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Gold Poised for Worst Monthly Run in 13 Years on European Crisis
Gold is not a safe haven in the traditional sense that people have described it as and I'm not sure where this comes from. I mean, people think "safe haven", but a safe haven *in the traditional sense* is not a thinly traded asset that can move 50-100 either way within the span of a day and can move 25-50 up/down within the span of literal minutes. A safe haven in the traditional sense is a CD that does nothing.
Gold is - I think - more accurately described as an insurance policy against scenarios that people don't want to happen. If you own gold, you do not want it to go to $5,000, $10,000 and beyond because of what the world may be like if it does. However, that's the insurance policy. Gold, however, is going to be puked up like anything else when you have margin calls and panic. You also have the USD$ soaring (for the time being, due to Europe cracking - you have people willing to buy Swiss bonds that offer negative interest rates and going into the bonds of the largest debtor nation in history), which is negative across the board for commodities (and stocks.)
If we have a deflationary recession (or worse, depression) due to Europe or one of our banks (cough JPM cough) doing something really stupid or otherwise (which will be a real "win" after having the easiest monetary policy in history for the last few years - short-term fixes are always sustainable), gold isn't going to do well, but stocks absolutely won't and I'd be a little curious about stability in regards to bonds and otherwise if tax revenues really dry up. My guess is the printing presses are turned on before we get to that point.
As I noted in another thread, the metals situation is either going to be viewed as a buying opportunity or a chance for those who seem oddly eager to proclaim they were right about gold (like many have tried proclaiming for the last 10 years.)
Personally, I continue to think that investors should have some precious metals exposure (I've been buying a little of the gold stock etfs), but I think the real long-term play is agriculture. More people, less clean water, less ag land that has to produce more and more. I continue to like real assets - including things like Brookfield Infrastucture (BIP), which - while certainly risky - has held up well in the midst of all this. There aren't many infrastructure investments available, but I think you're going to see - and I've said this in other threads - a lot more interest in infrastructure by governments and large, institutional investors. You're already seeing evidence of it.
"The debate around currencies, cash, and cash equivalents continues. Over the last few years, we have come to doubt whether cash will serve as a good store of value. If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per side. If you stacked the money seven feet high, you could store it in a warehouse roughly the size of a football field. The value of all that cash would be about a trillion dollars. In a hundred years, that money will have produced nothing. In a thousand years, it is likely that the cash will either be worthless or worth very little. It will not pay you interest or dividends and it won’t grow earnings, though you could burn it for heat. You’d have to pay someone to guard it. You could fondle the money. Alternatively, you could take every U.S. note in circulation, lay them end to end, and cover the entire 116 square miles of Omaha, Nebraska. Of course, if you managed to assemble all that money into your own private stash, the Federal Reserve could simply order more to be printed for the rest of us."
Oh, and speaking of spin, I'm watching the master of spin - Steve "Goebbels" Leisman try to spin the lousy numbers this morning.
I'm holding and looking for opps to pick up physical bullion in small quantities. I've been pretty much established in my position for years and repeat that 'everyone should have some gold in their overall wealth portfolio. 3% on up, depending upon your outlook on things.
Has it been weak of late? Yeah, but you've had a spending money panic in europe with folks seeking the liquidity that, as of yet, on the greenback provides. They're pulling their money out of spanish, italian, etc., banks and trying to get it into germany or at least greenbacks.
Let's put it this way, they've decided that their life savings AND retirement packages are no longer safe where they are at and they are moving them into something the people believe is saft - in relative terms. feh. The least smelly fish in the pile.
The question we all need to ask ourselves is, How safe is my IRA, 401, 457, pension, social security?
Comments
Gold is - I think - more accurately described as an insurance policy against scenarios that people don't want to happen. If you own gold, you do not want it to go to $5,000, $10,000 and beyond because of what the world may be like if it does. However, that's the insurance policy. Gold, however, is going to be puked up like anything else when you have margin calls and panic. You also have the USD$ soaring (for the time being, due to Europe cracking - you have people willing to buy Swiss bonds that offer negative interest rates and going into the bonds of the largest debtor nation in history), which is negative across the board for commodities (and stocks.)
If we have a deflationary recession (or worse, depression) due to Europe or one of our banks (cough JPM cough) doing something really stupid or otherwise (which will be a real "win" after having the easiest monetary policy in history for the last few years - short-term fixes are always sustainable), gold isn't going to do well, but stocks absolutely won't and I'd be a little curious about stability in regards to bonds and otherwise if tax revenues really dry up. My guess is the printing presses are turned on before we get to that point.
As I noted in another thread, the metals situation is either going to be viewed as a buying opportunity or a chance for those who seem oddly eager to proclaim they were right about gold (like many have tried proclaiming for the last 10 years.)
Personally, I continue to think that investors should have some precious metals exposure (I've been buying a little of the gold stock etfs), but I think the real long-term play is agriculture. More people, less clean water, less ag land that has to produce more and more. I continue to like real assets - including things like Brookfield Infrastucture (BIP), which - while certainly risky - has held up well in the midst of all this. There aren't many infrastructure investments available, but I think you're going to see - and I've said this in other threads - a lot more interest in infrastructure by governments and large, institutional investors. You're already seeing evidence of it.
This portion of the letter from Greenlight Capital said it well yesterday.
http://www.zerohedge.com/news/einhorn-eviscerates-buffet-if-you-wrap-all-100-bills-circulation-it-would-form-cube-74-feet-sid
"The debate around currencies, cash, and cash equivalents continues. Over the last few years, we have come to doubt whether cash will serve as a good store of value. If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per side. If you stacked the money seven feet high, you could store it in a warehouse roughly the size of a football field. The value of all that cash would be about a trillion dollars. In a hundred years, that money will have produced nothing. In a thousand years, it is likely that the cash will either be worthless or worth very little. It will not pay you interest or dividends and it won’t grow earnings, though you could burn it for heat. You’d have to pay someone to guard it. You could fondle the money. Alternatively, you could take every U.S. note in circulation, lay them end to end, and cover the entire 116 square miles of Omaha, Nebraska. Of course, if you managed to assemble all that money into your own private stash, the Federal Reserve could simply order more to be printed for the rest of us."
Oh, and speaking of spin, I'm watching the master of spin - Steve "Goebbels" Leisman try to spin the lousy numbers this morning.
I'm holding and looking for opps to pick up physical bullion in small quantities. I've been pretty much established in my position for years and repeat that 'everyone should have some gold in their overall wealth portfolio. 3% on up, depending upon your outlook on things.
Has it been weak of late? Yeah, but you've had a spending money panic in europe with folks seeking the liquidity that, as of yet, on the greenback provides. They're pulling their money out of spanish, italian, etc., banks and trying to get it into germany or at least greenbacks.
Let's put it this way, they've decided that their life savings AND retirement packages are no longer safe where they are at and they are moving them into something the people believe is saft - in relative terms. feh. The least smelly fish in the pile.
The question we all need to ask ourselves is, How safe is my IRA, 401, 457, pension, social security?
peace,
rono
Because video game companies are worth state funds. lol.