Posts Tagged ‘GoldMoney’

Stocks, Real Estate, Term Deposit, Bonds and Gold: Which is the best performer since 2000?

August 31, 2011 Leave a comment

Submitted by Adrian Ash | BullionVault


Galluping Gold!

1-in-3 Americans say they think gold is best long-term? BullionVault doesn’t buy it…

So ACCORDING TO GALLUP, one in every three Americans now thinks gold is the best long-term investment, writes Adrian Ash at BullionVault.

Kinda makes you wonder where the other two US citizens have been investing since the start of last decade…

Comparing performance of Gold, Real Estate, Bonds, Cash & Stocks

Comparing performance of Gold, Real Estate, Bonds, Cash & Stocks

“Which of the following do you think is the best long-term investment?” asked Gallup in its telephone survey of 1008 adults. You only need eyes to see.

Real estate boomed, then bust as never before. Even with dividends re-invested, stocks have gone nowhere since the start of 2000. Cash has barely beaten inflation (and is set to keep lagging it now the Fed has promised zero interest rates until at least 2013).

So besides gold, only higher-risk corporate debt has managed to deliver a strongly positive real return. But as our chart shows, it’s been way off the pace.

Trouble is, for market-timers trying to see the light in Gallup’s findings, that key phrase “long-term” wasn’t defined in the survey. Is that next year, next decade or not until you are dead or retired? Nor was the other key word – “best” – given much meaning either. Might it mean simply best return, or best return with lower volatility, or simply “best investment” in terms of not blowing up when some other fool defaults on his debt?

Little matter, perhaps. Because either way, the results sure do jar for longer-term gold investors. We’re more used to being laughed at by friends, family, financial advisers and daily papers alike. Standing aside from the crowd was how this bull market in gold got started. And becoming the No.1 popular pick rarely bodes well for an asset’s future performance.

If everyone’s in, who will be left to keep bidding up prices? Well, let’s take a look, using the best available survey of US family savings – the Federal Reserve’s triennial survey of consumer finances (SCF) – last run in 2009, and released in spring 2011.

Asset   % in Gallup poll       % in Fed SCF
Real estate 19 70 (own home) 13 (investment)
Stocks/mutual funds 17 29
Bank savings/CDs 14 30
Bonds 10 2.6
Other 1 10.3 (financial) 9.2 (non-finc’l)
Retirement accts ??? 56
Gold 34 ???

Source: Gallup, Federal Reserve

Unlike what people think (or say they think), actual investment takes time and money. And according to the Fed’s most recent survey, Joe Public remained a long way from over-invested in gold in 2009. Despite the Gallup findings, there’s no reason to think that’s changed too dramatically since.

The Federal Reserve’s triennial survey didn’t seem to include any questions on gold. So quite which asset-class category Gold Bullion might come under we can’t guess. Case by case for respondents, it would seem to depend on whether they saw gold as a financial or non-financial lump of metal – highly debatable when real estate comes under “non-financial”, while all of the Fed’s “financial” category is either securitized, packaged or actively managed products provided by the financial services industry.

Yes, exposure to the giant SPDR Gold Trust would perhaps show in “stocks/mutual funds”. But short of a revolution in private US allocations over the last two years, far fewer than 1-in-3 adults would seem to be backing gold as the No.1 long-term investment from here.

How about in Dollars and Cents? Taking data from the start of 2000 again, it’s safe conclude that – whatever the number of gold-buying Americans – they haven’t stuck anything like one third of the nation’s private savings into gold bullion. The World Gold Council’s regular updates (see Gold Demand Trends) put net total of bar and coin demand from private US citizens at just shy of 500 tonnes during this bull market to date. On top of that, if we were to assume (wrongly) that the entire SPDR Gold Trust is held to back shares belonging to US investors, that would be another 1230 tonnes, while the iShares IAU trust would add a further 167.5 tonnes. Outside packaged financial services, the two gold market leaders online – BullionVault and GoldMoney – account for 24 tonnes and 18.5 tonnes of gold respectively.

So assuming again (and wrongly again) that every last gram belonged to US savers, we’d therefore get a grand total of 1938 tonnes…which at $111 billion by value today is but a pimple next to the $11 trillion in household net worth suggested by the Fed’s 2009 SCF. (That was back when the stock market traded near 12-year lows, you will recall. And the comparison comes from over-stating US gold demand in all but the “retail bar and coin” data above.)

Now, reviewing these numbers, worse shills and snake-oil salesmen than us might dare to suggest that US citizens have barely begun to Buy Gold, and they clearly would like to. Matching their actual investment to their reported beliefs, the value of privately-invested US gold bullion would need to rise 33 times over (all other things being equal), a move which in itself would confirm gold as the very best long-term investment in history.

Between thought and expression sits the difference between $111bn and $3.7 trillion according to the calculations on BullionVault’s napkin this lunchtime. We’d never be so churlish as to suggest the Gallup poll points to strong US Gold Investment demand ahead of us – not behind – today. But we would point out, yet again, that the gold bubble comes far more in media coverage than in actual investment decisions to date.

The Gallup survey, for instance, was conducted between August 11 and 14th. Gold Prices had just broken above $1800 for the first time ever, on their way to $1900 and making headlines everywhere as the stock market sank. Moreover, interest in gold – like a Google search for “gold price” – doesn’t necessarily end in actual investment. But it does suggest a broader fear of low-growth-plus-rising-inflation – a fear reflected in this week’s Conference Board of US consumer confidence, now sunk to a two-year low. The Economist magazine noted the correlation just this weekend.

“Edward Ritchie, an investment analyst in London…tracks Google searches for the ‘gold price’ as an indicator of economic confidence,” reports The Economist. “[Because] the number of gold-price searches shoots up when consumer confidence dives, and subsides when households perk up again.

“Worryingly, the number of searches has recently vaulted above its 2008 peak, signalling the possibility of a double dip.”

More worrying still, one-in-three Americans – including 26% of 18-29 year olds – just told Gallup they’d prefer a lump of dumb metal over capital risk. Such disillusion with America’s future will no doubt prove either misplaced or self-fulfilling (depending on your proximity to Wall Street or Washington) in due course. But the only sure fact today is that our 21st century depression is clearly reflected in gold’s quickening comeback as a crucial, unique, and un-ignorable asset class.

Buying Gold today? Slash your costs to get the maximum security using world No.1 online, BullionVault


Adrian Ash runs the research desk at BullionVault, the world’s No.1 gold ownership and trading service. Formerly head of editorial at London’s top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian’s views on the gold market have been sought by the Financial Times andEconomist magazine in London; CNBC, Bloomberg and in New York; Germany’s Der Stern and FT Deutschland; Italy’s Il Sole 24 Ore, and many other respected finance publications.

Gold: The Political Metal in Action

August 29, 2011 1 comment

By Alasdair Macleod | GoldMoney

Gold, politics, and Venezuela

Markets were abuzz last week with Chavez’s recall of Venezuela’s gold reserves not currently held in Caracas. Bulls are excited by the thought that withdrawing some 150-200 tonnes from the Bank of England and the bullion banks will force a bear squeeze on the LBMA, where gearing between the physical and paper markets are assumed to be 100 to 1. This stretches the relationship between paper gold and physical gold even further. They are also excited by the possibility that others might follow Venezuela’s example.

These concerns are real and should not be dismissed lightly, and the announcement could not have come at a worse time for LBMA members, who also face being caught up in a European banking crisis. Fear dominates, but the real trigger for this market emotion, and therefore its outcome, is global politics. Chavez is not just recalling his country’s gold to protect its integrity, he is waging an idealist’s war against the capitalist system and the US in particular. This is why he has threatened to move gold and foreign reserves to the countries he says he trusts, principally Russia and China, and why he is proposing to nationalise Venezuela’s gold mines.

He has picked the capitalist system’s weakest point. He has been told by his central bank that the Fed, the BoE and the Bank for International Settlements hold gold for the whole central banking community in the main trading centres, and that much of this gold exists only as a ledger entry and is not backed by physical metal. Whether or not Venezuela’s gold is held in these fractionally-backed sight accounts, or in earmarked accounts where the gold is held separately, we do not actually know; but there is little doubt that this move is designed to encourage other central banks to demand that their gold is also repatriated.

Chavez has a point. It is a fair bet that the International Monetary Fund’s 2009 sales of 212 tonnes of gold to other central banks are held in sight accounts as a condition of sale. India, Mauritius and Sri Lanka, who bought this gold, must be very nervous. Interestingly, India and Sri Lanka are also associated with the Shanghai Cooperation Organisation, which was set up by China and Russia with the eventual goal of establishing an Asian supranational state.

This little-known connection is extremely important. The SCO even has a website. The central banks of its member states, observer states and dialogue partners are nearly all buying gold, overtly or covertly. This is more likely to be a co-ordinated economic attack on the West than just a purely random event.

Until Chavez’s intervention, China and Russia – who run the SCO – were gently turning the screws on the gold market: Russia by announcing regular purchases and China by encouraging its citizens to buy. They appear to have put the word about through the SCO that gold will have an important role in the SCO’s future, and those involved should have some. This is a world Chavez wants to be part of, and by removing his country’s gold from capitalist markets he is declaring his credentials.

