Friday, August 27, 2010
Gonzalo Lira: Hyperinflation, Part II: What It Will Look Like
Gonzalo Lira: Hyperinflation, Part II: What It Will Look Like: "I usually don’t do follow-up pieces to any of my posts. But my recent longish piece, describing how hyperinflation might happen in the Unite..."
Gonzalo Lira: How Hyperinflation Will Happen
Gonzalo Lira: How Hyperinflation Will Happen: "Right now, we are in the middle of deflation. The Global Depression we are experiencing has squeezed both aggregate demand levels and aggreg..."
Tuesday, March 2, 2010
THE CHINESE GOVERNMENT ADVISES CITIZENS TO BUY GOLD & SILVER
China have been introducing silver bars for investment. The state-run China Central Television (CCTV) is running a campaign encouraging the population to invest in gold & silver. Physical gold and silver investing has begun in China.
China's largest bank, the Industrial and Commercial Bank of China, created a new department to serve investors seeking gold and silver. The bank told Reuters the Chinese have a custom of holding gold as a form of personal wealth and its gold market could soar as people get wealthier. The Chinese government by encouraging its citizens to buy gold and silver is now held responsible for the gold price & silver price.
First it banned exports of silver, and then it endorsed gold and silver as investments for its people.
If the gold price falls the politicians will lose face and that would be political suicide in China, as Susan Shirk relates in her book China: Fragile Superpower...
Dogged by the specters of Mao Zedong and Deng Xiaoping, and the revered leaders who preceded them, China's current leaders feel like midgets, struggling desperately to stay on top of a society roiled by economic change. These leaders can't afford to look foolish, so they'll back up their words with deeds.
Consider what they've done already...
China has become the largest gold producer in the world (they passed South Africa last year).
In April, China's Foreign-Exchange Agency announced the purchase of an additional 16 million ounces of gold for state coffers. They want to diversify their reserves, replacing some of their U.S. dollars that are being devalued by the U.S. government, with something tangible - like gold.
In short, the Chinese government wants more gold.
They realize gold is one of the only buy-and-hold investments in the world right now. And they've got a lot of money to invest, nearly $2 Trillion according to a recent report in The New York Times.
Recently The Chinese Ministry of Land and Resources has completely rewritten the country's mining laws (known as the Minerals and Resources Law) to encourage local and foreign companies to explore for and produce more gold.
Once the Chinese Government gets behind a foreign company the stock price can become a sight to behold!
The government recently created the Shanghai Gold Exchange, to allow anyone to trade gold, on the open market, without government interference. China has a lot of money to invest... nearly $2 trillion. So the followers of Mao are telling their folks to buy gold with a wink and a nod.
While the government buys a bit of bullion on the sly, gold goes up, and they look great. Gold being a global commodity, an increase of Chinese buyers will increase the price of gold in the U.S. too.
It might not be a bad idea to buy what the Chinese are buying. With 300 million people in the Chinese middle class this is especially significant ... when you consider the average savings rate in China is 30 to 40%..... That's a lot of buying power.
You may want to own gold bullion for protection from our own government's policies.
Inflation is coming and there isn't any way around it. The policies that pulled us out of the recent economic crash put trillions of new dollars into circulation. That makes all of our existing dollars worth less... but it increases the value of copper, oil, and especially gold and silver.
This is a good reason to own, physical gold and silver as part of one's investment strategy.
By the way, you will want to buy bullion-- pure gold--not paper.
Buying exchange-traded funds (ETFs) or other electronic investments that purport to invest in bullion is NOT the same. When you buy a share of one of those, all you own is a stock certificate...
You don't have the physical wealth in your possession. The government wants to limit speculation on commodities through these vehicles - and you can be sure the gold ETFs will not be spared.
China's largest bank, the Industrial and Commercial Bank of China, created a new department to serve investors seeking gold and silver. The bank told Reuters the Chinese have a custom of holding gold as a form of personal wealth and its gold market could soar as people get wealthier. The Chinese government by encouraging its citizens to buy gold and silver is now held responsible for the gold price & silver price.
First it banned exports of silver, and then it endorsed gold and silver as investments for its people.
If the gold price falls the politicians will lose face and that would be political suicide in China, as Susan Shirk relates in her book China: Fragile Superpower...
Dogged by the specters of Mao Zedong and Deng Xiaoping, and the revered leaders who preceded them, China's current leaders feel like midgets, struggling desperately to stay on top of a society roiled by economic change. These leaders can't afford to look foolish, so they'll back up their words with deeds.
Consider what they've done already...
China has become the largest gold producer in the world (they passed South Africa last year).
In April, China's Foreign-Exchange Agency announced the purchase of an additional 16 million ounces of gold for state coffers. They want to diversify their reserves, replacing some of their U.S. dollars that are being devalued by the U.S. government, with something tangible - like gold.
