Jessica Fung, Commodities Analyst for BMO Nesbitt Burns, explained her firm’s belief that gold has always been and will always be a safe-haven investment. Fung sticks to the mainstream perspective that the Federal Reserve is still planning to raise interest rates in 2015, though she does admit that BMO now predicts the Fed is going to push back that rate hike. It’s interesting to watch a major financial firm dance around the increasingly confused market sentiment and convoluted messages from the Fed.
Investors should take note that major financial players are starting to publicly admit that gold is an essential investment regardless of the supposed strength of the US economy or dollar – exactly what Peter Schiff has been saying for years.
James Grant, Founder of Grant’s Interest Rate Observer, spoke with Kitco about his disappointment in the current price of gold. He places most of the blame on central banking, and the market’s inability to understand the long-term consequences of monetary manipulation. However, Grant believes it won’t be long before the world wakes up to the realities of this manipulation and returns to gold as a safe-haven investment.
The gold price, is to me, the reciprocal of the world’s faith in the words, deeds of these central bankers… The lower the confidence [in central banking], the higher the gold price.
“I, for one, can’t imagine why anyone would have confidence in the doctrines of central banking, predicated as they are on the manipulation of prices. Interest rates are prices. Central banks are in the business now, more than ever, of manipulating interest rates. They are inflating asset markets. It seems to me that the world will eventually see that these policies are non-starters.”
The Dow and S&P 500 once again closed at record highs last Friday, and investors continue to be bullish on the American economy. Nobel Prize-winning economist Robert Shiller sees things differently and has been warning of market bubbles.
A bubble is a social epidemic of enthusiasm and excitement spread by word of mouth, attracting more and more investors into a market.”
In the new edition of his book Irrational Exuberance, Shiller argues that many traditional investment assets are now driven by investor psychology rather than fundamental realties. From housing to stocks to bonds, Shiller sees the American economy entering a new era in which traditional investment approaches need to be reconsidered.
ADS Securities Chief Market Strategist Nour Eldeen Al-Hammoury explained to Bloomberg why he’s betting on the United States sliding back into recession in 2015. Just like Peter Schiff, he finds the GDP, factory orders, trade deficit, and other economic data points to be much more indicative of the true health of the economy than the bogus jobs numbers.
Since the end of QE, until today, most of the numbers – more than 70% of the numbers – came in far away from the expectations. If you go back to the history, every single QE, when the QE stops, the economy slides back into a recession…”
Eric Sprott, the well-known billionaire asset manager, believes that investors need to buy gold and silver to protect themselves from the increasingly volatile currency markets. Last year, 84% of the world’s population would have made money owning gold. Sprott puts his money where his mouth is, claiming that 80% of his assets are in precious metals.
Since this January interview, the gold price has fallen in US dollars. However, Sprott is focused on the long-term picture of how the radical monetary policies of global central banks will damage the global economy. With banking policies like negative interest rates and massive money printing, the world is experiencing a completely new financial landscape. When paired with the fact that gold demand seems to be exceeding supply, he expects to see gold-backed currencies within the next decade.
In his new Gold Videocast, Peter Schiff explained how Obamacare has created a “job-sharing” economy that is skewing the government’s employment data. As he put it:
Obamacare forces employers to provide insurance for full-time employees. As a result, employers are hiring more part-time workers than they normally would and that is substantially influencing these numbers… [Suppose an employer] cuts [two full-time workers’] hours back to 10 hours a week and then he actually hires two more guys. So now he has four guys working 40 hours instead of two guys working 80 hours. He’s cut the hours in half but doubled his workforce. According to the government, he’s just created two jobs even though he has four people sharing one job.”
Jim Rickards, author of Currency Wars, describes a game he plays with audiences when he speaks about gold and paper money. He presents to them US dollars, Monopoly money, and a gold coin. Then he asks, “Which of these is not like the other?”
Ivy League professors nearly always rationalize that the dollars are different, because they are a store of value while the other two cannot serve as real money. However, Rickards reminds us that the US dollar has lost 95% of its purchasing power since 1913.
Five-year-olds, on the other hand, instantly recognize that the gold coin is different. They probably don’t understand that gold has been a form of money for thousands of years, with a relatively stable value that entire time. Nevertheless, you have to wonder about the state of our basic economic knowledge when the instincts young children are more accurate than the reasoning of elite academics.
RT asked Marc Faber why he invests in physical gold. Faber emphasized that nobody should put all of their assets into physical precious metals. However, if investors want to protect themselves from the volatile bubbles created by the Federal Reserve since the late 1990s, then gold and silver are essential assets. Precious metals are Faber’s “iron reserves,” and he doesn’t worry about short-term price fluctuations.
Peter Schiff has always emphasized that gold is a long-term safe haven asset and not a means of making quick profits. Investors need to understand the big economic picture to grasp why gold such an essential asset. Perhaps the biggest picture is the rise and fall of global currencies throughout history.
Jim Rickards, author of The Death of Money, walks us through the 20th century history of the US dollar and the pound sterling. He explains how a currency gains and loses the status of a global reserve currency.
Bloomberg has published a feature-length article about the history of the German gold repatriation movement partly led by Peter Boehringer. The piece is unusual for the mainstream American media in that it actively entertains the possibility that foreign gold stored in the New York Federal Reserve may not be the same gold originally deposited. Even worse, some of the gold could be missing, which might be the reason so many European central banks have begun to show interest in repatriation.
We live in an era of unprecedented sovereign debts and extraordinary monetary manipulation by central banks. There’s never been a more important time for both individuals and governments to protect themselves with gold reserves. However, it appears that Germany has always been a bit blasé about its reserves: