- Source, GoldMoney:
Sunday, December 29, 2013
The Gold Price and Its Cycle
Tuesday, December 24, 2013
James Turk - Hyperinflation in Argentina
- Source, Gold Seek Radio:
Friday, December 20, 2013
It Does'nt Make Sense to Save National Currencies
What I've been recommending since I started Gold Money back in 2001, is that you accumulate gold and silver on a cost averaging basis. In other words, if you want to put in $500 every month of savings, or $50 a month of savings, whatever the number is, on a certain day of the month you buy that $500 or that $50 of gold or silver, and you just do that month after month, after month on a consistent basis. And view that accumulation of precious metals to be your savings.
It doesn't make sense to save any national currency any more because you don’t get the interest income to offset the risks. But savings are important for everybody in order to plan and prepare for a future which is uncertain and a future which no one can predict.
But we know that we’re heading on the wrong road. We know that we’re heading toward the cliff. So you have to be prepared for the contingencies that might arise. And the best way to do that is to go to the assets that are proven and time tested. And the proven and time tested assets throughout monetary history are gold and silver.
It doesn't make sense to save any national currency any more because you don’t get the interest income to offset the risks. But savings are important for everybody in order to plan and prepare for a future which is uncertain and a future which no one can predict.
But we know that we’re heading on the wrong road. We know that we’re heading toward the cliff. So you have to be prepared for the contingencies that might arise. And the best way to do that is to go to the assets that are proven and time tested. And the proven and time tested assets throughout monetary history are gold and silver.
- Source, James Turk via:
Sunday, December 15, 2013
Monetary Collapse is a Reality
Portfolio management is very much a personal decision. Everybody approaches it in very different ways because everybody’s subjective judgement is different. But the bottom line is that you have to do what you need to do to sleep well at night. And in my mind, the best way to sleep well at night with all of this uncertainty going on in the world, is to have to some physical gold and physical silver tucked away because they are your go to assets in the case of a monetary collapse or other problems.
And history has shown that monetary collapses are a reality when you go in the wrong direction. You can’t predict when you’re going to go over the cliff, but you know that if you’re heading toward the cliff, sooner or later you’re going to go over it.
And history has shown that monetary collapses are a reality when you go in the wrong direction. You can’t predict when you’re going to go over the cliff, but you know that if you’re heading toward the cliff, sooner or later you’re going to go over it.
- Source, James Turk via:
Thursday, December 12, 2013
This System is NOT Sustainable
If you look at the numbers, I just saw something, 57% of the American population, in some way, is dependent on some level of government, be it federal, local, or state government. So you've already got more than half the people who are tax eaters, and only 43% of the people who are tax payers. Obviously that situation is not sustainable. It could go on longer. But ultimately, you’re going to destroy economic activity.
The underlying reality of this is that the government doesn't create wealth. They can pump up the GDP numbers by borrowing and spending money, but it doesn't create wealth. Wealth is created by the private sector. All the government does is take wealth away and redistribute it. And if you end up taking too much wealth, if you end up pulling out too many feathers from the goose, the goose is going to start squawking, and all of a sudden the economy is going to collapse.
And I think we’re really seeing that now. The economy has been declining slowly. But we’re in, if not a depression, a very, very severe recession. And basically have been since the collapse in 2008. And the reason why I say that is that, if you look at the median income of the average American adjusted for a true rate of inflation, he’s no better off now than he was ten years ago. In fact, he’s worse off now than he was ten years ago.
So, until you get median family income adjusted for inflation, higher than it was prior to the collapse of 2008, you can’t say that the economy is doing well. It’s doing poorly, and is likely to continue doing even worse given the fact that the government is really just taking, taking, taking. And there’s only so much that the private economy has to give before the private economy collapses.
The underlying reality of this is that the government doesn't create wealth. They can pump up the GDP numbers by borrowing and spending money, but it doesn't create wealth. Wealth is created by the private sector. All the government does is take wealth away and redistribute it. And if you end up taking too much wealth, if you end up pulling out too many feathers from the goose, the goose is going to start squawking, and all of a sudden the economy is going to collapse.
And I think we’re really seeing that now. The economy has been declining slowly. But we’re in, if not a depression, a very, very severe recession. And basically have been since the collapse in 2008. And the reason why I say that is that, if you look at the median income of the average American adjusted for a true rate of inflation, he’s no better off now than he was ten years ago. In fact, he’s worse off now than he was ten years ago.
So, until you get median family income adjusted for inflation, higher than it was prior to the collapse of 2008, you can’t say that the economy is doing well. It’s doing poorly, and is likely to continue doing even worse given the fact that the government is really just taking, taking, taking. And there’s only so much that the private economy has to give before the private economy collapses.
- James Turk:
Sunday, December 8, 2013
James Turk Retirees As GoldMoney Chairman
The Founder and Chairman of GoldMoney, James Turk has retired as Chairman. Mr Turk will continue to serve on the board as a non-executive director utilising his valuable knowledge gained from 45 years of experience in international banking, finance and investments.
Mr Turk confirmed that his retirement from the active role of Chairman will enable him to focus on personal commitments. This will include a new book to follow up the success of the ‘The Collapse of the Dollar’, and to write content for his personal website (fgmr.com).
The Board has elected Jersey resident, Patrick Delafield, a long-standing GoldMoney non-executive director, as its new Chairman with immediate effect. Mr Delafield holds an MA in Law from the University of Cambridge and has travelled widely in both Western and Eastern Europe and the Middle East in the fulfilment of a number of senior roles in several major companies. He has lived in Jersey for over 30 years and has served as a non-executive director and/or chairman for other internationally focused businesses. Mr Turk said: “I look forward to working with Patrick and the other members of the board to ensure GoldMoney’s continuing success.”
Mr Turk founded GoldMoney in 2001 with his son, Geoff, to use the Internet to provide a convenient way to buy and store precious metals. Since then demand for physical bullion has grown, and GoldMoney has been at the forefront of supplying and storing precious metals. It currently safeguards more than US$1.6 billion of assets on behalf of over 22,000 customers from around the world.
CEO Geoff Turk said: “We remain extremely grateful to James for his vision and leadership in the creation of GoldMoney and its ability to enable individuals, companies and institutions in the global marketplace to conveniently and safely preserve purchasing power by diversifying their wealth with precious metals. “We will now build on this solid foundation in the months and years ahead. We are also, of course, delighted to have the benefit of James’ continuing involvement as a director, as he starts to enjoy his hard-earned retirement.”
Mr Turk confirmed that his retirement from the active role of Chairman will enable him to focus on personal commitments. This will include a new book to follow up the success of the ‘The Collapse of the Dollar’, and to write content for his personal website (fgmr.com).
The Board has elected Jersey resident, Patrick Delafield, a long-standing GoldMoney non-executive director, as its new Chairman with immediate effect. Mr Delafield holds an MA in Law from the University of Cambridge and has travelled widely in both Western and Eastern Europe and the Middle East in the fulfilment of a number of senior roles in several major companies. He has lived in Jersey for over 30 years and has served as a non-executive director and/or chairman for other internationally focused businesses. Mr Turk said: “I look forward to working with Patrick and the other members of the board to ensure GoldMoney’s continuing success.”
Mr Turk founded GoldMoney in 2001 with his son, Geoff, to use the Internet to provide a convenient way to buy and store precious metals. Since then demand for physical bullion has grown, and GoldMoney has been at the forefront of supplying and storing precious metals. It currently safeguards more than US$1.6 billion of assets on behalf of over 22,000 customers from around the world.
CEO Geoff Turk said: “We remain extremely grateful to James for his vision and leadership in the creation of GoldMoney and its ability to enable individuals, companies and institutions in the global marketplace to conveniently and safely preserve purchasing power by diversifying their wealth with precious metals. “We will now build on this solid foundation in the months and years ahead. We are also, of course, delighted to have the benefit of James’ continuing involvement as a director, as he starts to enjoy his hard-earned retirement.”
- Source, Mining.com:
Saturday, November 30, 2013
Ron Paul Could of Turned The Ship Around
It’s going to take someone with the vision, and a political leader, to turn the ship of state around. I think Ron Paul could have done that. But, unfortunately, he did not get elected as President. And, as a consequence, we continue to move, or the country continues to move, in the wrong direction.
