Pundits on TV tend to make us believe that commodities are in unlimited supply with improved technology as the basis for finding this "unlimited" supply. For the first time in 16 years, the price of gold has surpassed the S&P 500 Index. For the previous 18 years, the S&P Index number exceeded the price of gold. This would suggest a reversal in investing philosophy in the marketplace. Gold closed the week at $927.10. Gold producers’ cash costs in U.S. Dollars are benefiting from currency gains against the Dollar. I expect the Gold stocks to start moving back up as the investing public sees the profit improvement in this industry.
There is not an unlimited supply of gold just as there is not an unlimited supply of crude oil. This does not mean we have run out of either of these commodities. It is estimated that the world supply of known oil reserves has passed the halfway point thus peaking. Our Heavenly Father established gold as being "precious". In Genesis 2:11 the first mention of gold occurs: "The name of the first [is] Pison: that [is] it which compasseth the whole land of Havilah, where [there is] gold". Pison means "increase" and Havilah means "circle" or never-ending. The next mention of gold was to describe the wealth of Abram in Genesis 13:2: "And Abram [was] very rich in cattle, in silver, and in gold." Therefore, God’s Word established gold as a store of value. It provided an adequate medium of exchange versus herding cattle, sheep, or camels when you wanted to acquire something new. Gold has been a store of value for thousands of years.
Once the U.S. currency was disconnected from gold, the trouble began. Gold slowed down economic growth and by removing the dollar from the gold standard, determination of value was placed in the hands of man.
Politicians are expected to print 2-4 Trillion Dollars to fund the new aggregator bank where they plan to place the toxic assets of the banks. That is a bullish event for gold. Nouriel Roubini, professor at the Stern School, New York University, estimates the cost of this bank to be about $3.6 Trillion. Even though short term price gyrations and de-leveraging events can impact the price of gold, sustained excessive fiat money creation will cause the price of gold to rocket skyward. By using the new "don’t tell the public the real cost of the problem" multiplier, we could see up to 8 Trillion Dollars before it is all said and done.
Compared to one year ago, gold is up 3/10 of 1% whereas the Dow Jones Industrial Average is down about 35% and housing is down even more.
"Critical Status" is where many retirement funds are heading. Historically retirement funds view their investments on a 40-50 year picture. Short term fluctuations are not as important as cash for distribution of benefits. They MUST have liquidity to meet their monthly obligations. There is no financial based entity shielded from the current crisis. There are some retirement funds already modifying and limiting withdrawals. Over the last thirty years, retirement plans for the average American have been methodically dismantled in favor of Wall Street. Defined benefit plans were replaced by individual contribution plans. By establishing 401K plans, Wall Street effectively added millions of new stock investors to buy what Wall Street was selling. Share volumes exploded on the upside as a result. Instead of the boring 5% return received on bank and Treasury products, the American public was duped into believing that stock were a sure bet and could only head one direction- up. "Boring" looks good now and a 0% return on investment looks much better than the losses now being suffered by most retirement vehicles.
We have recommended you take possession of your stock certificates and precious metals. For those of us who focused on silver, it is more cumbersome than those who were able to buy gold simply due to the weight difference. Brokerage firms do not want to transfer stock certificates to the owner because it reduces the possibility for revenue. There’s been a move to eliminate paper certificates all together. Instead, the industry would prefer all electronic media which makes their job easier and more profitable. However, it also makes illegal activities easier and harder to investigate and prosecute. Anytime you place someone between you and your investment, you increase the risk of loss. See: http://query.nytimes.com/gst/fullpage.html?res=9C01E5DE173BF936A35753C1A965948260&sec=health&spon=&&scp=1&sq=AUDIT%20AFTER%20GOLD%20DEALER’S%20SUICIDE%20SUGGESTS%20CUSTOMERS%20LOST%20MILLIONS%20&st=cse
The cleansing of epic proportion is underway. It appears that we are heading for the cliff of currency devaluation. We are less than 24 months from my 1/11/11 watch date. Could we be at the end of an age?