"We seem to be entering a new stage of the currency wars where it's not just the emerging markets that are responding to broad dollar weakness," Callum Henderson, global head of currency research at Standard Chartered in Singapore, told Bloomberg. "Expect much more intervention in the future and further acrimony in terms of how the U.S. dollar is doing." Now seems a fitting time to revisit the End of America As you may recall, last November, we produced a video called the End of America (you can watch it here http://www.stansberryresearch.com/p...?o=426928&s=430252&u=49866210&l=294248&r=Milo). Our thesis was simple The United States (and the world's other leading democracies) are drowning in debt. And the subsequent money-printing ("easing") meant to solve the problem would only worsen the issue. Stocks, we posed, would languish. Gold, which would be viewed more and more as a monetary asset, would soar Since July 1, gold is up over 13%. The precious metal jumped $200, from $1,483 an ounce to Thursday's high of $1,683 an ounce. As we've said, the biggest reason for gold's surge is the U.S. and European debt crises (more on the latter in a bit). But it's also getting a boost from a lack of alternatives. While we may be entering "a new stage," the currency wars are nothing new. The fiat currency market is "a race to zero," meaning all governments with paper money are racing to devalue. On Wednesday, the Swiss National Bank cut interest rates to zero to devalue the soaring Swiss franc. On Thursday, Japan sold yen which was near highs against the dollar pushing it down over 2.5% versus the greenback. The Bank of Japan also increased its asset-purchase fund which includes government bonds, corporate bonds, and real estate investment trusts from 10 trillion yen to 15 trillion yen. And it increased a fund to encourage banks to lend by 5 trillion yen, bringing it to 35 trillion yen. According to a Wall Street Journal article, South Korea, the Philippines, and Brazil are among the many other nations considering devaluing their currency. This market manipulation means two things. First, gold will soar even higher as other currencies become less attractive. Second, global business growth will slow. As a business owner, it's difficult to plan for the future when you don't know what the value of your money will be. The real jump in gold will come from the worsening euro crisis namely the collapse of its banking system and the eventual third round of quantitative easing in the U.S. In a conference earlier this week, European Central Bank (ECB) President Jean-Claude Trichet said the European bond-buying program wasn't dormant "I would not be surprised if by the end of this teleconference you will see something on the market," he said. Sure enough, European bonds rallied as the ECB bought across the board. In addition to the reopening of the Securities Market Program, as the bond-buying is called, Trichet also said the ECB would offer a six-month tender of unlimited size next week. And it will maintain its policy of lending unlimited amounts at its one-week, one-month, and three-month operations until the end of the year. This simply means the ECB will lend European banks an unlimited amount of money through the year. It won't let banks get caught up in a funding crisis as private lenders (like the U.S. money markets) retreat. The European banks' eventual losses will be monetized. With this backdoor European bank bailout, you'd expect bank stocks to rally. Instead, they're getting crushed. The market knows these banks are toast. And I can't stress enough how bearish this action is Despite a government bailout, European banks are still plunging. In particular, Deutsche Bank and Royal Bank of Scotland were down 9.3% and 10.5% on Thursday, respectively. You may recall our call to short these banks in Stansberry's Investment Advisory: In last month's issue ("New American Socialism"), I reiterated my position on the European sovereign debt crisis and the special role the major Italian bank UniCredit will play in unleashing the next crisis There's no reason to dwell on the things already explained. But I must point out UniCredit in particular and Italy in general dominated the headlines last month. This will continue until actual sovereign defaults occur. The only question now is will a European sovereign default before America does? We don't know and that's not bullish for financial assets of any stripe sell short Europe's two leading banks Deutsche Bank (NYSE: DB) and Royal Bank of Scotland (NYSE: RBS). Porter Stansberry, July 2011, Stansberry's Investment Advisory We should expect continued easing from Europe "Continued moderate expansion is expected in the period ahead," Trichet said. "However, uncertainty is particularly high." He urged euro-zone governments to cut deficits faster and increase growth potential. He's particularly worried about one European nation. Can you guess which? "It's urgent for all and for Italy of course," Trichet said.
I think its really hard to tell with silver, the last times it's hit 50 or close to it its been due to Hunt Brothers manipulating the market and more recently just rampant speculation. I sometimes wonder how silver can even be classed as a precious metal when a very small percentage of purchases are for investment rather most are industrial. That said last week's crash was interesting because we did see a quite large drop off in silver which could be a indication that investors don't see it as a safe haven, even gold got sold off so one could argue in last weeks crash even Swiss franc's and Yen were better safe havens than gold.
There are two trains of thought, one that as a precious metal it's value should increase, but the other is that as a commodity it's value will diminish because world wide use of it will also fall. Take your pick.
I like this analysis and I agree that it is an each way bet. However IMO there will be a turning/tipping point. Sooner or later (my gut is telling me within a decade) Gold and silver will again play a roll in the monetary system. As this point in time nears, the run up of both will begin. Fiat currencies are doomed from day dot and you could argue that we are in the middle or closer to the end of that destruction. When the world starts realising that and moves toward a gold/pm standard things should really heat up. As they both get to the stage where the ratio in a nation of broad money supply to the price of gold becomes close enough to be being interchangeable then it will be very easy to make the switch. If Australia hadn't sold off 2/3rds of it's gold way back and had slowly been accumulating it over the years the switch could have been made far easier and required less of a revaluation of PM's to make it happen. It will be a fun ride watching it happen. If only Ron Paul was seen as electable. It could happen sooner than expected.
Nukz watch this if you havent already http://www.youtube.com/watch?v=xSLIDJ3HZHA&feature=player_embedded
I just watched the stansberry research video, anyone read any of their report yet? I'm planning to get the reports but want to know if it's worth it
a good solar flare wiping out a segment of our modern based electronic world will require a LOT of silver to get back up ...
I bought 6 ounces of gold on Friday. I am not used to something going up right after I buy it. Strange feeling, but one I could get used to.
Yea i'm a little disappointed we didn't even break through 1700 but we may see that break-through when U.S markets open later tonight.
if these gains are maintained (big if) these increases of over 6% are significant. I expect intervention almost immediately the US market opens as the central banks dont like gold to go up by more than 5% per day
according to apmex.com bid $1694.00... ASK:$1699.00 USD (change within 5 minutes...because i just made a purchase minutes before it hit this) I think we are going to hit 1700 pretty soon
The bid/ask spread on Gold for APMEX is massive, a whole $5. I've never seen anything like it. The volatility is probably worrying a lot of people.
Amid all of this... i think it is very interesting that Gold is almost the same price as Platinum lol....
kicking myself for not putting in an order last night...then again it could've gone the other way so no one really knew what was going to happen :S
