Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold IS the Best Game in Town

Commodities / Gold & Silver 2009 Oct 23, 2009 - 12:12 AM GMT

By: Neil_Charnock

Commodities

Best Financial Markets Analysis ArticleGold IS the best game in town and when the music stops it may be the ONLY game in town that can yield any sort of return.  The music I refer to here is the sound of spin given some measure of credibility (only to the un-initiated) by massive stimulus spending which has kept this farce of an economy on its last legs through various stages for 9 years.


Why do I claim that gold is the best game in town?  Gold has outpaced all investment classes over recent years - meaning that it IS the leading investment class of this decade.  Gold IS at record highs and has broken above resistance in USD but you have heard all that already.  Gold IS real money and vital to the monetary system at the highest levels, it IS real wealth and it IS a real store of wealth.

Gold IS the only substance on earth that is convertible to gold – “money” (currencies – bank notes and coins) are not.  Even today many people do not realize that the currencies they are forced to use for transacting goods and services are backed by nothing except confidence and more paper.  Gold bullion cannot be forged or printed, it cannot be won from the earth without honest effort and hard work so it IS rare – make no mistake gold just IS.

Gold IS a major part of the cultures that are in the process of inheriting some of the power that the USA is losing at present.  With vast pools of monetary reserves, manufacturing capacity, cheap labor and or oil reserves at their disposal – countries like China, India, Russia and those in the Middle East are in a unique position in this new emerging era.  They love gold and we now have to face an era with a more powerful Islamic Banking system that loves gold too.  Gold IS their favorite commodity and money.

The only way out for US citizens IS to get capital out of the USA and or to get their USD’s away from the US banking system.  This is best done by buying gold – gold IS the answer.

Gold IS won from the earth by mining companies who are in a unique position in the economy at this time in history.  They will become in essence, like a form of central bank churning out real money to be used to stabilize economies and currencies used for international trade.

International trading partners of the mighty USA have had to suffer an imbalance of power since 1944 when the Bretton Woods Agreement came into force.  The USA was handed this privilege and responsibility because it held the most significant proportion of the global gold reserves at the end of WW2.  USD’s were originally convertible into gold on request however that all ended in 1971 when Nixon withdrew this function.

They all said “gold IS NOT” but they were wrong and all history and common sense said so.  Inflation of the money supply and the “great” modern monetary / banking experiment was here in full force. 

This was managed more covertly and expertly than any similar deeply flawed and dishonest monetary experiment in history.   That is to say it lasted longer than any similar experiment to such a degree that the modern economic mantra became a new “truth” that even infiltrated education and common beliefs. 

As for the so called fantastic era of growth and prosperity, there have been many advances but also many disadvantages too. There is no doubt it was great while it lasted if you were the one with the food and a good job and nice car / house / holidays etc.  But have we really had any meaningful growth in GDP in the Western economies?  What about culture, human rights and other higher values revered by civilizations at their heights through history?

Gold bugs adjust the current price of gold in inflation adjusted terms and quite rightly so.  The peak of gold at US$850 per ounce in 1980 dollars can be conservatively shown to be equivalent to $3,000 in 2009 dollars.  But how about adjusting GDP growth to reflect true inflation?  Let’s face it 3% growth rates that have been considered strong and viewed in awe by some as unsustainable can be inflation adjusted to show a continuous depression for the last 20 years in the Western world.  That is right – no real growth at all and this is absolutely sustainable.

The real capital movement was from manufacturing to the finance sector, from the West to the East and Middle East, from the middle classes to the super rich and the power gradually shifted from the people to the Corporations.

This is a type of shell game where the same particles are shifted around but nothing really changes.  The populace gets the fleeting idea at times that they are like the white mouse running around in the wheel in the glass case getting nowhere.  But they quickly shift this thought to the back of their mind and out of sight. 

House prices went up in the US and refinancing paid for massive purchases of widgets, houses, SUV’s, electrical equipment and concrete jungles in China and India but nobody really got any better off - they just went deeper into debt all the while, totally distracted by their new “wealth” as they lost their rights and values.

Look where it all started and then where it went wrong for the common man and the middle classes of the Western World.  The 70’s were marked by increasingly massive price inflation and fear that the USD would blow up in an unregulated roar - and it nearly did.  Gold asserted itself once again at the end of the 70’s and history tells that it was put back in its box to suffer through the 80’s and 90’s in a controlled slumber.  This part of history is fascinating if you want to research it.  Please do it will assist your understanding of where and why we are here now staring into our own financial abyss.

World power is shifting and respect for the once mighty USD is gone.  The chance of writing off bank debts and clearing balance sheets is unfortunately gone too.  Debt woes merely deepened and now interest alone costs the US over 5% of its GDP every year.  Trader mentality - your first loss is generally your best loss but that is just too hard for some to swallow – “the song remains the same”. 

Government stimulus packages have given the banks some breathing space to rebuild and play the yield curve, trade - and write off some bad debt.  It bought them time and it bought time for the populace and business to reduce debt too.  Initially it was government capital injections that restored the bank reserves and liquidity but not enough for them to pass on via strong lending activity so the government had to fulfill this with cash for this and cash for that.  Clunkers and houses etc…

The lack of lending capacity and activity – and the lack of a debt securitization market which allows the banks to shift debt to another party so that they can lend their allocations again all over again is the reason for this great jobless “recovery”.
 
I have been reviewing the company report pages as I ready myself to update GoldOz Members pages this week and took notes on which companies raised capital – borrowed or received money via new share issues.  I was going to add to our file on capital raising but there were so many that I have considered doing a list of the companies that have not raised money.

In such a tight debt market it is striking and highly significant to see the amount of money raised in the Australian gold sector since late last year.  The smart moneyed sophisticated investors and banks ARE buying into this sector.  They believe gold IS a great investment in this highly risk adverse economic climate.  For decades they considered the gold mining sector to be high risk – well well well how about that – the wheel does turn while the masses are asleep.

These stimulus packages are coming to an end near mid 2010 so where do we go then? The smart money IS getting into gold and IS getting into gold shares.  The stimulus money is working it’s way through the system and this takes longer than most people and analysts think.  For now the show goes on and we see the Dow back around 10,000 but is that inflation adjusted?  How much new money has been created since the Dow first reached this level in April 1999?  Answer is heaps – and heaps so inflation adjusted Dow is nowhere near the 10,000 it reached in 1999.

The emperor is wearing a suit of nothing – he is nude and most people can see that and are waking up and scared and don’t know what to do.  This is not the fault of Obama or Rudd (Prime Minister of Australia) or the other new leaders so don’t waste your time getting angry at them even if they are making some bad decisions.  They are caught in between a rock and a very hard place with nowhere to turn.

I hate to be negative as it is not in my nature so I prefer to stay with an up-trend and promote survival.  The message within this article is important enough to cover again and again however – cover your rear end and get up to speed and fast.  Time is running out before the next down leg and you have the chance to do something – it is up to you.

This internet phenomena has given publishing power to the truth but you have to sort through the material yourself and study it all to get educated enough to understand what is happening.  Of course there are wide discrepancies of opinion – much debate and guess work when we discuss what lies ahead.

Those of us that have been with this gold boom since the beginning had the gift of foresight and timing – we have been trying to share that message since then and we keep at it.  Gold IS the answer to the investment woes of the lucky ones and getting into this asset class, and what ever level this may be, you will benefit as we have.  You can become one of the lucky ones it is a matter of scale – it is all relative even if you can only afford one gram of gold it is better than none.

We cannot on all honesty tell how the game will play out.  The global power dynamics are shifting; dangerous geopolitical tensions are emerging over currencies, commodities, food, land and oil.  The economy is in uncharted waters and we all need a hedge – protection from these uncertain times.  Gold IS and always WAS important, valuable and a safe haven in troubled times. 

Our part in this at GoldOz is not just education about gold – we specialize in the Australian gold mining sector and investment techniques – we hope to assist you too in this role with this part of the puzzle.  We are still running a special - offering some free bonus time for Gold Member subscribers and I hope you will join us – or at least join in the fun and make some money in the coming months. 

Good trading / investing.
Regards,
Neil Charnock

www.goldoz.com.au

GoldOz is currently developing a Member area and has added further resources for free access. We have stepped up our research and stand by to assist investors from all walks of life. We sell an updating PDF service on ASX gold stocks from only $AUD35 for 3 months – the feedback is grateful and enthusiastic because we are highlighting companies that have growth potential and offering professional coverage of the sector. GoldOz web site is a growing dynamic resource for investors interested in PGE, silver and gold companies listed in Australia , brokers, bullion dealers and other services.

Neil Charnock is not a registered investment advisor. He is a private investor who, in addition to his essay publication offerings, has now assembled a highly experienced panel to assist in the presentation of various research information services.  The opinions and statements made in the above publication are the result of extensive research and are believed to be accurate and from reliable sources. The contents are his current opinion only, further more conditions may cause these opinions to change without notice. The insights herein published are made solely for international and educational purposes. The contents in this publication are not to be construed as solicitation or recommendation to be used for formulation of investment decisions in any type of market whatsoever. WARNING share market investment or speculation is a high risk activity. Investors enter such activity at their own risk and must conduct their own due diligence to research and verify all aspects of any investment decision, if necessary seeking competent professional assistance.

Neil Charnock 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