Tuesday, May 28, 2013

Gold and Silver Should be Accumulated

"My recommendation for gold and silver remains unchanged. They should continue to be accumulated. View them as your savings, which everyone needs whether planning for retirement, purchasing some consumer good or just being prudent for a “rainy day”. It does not make sense to save national currency because the interest income they offer is insufficient to offset the risks of holding these currencies. These risks are real and threatening because countries around the globe are going through another of the recurring financial busts that periodically convulse national currencies, banks and more generally, the economy.

We can expect more turmoil given that the interrelated sovereign debt and bank insolvency problems have not been resolved. Until they are, I therefore will continue to rely on physical gold and silver for safety. They are the ultimate safe-haven and therefore an important diversifier in everyone’s portfolio."

- James Turk via a GoldMoney article, read the full article here:

Wednesday, May 22, 2013

People Are Exiting the Currency

“I was looking at the cash flow situation of the US government. Back in the 1990s and in the first part of the century, the government was spending, in gross interest expense, approximately 20% of all of the revenue that was being received.
Now, even though the debt has gone up, because interest rates have gone down we've dropped to about 14% or 15% of revenue being spent, but it looks like it’s starting to turn. The new debt being added to the US government and the interest rate burden which is resulting from that is now starting to go into the power of compounding.
In other words the government looks like it’s probably at the stage where it needs to borrow just to start paying interest. When that happens you are in the early stages of hyperinflation. Maybe that’s what the stock market is telling us because when you do have hyperinflation, you see the stock market going up and up, not because of valuations, but because people are exiting the currency."

- James Turk via a King World News interview, read the full interview here:

Monday, May 20, 2013

Central Planners Will Need to Retreat

"If the central planners want to keep the precious metals at these low prices, to meet the demand for physical metal they will need to empty more metal from central bank vaults, or borrow metal from the ETFs as some have suggested is happening. Otherwise, the central planners will have to step back and stop their intervention, thereby letting the price of gold and silver rise so that demand tapers off, bringing demand and supply of physical metal back toward some kind of balance.

We've seen this same situation several times over the last twelve years. It is what I have been calling a “managed retreat.” Despite the current weakness, I firmly believe we have again entered a critical period where the central planners will need to retreat once again in order to let the gold and silver prices climb higher.”

- James Turk via a King World News interview:

Saturday, May 18, 2013

Banks and National Currencies Have Real Risks

"The underlying and most fundamental usefulness of the precious metals remains unchanged. They are money outside the banking system. The risks of depositing money in a bank are clear from the events of Cyprus, and before that debacle, Lehman Brothers, Northern Rock and countless other bank collapses that litter the landscape of monetary history. Banks and the national currencies they use have real risks."

- James Turk via a recent GoldMoney article:

Wednesday, May 15, 2013

This is Going to Lead to Hyperinflation

"My view is that we are in a fiat currency bubble, in other words currency backed by nothing. If you look at history, whenever you have these kinds of periods where people think they can come up with some new kind of currency, it’s absolutely crazy some of the harebrained schemes (people come up with).

What we have now is another harebrained scheme that says currency can be backed by nothing except government promises. But when you take gold out of the monetary system, what monetary history always shows is that you remove the monetary discipline from government spending.

We are in an environment now where the government is spending more and more money, borrowing more and more money, the central bank is turning that money into currency, and eventually this is going to lead to hyperinflation...."

- James Turk via a recent King World News interview, read the full interview here:

Monday, May 13, 2013

We Are Heading Towards Hyperinflation

"In every year since the 2008 financial crisis, the US federal government has been incurring an operating deficit of more than $1 trillion. Because it is spending more than it receives in revenue, it needs to borrow dollars to fund these deficits. These borrowings cause its total debt to grow, so the debt ceiling must be raised periodically to enable it to keep borrowing. The latest ceiling of $16.4 trillion was reached in January.

Rather than deal with out-of-control spending, politicians of both parties agreed to suspend the debt ceiling, meaning that there will be no limit on what the federal government can spend and borrow through May 18. On May 19, the debt ceiling will be raised to the total amount of debt outstanding as of that date, and as a consequence, at that time the debt limit must again be considered to enable more borrowing to fund what is likely to be another year in which the deficit exceeds $1 trillion. I fully expect that that this scheme will repeatedly be used to avoid facing any limit.

This mechanism eerily parallels a step taken by President Nixon in August 1971. Rather than address the financial imbalances the US government faced, he chose – in his words – to “suspend temporarily” the US dollar's constitutional link to gold. His “temporary” suspension has now lasted 42 years. This observation brings up an important point.

This current suspension of the debt ceiling is not going to be temporary. From now on, each time it comes up for consideration, I expect that the politicians will just keep extending the suspension again and again. They will always take the soft political option, just like the politicians did in the German, Serbian and Zimbabwean hyperinflations."

- Excerpt from a recent article wrote by James Turk, read the full article here:

Thursday, May 9, 2013

Extraordinary Delays For Physical Gold & Silver

"It is also important to point out, Eric, that the physical market for precious metals also has two distinct segments. These need to be looked at separately because to a certain extent they are driven by different factors. One segment is reasonably visible. This is the retail market for coins and small bars, those weighing up to a kilo, which is about 32 troy ounces.

The shortages of these products that exist at the moment are very apparent with many dealers, mints and refiners reporting that they have no stock to sell because of demand. There are also exceptionally high premiums reported for those transactions that are being completed.

These shortages are the result of a fabrication bottleneck. In other words, the surge by retail buyers pretty much everywhere in the world has resulted in a demand that cannot be filled. They have opened their pocketbooks to buy coins and small bars on this last take down in prices. The fabricators who make these coins and small bars just do not have the manufacturing capacity to ramp up production quickly enough to supply the product needed to meet this heightened demand."

- James Turk via a recent King World News interview, read the full interview here:

Monday, May 6, 2013

Hyperinflation of the US Dollar

"Out of control spending by a government is always the cause of hyperinflation. The debt ceiling had been the last remaining roadblock to unlimited federal government spending. By suspending the debt ceiling, the US government has given itself a blank cheque, taking one giant leap down the road leading to the hyperinflation of the US dollar."

- Excerpt from a recent article by James Turk, read the full article here:

Thursday, May 2, 2013

Bullish Forecast for Precious Metals

"An asset can appear overpriced while actually being good value if the currency being used to establish the price is itself losing purchasing power and overvalued. To restate this point another way, economic calculation requires sound money, which is one axiom that does remain unchanged over time. Without sound money, we will reach inaccurate conclusions about an asset’s value.

Using two mathematical formulas – my Fear Index and the Gold Money Index – I have repeatedly made the case that the US dollar is overvalued and gold and silver are good value. Since their unprecedented drop in price that began last week, I've been looking for fundamental reasons to change my analysis, and thus alter my bullish forecast for the precious metals.

Since then I still haven't found any reason to change to change my bullish outlook. Given their lower price, in my view gold and silver are simply better value than they were a week ago, and the dollar more overvalued."

- James Turk via a recent GoldMoney article: