Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold and the G20 Summit

Commodities / Gold and Silver 2010 Jun 29, 2010 - 01:31 PM GMT

By: Dr_Jeff_Lewis


World leaders met at the G20 in Toronto to discuss how they will work to get the global economy moving again.  If you're new to the global economic forums like these, you might think that they're actually productive.   However, if you've been around long enough to follow them for a few years, you'd realize that politicians from the top 20 economic countries show up just to lay out their idealistic plans that they'll never really complete.

World Banking Tax

One of the top items at the G20 was the world banking tax that several countries, the US included, wants to impose on banks to insure against another financial crisis. 

The irony here is that it was the government, not the banks (this time), that created the financial mess that originated in US real estate.  The government, in its infinite wisdom, decided to increase the availability of home loans to those people who quite frankly couldn't pay for them.  They then tasked Fannie and Freddie to lower their standards and buy any mortgage backed security they could get their hands on.  The banks, sensing a money making opportunity, made terrible loans under the pretense that Fannie and Freddie would buy them with no questions asked.  Of course, we all know how well that worked out.

There were more than a few objections to a banking tax, most notably from Canada, which had the simple (and correct) view that Canadian banks were not a part of the financial crisis, and in no way, shape, or form would they be punished for the mistakes of the United States.  To make a long story short, one of the headline items at the G20 was swept off the table, and each country was left to moderate banks however it pleased within its own borders.

Deficit Reduction

If you thought a world banking tax was laughable, just wait until you hear about the deficit reduction plan upon which all nations agreed.  The G20 members will all work together to reduce their deficits 50% by 2013.  Also, they'll work to reduce government debt to GDP by 2016, which means that they'll either have to grow their economies or actually run surpluses. 

President Obama took his G20 promise to the American press today, and he noted that next year the government will have to do something to reduce the deficit.  If you've looked at gold, you'd notice that some gold investors actually took this pledge seriously, with a sell off occurring in the early hours of trading the day after the pledge.

Believe it When You See it

The pledge to reduce debt, cut spending, and promote economic growth was nothing more than a pledge.  While we can agree that precious metals would be poor investments if the government did really work to fight the debt and inflation, we can also agree that never in history has any government completed such a quick turnaround. 

Buy silver with both hands, as the people in power are either going to have to take drastic steps to cure the budget, or they're just going to keep doing what they have for more than a century.  What do you think they're most likely to do?

By Dr. Jeff Lewis

Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of and

Copyright © 2010 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - 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