Short covering, triggered by rumours of a potential US downgrade from Moody’s, are sending gold and silver prices vertical. The move higher comes after a very suspicious spike this night in which the silver price was pushed 10% lower within the first hour of Asian trading (with a bank holiday in Europe). The charts show the price action in today’s trading sessions. In our own words: folly of the highest degree, or the metals being subject to greediness of traders.
Author Archive: Casey Research
For over a quarter of a century, legendary investor and best-selling author Doug Casey and his team at Casey Research have been helping self-directed investors to earn superior returns through innovative investment research designed to take advantage of market dislocations. Doug Casey has been a featured guest on hundreds of radio and TV shows, including NBC News and CNN; and has been the topic of numerous features in periodicals such as Time, Forbes, People, and the Washington Post.
Buy, sell, hold, or pass altogether? This is the dilemma we face as investors, particularly if we subscribe to one or more investment newsletters. If a company was recommended in a previous issue, are we too late? Did the price escalate rapidly, or is it still a good choice? I subscribe to many newsletters myself, so it’s an issue I deal with often.
Bloomberg claimed that Russia has been a bigger buyer of gold over the past decade than China – by a full 25%. Based on data about gold imports through Hong Kong and the fact that Chinese production doesn’t leave the country, it seemed to me that this could not be right. The Chinese central bank holds an official 1,054 tonnes of gold in its reserves. Bloomberg states that China has added somewhere around 425 tonnes over the past decade.
Many of us see hair-curling rates of price inflation not too far down the road. Today inflation is hardly noticeable. But what’s coming will be so painful and so disruptive that soaring prices will become the voting public’s number-one complaint. How will the politicians respond? They will be responding to an audience for whom the idea of fiat money (even with a picture of a dead president on every bill) has been discredited. The obvious alternative to fiat money will be a return to a gold standard, and it’s hard to imagine what competing proposals might get in the way. In such an environment, being pro-gold will be politically smart. [...]
After a year or more of depressed prices, gold and silver stocks reversed with a vengeance. GDX (the ETF proxy for the Gold Miners Index) was up in just two months (August and September). Those who followed our lead and bought or averaged down this summer have profited handsomely. It’s been a fun ride, and I’m convinced we’ll see many more surges like this before it’s all over. What was perhaps more important about the surge in gold stocks, though, was the leverage they demonstrated, which is one of the primary reasons we invest in them. Here’s a comparison of GDX to GLD from August 1 to November 1. This [...]
By Dan Steinhart, Casey Research The US has too much debt. This is no longer a controversial statement. Some may believe other problems are more urgent, or that we need to grow our way out rather than slash spending. But even the most spendthrift pundits acknowledge that the debt-to-GDP ratio of the US must decrease if we are to have a stable, prosperous economy. The private sector has reacted to this over-indebted reality as you would expect: by deleveraging. Since 2008, households and businesses have extinguished of 67% of their debt when measured against GDP. Some paid debt down purposefully, and others defaulted. For our purposes, it doesn’t matter how [...]
Jeff Clark from Casey Research has written great articles and here is another one. The charts which show the exploding monetary base are well known in the meanwhile, but Jeff Clark presents a particular one that shows the correlation between the gold price and the monetary base. Is there anything more clear than this trendline? Now over the time period that is used in the chart, monetary policies were controlled to such a degree that money markets are leading an artificial life. Obviously that can last for a limited period of time. It’s impossible to continue several years with zero interest rates (negative real rates), exponential money growth in an environment with high real unemployment [...]
By Jeff Clark, BIG GOLD In early July, Japan set a premium price for solar energy that was three times the rate of conventional power. This meant utility companies would be paid three times more for electricity sourced from solar. It’s widely expected that the premium will ignite the use of solar power – and solar uses a lot of silver. Silver Demand from PV Panels As you may know, silver is used in photovoltaic (PV) technology to generate solar power. A typical solar panel uses a fair amount of the metal – roughly two-thirds of an ounce (20 grams). To put that in perspective, a cellphone contains around 200 [...]
