By Jeff Clark, Casey Research Mayan prophecies aside, many of the senior Casey Research staff believe that economic, monetary, and fiscal pressures could come to a head this year. The massive buildup of global debt, continued reckless deficit spending, and the lack of sound political leadership to reverse either trend point to a potentially ugly tipping point. What happens to our investments if we enter another recession or – gulp – a depression? Here's an updated snapshot of the gold price during each recession since 1955. … [Read more...]
Inflation Adjusted Gold vs Stocks vs Bonds
Recently our good friends at Casey research published the following chart comparing the inflation adjusted Gold returns to stocks and bonds for the period 1971 through the present. From this chart we can see that as bonds fell during the late 1970's gold rose equivalently and stocks were basically flat. During the 1980's bonds rose and gold fell while while stocks rose slightly. During the 1990's stocks rose sharply gold fell and Bonds were volatile but basically flat to slightly up. During the 2000's gold was up sharply, stocks were volatile and bonds were pretty flat. … [Read more...]
Why (and How) China is Boosting the Price of Gold
The History of Gold Prices (and How We Got Here) To get the full picture of the current price of gold we have to look back nearly 100 years. In the 1800's and early 1900's gold played a key role in international monetary transactions. The gold standard was used to back currencies. Each country determined a fixed exchange rates for its currency, i.e. how many ounces of gold each unit of currency was worth. Trade imbalances (importing more than they exported or vice versa) could rectified via the exchange of gold reserves. A country with a deficit would have to ship gold to the country with an excess. Any country experiencing inflation would lose gold and therefore would have a decrease in … [Read more...]
How Global Financial Developments are Affecting the Price of Gold
Let’s face it. With the US economy facing the bitter consequences of extravagance and unscrupulous spending, it has become quite difficult for the US to manage both its public and private debts now. In this phase of post recession hangover and economic meltdown, the U.S. federal government has bumped up against its permitted borrowing limit. According to Alison Fraser, director of the Roe Institute for Economic Policy Studies, America’s debt just crossed $15 trillion, which means presently, the amount owed by the United States government to the world, is equivalent to the amount produced by the American economy per year. All these factors lead to higher prices and intensifying inflation … [Read more...]
Another Way to Measure Inflation
In this article Jeff Clark shows us how to think about prices and purchasing power in a different way. The true measure of inflation is in relation to how much stuff your money can buy and in reality it is also related to the return you can get on your investment. If you can get 10% on your money a 5% inflation rate isn't so bad. But if you own any assets and they are only appreciating at 1% (or worse yet depreciating) and prices are increasing at a 5% rate the value of your assets are declining (i.e. they are being insidiously and secretly being stolen by the government printing presses). In this article Jeff will give you another way to look at the issue of prices and perhaps open your … [Read more...]
Wanna Beat Inflation?
In a recent article entitled Is Gold really a good Inflation Hedge? I showed the history of Gold and how it really was a fear hedge rather than an inflation hedge. Interestingly, I just read an article entitled "Wanna Beat inflation? Forget Commodities!" by newsletter author Dan Ferris. It seems almost like heresy to hear that statement from Dan since he writes commodity and oil-based newsletters. But some of the statistics he presented were very interesting so I thought I would pass them along to you. … [Read more...]
The Buzz Around Gold Is Growing Louder
By Jeff Clark, Casey Research BIG GOLD I outlined last week the increasingly bullish consensus among analysts about gold stocks. The same pattern exists with gold itself; growing numbers of analysts have either joined the movement or have upped their bullish outlook. The following comments and developments have all been reported just this month. It presents quite a convincing case when one strings them together like this. Keep in mind that this is what these analysts and managers are telling their clients. … [Read more...]
The Great Nugget Scam
By Doug Hornig, Casey Research You know an asset class is hot when the scam artists start coming out of the woodwork. Such was the case during the real estate bubble of this century’s first decade, as those selling mortgages packaged them in ever more complex vehicles, many of which are now known to have been utterly fraudulent. Is gold where real estate was? No, not quite. But the notion that we are approaching the same ballpark seems borne out by one of the more creative scams we’ve seen recently. And we’re not talking about all those hucksters now trying to separate you from your old jewelry for a fraction of its value. We’re talking about the great nugget scam. … [Read more...]
Soros Sells Gold- No Longer Fears Deflation???
When I think of using gold for asset protection I think of it for protection against inflation. But obviously, according to the WSJ, I am all wrong (or maybe not). According to a Wall Street Journal article, billionaire George Soros sold his $800 million stake in precious metals in the first quarter of 2011 saying that he "no longer fears deflation". What? With inflation climbing, I can see why he no longer fears deflation... but why would he buy gold to hedge against deflation, in the first place? … [Read more...]
Why $5,000 Gold May Be Too Low
Jeff Clark, BIG GOLD You already know the basic reasons for owning gold – currency protection, inflation hedge, store of value, calamity insurance – many of which are becoming clichés even in mainstream articles. Throw in the supply and demand imbalance, and you’ve got the basic arguments for why one should hold gold for the foreseeable future. All of these factors remain very bullish, in spite of gold’s 450% rise over the past 10 years. No, it’s not too late to buy, especially if you don’t own a meaningful amount; and yes, I’m convinced the price is headed much higher, regardless of the corrections we’ll inevitably see. Each of the aforementioned catalysts will force gold’s price … [Read more...]
