James Grant is a highly regarded financial analyst, author and historian. As someone who has studied the financial markets for over 40 years he always provides insightful commentary on its dynamics and enjoys a huge following to his Interest Rate Observer (since 1983). In short when he speaks many listen. This is what he had to say this last week: “You look around the world and you see exchange rates are properly disorderly, when you look around the world of lending and borrowing - we are in a regime of price control by another name, so-called zero percent rates and quantitative easing by the world central banks. We are in one of the most radical periods of monetary experimentation in the annals of money, with a low probability of a favourable outcome. Given the disorder I see in the world due to monetary experimentation and the very low gold price, you want to have exposure to the reciprocal asset of the paper assets that are the most popular - so gold, to me, is now the conjunction of price, value and sentiment, and I am very bullish indeed. The recent fall in prices are terrifically vexing but a wonderful opportunity. The reasons for owning gold have not gone away. Gold thrives in periods of turbulence and disorder and uncertainty. I think we have all three of these things."
I don't know, but he is very anxious to exchange it for fiat. They tell you how wonderful the yellow stuff is but want as much of the green stuff that they can get their hands on. Go figure
You nailed it. There is a coin & bullion dealer here in Calif. by the name of Ralph Foster and he wrote a book on the history and evils of FIAT paper currency. And yet he is selling gold and silver like it's going out of style and the payment he is taking is Green American FIAT Dollars.
And yet he is selling gold and silver like it's going out of style and the payment he is taking is Green American FIAT Dollars. Paper is for day to day trading to make a profit. PMs are for hoarding in the hope of a future capital gain. If you sell $1000 spot worth of gold for $1100, you can buy back your gold on the spot market for $1000 and have $100 in paper to pay the food bill or buy gas for the Ferrari.
Don't follow the fluff advertising. Use your heads to determine how you feel about prospects for metals, both precious and industrial. The following should turn some heads . . . http://www.kitco.com/news/2015-07-31/US-paychecks-grow-at-record-slow-pace-in-2nd-quarter.html . . . and have others nodding while saying, "I told you so".
The cost of hiring new employees is skyrocketing due to benefit costs - so companies are taking active measures to outsource to the lowest common denominator and retain their existing talent. Speaking of which, my boss called me this morning and informed me that my compensation package was recently reviewed and I got a 10% bump this year (Technically I was underpaid - but aren't we all?). He must have known that I've been getting calls from recruiters all summer long. I digress. Nobody wants to see the writing on the wall. The market has peaked and can't get past, the hiring is slowing, the cost of living is going up, and we're about to go into an election year with a "free for all" since it's a lame duck year. I see a 2 year cycle of uncertainty starting up right about - 2 months ago... Then again I am not a paid professional pundit. YMMV
I guess I'm a glass half full kinda guy. I see the tremendous recovery our country has experienced since 2008. The stock market has almost doubled in value, the Dollar is much stronger and in the SF Bay Area of Calif. property values are going through the roof. My own personal experience..... I have two properties in the Bay Area and both have more than doubled in value since 2008. Me and my wife's 401k's are doing very well because of the very strong stock market. Both of us have a good chunk in SP500 funds. I remember 2008, and we are in much better times now.
Unfortunately the OP's link is to a one sided view. What's completely left out is the already high historical price based on fear from the 2008 economic crash.
Interesting. You don't think any of the things that made those exact things happen, rise in property value, increase in stock market and economy doing well, from 2001 to 2008 happening today? Do you really believe this "incredible recovery" is due to a fundamentally strong economy, people back at work with good paying jobs and no outside monetary influences causing this euphoria?
Well, I guess you are talking about increasing the money supply. As I have said many times, this has to happen. You can argue all day long on how much is correct, but keeping the money supply static will lead to deflation and stagnation of growth. So it really appears to me the recovery was just a result of the normal course of events. So if the want to call it QE forever, so be it. Hopefully the economy will grow to a point where even more money is needed. That's just the way it works. So instead of being ticked the FED printed money, understand that is the norm, that is what is expected, and the FED will do it again. Please plan accordingly
The problem is not the money supply . . . there's more than enough money out there. Consider the monstrous cash positions of the large caps, and all of the money offshore that could be repatriated. Consider all of the money banks are sitting on because most of the eager borrowers have poor credit records and cannot receive loans. The issue is that the people who used to spend it hand over fist are now concerned about spending it at the wrong time and on the wrong things. They want to know their money is well spent, and with no credible reason for them to believe now is the time, they are as tight-fisted as can be. No, we don't need more money in the economy, we need more money velocity. We need a reason to believe that a dollar spent will return at least a dollar in value . . . not promises of good times ahead. We need sustained performance across all industries . . . not one good quarterly report, followed by corrections to the report, or followed by a bad quarter. That does nothing to fuel the fire. We need a major psychological event . . .
There's a difference between recovery and gaining prosperity. We have recovered - a lot. But most outside of Wall St. have not completely recovered - and many are still way under water. Especially those that shorted their homes out, and trusted that they should just leave static investments in their 401k. You are in a particularly favorable real estate market - but I have seen that insanity my whole life (parents bought a house in Saratoga, CA for $46k in 1971 - Trulia's estimate on the house is $1.9million today). These days a million bucks in the bay area buys a small 3/2/2 tract home in a good neighborhood. The rest of the country isn't seeing that. Better than it was? Sure, but it was about as bad as it could get. Unemployment was at 15% and nobody had any savings to speak of. The government drained their coffers with extended unemployment benefits, bailouts. I admittedly survived it pretty well myself, but I'm still way behind theoretical projections of what a stable economy would have presented. If you look at a long term historic chart of the DJIA - you will see that it's due for a correction/pullback/whatever you want to call it. 2002, 2008, 201? More importantly, look at the volume trend. http://stockcharts.com/freecharts/historical/marketindexes.html We built a lot of this "recovery" on credit and thin money. That note is going to come due, and it's probably going to happen in an election year. In all honesty, I think stacking bullion should be one of the last investments you make in a diversified portfolio. It ranks above coins, collector cars and art, but certainly in a capitalistic economy, betting on expansion is always the first (401k), real estate (your primary home) second and then diversify from there. But this is about bullion in here - and I honestly believe it's a buyer's market at current prices. It may go down more - but that's just an opportunity to double up. If it does go down, it will stay down for a while. I don't expect anything for at least a few years. It's just time to accumulate slowly and relax knowing that I have assets in a safety net if needed.
