Since last October, at BFI, we have hedged our clients’ core holdings in gold. We are now watching gold and silver prices closely, as we get closer to the end of the correction. We expect to lift our hedge very soon.
Currency devaluations travel around the world, in cycles, and they are reflected in the gold price in the affected currency. The dollar remains fairly strong because every time there is a panic it goes with a flight to quality. The dollar maintains its value, so will keep on printing, until very suddenly and unexpectedly, there will be a loss of trust in the dollar.
The world currency system is riding down the road to catastrophe. Those were the words from James Rickards during a recent interview on Wall Street Journal. The world already has entered a currency war that began in 2010 on the heels of the Federal Reserve’s massive easing program. Since then, plenty of nations have joined in, including Brazil, Switzerland and Japan.
An excellent overview was published by GoldSilver.com showing the 2012 performance of almost all currencies in the world against gold. In a detailed article, 164 fiat currencies were analyzed against the precious metals. Big surprise, 94% of all fiat currencies lost purchasing power to gold. The rare currencies that did not lose value compared to gold, did so with a minor percentage difference.
Gold serves numerous functions as an investment. Traditional reasons for investing in gold include: Inflation Investment market declines Burgeoning national debt Currency failure War or other extreme events Social unrest Some would argue these entire phenomenon are related. For instance investment market declines can lead to war which can be followed by inflation which can lead to currency failure – just look to Germany in the 1920s for proof of this (albeit in a mixed order of events). Basically, gold is protection against various ugly or undesirable societal, political, economic and financial occurrences. That reasoning broadly explains gold’s rise from $650 in 2007 to approximately $1800 today. Gold has risen [...]
Simply put – as the situation in Europe further deteriorates (yesterday the market YAWNED at the $125 billion Spain bailout), Italy is now coming into focus. Strangely enough, the US equity markets somehow think all of this is inconsequential as the bulls there continue to be giddy with delight.Their attitude is best described by an old Steve Wariner song, “Some Fools Never Learn”. You play with the fire, you’re gonna get burned”.Considering just how tenuous things are, the degree of complacency that exists among equity bulls is nothing short of astonishing. The situation can best be described by looking at a chart of the VIX, or Volatility Index.While the index [...]
Gold Settles Higher On May 23d – Finds Support From Drop In Dollar
With the present economic conditions in the US, there are various ways in which the fluctuations in the price of dollar will make the gold price rise and fall according to the rates. If you’re an investor, you should take into account the bigger picture so that you can take an informed and measured decision in the long run.
Gold & Silver Price Overreact to Fed Speech
The metals have been subject to the same type of trading behaviour. It became blatant once again today. In fact, it is the third time this week that we witness extreme speculation in the metals. Silver, for instance, saw its peak today at $23.20 and its lows at $22.15, a difference of almost 5% intraday. Note that the peak on the charts was during the speech of Mr. Bernanke. A bit later, prices came down triggered by one specific sentence in the speech.
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