Today’s private-sector ADP Payrolls Report said 215,000 jobs were added in the US last month, against consensus forecasts of 173,000. Rising ahead of that number, used by some as an advance guide to Friday’s official US non-farm payrolls figures, gold had then fallen $5 per ounce before jumping 0.9% in volatile trade. Gold “[had] hit a fresh 5-month low in every session this week,” says the Reuters newswire.
Author Archive: David Levenstein
David Levenstein is a leading expert on investing in precious metals . Although he began trading silver through the LME in 1980, over the years he has dealt with gold, silver, platinum and palladium. He has traded and invested in bullion, bullion coins, mining shares, exchange traded funds, as well as futures for his personal account as well as for clients.
If gold prices continue to slide, it is essential that you are not beguiled into thinking that you own a barbaric relic. There is enormous value to owning gold. And while it may not be apparent now, things are bound to change in the very near future. The Chinese have already figured this out and that is why they are buying as much gold as possible.
This leads me to believe that there will not be any tapering in the short-term and the major central banks, the US Fed, the ECB, the BoJ and the BoE are going to continue with their expansionary monetary policies and thus debase the value of these fiat currencies. Gold prices will continue to be volatile and the sideways action may continue for several more weeks. However, I believe we will see higher prices as we move towards the end of the year.
You can choose to trust these politicians and central bankers to do the right thing or alternatively, you can choose to take action yourself to protect your hard earned wealth buy owing physical gold. You only have yourself to rely on. Not the system. Not the government. And, for sure, you certainly cannot trust the bankers.
Personally, I am certain that some type of cosmetic deal will be reached soon and it will be back to business as usual. The U.S. Debt Ceiling will be raised once again. Another increase in the debt ceiling will allow U.S. politicians to continue spending which will lead to a further loss in confidence as well as the value of the U.S. dollar. And, as this happens the price of gold will go much higher.
Thanks to our politicians in most countries, in my opinion the US dollar will end in a collapse. In addition to all this money being printed, the U.S. Treasury is holding more than $2 trillion in short-term debt that must be refinanced within the next 12 months. And, the only way the government will be able to finance this debt will be to continue to print more money. This will only delay the day of reckoning while debasing the value of this fiat currency.
Despite recent disappointing economic data from the US, it is generally expected that the Federal Reserve will begin to taper its asset purchases. No matter what the Fed decides, any tapering or even lack thereof, its size, and what the FOMC implies for future tapering will almost certainly spark sharp price reactions in the bond markets, currency markets, stock markets, and precious metals. Your portfolio should include physical gold that is held out of the banking system. And, this physical gold does not include gold exchange traded funds, or limited edition medallions. Gold is not like other commodities, it’s the only honest currency and an alternative currency to all paper currencies.
Gold prices climbed back above the $1,400 an ounce on Tuesday after Interfax reported that Russia detected a missile launch. A Russian Defence Ministry spokesman quoted by the Interfax news agency said the launch was picked up by an early warning radar station at Armavir, near the Black Sea, which is designed to detect missiles from Europe and Iran. The momentum in gold prices continues to trade with an upward bias and look set to soon re-test $1450 an ounce.
One must consider the high debt burden of the US government. Any increase in yield will translate into higher servicing costs, and thus the US government has trapped itself in a situation where it finances itself by selling treasuries, but cannot afford increasing the interest rate. How much longer can the Fed continue to buy bonds in order to keep rates low? And, when they stop, what will happen? Owning gold is essential. Trading for a profit is not the same as owning a valuable asset. Physical gold is about ownership and not about price and profit.
The price of the yellow metal increased by almost 5% on the week following the release of some rather confusing FOMC minutes and a statement by US Fed chairman Bernanke that the central bank will maintain its accommodative policies for the foreseeable future. Signs of some physical supply tightness in gold, as reflected by high premiums and record volume in the Shanghai Futures Exchange, declining inventories on Comex and a surge in gold lease rates all indicate some strong buying of the physical metal.
Bullion dealers around the world continue to struggle to find adequate supplies as demand remains strong, especially in the Middle East where concerns about inflation and geopolitical risk with regard to Syria and Iran is leading to very robust demand. While the demand for physical gold continues in the East, individuals in the West are cutting their bets on the precious metal. Investor sentiment seems to be about as bad as it can get.
It is obvious that the policies of central bankers have been a total failure when it comes to stimulating economic growth. If history does repeat itself, then this nominal rise in asset prices will be followed by a period of rising inflation. The ensuing increase in interest rates will prevent governments from being able to pay the interest on their debt leading to a total loss of confidence in their respective currencies.
In current times, when governments can confiscate your savings, or impose ridiculous taxes while depreciating the value of your money, it is essential to accumulate physical gold and silver as a long-term insurance against further currency depreciation.
If you get my message, then you will see how important it is to own some physical gold and silver. In the long-term, they will prove, once again, to be an effective preserver of wealth. Take advantage of the current low prices.
Instead of being suckered into holding intrinsically worthless paper assets, a more intelligent and well-informed response favours increasing one’s personal stockpile of physical precious metals. In addition, it is important to keep some of your assets out of the main stream banking system. Not only should you accumulate gold and silver you should also open an offshore bank account.