Underlying this extreme socialist action is the Marxist belief that capitalism will destroy itself. Chavez believes it is his duty to give it a helping hand.

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Gold cartel is finally losing control.

August 14, 2011 Leave a comment


This enlightening discussion between James Turk (GoldMoney) and John Embry (Sprott Asset Management) touches on various significant developments in the gold market in recent past. They talked about the S&P downgrade, QE to infinity, hyperinflation, Jim Sinclair’s $1764 inflection point and looking at the value of gold rather than its price.

They concluded that by looking at the past & present central banks’ role and dynamics of Asian demand, physical gold is now taking the lead in price discovery instead of paper gold.

The Gold cartel is losing control and the era of the tail wagging the dog may soon be over!


$1764 (Updated)

August 11, 2011 3 comments


One Seven Six Four

Jim Sinclair commented that when gold breaches $1764, it signals the start of Phase 3 of the bull market and the price is expected to go exponential. Gold was around $1660 when the interview was recoded on 5th August 2010 at the GATA conference in London.

The $1764 Gold battle line has been drawn, and for the past 24 hours, gold has been repeatedly testing that level for the first time.

BullionVault Chart: Gold repeatedly testing $1764


Looks like we’ll know soon enough if gold will close above this critical number.


Updated: 11 Aug 2011

Gold indeed closed above that $1764 battle line number last night:

London PM Fix: $1772
Comex Close: $1781
Globex Close: $1798
HKMEx: $1775

So, if Sinclair is right on this call, as he has often been in the past, expect gold to print some interesting numbers on the charts going forward into phase 3 of the gold bull market. According to James Turk, gold went into Phase 2 when it crossed $1000 around November 2009.

After leading gold since Aug 2010 when the Gold/Silver ratio (GSR) was around 65 until the May 1 cartel-orchestrated price take-down (GSR at 32), silver has been playing catching up lately. 18 minutes into this interview with Eric Sprott, James Turk, founder of GoldMoney commented that he believes silver is still in Phase 1 and will not enter Phase 2 until it crosses $50 (its 1980 high). If you think you’re a little late in gold and feeling nervous about jumping into the bandwagon around it’s all time nominal high, silver may offer an easier entry point. But as most hard currency adherents would advise, have a healthy ratio between both monetary metals.

Notwithstanding the euphoria of breaking through the much watched “$1764 Gold” number, extreme volatility in both directions for both PMs is to be expected. Gene Arensberg, in his latest Got Gold Report commented that the Large Commercial Net Short (LCNS) position is near its all time high but he can’t predict whether these BIG Commercial short sellers will push gold and silver back down or get overrun this time. If it’s the former, we’ll see another take down. If the latter, the short covering and new buying arising from the flight to safety crowd will cause Sinclair’s forecast to be cast in gold!

GotGoldReport Chart: Gold LCNS, Source CFTC for COT data, Cash market for gold


Updated: 12 Aug 2011

Comex gold closes $66/oz off record high as stocks rise, CME increases margins


-Updated August 12

Gold is NOT an Investment. If you’re Looking for an Investment, Look Elsewhere.

June 7, 2011 2 comments

In the “About” page, I listed 5 points forming the theme of this website, which was set up to share my personal experience in discovering that the debt-based financial world as we know it today is one gigantic Ponzi scheme. That it was designed to work against people who’ve expended labour to earn in excess of what they needed, saving that surplus for a time in the future when they could no longer exchange labour for the daily necessities of life.

The first of my 5 points was Do not invest in gold or silver. Own them in place of Fiat Money

Distinguishing between investing and owning gold (or silver) goes beyond semantics. It lies at the core of why so many are still reluctant to make gold or silver a part of their asset portfolio despite the financial turmoil and uncertainties surrounding them. Owning gold is not meant to make you richer. It protects you from getting poorer due to rising inflation.  It preserves what you already have - performing that critical function of money (Store of Value) better than any other forms of money available today.

The idea of not investing in gold is not my original idea. It’s a concept I learnt from many who’s been in this space long before I discovered that gold is money. The recent presentation given by James Turk, founder of GoldMoney, at the 2011 Munich DEG conference on 29th April 2011 explains this concept very eloquently.

Also reproduced below are some charts appearing in the video for your easy reference. (They were from a previous presentation made a few months earlier)

Exchange rates of gold & other currencies over the past 10 years

Gold (the Green Portion) is not an investment

Price of Crude Oil in GBP, USD, EUR and Goldgrams

Stocks measured in Gold

The implications for the fiat currency

Gold in GBP. Similar charts in USD, GBP, EUR & SFR display the same parabolic up trend


Q&A after the presentation

The EXIT $ign

May 5, 2011 Leave a comment


In recent times, major institutions are running to the EXIT. The most famous of which was how The University of Texas Investment Management Company took delivery of almost $1 billion in gold bullion, and that’s because

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said today in a telephone interview. “I look at gold as just another currency that they can’t print any more of”.

Groups of nations are running to the EXIT. I highlighted one of the more significant runs in this post Another new writing on the wall - BRICS dump the USD.

Brazil, Russia, India, China and South Africa – the BRICS group of fastest growing economies – Thursday signed an agreement to use their own currencies instead of the predominant US dollar in issuing credit or grants to each other.

Yesterday, it was reported that Mexico saw smoke coming from her northern neighbour and headed for the exit, big time! Considering how many other nations (China, Russia, Thailand, Belarus, Bangladesh, Venezuela, Tajikistan, Ukraine, Jordan, Philippines, South Africa, Sri Lanka, Germany, Kazakhstan, Mexico, Greece, Pakistan, Belgium, Czech Republic, Mauritius and Malta) have been running towards the exit since 2009, Mexico’s Central Bank wasted no time to catch up, as illustrated by this very pretty chart.

MEXICO CITY, May 4 (Reuters) - Mexico massively ramped up its gold reserves in the first quarter of this year, buying over $4 billion of bullion as emerging economies move away from the ailing U.S. dollar, which has dipped to 2-1/2-year lows.

The third biggest one-off purchase of gold by any country over the past decade took Mexico’s reserves to 100.15 tonnes - or 3.22 million ounces - by the end of March from just 6.84 tonnes at the end of January, according to the International Monetary Fund and Mexico’s central bank.

…… Credit Suisse precious metals analyst Tom Kendall said it was worthy of note that Mexico, whose economy is very closely tied to the United States, had taken this step.

“The size (of the purchase) is certainly pretty chunky to have been accomplished in that space of time. So it certainly gives another sizable layer of support to gold’s position in the international reserves system,” he added.

George Milling-Stanley, managing director of government affairs at the World Gold Council industry group, said Mexico was following a recent trend among central banks to restore a “prior balance between gold and currency reserves.”

“This is further supported by the fact that the May IMF numbers show continued buying by Russia and Thailand of 18.8 tonnes and 9.3 tonnes respectively,” he added.

Mexico’s reserves rank it 33rd among the top official holders of gold. The United States is the largest official holder of gold, with 8,133 tonnes, which account for 73.8 percent of its total international reserves.

China is the sixth largest holder of gold, with 1,054.1 tonnes, or just 1.6 percent of total reserves, while eighth-ranked Russia now has some 811 tonnes of gold, up from 788.78 in January, according to the IMF data.

Silver, which hit a record price earlier this year, may also have been on Mexico’s buying list, said Martin at HSBC.

Premier Wen Jiabao shakes hands with his Russian counterpart Vladimir Putin on a visit to St. Petersburg on Tuesday.ALEXEY DRUZHININ / AFP

Premier Wen Jiabao shakes hands with his Russian counterpart Vladimir Putin

Going back to November last year, recall how China Daily reported that

“China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.”

Well, just as Mexico was reported playing catching up yesterday, Japan and South Korea did not want to be left behind in the multi-lateral Dump USD game either. WSJ reported:

May 3, HANOI—Finance ministers from China, Japan and South Korea said in a joint statement Wednesday they have agreed to start studying the use of their own currencies in trade settlement, the latest sign of Asian efforts to reduce dependence on the U.S. dollar.

The ministers from the three big Asian economies also said they are “mindful of” challenges such as growing inflationary pressures in Asia, rising global commodity prices and increasingly volatile capital flows into the region.

Blocks of Nations, individual nations, institutions, and individuals are all heading to the EXIT sign or have already exited the world reserve [paper] currency. They are doing so because the writing is already on the wall. The “Waterfall Decline” event that James Turk, founder of GoldMoney predicts seems to be approaching fast. They exit because they’ve lost confidence in the once almighty USD.

But, if the exit is into monetary metals gold and silver, why are we witnessing the sudden “Waterfall Decline” in the monetary metals instead of the USD? The only sane way to look at this insane price action is to understand that they are Political Metals whose prices are being manipulated by political powers through their Gold and Banking Cartels. The best way to exit your paper currency is to hold gold and silver, not invest in them. View them as owning another currency rather than buying them as an investment.

Gold & Silver take down since May 1

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