by GoldCore
| Today’s AM fix was USD 1,317.25, EUR 948.62 & GBP 785.71 per ounce. Yesterday’s AM fix was USD 1,321.50, EUR 953.19 & GBP 787.73 per ounce. Gold gained $6.90 or 0.53% yesterday to $1,318/oz. Silver rose $0.17 or 0.86% to $20.05/oz.
Spot gold was steady at $1,322.10 an ounce by 1137 GMT, after three straight days of gains. The precious metal is up 1.4% for the week, having hit a high of $1,324.40 on Thursday - its highest since March 24.
Quarter ends appear to be a good time to buy as seen on June 28th 2013, December 31st 2013 and now on March 31st, 2014. These anomalies would appear to more than coincidental. They may be due to traders painting the tape or manipulation through HFT and computer trading. Goldman Sachs have been very vocal in their bearishness on gold at quarter ends. It is worth considering whether there is an attempt to "jaw bone" gold prices lower. Silver continues to be favoured by contrarian investors who see it as oversold and very undervalued vis a vis other assets, including gold. The gold silver ratio is now at 65, meaning that with one ounce of gold, one can buy 65 ounces of silver. The historic average throughout most of history is 15 to 1. Even in the 20th Century, the century in which silver was demonetised, the gold silver ratio averaged around 40. Secondly, the other reason is that silver is used in many industrial, medical and technological applications today including photovoltaic cells in solar panels. Since the Industrial Revolution and in recent times, a huge amount of silver has been used up in industry. Silver is unlike gold in this regard. Rather it is akin to oil and other consumable commodities in this regard. Thus, for every ounce of gold in the world today, there is less than 15 ounces of silver. Passionate silver buyers or “silver stackers” say the actual ratio of above ground refined silver to above ground refined gold is close to 1 to 1. Even if one uses a conservative number of 20 to 1, it shows that silver remains very undervalued versus gold. The supply demand equation in silver has gotten much more favourable in recent years and gets more favourable with every passing year. Prepare For Dollar Collapse With 33% Allocation To Gold Topics covered included the risk of a deflationary collapse and depression, the risks of printing and creating too many dollars, the manipulation of gold and the importance of focusing on the long term and not just trying to make money in the short term but rather on preserving wealth. DEFLATION AND THE RISK OF COLLAPSE “The system is now larger than 2008 — make the system bigger and you’re going to have a bigger collapse … we are further down the timeline,” Rickards warns. “Are you going to believe me or the IMF? I have a little better track record.” “The ultimate thesis is that deflation is the biggest problem in the world.” “The world wants to deflate but central banks and governments cannot have deflation – it increases the Debt-to-GDP ratio, destroys tax collection, creates bad debts and hurts the banks.” “So central banks will do anything to avoid deflation. The way they do this is to print money. But if you print too much money then you’ll collapse confidence in the U.S. dollar.” “The U.S. dollar is ultimately backed by confidence, as also said by Paul Volcker.” “The FED is insolvent on a mark to market basis. I came to this conclusion himself, but insiders have also told me this privately … they won’t say it publicly.” “Money is a perpetual non-interest-bearing note issued by an insolvent central bank. DEPRESSION Rickards questions the consensus mantra of recovery and asserts that “we are in a depression and we have been in one since 2007.” He admits that “if the FED had not done everything they’ve done, then things would have been much worse than they were in 2010. No question about that — unemployment would have been higher and growth would have been lower. “But we should have been much stronger today. We should be having 7% growth now. We can’t have 7% for a long time, but we can for a short time while people come back into the workforce. Instead we’re Japan — we’ve got 1.9% growth as far as the eye can see. “So I would much rather have a little pain up front and then have robust growth”. “Everyone wants a ‘V’ shape recovery, but you can’t have a ‘V’ unless you get to the bottom. We didn’t get to the bottom because the FED truncated the ‘V’. In answer to the assertion that investors should not care how much is printed, Rickards points out that “the Fed’s safety net of printing has holes in it.” “If the money printing could go on indefinitely then you would be right and I would agree with you but it cannot go on indefinitely.” “The Fed could legally print more than the $4 trillion they’ve already created — $8 trillion, $12 trillion, $16 trillion. Some people say that they can do that — legally they can but my view is that that will destroy confidence at some point.” ECONOMY NOT RECOVERING Rickards questions the assertion that the economy is recovering. “The Fed said we had “green shoots” in 2009. Timothy Geithner declared a recovery in 2010. Nobody has a worse forecasting record than the FED. They do a one-year forward forecast each year … they have been wrong and off by orders of magnitude every year.” Rickards says “listen to yourself … who cares about unlimited printing of money, who cares about bad forecasting, who cares about destroying confidence. “I care. I think we all should all care.” THE CURSE OF THE 2 SECOND ATTENTION SPAN People are investing based on what they think is going on right now, because they have “the curse of the 2 second attention span … So when the stock market is down 30% a couple of years from now, you can kiss those investments goodbye.” “WARREN BUFFETT IS BUYING HARD ASSETS AS FAST AS HE CAN” “I talk about this in Chapter 3 of ‘The Death of Money2, the FED is manipulating every market in the world with zero interest rates … I don’t like to be in manipulated markets … I’d rather be in things that retain their value”. RESULTS: GOLD VERSUS STOCKS GOLD MANIPULATION “The IMF sold 400 tonnes of gold in 2010. We know 200 tonnes went to India and Sri Lanka.Where did the other 200 tonnes go that they dumped on the market? They are funded by U.S. taxpayers but they are not being transparent.” “If you manipulate stocks higher and manipulate gold lower, then you’ll see the chart from 2009 looking as it does.” MAKE MONEY OR PRESERVE WEALTH “Do you want to make money or do you want to preserve wealth?” Because you could make money today and lose it tomorrow. We talk about the ‘old money’ in the U.S. , the 100 year money, and the ‘new money’. When you go to Europe, some of that money is 400 or 500 years old … and you say how did you survive the Thirty Years War, Napoleon and World War I etc and they will say … A third — a third — a third … One third gold. And a little cash to run your jet and your yacht” he jested. “That’s how you preserve wealth for the long run. If you want a short pop go buy some stocks.” It is a very interesting interview and we like the conclusion where he said investors can all make money in the short term but we can lose it just as easily. The interview with James Rickards can be watched here: Should Investors Prepare for a Dollar Doomsday? |
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