The chief executive of the world’s largest asset management corporation made comments this week that suggested gold was passé. He said gone are the days where gold acts as the de facto store of wealth. Instead, those with excess cash flow are looking to acquire condominiums in international cities or are making a bid for contemporary art; however, gold is being viewed as nothing more than a relic of the past.

Blackrock’s CEO, Larry Fink might be regarded as one of the most sought after minds in international finance. And for a man that preaches a long term view that suggests all investors remain fully invested in the stock market, as that is the asset class that boasts positive returns over the long run, he is taking a rather myopic view on gold.

The rationale for owning precious metals like gold is simple when looking to acquire and retain wealth. Governments can confiscate land. Art is subject to fashion trends or current fads. But the allure of gold is something that has been time tested throughout history. It may go in or out of favor in the near term, and of course caries the characterization and negative stigmatization for those over focused on the asset known as “gold bugs,” but its relationship holds as a long term store of value, and a natural hedge to the world’s reserve currency.

The uptrend in the US dollar is only something that looks set to continue. To close the week the Wall Street Journal published an article that examined a world burdened with oversupply. Whether its commodity markets, laborers, or capital, there is no natural shortage in any of the aforementioned markets acting as a driver of demand. An oversupply in commodity markets is prompting selling pressure for the globe’s energy and mineral rich export countries. Youth and millennials despite advanced education struggle to make gains in competitive labour markets. And savers are essentially punished for being adverse to risk and thus are forced to accept a rate of return less than inflation.

Naturally this would create an environment where gold as a store of wealth struggles. Obviously gold is no longer the front-page asset that is garnering the excitement of investors because we are not in an environment where a level of overall risk requires increased diversification for alternative asset classes. Alternatively, the malaise of other financial markets has prompted investors (since 2009) to look elsewhere for returns and hence fears arise of bubbles in real estate and there are questionable valuations for modern art.

To digress, the luxuries of private versus public ownership in investment decisions are not made dependent on results in the next fiscal year or quarter. They are decisions that are based on the long term with only a limited number of shareholders to answer to. The same can be said for gold. Larry Fink may be right that overall market demand may be waning for the yellow metal as prices sits rather dormant. The point he is missing, or failing to comprehend is that gold has been around longer than the skyscrapers of Manhattan or the most recent piece of modern art.

To repeat: land is subject to taxes and confiscation. Modern art goes out of style. Gold is time tested and has remained coveted throughout history.

Robert Levy

Border Gold Corp | www.bordergold.com

15234 North Bluff Road, White Rock, BC V4B 3E6

(Tel) 1-604-535-3287

(TF) 1-888-312-2288

(Fax) 1-604-535-3259

Today the man who remarkably predicted the collapse of the euro against the Swiss franc warned King World News that the world is in for another major surprise.

Egon von Greyerz:  “There is clearly apathy in the gold market now.  Gold has essentially gone sideways for the last couple of years.  Gold was at these levels in June of 2013.  So for two years gold has been trading sideways with some volatility….

Continue reading the Egon von Greyerz interview HERE

Summary

• How concerned is the market about the recent soft patch?
• Were there any warning signs in 2007?
• How does 2015 compare?

Bad Weather To Blame?

Recent economic numbers and earnings projections have come in on the soft side. If the rationale below holds water, we have nothing to worry about. From MarketWatch:

Once again, the U.S. economy appears to have slowed in the first quarter. And once again the fault has fallen on several major snowstorms and periods of frigid temperatures that afflicted much of the country in late January and February. That kept consumers away from retail stores during typically busy shopping hours and prevented builders from starting new construction projects, among other things.

Objective View Of Market Risk

There are many ways to attempt to quantify risk in the stock market. Regardless of whether or not you believe in technical analysis, we know one thing with 100% certainty… we cannot start a new bear market until stocks make a lower high and a lower low. For example, the weekly moving averages shown below made a discernible lower high (near point A) followed by a discernible lower low (near point B) when the S&P 500 (NYSEARCA:SPY) was still trading over 1,400 (it eventually fell to 666).

How Does The Same Chart Look Today?

Instead of making a lower low, the same moving averages recently broke above a downward-sloping trendline (near point A), made a higher high (point B), and last week posted another higher high (point C). Recent market action tells us the aggregate opinion of all market participants is much more favorable today than it was in late 2007.

A More Detailed Look

This week’s video looks at the stock market (NYSEARCA:VTI) from numerous perspectives to assess risk and potential reward.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode. 

Investment Implications – The Weight Of The Evidence

Our market model will begin to reduce equity exposure when the hard data and observable evidence begins to deteriorate. The lower low in December 2007 is an example of observable bearish evidence. Based on the evidence in hand, we continue to hold an equity-heavy allocation. With inflation data, durable goods, and GDP coming later this week, we will observe with a flexible and open mind.

90-year-old Richard Russell, warned that China and the super wealthy are preparing for something big but silver will surprise everyone.

Richard Russell: “Negative news is coming out about the US economy. The result will be the Fed will put off raising rates to as far as the eye can see. If the economy continues to deteriorate, we might even see QE4 as the Fed struggles to offset a declining US economy. My advice continues to be: buy and accumulate physical silver and gold.

…..read more HERE