- James Turk via Sprott Money:
Thursday, November 28, 2013
The Government HAS Defaulted Before
The government has defaulted several times before. It defaulted in 1933 when it refused to honor its debts by paying in gold. It defaulted in 1965 when it took silver out of the monetary system. It’s basically been defaulting all along by allowing the dollar’s purchasing power to be eroded through inflation and debasement year after year, after year.
So, given the fact that they’ve defaulted so many times before, can they default this time? Yeah, sure they can. And it won’t mean anything to the politicians, but it’s going to mean a lot to anybody who has debt with the US government. It’s always sort of amazed me that, after the government takes 30 to 40% in taxes of what you earn, why you would ever lend money back to the government with the rest of it. Because once you lend it to them, they’re in control, you’re not in control.
And this is a good example of that attitude. The government is in control of the situation. If they default they might say, “well, we will pay everybody who has a $10,000 T bill. But we’re not going to pay individuals who have a million dollar T bill because they can afford a loss of a million dollars. Where somebody with only 10,000 may not be able to afford a loss.” They can do all kinds of crazy things like that.
The reality is that they don’t have to default. They can prioritize their bills. They get money coming in all of the time for taxes, so they can use that money to pay interest on the T bills and T bonds that the government owes, so there’s a lot of theater in claiming that there’s going to be a default on October 17th. It doesn’t have to be that way.
I think the ramifications to the world is really a key question here though. Because it’s just part of the erosion of American credibility in the rest of the world. Everybody outside of the United States, and I think a growing number of people in the United States, recognize that the US is on the wrong path. That what has been happening to the dollar, and the continual increases in the debt are the wrong path.
And the US, given its role as the world’s reserve currency, has a responsibility to the rest of the world to maintain the dollar as a sound unit of account. And the US government has hopelessly failed in that responsibility. So it’s not surprising to me to see other countries around the world taking steps for a post-dollar world reserve currency situation.
In other words, you see China building up trade relationships with various partners, trading partners, where goods and services are paid in terms of Yuan, the Chinese currency. You see Germany pulling gold out of the United States. These are types of things that confidence in the US government is eroding. And the concern here is that it could erode very, very quickly, given the fiasco that’s going on in Washington right now.
I think that the debt limit is extremely important. It’s the last form of discipline that we have in terms of controlling government spending. But at the end of the day I think the politicians are going to increase the limit, and when they do it’s going to open another tidal wave of money printing by the Federal Reserve.
So, given the fact that they’ve defaulted so many times before, can they default this time? Yeah, sure they can. And it won’t mean anything to the politicians, but it’s going to mean a lot to anybody who has debt with the US government. It’s always sort of amazed me that, after the government takes 30 to 40% in taxes of what you earn, why you would ever lend money back to the government with the rest of it. Because once you lend it to them, they’re in control, you’re not in control.
And this is a good example of that attitude. The government is in control of the situation. If they default they might say, “well, we will pay everybody who has a $10,000 T bill. But we’re not going to pay individuals who have a million dollar T bill because they can afford a loss of a million dollars. Where somebody with only 10,000 may not be able to afford a loss.” They can do all kinds of crazy things like that.
The reality is that they don’t have to default. They can prioritize their bills. They get money coming in all of the time for taxes, so they can use that money to pay interest on the T bills and T bonds that the government owes, so there’s a lot of theater in claiming that there’s going to be a default on October 17th. It doesn’t have to be that way.
I think the ramifications to the world is really a key question here though. Because it’s just part of the erosion of American credibility in the rest of the world. Everybody outside of the United States, and I think a growing number of people in the United States, recognize that the US is on the wrong path. That what has been happening to the dollar, and the continual increases in the debt are the wrong path.
And the US, given its role as the world’s reserve currency, has a responsibility to the rest of the world to maintain the dollar as a sound unit of account. And the US government has hopelessly failed in that responsibility. So it’s not surprising to me to see other countries around the world taking steps for a post-dollar world reserve currency situation.
In other words, you see China building up trade relationships with various partners, trading partners, where goods and services are paid in terms of Yuan, the Chinese currency. You see Germany pulling gold out of the United States. These are types of things that confidence in the US government is eroding. And the concern here is that it could erode very, very quickly, given the fiasco that’s going on in Washington right now.
I think that the debt limit is extremely important. It’s the last form of discipline that we have in terms of controlling government spending. But at the end of the day I think the politicians are going to increase the limit, and when they do it’s going to open another tidal wave of money printing by the Federal Reserve.
- Source, James Turk via a interview with Sprott Money:
Wednesday, November 20, 2013
Everything is in Place for Another Crisis
The locomotive is the market, and in the end markets are always more powerful than government intervention. The locomotive is gaining momentum for the reason that I have been making since May, which is when the tipping point was reached. Since then there have been more investors willing to sell government securities than the Fed or other central banks are willing to buy. The consequence has been rising yields on the 10-Year Treasury Note.
But interest rates are not rising in spite of QE, instead, since May they have been rising because of QE. Interest rates are just way too low and do not offset all of the risks associated with holding Treasury paper. Therefore, Treasury paper is being sold, meaning that its supply is greater than the demand for this paper.
The reason why all of this so incredibly important is that everything is now in place for another crisis as we approach the February debt ceiling limit. As a consequence, it is extremely critical that investors understand that they should absolutely not be holding dollars or Treasury paper. They are incredibly overvalued and therefore they will be the ultimate losers here. Physical gold and silver are the place to be, and can continue to be picked up at prices that reflect severe undervaluation.
But interest rates are not rising in spite of QE, instead, since May they have been rising because of QE. Interest rates are just way too low and do not offset all of the risks associated with holding Treasury paper. Therefore, Treasury paper is being sold, meaning that its supply is greater than the demand for this paper.
The reason why all of this so incredibly important is that everything is now in place for another crisis as we approach the February debt ceiling limit. As a consequence, it is extremely critical that investors understand that they should absolutely not be holding dollars or Treasury paper. They are incredibly overvalued and therefore they will be the ultimate losers here. Physical gold and silver are the place to be, and can continue to be picked up at prices that reflect severe undervaluation.
- James Turk via King World News:
Monday, November 18, 2013
Don't Keep Your Gold in the Bank
Money in banks is not safe. I would not keep any precious metals in a bank, first of all. Keep your precious metals in a non-bank depository. There are a number of vaulting companies around the world. We at GoldMoney use four different vaulting companies. VIA MAT, which is a Swiss company. Brink’s, which is a US company. We use Brink’s in Canada. We use Malca-Amit in Asia, and we also use G4S, which is a British company, we use their vaults in Asia as well.
None of these companies are in the business of lending, like banks. They’re all in the business of storing. The aim of banks is to keep their vaults empty because they’re in the business of lending, they’re not really in the business of storing. They make more business by lending gold than they do storing gold. So don’t keep your gold in a bank.
And as for currencies, just like I was saying before, in the short term to a certain extent, we’re reliant upon the banking system and having to use some national currencies to pay bills. But I would keep that to a minimum because at any moment in time, your bank which you think might be safe, may in fact not be safe.
None of these companies are in the business of lending, like banks. They’re all in the business of storing. The aim of banks is to keep their vaults empty because they’re in the business of lending, they’re not really in the business of storing. They make more business by lending gold than they do storing gold. So don’t keep your gold in a bank.
And as for currencies, just like I was saying before, in the short term to a certain extent, we’re reliant upon the banking system and having to use some national currencies to pay bills. But I would keep that to a minimum because at any moment in time, your bank which you think might be safe, may in fact not be safe.
- Source, Sprott Money:
Saturday, November 16, 2013
Keep Your Liquid Wealth in Precious Metals
Everybody to a certain extent has to hold some national currency, because some bills have to be paid in the national currency in the country where you live. So you cannot avoid national currencies, but you don’t have to keep much of your liquidity. The liquid part of your wealth, you don’t have to keep much of your monetary needs in national currency.
You’re better off keeping the liquid part of your wealth in a precious metal than you are in any of the dollars. But this relates to the issue of, is your objective short term, or long term. From a short term point of view, holding gold and silver may not look like the best alternative because you do get movements of its price down, as well as up, for that matter. And that volatility can upset people in terms of what their requirements are for living expenses from month to month.
But from a long term point of view, you’re much better off owning any precious metal than you are owning any national currency. Because you don’t earn enough interest income on national currencies to offset the risks of holding them, to maintain your purchasing power in that national currency. Or to overcome the counter party risk that you have. That your bank might ultimately go under, and just like [happened] in Cypress earlier this year, you might lose 40, 50, 60% of your money in a bank bail-in.
