Report: You founded this firm based on your long wave theory that is based on the Kondratieff Cycle. How is this same or different from Kondratieff?
Ian Gordon: We have gone significantly beyond Kondratieff's original thesis published in 1925. I am very proud that we have made the cycle far more encompassing than Kondratieff would have ever envisioned. For instance, one of the key things we have done is identify an investment cycle within the long cycle. This is an extremely valuable tool for investors, which allows them to make appropriate investment decisions in each quarter of the cycle
TGR: Do you feel that you have legitimized the Kondratieff Cycle beyond theory and as a general principle?
IG: Well, I think we have. The proof is in the pudding. We have been able to recognize exactly where we are in the cycle and envision what the implications are likely to be. I think we have been able to pinpoint that with a great deal of accuracy the critical aspects of the cycle and how these relate to the economy and to investing.
TGR: You obviously can't expect investors to wait through an 80-year super cycle. You've managed to isolate the bull and bear markets. Is that what you are saying?
IG: Yes, we have not only been able to isolate the bull and bear markets but also we have been able to identify the best and most appropriate investments for each quarter of the cycle, and they generally work throughout that quarter. In our work we have broken the cycle into the four seasons. We call it a lifetime cycle because it is 60–80 years, and each of its seasons is approximately 15–20 years, a quarter of the cycle. By the way, this is the fourth cycle, and it has always repeated pretty well the same in every cycle. Certainly essential investment decisions have been the same for each of the seasons in the cycle.
TGR: Take it from the beginning.
IG: Spring essentially renews economic growth. It is the rebirth of the economy following the winter of the cycle, which is the time when the economy dies and when debt is wrung out of the system. Because spring is the rebirth, stocks and real estate make appropriate investments and do very well for investors. We can show from our current cycle, which we maintain began in 1949, that the Dow Jones Industrial Average rises from 161 points at the beginning of spring and ends at 995 points at the end of spring. Of course, real estate also does exceptionally well during this period.
Then, following spring we move to the summer, which began in 1966 in our current cycle. We have always had inflation in summer because there has always been a war in this part of the cycle, and that war has always been financed through a huge expansion of the money supply. In the first cycle, it was the War of 1812. In the second cycle, it was the U.S. Civil War. In the third cycle, it was the First World War from 1914 to 1918. And, in the fourth cycle, it was the Vietnam War. With that inflation, stocks do not do that well and essentially make no gains. If anything, stocks end summer about 30% below the point from where they began. Conversely, gold performs exceptionally well, as do all commodities. Gold goes from $35/ounce (oz.) in 1966 to $850/oz. in 1980, and the Dow goes from 995 at the end of spring and ends the summer at 777 points. Real estate continues to do well in the summer of the cycle.
Four things always anticipate the onset of autumn in every cycle: These are the peak in interest rates; the peak in the consumer price index; the bear market in stocks such as the one that occurred between 1981 and 1982; and a recession. Now, autumn is always the point from which stocks, bonds and real estate perform the best in the cycle. It is the most speculative period in the cycle, and it is when debt really starts to build exponentially, and so gold performs very poorly in this portion of the cycle. In fact, gold prices go from that $850/oz. peak at the end of summer to $250/oz. at the end of autumn, and the Dow goes from 777 to 11,750 and real estate continues to perform very, very well. So, real estate has a three-season growth period and stocks have a two-season growth period, to the end of autumn, while gold has a one-season growth period.
The winter of the cycle, which we call the payback period, is when the economy dies. It goes into a deflationary depression overcome by the overwhelming debt in the system that has built-up principally through autumn. When we get into winter, we get very defensive and we move into gold, which performs exceptionally well, as do gold stocks. The general stock market performs abysmally. Between 1929 and 1932, the Dow lost 90% of its value. And, real estate also performs very, very poorly on account of the economic depression and the fact that homeowners have assumed huge mortgage debt to purchase their homes. During this time many people lose their homes because they are unable to make the mortgage payments. House prices decline to very low levels and in many cases mortgage debt is significantly higher than the value of the home.
TGR: Where are we in the cycle now?
IG: We are in the winter. The signal of the onset of winter was the peak in stock prices in January 2000 for the Dow and March 2000 for the NASDAQ. That was the end of autumn. And, yes, the Dow was higher than that in October 2007, but, again, that was really an abnormality created by paper money systems. The Federal Reserve was able to print copious amounts of money, pump it into the economy and revive the stock market after 2000 and into 2007. That money printing also contributed to the greatest real estate bubble in history and we know what the outcome of that bubble is.
TGR: I'm looking at your dire wintery target prediction that the Dow Jones Industrial Average will descend by more than 90% to 1,000 from current levels that are around 11,000. It sounds like a global economic meltdown of unseen proportions.
IG: Politicians are desperately trying to revive the economy by printing even more money. So, this bear market that started in 2000 continues in 2011. Normally bear markets last about one-third the time of the preceding bull market; obviously that has not been the case this time. So, we think when the end does come, it is going to be very traumatic. Eventually the Federal Reserve will lose control and will not be able to get the stock market reignited because it will reflect the reality in the economy. We think the Dow at 1,000 is probably a little optimistic. We think it could go below that to something like 500 if we were to emulate the 1929–1932 experience.
TGR: That translates into massive unemployment, does it not?
IG: It translates into an economy that's basically a disaster: massive unemployment, huge bankruptcies, breadlines and a government that, in fact, can't raise the cash to support the depression. Remember, going into the last depression the U.S. government was extremely wealthy, and America was the world's largest creditor nation by a huge margin. The U.S. government debt had been paid down all the way through the 1920s, and it went into the last depression with government debt of only $16 billion. So, when the depression hit the government had oodles of cash to throw at it to get the economy going. Yet it was never effectively able to do that. The Second World War brought us out of the depression.
TGR: Ian, I know you said gold will perform quite well in this kind of environment, and so I assume you believe there is much more upside yet for gold.
IG: Well, I do. One of the ways that we've always been able to measure where we think gold is going to go is simply using the Dow/Gold ratio, the value of the Dow Jones Industrial Average divided by the price for an ounce of gold. When this ratio reaches extreme highs, stocks have performed exceptionally well. So, we would anticipate that it would reach an extreme high at the end of spring of our current cycle, and so it did when it was about 28:1. In other words, it took 28 ounces of gold to buy the Dow Jones. And at the end of summer, gold performs well, and stocks don't. It went down to a 1:1 relationship that was the lowest low, which we have seen twice. But, we are envisioning that we are going to go below 1:1 simply because we made an all time high at the end of autumn of 44:1. The decline must be in proportion to the advance. So, we think the decline is going to take us to something like a quarter to one (0.25:1), which is $4,000/oz. gold and a Dow of 1,000. We're currently at about 6:1 on the ratio.
TGR: What about gold equities versus physical gold? Will gold equities climb this wall of fear into this winter cycle?
IG: Well, we know that between 1929 and 1936 gold equities performed exceptionally well. I think that the reason that they haven't performed that well recently, particularly in the junior sector, is that [non-gold] stocks have generally performed pretty well aided and abetted by the Federal Reserve. If the bear market had followed its normal course, it should have ended in 2006, but it did not follow that normal course. So, once that bear market begins in earnest and once the Federal Reserve loses control of the stock market, we believe that the gold stocks will begin to mirror the actual price of gold, for which our forecast is $4,000/oz. And, that may be conservative because we believe that when the whole debt bubble continues to unravel that you won't be able to obtain gold at any price. But at $4,000/oz., the gold stocks will perform exceptionally well.
TGR: This would be a dramatic divergence between gold equities and non-gold equities. What are your recommendations for investors?
IG: Well, we have always believed that you should definitely own the physical metal as well as the equities. And we have always had a big belief in the performance of the juniors because of the leverage that they provide to the price of gold.
TGR: My final question is, how long will winter last?
IG: It will last until the debt has been eradicated from the economies of the world. So, to give it a date is difficult. If the whole world monetary system collapses under the massive mountain of debt that has accumulated worldwide, then it will happen reasonably fast, and a new world monetary system will evolve. I think that new system will be based on gold.
TGR: Ian, this has been very valuable. Thank you.
IG: Thank you very much for having me.
A globally renowned economic forecaster, author and speaker, Ian Gordon is founder and chairman of the Longwave Group, comprising two companies—Longwave Analytics and Longwave Strategies. The former specializes in Ian's ongoing study and analysis of the Longwave Principle originally expounded by Nikolai Kondratiev. With Longwave Strategies, Gordon assists select precious metal companies in financings. Educated in England, Gordon graduated from the Royal Military Academy, Sandhurst. After a few years serving as a platoon commander in a Scottish regiment, he moved to Canada in 1967 and entered the University of Manitoba's History Department. Taking that step has had a profound impact because, during this period, he began to study the historical trends that ultimately provided the foundation for his Long Wave theory. Gordon has been publishing his Long Wave Analyst website since 1998. Eric Sprott, chairman, CEO and portfolio manager at Sprott Asset Management, describes Gordon as "a rare breed in the investment-advisor arena." He notes that Gordon's forecasts "have taken on a life force of their own and if you care to listen, Gordon will tell you how it will all end."
After leaving the securities brokerage industry in 2009, Ian Gordon founded Longwave Analytics and Longwave Strategies to focus on protecting investors from what he believes is a global macroeconomic meltdown that is already underway. Gordon proposes that physical gold and certain gold stocks will be investors' best hedge and overall solution to the worst financial crisis the world has seen. In this exclusive interview with The Gold Report, Gordon shares his thoughts on the current economic mess and how investors can take action now.
The Gold Report: You founded this firm based on your long wave theory that is based on the Kondratieff Cycle. How is this same or different from Kondratieff?
Ian Gordon: We have gone significantly beyond Kondratieff's original thesis published in 1925. I am very proud that we have made the cycle far more encompassing than Kondratieff would have ever envisioned. For instance, one of the key things we have done is identify an investment cycle within the long cycle. This is an extremely valuable tool for investors, which allows them to make appropriate investment decisions in each quarter of the cycle
TGR: Do you feel that you have legitimized the Kondratieff Cycle beyond theory and as a general principle?
IG: Well, I think we have. The proof is in the pudding. We have been able to recognize exactly where we are in the cycle and envision what the implications are likely to be. I think we have been able to pinpoint that with a great deal of accuracy the critical aspects of the cycle and how these relate to the economy and to investing.
TGR: You obviously can't expect investors to wait through an 80-year super cycle. You've managed to isolate the bull and bear markets. Is that what you are saying?
IG: Yes, we have not only been able to isolate the bull and bear markets but also we have been able to identify the best and most appropriate investments for each quarter of the cycle, and they generally work throughout that quarter. In our work we have broken the cycle into the four seasons. We call it a lifetime cycle because it is 60–80 years, and each of its seasons is approximately 15–20 years, a quarter of the cycle. By the way, this is the fourth cycle, and it has always repeated pretty well the same in every cycle. Certainly essential investment decisions have been the same for each of the seasons in the cycle.
TGR: Take it from the beginning.
IG: Spring essentially renews economic growth. It is the rebirth of the economy following the winter of the cycle, which is the time when the economy dies and when debt is wrung out of the system. Because spring is the rebirth, stocks and real estate make appropriate investments and do very well for investors. We can show from our current cycle, which we maintain began in 1949, that the Dow Jones Industrial Average rises from 161 points at the beginning of spring and ends at 995 points at the end of spring. Of course, real estate also does exceptionally well during this period.
Then, following spring we move to the summer, which began in 1966 in our current cycle. We have always had inflation in summer because there has always been a war in this part of the cycle, and that war has always been financed through a huge expansion of the money supply. In the first cycle, it was the War of 1812. In the second cycle, it was the U.S. Civil War. In the third cycle, it was the First World War from 1914 to 1918. And, in the fourth cycle, it was the Vietnam War. With that inflation, stocks do not do that well and essentially make no gains. If anything, stocks end summer about 30% below the point from where they began. Conversely, gold performs exceptionally well, as do all commodities. Gold goes from $35/ounce (oz.) in 1966 to $850/oz. in 1980, and the Dow goes from 995 at the end of spring and ends the summer at 777 points. Real estate continues to do well in the summer of the cycle.
Four things always anticipate the onset of autumn in every cycle: These are the peak in interest rates; the peak in the consumer price index; the bear market in stocks such as the one that occurred between 1981 and 1982; and a recession. Now, autumn is always the point from which stocks, bonds and real estate perform the best in the cycle. It is the most speculative period in the cycle, and it is when debt really starts to build exponentially, and so gold performs very poorly in this portion of the cycle. In fact, gold prices go from that $850/oz. peak at the end of summer to $250/oz. at the end of autumn, and the Dow goes from 777 to 11,750 and real estate continues to perform very, very well. So, real estate has a three-season growth period and stocks have a two-season growth period, to the end of autumn, while gold has a one-season growth period.
The winter of the cycle, which we call the payback period, is when the economy dies. It goes into a deflationary depression overcome by the overwhelming debt in the system that has built-up principally through autumn. When we get into winter, we get very defensive and we move into gold, which performs exceptionally well, as do gold stocks. The general stock market performs abysmally. Between 1929 and 1932, the Dow lost 90% of its value. And, real estate also performs very, very poorly on account of the economic depression and the fact that homeowners have assumed huge mortgage debt to purchase their homes. During this time many people lose their homes because they are unable to make the mortgage payments. House prices decline to very low levels and in many cases mortgage debt is significantly higher than the value of the home.
TGR: Where are we in the cycle now?
IG: We are in the winter. The signal of the onset of winter was the peak in stock prices in January 2000 for the Dow and March 2000 for the NASDAQ. That was the end of autumn. And, yes, the Dow was higher than that in October 2007, but, again, that was really an abnormality created by paper money systems. The Federal Reserve was able to print copious amounts of money, pump it into the economy and revive the stock market after 2000 and into 2007. That money printing also contributed to the greatest real estate bubble in history and we know what the outcome of that bubble is.
TGR: I'm looking at your dire wintery target prediction that the Dow Jones Industrial Average will descend by more than 90% to 1,000 from current levels that are around 11,000. It sounds like a global economic meltdown of unseen proportions.
IG: Politicians are desperately trying to revive the economy by printing even more money. So, this bear market that started in 2000 continues in 2011. Normally bear markets last about one-third the time of the preceding bull market; obviously that has not been the case this time. So, we think when the end does come, it is going to be very traumatic. Eventually the Federal Reserve will lose control and will not be able to get the stock market reignited because it will reflect the reality in the economy. We think the Dow at 1,000 is probably a little optimistic. We think it could go below that to something like 500 if we were to emulate the 1929–1932 experience.
TGR: That translates into massive unemployment, does it not?
IG: It translates into an economy that's basically a disaster: massive unemployment, huge bankruptcies, breadlines and a government that, in fact, can't raise the cash to support the depression. Remember, going into the last depression the U.S. government was extremely wealthy, and America was the world's largest creditor nation by a huge margin. The U.S. government debt had been paid down all the way through the 1920s, and it went into the last depression with government debt of only $16 billion. So, when the depression hit the government had oodles of cash to throw at it to get the economy going. Yet it was never effectively able to do that. The Second World War brought us out of the depression.
TGR: Ian, I know you said gold will perform quite well in this kind of environment, and so I assume you believe there is much more upside yet for gold.
IG: Well, I do. One of the ways that we've always been able to measure where we think gold is going to go is simply using the Dow/Gold ratio, the value of the Dow Jones Industrial Average divided by the price for an ounce of gold. When this ratio reaches extreme highs, stocks have performed exceptionally well. So, we would anticipate that it would reach an extreme high at the end of spring of our current cycle, and so it did when it was about 28:1. In other words, it took 28 ounces of gold to buy the Dow Jones. And at the end of summer, gold performs well, and stocks don't. It went down to a 1:1 relationship that was the lowest low, which we have seen twice. But, we are envisioning that we are going to go below 1:1 simply because we made an all time high at the end of autumn of 44:1. The decline must be in proportion to the advance. So, we think the decline is going to take us to something like a quarter to one (0.25:1), which is $4,000/oz. gold and a Dow of 1,000. We're currently at about 6:1 on the ratio.
TGR: What about gold equities versus physical gold? Will gold equities climb this wall of fear into this winter cycle?
IG: Well, we know that between 1929 and 1936 gold equities performed exceptionally well. I think that the reason that they haven't performed that well recently, particularly in the junior sector, is that [non-gold] stocks have generally performed pretty well aided and abetted by the Federal Reserve. If the bear market had followed its normal course, it should have ended in 2006, but it did not follow that normal course. So, once that bear market begins in earnest and once the Federal Reserve loses control of the stock market, we believe that the gold stocks will begin to mirror the actual price of gold, for which our forecast is $4,000/oz. And, that may be conservative because we believe that when the whole debt bubble continues to unravel that you won't be able to obtain gold at any price. But at $4,000/oz., the gold stocks will perform exceptionally well.
