Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stock Market Stalls: Caution Ahead - 21st Oct 19
Stock Market Crash Setup? - 21st Oct 19
More Stock Market Congestion (Distribution) - 21st Oct 19
Revisiting “Black Monday Stock Market Crash October 19 1987 - 21st Oct 19
Land Rover Discovery Sports Out of Warranty Top Money Saving Tips - 21st Oct 19
Investing lessons from the 1987 Stock Market Crash From Who Beat it - 20th Oct 19
Trade Wars: Facts And Fallacies - 20th Oct 19
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Buying Gold appeals most when everything else fails to hold value...

Commodities / Gold & Silver 2009 Sep 09, 2009 - 01:29 PM GMT

By: Adrian_Ash

Commodities

Best Financial Markets Analysis ArticleSO YOU GET BACK after Labor Day as summer ends, and what do you find...?

Deposit accounts are still paying zero, the stock-market's trading way above its average price-earnings ratio, housing could have another 15% to fall before finding rock bottom, and central bankers would be drowning in ink if they didn't use photons to create money instead.


Little wonder a small but growing number of private investors want out.

"With this current crisis, and all the money that's being printed, gold looks a sensible thing, more stable than currencies," said one BullionVault user in a call on Tuesday. It's a hedge against holding cash..."

"For now, I'm as sure as I can be [in gold] that my money is safe," said another. "The stock-market rally looks like fool's gold to me. There's no real value being created. I don't believe cash will be useful either. We're printing more money than the Weimar Republic, and that's got to have an impact at some point."

Buying Gold appeals most when everything else fails to hold value. Hence the panic of late 2008...a flood of new money into coins and small bars that pushed premiums so high, buyers need a 10% move just to break even as we explained to CNBC this morning.

Getting in before that failure strikes, in contrast, soon looks a smart move in hindsight. Your risk is buying the top, and forecasting a panic ahead that never shows up.

"Mr.Bernanke is the greatest money-printer in history," said Asia-based Swiss investment advisor and manager Marc Faber in a webcast for US Global Investors on Wednesday.

Noting the huge leap in US cash and cash-savings relative to the current value of stocks – as in the chart above – "All that money has to go somewhere," he said. And yes, it may well go into stocks; the German hyperinflation of 1919-23 saw Berlin equities rise more than 340,000 times over.

Armageddon aside, however, even Jim Cramer knows that stock-markets bulls get slaughtered by inflation sooner or later. But what he might not notice – unlike foreign investors – is the real loss of purchasing even a rising stock-market can deliver when the currency craters. And this decade's bull market in gold, rather than simply signalling a decline in the Dollar, has in fact come against all currencies...rising three-fold and more versus the world's major moneys.

So far, investors still remain underweight for anything like a true "crisis" peak, meantime. Bullion and coin were reckoned (by the World Gold Council) to be around 0.7% of world financial assets at the end of last year. That ratio stood nearer 5% in the late 1960s. It reached 20% and more in the early 1930s and '80s.

Put another way, "Is gold still in a bull market?" as John Hathaway of Tocqueville Asset Management asked in October '08...back when the price of bullion had dropped 15% from its Bear Stearns peak...but hadn't found its floor, a further 23% lower still by month's end.

"The question seems absurd," Hathaway answered himself. "It is tantamount to saying that paper currencies have bottomed out and that the coast is now clear for financial assets."

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules