Bonds & Interest Rates
“We have never had every government debasing their currency at the same time. . . . This is the first time in recorded history where you have most of them doing it all together. These are perilous times . . . one way or another, this is going to end badly.”
Rogers, who owns Gold, on last week’s gold sell off – “This is normal. This is not unusual. I welcome it. I expect gold to go much, much, much higher over the next decade, but it will not and cannot until it starts having normal corrections.”
“If the U.S dollar becomes confetti, any number you want to make up. They’re printing U.S. dollars fast enough to turn them into confetti. Who knows how high gold will go as long as we have a mad man running the central bank.”
Today’s AM fix was USD 1,425.00, EUR 1,092.54 and GBP 935.04 per ounce. Friday’s AM fix was USD 1,414.00, EUR 1,080.46 and GBP 920.63 per ounce.
Cross Currency Table – (Bloomberg)
Gold climbed $12.90 or 0.93% on Friday to $1,400.90/oz and silver finished up 0.04%. Gold and silver both traded down for the week at 5.86% and 11.39%.
The state of Arizona may become the second state to use gold and silver coins as legal tender.
Last week, Arizona lawmakers passed a bill that makes precious metals legal tender. Arizona is the second state after Utah to allow gold coins created by the U.S. Mint and private mints to be used as currency. More than a dozen states have legislature underway to pass similar measures.
The move was launched by people who fear the Federal Reserve is not tackling the federal deficit and is thus debasing and devaluing the dollar. Some even fear, that if the Fed continues on the existing path it could lead to hyperinflation.
Miles Lester, who represents a group called Arizona Constitutional Advocates, said during a recent public hearing on legal-tender legislation that “the dollar is on its way out. It’s not a matter of if; it’s a matter of when.”
The upcoming U.S. FOMC meeting next week is April 30 and May 1 and will be closely watched by investors.
….read page 2 HERE
In the middle of crisis are the seeds of both danger and opportunity; think precious metals.
Unlike U.S. stocks, Canadian equity markets have already been badly damaged by: 1) unusual seasonal weakness in Oil and Energy stocks (portending global weakness?), 2) a sympathetic (to the U.S.) pullback in Canadian financial stocks, and 3) a massive drop in the Canadian Materials sectors – especially gold and silver stocks. The TSX is now negative Year-to-Date, and flat over the last three years.
As most investors are aware, the Precious Metals sector has been simply awful Year to Date. Gold is down > 16%, Silver is down > 23%, and Canadian Gold-producer stocks are down > 36%.
What a gift this Precious Metals sell-off has been, because a falling market is only bad if you are in it all the way down.
We never, ever like any losses or declines in portfolios but realize that avoiding all losses is not realistic. Risk management is always #1 and we constantly strive to improve it. Taking a few steps back, the massive sell-off in Precious Metals is a tremendous gift to our clients. Once we hit bottom there will emerge an exceptional longer-term buying opportunity – one whose profits should easily fill in the recent small declines and help generate very solid overall portfolio returns through the end of 2013.
There is no shortage of opinions, but the best informed, historically accurate and objective analysts we can find are advising that $1,158 for gold (with a similar or greater % decline for silver) is not only possible, but quite likely. If the $1,158 support level does not hold, then $907 comes into play. Yes, $907 per ounce is possible when looking objectively at market cycles, though hopefully not likely. The volatility is expected to last as long as 6 to 8 weeks.
Many gold propagandists have been denying the possibility of gold and silver dropping, citing the fundamentals of money printing, government indebtedness, massive physical buying, and the rising costs of new supply coming on stream, etc. Declines are blamed on other things, but never do they admit they are wrong. Gold propagandists have essentially turned Precious Metals into a quasi-religious community. Beware the Kool-Aid!
In my life experience, candidly admitting being wrong – when the evidence shows it – is incredibly liberating. Fighting the truth is a losing battle that consumes energy that could be re-directed to more positive and fruitful endeavours.
We’ve been very clear about our longer term belief in the upside of gold and silver, but have also emphasized the need to put “price” ahead of our hopes and opinions, because Precious Metals are a market just like all other markets – they go up and they go down. In investing “PRICE is the only Objective Truth; all else is opinion.”
I’ve written many times about the Mass Emotions of Fear and Greed. Financial risk is lowest when price is lowest, but price is lowest when Fear is at its highest. Whenever and at whatever price level the Precious Metals do finally make a major bottom, the Fear in markets will be palpable. Be on the look-out for some of the following factors:
1) Rhetoric related to the hatred of gold and silver will be extremely loud and PERVASIVE, including name calling such as “barbarous relic,” 2) Some high-cost mining operations may be threatened with closure resulting in supply destruction, 3) Very few quality analysts will have the courage to suggest buying, 4) Those who have held on all the way from much higher levels will look on like a “deer in the headlights”, 5) The TV ads offering to buy gold and silver jewelry will finally go silent, 6) The pain of being a buy and hold PM investor metals will literally make some people scream, and 7) The thought of buying gold could make you nauseous.
We are committed to patiently waiting for an extreme panic bottom – as described above – to form before committing significant capital for patient long-term gains. If the next 6 – 8 weeks show that a bottom is already in place, we’ll admit we missed the bottom and get on board the uptrend. What matters most is not whether or not we sold the top or bought the bottom – that’s ego-based nonsense. All that matters is that we make net gains.
What a gift this Precious Metals sell-off has been. There is a time to buy and a time to sell.
Patience and Discipline are accretive to your wealth, health and happiness; Fear and Greed are destructive.
Cheers,
Andrew H. Ruhland, CFP, CPCA
President, Integrated Wealth Management Inc.
Marc Faber on the April Gold & Silver Price Crash
That will offer an excellent buying opportunity. I would just like to make one comment. At the moment, a lot of people are knocking gold down. But if we look at the records, we are now down 21% from the September 2011 high. Apple is down 39% from last year’s high. At the same time, the S&P is at about not even up 1% from the peak in October 2007. Over the same period of time, even after today’s correction gold is up 100%. The S&P is up 2% over the March 2000 high. Gold is up 442%. So I am happy we have a sell-off that will lead to a major low. It could be at $1400, it could be today at $1300, but I think that the bull market in gold is not completed.”
“$1300. Nobody knows for sure but I think the fundamentals for gold are still intact. I would like to make one additional comment. Today we have commodities breaking down including gold. At the same time we have bonds rallying very strongly. If you stand aside and you look at these two events, it would suggest that they are strongly deflationary pressures in the system. If that was the case, I wouldn’t buy stocks or sovereign bonds because the stock market would be hit by disappointing profits if there was a deflationary environment.”
On gold falling lower if we have a deflationary environment:
“Yes, I agree. That’s why I said if the gold market collapse is saying something about deflation and at the same time we have this sharp rise in bond prices and the signals are correct that we have deflation, I wouldn’t buy stocks because in a deflationary environment, corporate profits will disappoint very badly.”
On whether a deflationary environment is possible right now:
“Everything is possible…In the economy of the cuckoo people that populate central banks, everything is possible. What you have is gigantic bubbles, the NASDAQ in 2000, then the housing bubble and then commodities in 2008 when oil went from $78 to $147 before plunging to $32 within sixth months. That kind of volatility comes from expansionary monetary policies from money-printing.”
“All I’m saying is that I think we’re going to have a major low in gold in within the next couple of weeks. Gold, as of today, you should actually buy as a trade. I think it can rebound in the next two days by $40.”
On why gold will rebound $40 in the next two days:
“Because we are about in gold as oversold and we were essentially during the crash in 1987. From there we have a strong rebound. All I am saying as a trader I would probably enter the market quickly for a rebound of $20 or $40. From a longer term perspective, I would give it some time. We may go lower. I am not worried. I am happy gold is finally coming down, which will provide a very good entry point.”
On whether investors should also stay in cash:
“My argument is that you should always have in this kind of high volatility environment a fair amount of cash because opportunities will always arise again and again and if you have cash you can then buy assets at a reasonable price. I think Patience is very important in this environment. The question is, how do you hold your cash? Hopefully not with a Cyprus bank.”
More from Marc’s website:
Marc Faber : If the U.S. Government was a Company, the deficit would be $5 Trillion
Marc Faber : “I think the problem in most countries,” he says, “ is a political problem. You have, essentially, large mandatory expenditures…and as a percentage of the population, less and less people working. And so these unfunded liabilities…accrue at a very fast pace.”
“If the U.S. Government was a company, the deficit would be $5 trillion because they would have to account by general accepted accounting principles. But actually they encourage government spending, reckless government spending, because the government can issue Treasury bills at extremely low interest rates.” – in a recent interview with Porter Stansberry
HUSSMAN: The Cover Of The Latest Barron’s Is A Screaming Sign Of A Stock Market Top
….read more HERE
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