You’re better off keeping the liquid part of your wealth in a precious metal than you are in any of the dollars. But this relates to the issue of, is your objective short term, or long term. From a short term point of view, holding gold and silver may not look like the best alternative because you do get movements of its price down, as well as up, for that matter. And that volatility can upset people in terms of what their requirements are for living expenses from month to month.
But from a long term point of view, you’re much better off owning any precious metal than you are owning any national currency. Because you don’t earn enough interest income on national currencies to offset the risks of holding them, to maintain your purchasing power in that national currency. Or to overcome the counter party risk that you have. That your bank might ultimately go under, and just like [happened] in Cypress earlier this year, you might lose 40, 50, 60% of your money in a bank bail-in.
- Source, James Turk via Sprott Money:
Thursday, November 14, 2013
The FED is NOT Going to Taper
I've been of the view that they’re not going to taper. And the reason is that, once you get on this treadmill, or down the rabbit hole, you’re stuck. It takes a real leader to say that we went the wrong direction, and we’re going to stop and go back the other direction. This is the exact same thing that happened in Weimar, Germany in the 1920s. The German Reich’s bank was buying government paper in Germany and turning that into currency. It’s the exact same thing that happened in Zimbabwe a few years ago. It’s the exact same thing that happened in Argentina. The central bank there was buying Argentine government paper and turning it into currency. And that’s what QE is all about. It’s turning government debt into currency. And ultimately it leads to the destruction of the currency.
So I really don’t think they’re ever going to taper. And the Fed will continue to do what they’ve done very effectively. For a long time they’re going to just propagandize, they’re going to protect the purchasing power of the dollar, but they never do.
Since the Fed was established 100 years ago, the purchasing power of the dollar has gone down by various estimates: 97 or 98%. And it’s going to continue to go down. And the only way to protect yourself against that is to own physical gold and physical silver. And any other tangible asset that represents real wealth.
So I really don’t think they’re ever going to taper. And the Fed will continue to do what they’ve done very effectively. For a long time they’re going to just propagandize, they’re going to protect the purchasing power of the dollar, but they never do.
Since the Fed was established 100 years ago, the purchasing power of the dollar has gone down by various estimates: 97 or 98%. And it’s going to continue to go down. And the only way to protect yourself against that is to own physical gold and physical silver. And any other tangible asset that represents real wealth.
- Source, James Turk via Sprott Money:
Tuesday, November 12, 2013
The Dollar is Our Currency but Your Problem
Just before Nixon closed the “Gold Window” in the 1971 dollar crisis, Treasury Secretary John Connolly, speaking to the world, said "The dollar is our currency, but your problem.” To paraphrase him today, he could be saying "Treasury paper is our debt, but your problem."
- James Turk via King World News:
Saturday, November 9, 2013
Yields Are Rising and it's Relentless
My expectation is that that QE will be increased in Q1 of 2014. She, like most of the FOMC members, believes that they can control long-term interest rates with QE, and that low rates help the economy. So even though it is clear that neither of these objectives are being achieved, I expect that she will try to keep the yield on the 10-Year Note below 3% with even greater amounts of Treasury paper being gobbled up with massive Fed buying.
The really important thing is that the yield on the 10-Year Treasury Note is inching back up. The yield dropped slightly after last week’s FOMC announcement, but that respite was short-lived. Yields have been in an uptrend since May, and this trend is likely to continue.
It is interesting to note that yields are following the same pattern that started with the May FOMC meeting. Despite all the bond buying by the Fed which should create demand and therefore lower yields, the opposite is happening. Yields are rising, and it is relentless. It is happening slowly, but surely, like a powerful locomotive chugging away, which I think is a good way to describe what is taking place.
The really important thing is that the yield on the 10-Year Treasury Note is inching back up. The yield dropped slightly after last week’s FOMC announcement, but that respite was short-lived. Yields have been in an uptrend since May, and this trend is likely to continue.
It is interesting to note that yields are following the same pattern that started with the May FOMC meeting. Despite all the bond buying by the Fed which should create demand and therefore lower yields, the opposite is happening. Yields are rising, and it is relentless. It is happening slowly, but surely, like a powerful locomotive chugging away, which I think is a good way to describe what is taking place.
- James Turk via a recent King World News interview:
Thursday, November 7, 2013
Spending Cuts and the Debt Ceiling
"The reality is that Bernanke had his chance to taper in September and fumbled that opportunity. So it looks increasingly unlikely that there will be any tapering before he leaves office. And when Ms Yellen takes over, it’s a whole new ball game. She will be working with an economy that is rolling over, and confronted with a big divide in Washington regarding spending and the debt ceiling."
- James Turk via a recent King World News interview, read the full interview here:
Thursday, October 31, 2013
You Are Saving Sound Money
The outlook for silver is spectacular, and my recommendation for both precious metals remains unchanged. Accumulate gold – and if you are inclined to accept the greater volatility, then accumulate silver too – on a cost-averaging program with monthly (or quarterly if it fits your budget better) purchases. By doing so you are saving sound money. Buy physical gold and physical silver only.
- James Turk via FGMR:
Tuesday, October 29, 2013
Currencies in Turmoil
When you have currency turmoil, all you have to do is look at monetary history and conclude that yes, gold and silver, physical gold and physical silver are the place to be to provide that safe haven from that monetary turmoil. And they are a safe haven because, in contrast to the national currencies which are just a bookkeeping entry based on some banks or some government’s promise, physical gold and physical silver, the value of them — first of all, they’re tangible assets, and they don’t have counter party risk — and the value of them derives from the preponderance of people around the world who understand gold and silver’s usefulness as money.
- James Turk via Sprott Money:
Sunday, October 27, 2013
Eventually The Manipulation and Capping of Gold Will be Overwhelmed
What happened back in the 1960s is, eventually, governments threw in the towel. There was 12,000 tons of gold hoarded from Fort Knox, officially. There may have been even more done unofficially. We don’t know because there’s never been an outside audit of Fort Knox since the 1950s.
But the point I’m making is that the market is bigger than any government or group of governments. And when something is undervalued, or conversely when something is overvalued, the market doesn’t like it. And the market will respond accordingly.
And what we’ve seen over the past few months, particularly, is this huge demand for physical gold. A wave of buying because price is so cheap. Here at $1,270 an ounce, just like gold was cheap at $35 an ounce back in the 1960s. So it’s taking time, more time than I thought it would take.
But that’s the thing about markets. You can sort of forecast which way the market is heading, and you can determine which assets are overvalued or undervalued, but you can never predict the timing of these things. And what markets require is patience.
But as long as you’re acquiring an undervalued asset, you should be patient. And hope that eventually the market will return to a free market environment, without concerted government intervention trying to cap the gold price, and trying to deny the reality of the situation that gold is very undervalued at these levels.
There’s a bigger issue here too, Nathan. Gold has been money for 5,000 years. It didn’t stop being money in 1971. It stopped circulating as currency in 1971, but it’s still money because it’s useful in economic calculation. In other words, it’s still useful to measure the price of goods and services with gold to determine what’s truly happening.
An ounce of gold still buys the same amount of crude oil it did 60 years ago. You can’t say that for the dollar or any other national currency, which are constantly being debased. So even though gold doesn’t circulate as currency anymore, except in a few places like Turkey, and Vietnam, and parts of the Middle East, it’s still money. And it’s still useful for that reason. And eventually the manipulation and capping of the gold price will be overwhelmed, just like it was back in the 1960s when the London Gold Pool feel apart in March of 1968.
But the point I’m making is that the market is bigger than any government or group of governments. And when something is undervalued, or conversely when something is overvalued, the market doesn’t like it. And the market will respond accordingly.
And what we’ve seen over the past few months, particularly, is this huge demand for physical gold. A wave of buying because price is so cheap. Here at $1,270 an ounce, just like gold was cheap at $35 an ounce back in the 1960s. So it’s taking time, more time than I thought it would take.
But that’s the thing about markets. You can sort of forecast which way the market is heading, and you can determine which assets are overvalued or undervalued, but you can never predict the timing of these things. And what markets require is patience.
But as long as you’re acquiring an undervalued asset, you should be patient. And hope that eventually the market will return to a free market environment, without concerted government intervention trying to cap the gold price, and trying to deny the reality of the situation that gold is very undervalued at these levels.