TGR: This would be a dramatic divergence between gold equities and non-gold equities. What are your recommendations for investors?
IG: Well, we have always believed that you should definitely own the physical metal as well as the equities. And we have always had a big belief in the performance of the juniors because of the leverage that they provide to the price of gold.
TGR: My final question is, how long will winter last?
IG: It will last until the debt has been eradicated from the economies of the world. So, to give it a date is difficult. If the whole world monetary system collapses under the massive mountain of debt that has accumulated worldwide, then it will happen reasonably fast, and a new world monetary system will evolve. I think that new system will be based on gold.
TGR: Ian, this has been very valuable. Thank you.
IG: Thank you very much for having me.
A globally renowned economic forecaster, author and speaker, Ian Gordon is founder and chairman of the Longwave Group, comprising two companies—Longwave Analytics and Longwave Strategies. The former specializes in Ian's ongoing study and analysis of the Longwave Principle originally expounded by Nikolai Kondratiev. With Longwave Strategies, Gordon assists select precious metal companies in financings. Educated in England, Gordon graduated from the Royal Military Academy, Sandhurst. After a few years serving as a platoon commander in a Scottish regiment, he moved to Canada in 1967 and entered the University of Manitoba's History Department. Taking that step has had a profound impact because, during this period, he began to study the historical trends that ultimately provided the foundation for his Long Wave theory. Gordon has been publishing his Long Wave Analyst website since 1998. Eric Sprott, chairman, CEO and portfolio manager at Sprott Asset Management, describes Gordon as "a rare breed in the investment-advisor arena." He notes that Gordon's forecasts "have taken on a life force of their own and if you care to listen, Gordon will tell you how it will all end."
Monday 10 October 2011
Buying gold is like establishing your own personal bank reserve
National central banks buy gold bullion for the security it provides. While currencies can become devalued to such a degree that they become almost worthless, that won’t happen to gold.
That’s why national banks around the globe are now buying gold bullion. It’s a safe haven. It’s a way to secure their wealth.
You and I can follow the same strategy.
This doesn’t mean converting all your wealth into gold. It simply means you should get into the habit of buying gold, and should increase your gold reserves gradually and consistently.
When should you buy? Buy your gold bullion, in the form of coins or bars, during corrections. It doesn’t make sense to buy at the peak. But even when gold is increasing in value consistently, as it is now, there are always pauses and corrections along the way. That’s when you buy.
Gradually, over the course of months and years, the gold reserve of your own, personal bank will become substantial.
Once that happens, you will be in a far more secure situation if and when things get worse in the world of paper currencies. Whether you are hit by unemployment, high inflation, massive interest rates or even social unrest, you’ll be able to dip into your gold reserve, sell some coins, and take care of yourself and your family.
Building your own gold reserve is simply to follow in a long tradition established by nation states, kings, emperors and the super-wealthy. They have always secured a proportion of their wealth in the form of gold bullion.
Now it’s our turn.
http://www.owninggold.com
Gold prices may rise and fall, but they will never fall to zero.In fact, at the exact time that paper currencies go into free-fall, gold prices typically rise higher and higher.
That’s why national banks around the globe are now buying gold bullion. It’s a safe haven. It’s a way to secure their wealth.
You and I can follow the same strategy.
This doesn’t mean converting all your wealth into gold. It simply means you should get into the habit of buying gold, and should increase your gold reserves gradually and consistently.
When should you buy? Buy your gold bullion, in the form of coins or bars, during corrections. It doesn’t make sense to buy at the peak. But even when gold is increasing in value consistently, as it is now, there are always pauses and corrections along the way. That’s when you buy.
Gradually, over the course of months and years, the gold reserve of your own, personal bank will become substantial.
Once that happens, you will be in a far more secure situation if and when things get worse in the world of paper currencies. Whether you are hit by unemployment, high inflation, massive interest rates or even social unrest, you’ll be able to dip into your gold reserve, sell some coins, and take care of yourself and your family.
Building your own gold reserve is simply to follow in a long tradition established by nation states, kings, emperors and the super-wealthy. They have always secured a proportion of their wealth in the form of gold bullion.
Now it’s our turn.
http://www.owninggold.com
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