Another gold scam has been exposed this month, but only after customers gave more than $2.6 million to precious metals dealer Robert Escobio who lost $600,000 of the invested funds. The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement claim against Escobio and his company Southern Trust Metals, Inc.
Escobio convinced investors to send him a down payment towards a large purchase of gold, promising to lend them the rest. This sounds exactly like the classic leveraged gold scam, in which the scammer convinces his victims to buy more gold than they can actually afford. He then loans them the remainder at unreasonably high interest rates, promising to deliver all the gold when the debt is paid.
Why would anyone fall for this?
This is part two of three in a series exploring three key reasons why gold could be the best hedge in the event of a major market correction. For part one, click here.
As we wrote yesterday, there are many stories in the news lately exploring the various ways to protect yourself from a major market correction. They talk about hedge funds shorting US municipal debt, junk bonds, and foreign bonds in Asia and the eurozone. However, hardly anyone in the media mentions the use of physical gold bullion to protect your savings from a stock market crash. We believe gold will outperform any of these conventional “safe havens” for three key reasons.
The second promising factor for gold is that many of the “weak hands” have been shaken out of the gold market. This means that short-term speculators who were just jumping on the bandwagon have exited the gold market. Those that remain are primarily long-term holders who understand the fundamentals of gold.
A primary example of these “weak hands” is those who held “paper gold” investments such as exchange-traded funds (ETFs). In this type of investment, you don’t actually own gold. You simply put your money into a fund that is invested in gold companies or gold bullion. This is very different from holding the physical precious metal yourself. These paper gold investments are very popular with short-term speculators who can make quick money if they’re savvy enough.
This is part one of three in a series exploring three key reasons why gold could be the best hedge in the event of a major market correction.
There are many stories in the news lately exploring the various ways to protect yourself from a major market correction. They talk about hedge funds shorting US municipal debt, junk bonds, and foreign bonds in Asia and the eurozone. However, hardly anyone in the media mentions the use of physical gold bullion to protect your savings from a stock market crash. We believe gold will outperform any of these conventional “safe havens” for three key reasons.
The first promising factor for gold is that it is heavily out of favor. That is to say, the financial media loathes the yellow metal. Bullish sentiment on gold is currently at its lowest level since 2004. Due to the 30% decline of gold in 2013, those who have long hated it have been doing a victory lap. This is despite the fact that gold rose nearly 600% from 2001 to 2012.
Gold’s detractors somehow see fit to celebrate being correct once in 13 years. However, being on the ball less than 8% of the time since 2001 is nothing to brag about. With that kind of batting average, they couldn’t make the cut on a little league baseball team, let alone presume to give advice on how people can protect their hard-earned wealth.
Jim Rickards, author of The Death of Money, was interviewed on RT. Jim checks off a daunting list of countries around the world experiencing economic difficulties and offers analysis of what is really going on.
What’s happening in Germany is happening all over the world. Germany’s economy contracted… Italy’s already contracted. France has two quarters in a row of zero GDP. The United States in the first half [of 2014]… did not even grow 1%… China is slowing down, and of course, Japan fell off a cliff. If you look around the world, it looks like we’re going into a global recession, except I would say this is a continuation of a global depression that began in 2007… This is not a normal recovery, not a normal business cycle…”
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Forty-three years ago today, President Nixon severed the last remaining shred of the gold standard when he suspended the ability of foreign banks to directly exchange the dollar for gold. Nixon promised his actions would be temporary, but this turned out to be an even bigger lie than his promise to end the Vietnam War.
In the video below, you’ll notice that Nixon also promised that the value of the dollar would remain stable in spite of his actions. Of course, this turned out to be completely wrong. According to the Consumer Price Index data released by the Bureau Labor of Statistics, the dollar has lost more than 80% of its value since Nixon’s fateful decision. Meanwhile, the dollar value of gold has gone from $35 an ounce to about $1,300.
What does this mean? Suppose you stashed an ounce of gold worth $35 alongside thirty-five one-dollar bills under your bed in 1971. Today, you would be sitting on gold that could buy you a nicely-tailored suit, while the cash couldn’t get you a pack of fancy boxer shorts. Who knows how much worse this is going to get. In our latest Videocast, Peter Schiff talks with Jim Rickards about the very real possibility that in the coming years, the dollar might lose its status as the world’s reserve currency. When that happens, you won’t even be able to buy a burger with your thirty-five bills. Click here to watch the interview.
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” – John Maynard Keynes
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In his latest Gold Videocast, Peter Schiff meets with Jim Rickards, author of The Death of Money, for an exclusive interview about gold’s role in the international currency wars.
Jeff Clark of Casey Research has just released a new commentary laying out his reasoning for buying silver right now. From the rising cost of production to Asian demand, Clark goes into detail about the latest silver fundamentals that serious precious metals investors need to be aware of.
The drugs of choice for governments—money printing, deficit spending, and nonstop debt increases—have proved too addictive for world leaders to break their habits. At this point, the US and other governments around the world have toked, snorted, and mainlined their way into an addictive corner; they are completely hooked. The Fed and their international central-bank peers are the drug pushers, providing the easy money to keep the high going. And despite the Fed’s latest taper of bond purchases, past actions will not be consequence-free.
At first, drug-induced highs feel euphoric, but eventually the body breaks down from the abuse. Similarly, artificial stimuli and sub-rosa manipulations by central banks have delivered their special effects—but addiction always leads to a systemic breakdown.
When government financial heroin addicts are finally forced into cold-turkey withdrawal, the ensuing crisis will spark a rush into precious metals. The situation will be exacerbated when assets perceived as “safe” today—like bonds and the almighty greenback—enter bear markets or crash entirely.
As a result, the rise in silver prices from current levels won’t be 10% or 20%—but a double, triple, or more.”
Read the Full Article Here
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By Dickson Buchanan Jr., Director of International Development
Last week, on July 30, the Republic of Argentina was declared to be in default for the third time in 30 years.
Let’s put that into perspective. If you were a bank officer who offered a 30-year mortgage to the Government of Argentina in the early ‘90s you would have spent nearly the entire life of the loan in a perpetual nightmare of refinancing. You would likely be not only fired from your job, but a pariah in the entire industry. This is what Argentina’s international creditors and domestic citizens have faced in real life. At the time of writing this article, S&P has downgraded Argentina to CCC-, one of the lowest ratings available for sovereign governments.
According to a new report released by the Silver Institute, the demand for silver is expected to exceed projected global GDP growth. Silver demand should grow by 5% per year from 2014 to 2016. Demand for industrial silver, which accounts for over 50% of global demand, will rise due to its use in three key areas: flexible electronics displays, LEDs, and semiconductor computer chips.
With the introduction of these advanced uses of silver in the electrical and electronics category, which last year provided over 40% of total silver industrial demand, along with growth in established uses, we should see silver industrial demand develop even further, especially as economies grow globally.” – Michael DiRienzo, Executive Director of the Silver Institute.
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Peter Schiff interviews Chris Rossini, contributor to the Ron Paul Institute for Peace and Prosperity, about his book Set Money Free. They talk about the Federal Reserve’s role in centrally planning the economy and how it funds the biggest welfare-warfare state in history. Peter says that price inflation is much higher than the official estimates. However, the Fed has put itself into a position where it will be impossible to do anything about it, even when it becomes undeniable to those in power.
The only way they can save [the dollar] is to bankrupt the federal government. But somehow I have a hard time believing that the treasury defaulting on its debts is going to be a bullish situation for the world’s reserve currency. So, I think they’re damned if they do, damned if they don’t.”
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Interested in learning about the best ways to buy gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!