There’s a bigger issue here too, Nathan. Gold has been money for 5,000 years. It didn’t stop being money in 1971. It stopped circulating as currency in 1971, but it’s still money because it’s useful in economic calculation. In other words, it’s still useful to measure the price of goods and services with gold to determine what’s truly happening.
An ounce of gold still buys the same amount of crude oil it did 60 years ago. You can’t say that for the dollar or any other national currency, which are constantly being debased. So even though gold doesn’t circulate as currency anymore, except in a few places like Turkey, and Vietnam, and parts of the Middle East, it’s still money. And it’s still useful for that reason. And eventually the manipulation and capping of the gold price will be overwhelmed, just like it was back in the 1960s when the London Gold Pool feel apart in March of 1968.
- Source, Sprott Money:
Friday, October 25, 2013
CFTC - Whose Interest Are Really Being Served?
I think the CFTC was following orders from above. And the orders from above came down that, yes there’s been interventions in the gold market, and the market is being manipulated, but it’s being done by the bank for its client. Its client being the US government, and more specifically, the Exchange Stabilization Fund. So I think, essentially, the CFTC bowed to a higher authority.
But more generally, you have to really look at what’s going on in Washington DC these days. And not just with the CFTC, but generally. With a lot of these regulatory and bureaucratic organizations, whose interests are really being served? Is it Wall Street’s interests or is it Main Street’s interests? I think this is just another evidence that, in this particular case, Wall Street’s interests have been put over Main Street’s interests. Which is unfortunate, but that’s the reality of the world in which we live today.
But more generally, you have to really look at what’s going on in Washington DC these days. And not just with the CFTC, but generally. With a lot of these regulatory and bureaucratic organizations, whose interests are really being served? Is it Wall Street’s interests or is it Main Street’s interests? I think this is just another evidence that, in this particular case, Wall Street’s interests have been put over Main Street’s interests. Which is unfortunate, but that’s the reality of the world in which we live today.
- Source, Sprott Money:
Wednesday, October 23, 2013
Ask The Expert - James Turk
- Source, Sprott Money:
Tuesday, October 15, 2013
Scramble For Tangible Assets
- Source, James Turk via USA Watchdog:
Sunday, October 13, 2013
Policy Makers Are Doing Little
Don’t put your faith on the pronouncements of any central planner. Rely instead on your own common sense, which hopefully has been well grounded by insights from parents or grandparents who lived through the collapse of the German Reichsmark, Serbian dinar, Argentine austral or any of dozens of other currency collapses. If you did not have that opportunity to learn from relatives who experienced a currency collapse firsthand, then I recommend that you read Mises, Rothbard and the other Austrian School scholars published at Mises.org.
Once you do, then decide for yourself whether the problem facing the US is cyclical or structural. Common sense and experience are telling me that it is structural.
Sadly, policy makers are doing little if anything about it. So we need to prepare for the consequences. The best way to do that of course is to own physical gold and silver.
Once you do, then decide for yourself whether the problem facing the US is cyclical or structural. Common sense and experience are telling me that it is structural.
Sadly, policy makers are doing little if anything about it. So we need to prepare for the consequences. The best way to do that of course is to own physical gold and silver.
- Source, James Turk via FGMR:
Friday, October 11, 2013
Hyperinflation and Destruction of the Dollar
Normally economic activity revives after a recession, which in turn leads to increased revenue for the federal government, like it did from 2004-2008 when the more rapid growth in revenue almost eliminated the deficit. But not this time. Revenue is increasing, but so are expenditures at almost the same rate.
Consequently, the deficit is not shrinking, which confirms a point I have made repeatedly for two years. The US is confronting a structural problem. It is not a cyclical one that will go away with improved economic activity. Importantly, the failure to address this problem will eventually lead to hyperinflation and the destruction of the dollar.
- James Turk via FGMR:
http://www.fgmr.com/cyclical-or-structural.html
Consequently, the deficit is not shrinking, which confirms a point I have made repeatedly for two years. The US is confronting a structural problem. It is not a cyclical one that will go away with improved economic activity. Importantly, the failure to address this problem will eventually lead to hyperinflation and the destruction of the dollar.
- James Turk via FGMR:
http://www.fgmr.com/cyclical-or-structural.html
Wednesday, October 9, 2013
Growth of National Debt Continues to Accelerate
The US federal government spent $369 billion in August, but only received $179 billion in revenue. The resulting $190 billion deficit was a record for any August and the third highest monthly deficit in the current fiscal year, which ends on September 30th.
Looking at this deficit another way, the federal government borrowed 51.6% of the dollars it spent in August. Consequently, the growth of the national debt continues to accelerate...
Looking at this deficit another way, the federal government borrowed 51.6% of the dollars it spent in August. Consequently, the growth of the national debt continues to accelerate...
- James Turk via FGMR:
Thursday, October 3, 2013
Thursday, September 26, 2013
The Danger of Currency Hyperinflation
One thing is certain in life, besides death and taxes, and that is if you expand the quantity of money prices eventually rise; or more accurately the purchasing power of debased money falls. The problem is how to measure currency debasement, and this has been a topic of heated debate since fiat currencies first developed. This has led me to propose a new measure of money, which at James Turk’s suggestion I am calling the Fiat Money Quantity (FMQ). The purpose is to gives us a measure of fiat money that enables us to assess the danger of currency hyperinflation.
- Source, ALASDAIR MACLEOD of James Turk Gold Money:
Thursday, September 19, 2013
Gold Will Finish 2013 at $1675 or Better
James Turk remains extremely bullish on the yellow metal and for good reason.
Turk believes gold will finish positive for the year and that this will be the 13th winner in a row. Perhaps he’s a bit overly optimistic, but he’s been right twelve years running and that’s good enough for us. He’s still seeing extremely powerful Asian buying, with China picking up Indian slack and we are heading into the strong gold buying season. Indian brides are happier when showered with gold.
Click Here to Listen to the FSN interview with James Turk
Turk believes gold will finish positive for the year and that this will be the 13th winner in a row. Perhaps he’s a bit overly optimistic, but he’s been right twelve years running and that’s good enough for us. He’s still seeing extremely powerful Asian buying, with China picking up Indian slack and we are heading into the strong gold buying season. Indian brides are happier when showered with gold.
Click Here to Listen to the FSN interview with James Turk
- Source, The Silver Doctors:
Tuesday, September 17, 2013
Sunday, September 15, 2013
Sunday, September 8, 2013
A Run on the Bank
This is a run on the bank, Eric ... You had inventories (of physical gold and silver) on the COMEX climbing for years. And now all of the sudden, over the past 8 months, they've taken this huge nosedive.
The gold is being withdrawn from the warehouses because it’s not being valued properly in the West. And it’s being shipped to the East where it is being valued properly. People in the East understand gold is very undervalued and it serves a very useful purpose at this time -- the fact that it’s money outside of the banking system.
- James Turk via King World News:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/8/5_Turk_-_LBMA_Fractional_Reserve_Gold_System_Is_Disintegrating.html
The gold is being withdrawn from the warehouses because it’s not being valued properly in the West. And it’s being shipped to the East where it is being valued properly. People in the East understand gold is very undervalued and it serves a very useful purpose at this time -- the fact that it’s money outside of the banking system.
- James Turk via King World News:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/8/5_Turk_-_LBMA_Fractional_Reserve_Gold_System_Is_Disintegrating.html
Monday, September 2, 2013
Governments Think They Have a Recovery
US consumers are more responsive to confidence in stock markets and property prices than in the UK, and here the news has been bullish. Interest rates are low, and they will rise, so buy those big-ticket items now. The cost of buying and financing the average house purchase has already risen an estimated 40%.
Governments and economists will think they have the recovery they have wished for. Unfortunately it will almost certainly be marred by price inflation greater than the increase in demand suggests. So while nominal GDP growth rates will turn out to be somewhat better than currently expected, the talk will be of temporary capacity constraints.
The end result is that while central banks will realise that price inflation is a growing problem they will be reluctant to use higher interest rates to choke off inflation. And if consumers see central banks are behind this curve, further consumer borrowing will be encouraged.
Governments and economists will think they have the recovery they have wished for. Unfortunately it will almost certainly be marred by price inflation greater than the increase in demand suggests. So while nominal GDP growth rates will turn out to be somewhat better than currently expected, the talk will be of temporary capacity constraints.
The end result is that while central banks will realise that price inflation is a growing problem they will be reluctant to use higher interest rates to choke off inflation. And if consumers see central banks are behind this curve, further consumer borrowing will be encouraged.
- Alasdair Macleod of James Turk's Goldmoney:
Saturday, August 31, 2013
Physical Gold Being Dishoarded
My expectation going forward from here is the gold forward rate is just one of these signals that there is a lot of stress in the (fractional reserve gold) system, and that the stress in the system is ultimately going to be met by higher gold prices, because it takes higher gold prices to entice people to get rid of their gold and accept a national currency in exchange.
And it’s this physical gold (being) dis-hoarded from the above ground stock that ultimately relieves the pressure and the stress that we are now seeing in the LBMA system.
And it’s this physical gold (being) dis-hoarded from the above ground stock that ultimately relieves the pressure and the stress that we are now seeing in the LBMA system.
- James Turk via King World News:
Thursday, August 29, 2013
Physical Gold Cannot be Created Out of Thin Air
The LBMA site is reporting the gold forward rate as a negative, meaning that gold forward rates are higher than (U.S.) dollar interest rates. In theory, this isn't supposed to happen. Gold interest rates are always lower than dollar interest rates for one important reason: Physical gold cannot be created by bookkeeping entries.
- James Turk via King World News:
Thursday, August 22, 2013
Shortage and Tightness in Gold Supply
A “shortage or tightness of supply” means that unless demand slackens or supply increases, the price must rise. Given the strong demand for physical gold at the moment, a decline in demand at current price levels seems unlikely.
In contrast to national currencies, the supply of which can be increased to any quantity by mere bookkeeping entries, physical gold comes from two sources – new mine production or the existing aboveground stock. But mine production is relatively fixed. As I explain in The Aboveground Gold Stock: Its Importance and Its Size, the aboveground stock of gold grows consistently year after year by 1.8% per annum, which is not rapid enough to satisfy current demand.
Consequently, the present “shortage or tightness of supply” of gold can only be relieved from its existing aboveground stock. The only way for that to happen is for the gold price to rise high enough to entice people to exchange their physical metal for dollars, which is what happened the last two times gold was backwardated.
In summary, when gold backwardated in 1999 and in 2008, it marked important lows and key turning points in the gold price, which thereafter began multi-year uptrends. I expect the same outcome to be repeated now given that gold is once again in backwardation.
In contrast to national currencies, the supply of which can be increased to any quantity by mere bookkeeping entries, physical gold comes from two sources – new mine production or the existing aboveground stock. But mine production is relatively fixed. As I explain in The Aboveground Gold Stock: Its Importance and Its Size, the aboveground stock of gold grows consistently year after year by 1.8% per annum, which is not rapid enough to satisfy current demand.
Consequently, the present “shortage or tightness of supply” of gold can only be relieved from its existing aboveground stock. The only way for that to happen is for the gold price to rise high enough to entice people to exchange their physical metal for dollars, which is what happened the last two times gold was backwardated.
In summary, when gold backwardated in 1999 and in 2008, it marked important lows and key turning points in the gold price, which thereafter began multi-year uptrends. I expect the same outcome to be repeated now given that gold is once again in backwardation.
- Source, Goldmoney:
Wednesday, August 21, 2013
Gold Will Finish 2013 At 1675 Or Better
James Turk came back on the show after a long haitus. He's extremely bullish on the yellow metal and for good reason. It's been going back up as of late and we're not seeing very much resistance on the upside. James is thinking that it will finish positive for the year and that this will be the 13th winner in a row. Perhaps he's a bit overly optimistic, but he's been right twelve years running and that's good enough for us. He's still seeing extremely powerful Asian buying, with China picking up Indian slack and we are heading into the strong gold buying season. Indian brides are happier when showered with gold.
- Source, Financial Survival Network:
Thursday, August 15, 2013
James Turk on Gold Seek Radio August 14th 2013
James Turk appears on Gold Seek Radio and talks about gold backwardation and the depleting inventories of the precious metals worldwide.
- Source, Gold Seek Radio:
Thursday, August 8, 2013
Gold Backwardation Has Only Happened Twice
Gold backwardation is an abnormal condition, but theory and practice are different things. It is extremely rare for gold to be in backwardation, but it does happen when governments intervene in the market process. In this regard, gold is different from crude oil, soybeans and all other commodities, any and all of which can be – and frequently are – in backwardation. Gold has an interest rate. Lumber, sugar, corn and all other commodities do not. Their “cost of carry” to determine their future price is based mainly on warehousing fees that need to be paid for their storage.
More to the point, gold is money because it is accumulated. Essentially all the gold mined throughout history exists in its aboveground stock, whereas commodities get consumed and disappear. They are not money, as I explain in The Aboveground Gold Stock: Its Importance and Its Size.
So while commodity backwardation is not a unique event, gold backwardation is rare. Even though gold backwardation cannot happen in theory, it does occur when government intervention loses its desired effect, meaning that market forces are overpowering government attempts at manipulation.
Until now gold backwardation has only happened two times since this bull market in gold began back in 1999, and each prior occurrence lasted only a few days. In both instances market forces briefly overpowered government interventions aimed at manipulating interest rates. So gold backwardation does occasionally occur in spite of government intervention because central banks cannot “print” physical gold to alleviate demand pressures.
More to the point, gold is money because it is accumulated. Essentially all the gold mined throughout history exists in its aboveground stock, whereas commodities get consumed and disappear. They are not money, as I explain in The Aboveground Gold Stock: Its Importance and Its Size.
So while commodity backwardation is not a unique event, gold backwardation is rare. Even though gold backwardation cannot happen in theory, it does occur when government intervention loses its desired effect, meaning that market forces are overpowering government attempts at manipulation.
Until now gold backwardation has only happened two times since this bull market in gold began back in 1999, and each prior occurrence lasted only a few days. In both instances market forces briefly overpowered government interventions aimed at manipulating interest rates. So gold backwardation does occasionally occur in spite of government intervention because central banks cannot “print” physical gold to alleviate demand pressures.
- Source, GoldMoney:
Tuesday, August 6, 2013
Central Bank Manipulation is Being Overpowered
Market forces overpowering central bank manipulation can explain what is now happening in gold. The US government does not want gold to go into backwardation because it means that people would rather hold physical gold than dollars, which undermines the power that comes with being the world’s reserve currency. But as we can see in the following table that presents the US dollar spot gold price and forwards against gold, market forces are prevailing to some extent over the Federal Reserve’s attempts to control interest rates.
- James Turk via Goldmoney:
Sunday, August 4, 2013
There Are No Markets Anymore
The answer is straightforward. Interest rates are a reflection of risk. The interest rate structure in the above table implies that the pound has a higher interest rate because it is more likely to be debased by government and central bank policy (i.e., lose purchasing power) than the dollar, which itself is more likely to be debased than the euro. Carrying this concept one step further, the pound is in contango (as are the dollar and euro) against the Indian rupee and South African rand for example, both of which have higher interest rates than the pound because they have a greater risk of being debased by government and central bank mismanagement.
However, the interest rates of all national currencies need to be viewed cautiously. As Chris Powell of GATA.org famously declared in 2008: “There are no markets anymore, just interventions.” So rather than being a reflection of true market conditions, interest rates today result from heavy-handed central bank manipulations, thwarting real and accurate price discovery by the market.
However, the interest rates of all national currencies need to be viewed cautiously. As Chris Powell of GATA.org famously declared in 2008: “There are no markets anymore, just interventions.” So rather than being a reflection of true market conditions, interest rates today result from heavy-handed central bank manipulations, thwarting real and accurate price discovery by the market.
- James Turk via a recent GoldMoney article, read the full article here:
Tuesday, July 30, 2013
Physical Metals Are Cheap
"The physical market is starting to drive the price of the metal, rather than what we have seen the past several months where paper selling drove gold and silver prices to abnormally low levels. The bottom line, Eric, is that in a year or two when we look back at today, we will marvel at how cheap the prices of physical gold and physical silver plummeted to."
- James Turk via King World News:
Sunday, July 28, 2013
Western Central Planners Will Ultimately Fail
"The dis-hoarding by central banks has caused the gold price to drop precipitously, but the central bank's use of gold makes clear gold's greatest attribute, which is the exceptional liquidity gold provides. Gold is money, and in this case it is rainy-day money in the sense that if I am right about how it is being used here, it is giving insolvent banks a lifeline.
