'Gold bullion remains an essential diversification and essential financial insurance to have in all properly diversified portfolios. Besides the ever more important factors of inflation hedging and financial insurance, we believe that gold is likely to continue to outperform other asset classes and to provide significant returns to gold buyers, and eventually surpass its inflation adjusted 1980 high of $2,400/oz in the coming years.
In fact, Citigroup's former head of technical research and managing director of Yamada Technical Research Advisors LLC., Louise Yamada sees gold on its way to $3,000 within a decade. "Gold is the purest play against the dollar," said Louise Yamada, Yamada is highly respected and was voted Wall Street's best technical analyst from 2001 to 2004.
Credit Agricole's (France's largest bank and the fourth largest bank in the world) brokerage, Cheuvreux, see the possibility of a rise to $2,000/oz or higher
So, how should one invest in gold?
There are many different ways to invest in gold and one's motivation for buying gold should dictate how one buys gold. Are you a speculator, investor or saver? Are you buying to make a capital gain or as a hedge against systemic risk and using your gold as financial insurance? Is your motivation a little of each?
ETFs, mining funds, digital gold, Perth Mint certificates, gold bullion coins and bars in one's possession and or semi numismatic gold coins are good ways to buy gold.
Given the extent of current macroeconomic and systemic risk a diversified precious metals holding makes sense and it should not be a question of "either or", rather a combination of these various ways.
Having eggs in various gold baskets, so to speak, is the most sensible and prudent strategy.
As part of this mix, older gold coins should be looked at. Classic European and world gold coinage is an often overlooked but extremely important sector in today's gold market. Pre 1933 and 19th century European and world gold coins are an intelligent alternative to modern gold bullion coins or bars, as there is often more room for appreciation because of their rarity - and yet, they can often be bought at bullion prices.
What is important, from an investment point of view, is the fact that gold bullion and older gold coins are not subject to VAT, due to the EU Gold Directive. Even more important is the fact that, unlike the other forms of gold investment outlined above,British gold sovereigns are also not subject to capital gains tax (CGT). Thus all post-1837 British gold sovereigns – because they are legal tender and have a legal tender face value - are capital gains tax free, which is obviously a massive benefit to investors vis-à-vis other gold investments.
The prices of these beautiful coins are only slightly higher than modern gold bullion, but they offer many advantages. Besides not having to pay CGT, other advantages include increasing scarcity, aesthetic value and historical significance. European and British gold coins are recognised by sophisticated investors as one of the most advantageous ways to invest in 'bulk' gold.
European, American and world gold coins are bought by both collectors and investors at a small premium to the price of bullion coins. Perhaps the most popular semi-numismatic gold coins internationally are British sovereigns.
The British sovereign (originally the one pound coin) is the most widely traded semi-numismatic gold coin in the world.There is constant and excellent liquidity in most countries in the world. For the investor looking for slight leverage to the gold price with the potential for the premium (numismatic value) to rise, British sovereigns are a good way to invest in gold...'
More: Money Week
Friday, August 22, 2008
British gold sovereigns
Thursday, August 21, 2008
Is Your Bank Safe from Collapse?
'JP Morgan Chase acquires the Bear Stearns financial empire for $260mln. That’s less than the $275mln the New York Yankees paid to secure A-Rod for 10 years!
Ordinary Americans, usually too preoccupied gossiping about junk like Tori Spellings new baby, are finally starting to realize that somethings not quite right with America’s financial system.
The US economy is–to put it bluntly–whack.
Housing prices are still falling. Home foreclosures are heightening. The US Dollar is depreciating. Gas prices are skyrocketing. Inflation is soaring.
Is this the beginning of the great bank run of 2008?
Ben Bernanke and Warren Buffet predicted in 2007 that we would see major bank failures in 2008. They seem to be right, but who is next?What I am afraid of is seeing a large consumer bank fail. If a major bank like Washington Mutual, Bank of America, or Wells Fargo were to go under, Americans would panic and make a run on the banks, withdrawing their savings.
If you know anything about how banking works, bank runs create a vicious cycle of financial pain that does exponential damage to the way banks operate. To make things worse, there are rumors that the FDIC only has $54 billion to cover over $4 trillion in deposits.
What is the safest bank to put your money?
I honestly don’t know... '
By J, Wu
Source: Bankaholic
Wednesday, August 13, 2008
Telegraph: Stage two of the gold bull market is just beginning
'...What we are about to see is a race to the bottom by the world's major currencies as each tries to devalue against others in a beggar-thy-neighbour policy to shore up exports, or indeed simply because they have to cut rates frantically to stave off the consequences of debt-deleveraging and the risk of an outright Slump.
When that happens - if it is not already happening - it will become clear that the both pillars of the global monetary system are unstable, infested with the dry rot of excess debt.
The Fed has already invoked Article 13 (3) - the "unusual and exigent circumstances" clause last used in the Great Depression - to rescue Bear Stearns. The US Treasury has since had to shore up Fannie and Freddie, the world's two biggest financial institutions.
Europe's turn will come next. We will discover that Europe cannot conduct such rescues. There is no lender of last resort in the system. The ECB is prohibited by the Maastricht Treaty from carrying out direct bail-outs. There is no EU treasury. So the answer will be drift and paralysis.
When EU Single Market Commissioner Charlie McCreevy was asked at a dinner what Brussels would have done if the eurozone faced a crisis like Bear Stearns, he rolled his eyes and thanked the Heavens that so such crisis had yet happened.
It will.
Gold bugs, you ain't seen nothing yet. Gold at $800 looks like a bargain in the new world currency disorder...'
Wednesday, August 6, 2008
The Four Tires of the Apocalypse
Darryl Robert Schoon
Aug 5, 2008
'The engine used to run on premium, e.g. gold and silver; now it's being run on credit which over time will destroy the engine and everything else.
The euro, the yuan, the yen, and the dollar are The Four Tires Of The Apocalypse, an event that recently appears to have come out of nowhere. It didn't. Its apparently sudden appearance is new only to those who wished to see otherwise.
The destructive juggernaut now bearing down on the financial house of cards constructed by central bankers contained within it the seeds of its own destruction from its very beginning. Over time, those seeds would turn into Cerberus, the hound of hell, on whose mercy Bernanke et. al. now depends.
Epochs, like movies, need time to reveal protagonists and antagonists, as well as victims, villains and victors. We are now at the end of an epoch and as the final scene opens, the program notes are becoming disturbingly clear.
We find ourselves participants in the last and final act of capitalism and its credit based capital markets - or more correctly, credit and/or debt markets masquerading as free markets...'
Thursday, July 31, 2008
The Cost of Socialism
by John Browne
'Over the past few decades, the United States has steadily evolved from a nation of 'producers' to one of 'consumers'. The change has been celebrated by politicians and economists as proof of America's arrival at the top of the global economic food chain. In reality, the development has depleted the nation of its hard-earned wealth, and has led us to the brink of ruin.
But rather than encouraging a return of America's productive energy, our government is responding to the growing economic crisis by simply trying to boost consumerism at all costs. Their strategy involves socializing losses among all citizens so that the depletion can't be easily discerned.
Now that the nation has chosen socialism as its economic salvation, it is worthwhile to examine some historic precedents. They are not encouraging. Europe, the former Soviet block and much of Africa and Asia, show vividly that socialism curbs individual freedom and enterprise, and leads inevitably toward economic decline.
America was blessed both with abundant natural resources and individual freedom, the backbone of enterprise. The combination rendered American productivity the envy of the world. Based on the strength of our industry and productivity, the American Treasury became the world's largest.
Why would America swap a history of successful capitalism for a murky future of socialism? The Answer is politics...'
Wednesday, May 21, 2008
Why all roads lead to inflation
Source: msn money
A combination of global expansion and money printing to avoid today's economic pain has set us up for tomorrow's spiraling prices.
By Bill Fleckenstein
'Inflation is a topic that does not receive enough attention. I'll try to address that deficiency in this week's column.
Regular readers know my motto (which is on the masthead of my Web site): "In a social democracy with a fiat currency, all roads lead to inflation." Over the past couple of decades, through all the occasional chatter about deflation, I have resolutely maintained that deflation would not be the outcome we would see because the Fed would do what the Fed has done.
One major force helped hold inflation at bay during the 1990s: globalization. As Jim Grant points out in a brilliant essay titled "The Close of the Era of Peace and Quiet" in the current Grant's Interest Rate Observer (subscription required):"Between the early 1980s and the late 1990s, an estimated 2 billion new pairs of hands had joined the global labor force. Employers never had it so good, especially so in countries like the United States, where relocation to low-cost meccas of the East was no idle threat, but an actionable business plan."
Cheap labor, when combined with the technological advances of the late 1990s -- which were powerful, though no more potent than those we'd seen in the 1920s and 1960s, for instance -- helped offset the Federal Reserve's money printing.
However, in the wake of the stock bubble, that money printing set off the U.S. housing boom and began to cause different consequences...'