Doug Casey had the following things to say from the Freedom Fest.
People must have political and geographical diversity – and almost no Americans or Canadians have it.
Gold is not something you speculate in, it is something you set aside; you save in gold. If you have extra income, you have to do something with your money and stocks, bonds and real estate no longer offer good value. The fact that gold has come down in price is a good thing. You can buy it at a discount. The bull market is not over and gold will go back up. One can’t know for sure, but it looks like gold has bottomed.
The central banks are all crazy and on a path to destroying their currencies. The Fed is buying 90% of our Treasuries and that is what causes inflation. But there is also the chance for deflation – the housing market bubble is reflating again. The stock market is overpriced. If it loses half its value, trillions will be lost.
We are caught between hyperinflation and deflation. You’ve got to continue buying gold because it’s the only asset that is not simultaneously someone else’s liability.
–Casey Research, July 16, 2013
Our friends over at ASI ran an interesting article on gold. Here are some of their comments below:
Gold has fallen by more than 30% since its high of $1,791.75 last October, leading many investors to conclude that the bull run is over.
In fact, I am hard pressed to think of any asset in history with such significant long-term upside.
People forget that periodic pullbacks like the one we are living through right now are part of the process and absolutely necessary before gold resumes its upward trajectory.
There’s another benefit too, and it’s one that most people don’t think about – pullbacks are a great time to get into the proverbial game or add to existing positions.
If you’re not crazy about buying gold right now, I don’t blame you. But, ask yourself this question: “Would you rather buy something on sale or pay too much for it?”
Obviously, the arguments for long-term gold ownership are well documented and range from the fact that gold is now below its production costs to the fact that it’s survived when paper and cash-based investments have failed throughout history. So I won’t repeat those today.
Here are two new upside influencers I’m focused on right now, and what they suggest about gold prices ahead.
First, total gold deliveries via the Shanghai Gold Exchange are now nearly equal to the entire world’s mining production. Over time, the trend is almost surreal, with deliveries through Shanghai accounting for 918 tons of 1,134 tons produced year to date.
Not only is China taking delivery of huge amounts, but it’s buying at such a rate that it threatens to overwhelm global supply all by itself. Imagine what happens to prices when people figure that out!
Figure 1: Courtesy U.S. Global
Second, gold’s price is what’s out of whack. The fundamentals justifying ownership remain intact, especially when it comes to preserving value. This, too, sounds counterintuitive, but it’s an important subtlety.
Here’s why – gold ownership is never about the price of gold itself. Instead, it’s about relative value.
What I mean by that is how it relates to other investments and financial instruments you own over time.
Gold has more than 1,000 years of monetary history and, as such, is perhaps the only substance capable of providing the diversification and preservation of wealth irrespective of what actually happens to its price.
Obviously, I’d rather see its price higher over time than lower but that doesn’t void the argument, especially when you look at charts like this one from the FED, which shows the U.S. dollar has lost 96% of its purchasing power since 1913.
Here is a very significant development, courtesy of JSMineset below:
(Hat tip to Ed Steer; but I think this is the most important news item in the PMs space in weeks, so I wanted to flag it. The re-titling above is my doing; I thing it’s more accurate and to the point)
It looks like the LME’s new Chinese-based owners are kicking ass and taking names in the metals warehousing sector, with the LME ownership itself serving as leverage to influence the warehousing practices.
To any who needs the dots connected, PMs warehousing, with its anomalous lengthy delays (100+ days to withdraw metal, as recently reported), has become a key manner in which the wholesale PMs market has been kept dysfunctional, with delay and shortages “developing” to keep overt price impact muted and prevent a feedback loop of wholesale (and downstream retail) demand from (rightly) boosting the main PMs price benchmarks. And of course, this practice would tend to boost the apparent warehouse stocks as well.
If there were any questions about whether the Chinese would be content to sit back after purchasing the LME and let the game be played as it was before, with the Western banking cabal continuing to distort and exploit virtually every corner of the precious metals market, this should answer it. I have rarely seen anything like this — the top two trading banks, JPM and GS, fleeing with their tails between their legs, as an exit from a sector after a mere three years represents.
This heartens me very much. History is being made, friends!
Key excerpt below:
“The LME has cratered the valuations of these companies,” said one rival trading house executive.
The LME’s proposed rule change takes aim at bottlenecks that slow the delivery of metal out of their sheds.
CIGA David Madisonstyle
–jsmineset.com, July 16, 20113