The net result is that gold continues to flow from the West to the East where it is more highly valued. But even if desperate Western central banks are dis-hoarding gold in order to bail-out insolvent commercial banks, don't take your eye off the ball. Keep accumulating physical gold and silver because they have always stood the test of time as the world’s only true money. All of these schemes by Western central planners will ultimately fail and the current financial system will end in disaster. As the system implodes, one of the only things left standing will be physical gold and silver."
The net result is that gold continues to flow from the West to the East where it is more highly valued. But even if desperate Western central banks are dis-hoarding gold in order to bail-out insolvent commercial banks, don't take your eye off the ball. Keep accumulating physical gold and silver because they have always stood the test of time as the world’s only true money. All of these schemes by Western central planners will ultimately fail and the current financial system will end in disaster. As the system implodes, one of the only things left standing will be physical gold and silver."
- James Turk via King World News:
Friday, July 26, 2013
Demand for Physical Gold and Silver is Extraordinary
James Turk of Goldmoney.com predicts, "It's inevitable you are going to see bail-ins as we go forward from here because the capital just doesn't exist." He also says gold is going much higher in a scramble for tangible assets. Turk points out, "The problems we've been confronting the past several years haven't gone away . . . governments have been trying to buy time, but they aren't coming up with any solutions."
- Source, USA Watch Dog:
http://usawatchdog.com/
- Source, USA Watch Dog:
http://usawatchdog.com/
Wednesday, July 24, 2013
Gold, Silver and the Coming Debt Crisis
Friday, July 19, 2013
Cyprus A Wake Up Call
We believe everyone should have the right to choose their own currency.
- Source, James Turk Gold Money and Bitcoin Magazine:
http://www.bitcoinmagazine.com
Wednesday, July 17, 2013
James Turk - The US Economy and Gold
James Turk joins Jim Puplava on Financial Sense. He discusses the stagnant US economy and the stubborn unemployment rate. Of course he also discusses gold.
- Source, Financial Sense:
Saturday, July 13, 2013
The Dark Side of QE
"Interest rates are rising because of QE. We have reached a tipping point, meaning that QE can no longer keep interest rates from rising. The market is now focusing on the dark-side of QE, which is the inflationary consequences of all this money printing.
Rising interest rates with QE ongoing means that we have reached the stage where the Fed has now lost control. This result was inevitable because market forces always beat central planners and its groupies in the end. Only the timing of this event could not be predicted."
- James Turk via King World News:
Thursday, July 11, 2013
People Are Still Looking For An Economic Recovery
"There are two major events under-way which everybody should be paying close attention, Eric. The first one is rising interest rates. You and I have already focused on this point to some extent, but we saw another huge surge in rates to a new multi-year high after the unemployment report on Friday, which is very telling. We need to look at this rise in interest rates in relation to an economy that is barely crawling along.
Here we are nearly five years after the 2008 collapse, yet people are still looking for an economic recovery...."
Here we are nearly five years after the 2008 collapse, yet people are still looking for an economic recovery...."
- James Turk via a recent King World News interview, read the full interview here:
Tuesday, July 9, 2013
Why the Selling Frenzy in Gold?
"Even though Western central banks killed the gold price during the last couple of months with their dis-hoarding we do not yet know precisely why they killed the gold price. What did the central planners want to accomplish by dis-hoarding so much metal in such a short period of time?
Of course we know the obvious reasons, like trying to keep people in national currencies, and the various risks these currencies involve, particularly the risk of keeping money on deposit in banks. Reasons such as these have been in play for more than a decade as the central planners have attempted to hold together a financial system that is no longer sustainable because of insolvent banks, unmanageable levels of debt and governments that cannot control their spending. These reasons have been well documented by the various analysts whose work has been published at places such as GATA and King World News.
But we have never before seen such a massive amount of dis-hoarding from central banks in such a short period of time. Given that the central bankers all recognize the importance of gold as a key monetary asset on their balance sheet and one they only sell gold reluctantly, why did they do it? Why the selling frenzy? And why right now?"
Of course we know the obvious reasons, like trying to keep people in national currencies, and the various risks these currencies involve, particularly the risk of keeping money on deposit in banks. Reasons such as these have been in play for more than a decade as the central planners have attempted to hold together a financial system that is no longer sustainable because of insolvent banks, unmanageable levels of debt and governments that cannot control their spending. These reasons have been well documented by the various analysts whose work has been published at places such as GATA and King World News.
But we have never before seen such a massive amount of dis-hoarding from central banks in such a short period of time. Given that the central bankers all recognize the importance of gold as a key monetary asset on their balance sheet and one they only sell gold reluctantly, why did they do it? Why the selling frenzy? And why right now?"
- James Turk via King World News:
Sunday, July 7, 2013
Return to Sound Money
"The outlook for gold and silver remains very bullish, and will continue to be as long as central planners intervene in markets, instead of taking the prudent course which is to return to sound money based on precious metals."
- Source Gold Money:
Friday, July 5, 2013
Deplorable Policy Ushered In
"Beginning in the 1970s, countries around the world led by the United States began pursuing monetary policies that no longer encouraged savings. The relatively sound money that had previously prevailed, when it was said that the “dollar was as good as gold”, gave way to deplorable policy that ushered in decades of money debasement. Currency as a consequence has lost purchasing power over time, and the interest that banks pay on savings accounts has not sufficiently compensated the saver. In other words, even though the nominal value of a savings account rose from the interest income being earned, the overall purchasing power of the money being saved was losing value."
- James Turk via a recent Gold Money article:
Wednesday, July 3, 2013
500 Tons Of Gold Now Being Moved Each Month!
"There have been bottlenecks in moving metal, which is clearly flowing from West to East. Supply from mining in the West, excluding Russia and China which do not export their production, is about 160 tons per month. In addition, there may be another 50-to-80 tons per month of gold already in the aboveground stock which moves around as a result of normal flows among countries and changing demand for different gold products.
But I estimate that recently over 500 tons per month have been moving around. This has had the effect of creating some transportation bottlenecks. The transport providers have not been able to cope with this remarkable development. Similarly, the refiners have not been able to cope with the historic level of demand by fabricating the metal needed to meet the frantic buying, even though they are operating 24/7. So we have to ask ourselves, where is all this metal coming from?"
But I estimate that recently over 500 tons per month have been moving around. This has had the effect of creating some transportation bottlenecks. The transport providers have not been able to cope with this remarkable development. Similarly, the refiners have not been able to cope with the historic level of demand by fabricating the metal needed to meet the frantic buying, even though they are operating 24/7. So we have to ask ourselves, where is all this metal coming from?"
- Source, James Turk via a recent King World News interview:
Sunday, June 30, 2013
Money Out of Thin Air
"Mr Bernanke’s objective is not to save the dollar. He thinks artificially low interest rates from repeated market interventions by central planners will enable him to save an over leveraged financial system that perpetuates government power by giving central planners the authority to create money out of thin air. Mr Bernanke is trying to prove that central planning and fiat currency are good things."
- James Turk via Gold Money:
Friday, June 28, 2013
Saving Precious Metals is Still a Good Strategy
Saving the precious metals has been a good strategy for the past 12 years, but is it still a good strategy for the foreseeable future? Yes, for four reasons.
Consequently, saving a weight of precious metals suited to your personal needs by accumulating them through a disciplined cost-averaging programme remains a sound strategy to provide for an uncertain future. So for now, I continue to recommend it.
- Accumulating savings is itself a worthwhile and valuable objective for everyone to prepare for an uncertain future, but saving a national currency results in the loss of purchasing power. In a continuation of the trend now well established over the past 12 years, gold and silver are likely to appreciate faster than the rate of inflation because central bank and government actions are debasing national currency, so demand for the precious metals will continue to grow
- The precious metals remain undervalued, as explained by my Fear Index and Gold Money Index. Silver remains undervalued relative to gold as evidenced by their historically high ratio.
- Owning gold and silver are useful diversifiers for everyone’s portfolio. Diversification is always a good way to mitigate unpredictable outcomes and the risks from an uncertain future.
- Gold and silver are money outside the banking system, which is still teetering on the edge of insolvency, meaning that more events like Northern Rock, Lehman Brothers and Cyprus are likely.