By Louis James, Casey Research One of the points we’ve made several times over the last year is that traders stuck in an old paradigm are frequently selling gold for the wrong reasons. The most egregious (or just plain silly) example is that gold often drops when the euro drops. This happens, not because there’s anything wrong with gold at such times, but because gold is priced in dollars. Instead of being thought of as a store of value in many investors’ minds, gold is viewed as a hedge against weakness in the dollar. But what are dollars priced in? Nothing, actually. Purchasing power is the underlying reality any “price” [...]
Louis: Hola Doug. What’s on your mind this week? Doug: The color yellow. As in “yellow journalism” – which seems almost the only kind we have these days. Of course, to be fair, inflammatory, shamelessly dishonest “man bites dog” journalism has always been the dominant kind, simply because it sells papers. But we’ll see more than the usual amount in the next couple of months, simply because elections lend themselves to it; politics seems to stimulate the reptilian part of the brain, the most primitive part. Both politics and the reptilian brain relate well to the yellow press. Anyway, like many people, I watched snippets of the Republican National Convention [...]
By Jeff Clark, Casey Research Gold’s pullback a year ago no doubt shook out a lot of nervous buyers. They got in on the rise, they got nervous on the pull back. They sold, and they lost. That’s just the way the market works. But it’s a shame, because when we look logically at gold’s historical performance – for example over the last 12 years – we see that holding their nerve, tough though it can be, will most likely turn out to be the best approach, and for good reason. Look at gold prices for the last five years. You can see, despite the pullback, that the trend is [...]
By Jeff Clark, Casey Research The cheek of it! They raised the price of my favorite ice cream. Actually, they didn’t increase the price; they reduced the container size. I can now only get three servings for the same amount of money that used to give me four, so I’m buying ice cream more often. Raising prices is one thing. I understand raw-ingredient price rises will be passed on. But underhandedly reducing the amount they give you… that’s another thing entirely. It just doesn’t feel… honest. You’ve noticed, I’m sure, how much gasoline is going up. Food costs too are edging up. My kids’ college expenses, up. Car prices, insurance [...]
By Jeff Clark, Casey Research Even the hardiest investors have been lamenting that gold prices have been stuck in a rut for a long time. Others with less experience have watched the market waiting for something to happen…. And as always, many bailed out of the market entirely, licking their wounds. But some, including me, have been stocking up. We’re convinced prices won’t stay down forever. In fact, I think there’s a good reason to buy gold if you can, and as soon as possible. Here’s why: Based on the data I chart below, I believe the window of time to buy gold for less than $1,700 an ounce is [...]
It is a deal with the devil: governments churn out more and more cash for the promise of continued prosperity. But the day of reckoning is near, according to Doug Casey, chairman of Casey Research and an expert on crisis investing. As the epic battle between inflation and deflation continues, Casey discusses his predictions for the new world market in this exclusive interview with The Gold Report. The Gold Report: There will be a Casey Research Summit on “Navigating the Politicized Economy” in Carlsbad, California in September. Investors from around the world look to these summits as future road maps for investing pitfalls and opportunities. The thesis behind the Summit [...]
On June 18, the Federal Reserve and FDIC circulated a letter to banks that proposes to harmonize US regulatory capital rules with Basel III. BASEL III is an accord that tells a bank how much capital it must hold to safeguard its solvency and overall economic stability. It’s a global standard on bank capital adequacy, stress testing, and market liquidity risk. Here’s the important bit: At the top of the proposed changes is the new list of “zero-percent risk weighted items,” which now includes “gold bullion,” right after “cash.” That’s the part to take notice of. If the proposals are approved by regulators – and that seems likely since adoption of Basel III will be– then [...]
By David Galland, Casey Research For some time now – years actually – I have pondered the nature of liberty. Or more specifically, what liberty actually means to me. And to be extra clear, I am not talking about the meaning in abstract or philosophical terms, but tangibly – in much the same way I might answer if asked what my wife means to me. The trigger for this entirely personal discourse comes from reading various articles and viewing various YouTube videos and speeches from self-styled champions of liberty (COL). There is even an entire conference, Mark Skousen’s FreedomFest, dedicated to the topic. Invariably, these well-meaning COL rail against “The [...]