Consequently, saving a weight of precious metals suited to your personal needs by accumulating them through a disciplined cost-averaging programme remains a sound strategy to provide for an uncertain future. So for now, I continue to recommend it.
- James Turk via a recent Gold Money interview:
Wednesday, June 26, 2013
How Can You Save Money Today?
"Over time, the concept of saving money has lost general acceptance. No longer do people put away money in a savings account for a rainy day, retirement, or even just to save money to purchase a consumer good. Nevertheless, the worth whileness of these objectives has not been diminished by modern disruptions to money nor has the resulting monetary disorder changed the obvious necessity that everyone needs to plan and prepare for an uncertain future. So savings remain as important today as at any time in the past, which poses an obvious problem.
How can you save money today when central bank and government policy result in the erosion of your purchasing power when saving any national currency?
The answer lies in the money being saved. Save gold and/or silver instead of any national currency."
How can you save money today when central bank and government policy result in the erosion of your purchasing power when saving any national currency?
The answer lies in the money being saved. Save gold and/or silver instead of any national currency."
- James Turk via a recent Gold Money article:
Saturday, June 22, 2013
How High Could Precious Metals Go?
"At these levels, as long as you are taking a long-term view and recognizing the monetary problems that we face, and that these problems are likely going to lead to a blow up in terms of the currency, who is to say how high these precious metals could go? But clearly I remain in the bullish camp.”
- James Turk via a King World News interview, read the full interview here:
Thursday, June 20, 2013
Money Outside of the Banking System
"Physical metal, whether gold or silver, does not have counterparty risk and is therefore a safe-haven. It is money outside of the banking system."
Tuesday, June 18, 2013
No One Can Predict the Future
"No one can predict what will happen in the future, but gold’s 5,000-year history as money provides a lot of comfort to everyone seeking prudent ways to get through the monetary upheaval that is rocking the world today."
- James Turk via a GoldMoney article:
Wednesday, June 12, 2013
5000 Year History as Sound Money
"Physical gold and silver are tangible assets, they do not have counterparty risk. Their value is not based on any bank or central bank’s promise, but rather, on those individuals who appreciate their 5,000-year history as sound money and usefulness in economic calculation."
- James Turk via a GoldMoney article, read the full article here:
Thursday, June 6, 2013
The Next Big Banking Crisis
"As economies head into the tank, more loans in the banking system will become impaired, and many banks around the world remain over-leveraged with weak balance sheets. As interest rates rise, the long-term interest rates banks have locked into in on their loan books will mean the value of those assets will be declining, further adding to bank woes.
Even the Fed's and other central bank balance sheets are not immune to the loss in value of the fixed-rate paper they own when yields climb. In other words, the next big banking crisis may be just around the corner, and the best way to prepare for it is to own physical gold and silver.”
Even the Fed's and other central bank balance sheets are not immune to the loss in value of the fixed-rate paper they own when yields climb. In other words, the next big banking crisis may be just around the corner, and the best way to prepare for it is to own physical gold and silver.”
- James Turk via a recent King World News interview, read the full interview here:
Tuesday, June 4, 2013
A Selling Climax in Gold and Silver
“Gold has now risen two weeks in a row, Eric, and with the strong showing today, maybe it will end this week by scoring three in a row. That would be a very positive development. The really important point is that gold and silver are steadily moving further away from the low made on Monday, May 20th, as evidenced by their short-term moving averages.
You will recall that both precious metals opened lower that day and sold off badly before putting in a remarkable upside reversal as the day wore on. That day had all the earmarks of a selling climax in both gold and silver, so it could prove to be an important turning point and if so, the end of this long correction in the precious metals which would be a welcomed relief...."
You will recall that both precious metals opened lower that day and sold off badly before putting in a remarkable upside reversal as the day wore on. That day had all the earmarks of a selling climax in both gold and silver, so it could prove to be an important turning point and if so, the end of this long correction in the precious metals which would be a welcomed relief...."
- James Turk via a recent King World News interview, read the full interview here:
Monday, June 3, 2013
James Turk Refutes Warren Buffets View on Gold
by James Turk:
In my view, there is only one conclusion possible, because there are only two alternatives when it comes to allocating assets in any portfolio, whether that of an individual or an institution. Your assets are either an investment, which gold is not; or money, which gold indeed is.
Mr Buffet defines investing as “…the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power…in the future”. In other words, you put your money at risk hoping that you have made a good decision, so that more money is returned to you from your investment in the future.
Note though that Mr Buffett purposefully uses the term ‘purchasing power’, and not money. He clearly understands that money today is no longer a constant measure of wealth. The purchasing power of £100 today will be less than £100 a year from now because of inflation. Thus, the success of an investment should be measured by purchasing power to determine whether your investment actually increases your wealth.
If money were sound, to use a term rarely heard today, it would preserve purchasing power. When Sir Isaac Newton invented the classical Gold Standard circa 1700, he set into motion a monetary policy that would preserve the pound’s purchasing power, which it did. For more than two centuries the purchasing power of the pound was essentially unchanged – until 1914 when Newton’s invention was abandoned, notwithstanding its remarkable track record. Money has never been the same. But what about gold?
Mr Buffett explains that gold is “incapable of producing anything”. If you take the gold you own, melt it down into a cube, and check back years later, he observes that the cube “…will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond”. But the same can be said of all money.
If you take a stack of pound notes and store them in a vault, and then check back years later, they too will not “respond”. They also will be unchanged, at least as far as their appearance goes. But what about the purchasing power of that stack of pound notes, which is the important question that needs to be asked?
Did that stack of pound notes preserve purchasing power as effectively as gold? The answer can be found in the following table which presents gold’s annual appreciation against nine of the world’s major currencies for the past 12 years.
| Gold % Annual Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| USD | AUD | CAD | CNY | EUR | INR | JPY | CHF | GBP | |
| 2001 | 2.5% | 11.3% | 8.8% | 2.5% | 8.1% | 5.8% | 17.4% | 5.0% | 5.4% |
| 2002 | 24.7% | 13.5% | 23.7% | 24.8% | 5.9% | 24.0% | 13.0% | 3.9% | 12.7% |
| 2003 | 19.6% | -10.5% | -2.2% | 19.5% | -0.5% | 13.5% | 7.9% | 7.0% | 7.9% |
| 2004 | 5.2% | 1.4% | -2.0% | 5.2% | -2.1% | 0.0% | 0.9% | -3.0% | -2.0% |
| 2005 | 18.2% | 25.6% | 14.5% | 15.2% | 35.1% | 22.8% | 35.7% | 36.2% | 31.8% |
| 2006 | 22.8% | 14.4% | 22.8% | 18.8% | 10.2% | 20.5% | 24.0% | 13.9% | 7.8% |
| 2007 | 31.4% | 18.1% | 11.5% | 22.9% | 18.8% | 17.4% | 23.4% | 22.1% | 29.7% |
| 2008 | 5.8% | 33.0% | 31.1% | -1.0% | 11.0% | 30.5% | -14.0% | -0.3% | 43.7% |
| 2009 | 23.9% | -3.6% | 5.9% | 24.0% | 20.4% | 18.4% | 27.1% | 20.3% | 12.1% |
| 2010 | 29.8% | 15.1% | 24.2% | 25.5% | 40.2% | 25.3% | 13.9% | 17.4% | 36.3% |
| 2011 | 10.2% | 8.8% | 11.9% | 5.1% | 12.7% | 30.4% | 3.9% | 10.2% | 9.2% |
| 2012 | 7.0% | 5.5% | 4.4% | 5.9% | 5.2% | 11.0% | 20.5% | 4.4% | 2.3% |
| Average | 16.8% | 11.0% | 12.9% | 14.0% | 13.7% | 18.3% | 14.5% | 11.4% | 16.4% |
Against the British pound, gold has appreciated by 16.4% per annum on average. This result far exceeds the interest one could earn from bank deposits during this period.
The difference between what one earned from a bank deposit, and the rising gold price, is particularly striking at the moment because of the near-zero interest rate conditions which central banks are imposing on the market economy. The cumulative detrimental effect on savers from years of suppressed interest rates has been catastrophic. Their wealth has shrunk because they are not able to earn enough interest on their savings to compensate them for the loss of purchasing power from inflation and other insidious debasements of national currencies.
The low deposit rate which has lasted now for several years is one factor explaining why so many people are finding it increasingly difficult to maintain the standard of living which they previously enjoyed. It also explains, along with the above table, why gold may be a prudent alternative to traditional bank savings accounts; or at least be a meaningful diversifier in which to hold part of one’s savings, until bank deposit rates return to normal levels.
Admittedly, gold’s appreciation has not been a smooth ride. Though gold has risen against the British pound in 11 of the past 12 years, the annual rates of change have ranged from a loss of -2.0% in 2004 to an astounding annual gain of 43.7% in 2008, the year of the financial crisis, which highlights another important point.
Gold is a safe-haven. This attribute results from the fact that gold is a tangible asset. It is money that is not based on any bank’s promise or central bank policy.
The collapse of Northern Rock and Lehman Brothers are events that will not be forgotten. But even more lessons have been learned recently from the banking collapse in Cyprus. Depositor money was grabbed by the monetary authorities to bail-out insolvent banks. Even savers with small deposits were hurt by the capital controls that were imposed because these restrictions prevented deposits from being withdrawn, except nominal amounts that could be disbursed through ATMs.
Thus, gold offers two clear advantages over the British pound and other national currencies. It can preserve purchasing power, which is an attribute that is particularly important when the interest rate on bank deposits is not high enough to offset the erosion of purchasing power from inflation. Second, a tangible asset like gold eliminates the uncertainty of not knowing whether keeping money in a bank is safe.
From reading Mr Buffett’s various statements about money and investments, it is clear that he has a nuanced view. He sidesteps gold and its 5,000-year history as money, but you should not. Gold still has an important place in everyone’s portfolio.
Given Warren Buffett's well-known views about gold, it's ironic that one of the few politicians in 20th century America with a clear appreciation of gold's use as money was one Howard Buffett – a four-term Republican congressman from Omaha, Nebraska and Warren's father. For a more detailed examination of the contrasting views of the Buffetts on this subject, readers might be interested in the following essay, published by the GoldMoney Foundation: 'A Perspective on Money from Howard and Warren Buffett'.
In my view, there is only one conclusion possible, because there are only two alternatives when it comes to allocating assets in any portfolio, whether that of an individual or an institution. Your assets are either an investment, which gold is not; or money, which gold indeed is.
Mr Buffet defines investing as “…the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power…in the future”. In other words, you put your money at risk hoping that you have made a good decision, so that more money is returned to you from your investment in the future.
Note though that Mr Buffett purposefully uses the term ‘purchasing power’, and not money. He clearly understands that money today is no longer a constant measure of wealth. The purchasing power of £100 today will be less than £100 a year from now because of inflation. Thus, the success of an investment should be measured by purchasing power to determine whether your investment actually increases your wealth.
If money were sound, to use a term rarely heard today, it would preserve purchasing power. When Sir Isaac Newton invented the classical Gold Standard circa 1700, he set into motion a monetary policy that would preserve the pound’s purchasing power, which it did. For more than two centuries the purchasing power of the pound was essentially unchanged – until 1914 when Newton’s invention was abandoned, notwithstanding its remarkable track record. Money has never been the same. But what about gold?
Mr Buffett explains that gold is “incapable of producing anything”. If you take the gold you own, melt it down into a cube, and check back years later, he observes that the cube “…will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond”. But the same can be said of all money.
If you take a stack of pound notes and store them in a vault, and then check back years later, they too will not “respond”. They also will be unchanged, at least as far as their appearance goes. But what about the purchasing power of that stack of pound notes, which is the important question that needs to be asked?
Did that stack of pound notes preserve purchasing power as effectively as gold? The answer can be found in the following table which presents gold’s annual appreciation against nine of the world’s major currencies for the past 12 years.
| Gold % Annual Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| USD | AUD | CAD | CNY | EUR | INR | JPY | CHF | GBP | |
| 2001 | 2.5% | 11.3% | 8.8% | 2.5% | 8.1% | 5.8% | 17.4% | 5.0% | 5.4% |
| 2002 | 24.7% | 13.5% | 23.7% | 24.8% | 5.9% | 24.0% | 13.0% | 3.9% | 12.7% |
| 2003 | 19.6% | -10.5% | -2.2% | 19.5% | -0.5% | 13.5% | 7.9% | 7.0% | 7.9% |
| 2004 | 5.2% | 1.4% | -2.0% | 5.2% | -2.1% | 0.0% | 0.9% | -3.0% | -2.0% |
| 2005 | 18.2% | 25.6% | 14.5% | 15.2% | 35.1% | 22.8% | 35.7% | 36.2% | 31.8% |
| 2006 | 22.8% | 14.4% | 22.8% | 18.8% | 10.2% | 20.5% | 24.0% | 13.9% | 7.8% |
| 2007 | 31.4% | 18.1% | 11.5% | 22.9% | 18.8% | 17.4% | 23.4% | 22.1% | 29.7% |
| 2008 | 5.8% | 33.0% | 31.1% | -1.0% | 11.0% | 30.5% | -14.0% | -0.3% | 43.7% |
| 2009 | 23.9% | -3.6% | 5.9% | 24.0% | 20.4% | 18.4% | 27.1% | 20.3% | 12.1% |
| 2010 | 29.8% | 15.1% | 24.2% | 25.5% | 40.2% | 25.3% | 13.9% | 17.4% | 36.3% |
| 2011 | 10.2% | 8.8% | 11.9% | 5.1% | 12.7% | 30.4% | 3.9% | 10.2% | 9.2% |
| 2012 | 7.0% | 5.5% | 4.4% | 5.9% | 5.2% | 11.0% | 20.5% | 4.4% | 2.3% |
| Average | 16.8% | 11.0% | 12.9% | 14.0% | 13.7% | 18.3% | 14.5% | 11.4% | 16.4% |
Against the British pound, gold has appreciated by 16.4% per annum on average. This result far exceeds the interest one could earn from bank deposits during this period.
The difference between what one earned from a bank deposit, and the rising gold price, is particularly striking at the moment because of the near-zero interest rate conditions which central banks are imposing on the market economy. The cumulative detrimental effect on savers from years of suppressed interest rates has been catastrophic. Their wealth has shrunk because they are not able to earn enough interest on their savings to compensate them for the loss of purchasing power from inflation and other insidious debasements of national currencies.
The low deposit rate which has lasted now for several years is one factor explaining why so many people are finding it increasingly difficult to maintain the standard of living which they previously enjoyed. It also explains, along with the above table, why gold may be a prudent alternative to traditional bank savings accounts; or at least be a meaningful diversifier in which to hold part of one’s savings, until bank deposit rates return to normal levels.
Admittedly, gold’s appreciation has not been a smooth ride. Though gold has risen against the British pound in 11 of the past 12 years, the annual rates of change have ranged from a loss of -2.0% in 2004 to an astounding annual gain of 43.7% in 2008, the year of the financial crisis, which highlights another important point.
Gold is a safe-haven. This attribute results from the fact that gold is a tangible asset. It is money that is not based on any bank’s promise or central bank policy.
The collapse of Northern Rock and Lehman Brothers are events that will not be forgotten. But even more lessons have been learned recently from the banking collapse in Cyprus. Depositor money was grabbed by the monetary authorities to bail-out insolvent banks. Even savers with small deposits were hurt by the capital controls that were imposed because these restrictions prevented deposits from being withdrawn, except nominal amounts that could be disbursed through ATMs.
Thus, gold offers two clear advantages over the British pound and other national currencies. It can preserve purchasing power, which is an attribute that is particularly important when the interest rate on bank deposits is not high enough to offset the erosion of purchasing power from inflation. Second, a tangible asset like gold eliminates the uncertainty of not knowing whether keeping money in a bank is safe.
From reading Mr Buffett’s various statements about money and investments, it is clear that he has a nuanced view. He sidesteps gold and its 5,000-year history as money, but you should not. Gold still has an important place in everyone’s portfolio.
Given Warren Buffett's well-known views about gold, it's ironic that one of the few politicians in 20th century America with a clear appreciation of gold's use as money was one Howard Buffett – a four-term Republican congressman from Omaha, Nebraska and Warren's father. For a more detailed examination of the contrasting views of the Buffetts on this subject, readers might be interested in the following essay, published by the GoldMoney Foundation: 'A Perspective on Money from Howard and Warren Buffett'.
- Source, GoldMoney:
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