In short, the Chinese government wants more gold.
They realize gold is one of the only buy-and-hold investments in the world right now. And they've got a lot of money to invest, nearly $2 Trillion according to a recent report in The New York Times.
Recently The Chinese Ministry of Land and Resources has completely rewritten the country's mining laws (known as the Minerals and Resources Law) to encourage local and foreign companies to explore for and produce more gold.
Once the Chinese Government gets behind a foreign company the stock price can become a sight to behold!
The government recently created the Shanghai Gold Exchange, to allow anyone to trade gold, on the open market, without government interference. China has a lot of money to invest... nearly $2 trillion. So the followers of Mao are telling their folks to buy gold with a wink and a nod.
While the government buys a bit of bullion on the sly, gold goes up, and they look great. Gold being a global commodity, an increase of Chinese buyers will increase the price of gold in the U.S. too.
It might not be a bad idea to buy what the Chinese are buying. With 300 million people in the Chinese middle class this is especially significant ... when you consider the average savings rate in China is 30 to 40%..... That's a lot of buying power.
You may want to own gold bullion for protection from our own government's policies.
Inflation is coming and there isn't any way around it. The policies that pulled us out of the recent economic crash put trillions of new dollars into circulation. That makes all of our existing dollars worth less... but it increases the value of copper, oil, and especially gold and silver.
This is a good reason to own, physical gold and silver as part of one's investment strategy.
By the way, you will want to buy bullion-- pure gold--not paper.
Buying exchange-traded funds (ETFs) or other electronic investments that purport to invest in bullion is NOT the same. When you buy a share of one of those, all you own is a stock certificate...
You don't have the physical wealth in your possession. The government wants to limit speculation on commodities through these vehicles - and you can be sure the gold ETFs will not be spared.
Friday, February 26, 2010
China To Purchase IMF's Gold
China has confirmed the intention to purchase 191.3 tons of gold from the International Monetary Fund at an open auction, Finmarket news agency said.
World central banks started to increase their gold reserves after prices on gold began to climb in 2001. The IMF sells gold within the scope of a program to diversify sources of income and achieve an increase in lending.
The IMF announced an intention to sell 403.3 tons of gold in accordance with the adequate decision made by the board of directors of the fund in September of 2009. India, Mauritius and Sri Lanka purchased about 212 tons of the amount at the end of 2009. India purchased most – 200 tons.
China’s interest in international trade is connected with the development of the nation’s economy, as well as with the growing consumer demand in the country.
“Chinese officials have confirmed previous announcements from IMF experts and said that the purchasing of 191 tons of gold would not exert negative influence on the world market. China is interested in the development of the domestic consumer market,” the agency reports.
Most of Chinese citizens believe that investing in gold jewelry is a good way to avoid inflation, Rough & Polished agency said.
The IMF has received the profit of $7.2 billion from gold sales. A part of the funds is to be used for crediting poor countries.
Source : www.pravda.ru
World central banks started to increase their gold reserves after prices on gold began to climb in 2001. The IMF sells gold within the scope of a program to diversify sources of income and achieve an increase in lending.
The IMF announced an intention to sell 403.3 tons of gold in accordance with the adequate decision made by the board of directors of the fund in September of 2009. India, Mauritius and Sri Lanka purchased about 212 tons of the amount at the end of 2009. India purchased most – 200 tons.
China’s interest in international trade is connected with the development of the nation’s economy, as well as with the growing consumer demand in the country.
“Chinese officials have confirmed previous announcements from IMF experts and said that the purchasing of 191 tons of gold would not exert negative influence on the world market. China is interested in the development of the domestic consumer market,” the agency reports.
Most of Chinese citizens believe that investing in gold jewelry is a good way to avoid inflation, Rough & Polished agency said.
The IMF has received the profit of $7.2 billion from gold sales. A part of the funds is to be used for crediting poor countries.
Source : www.pravda.ru
Thursday, February 25, 2010
I Should Have Bought GOLD
The chart shows how the Brazilian currency (called the "real") price of gold soared nearly 80% in a two week period in January 1999. I believe the US dollar price rise of gold will be equally dramatic, violent and without notice sometime during the next 6-8 months.
Economic and monetary crisis overwhelmed Brazil - as it did a few years later to Argentina and twice in Venezuela...and is a 'preview' of what the US may well see during 2010
To use apropos Chinese cliché, "a picture is worth a 1,000 words"
--------BRAZIL JANUARY 1999
"Eu sabia que devia ter comprador ouro!"
"I KNEW I SHOULD HAVE BOUGHT GOLD"
This Brazilian picture will likely be replayed in a theater near you…in the not too distant future. ....around the globe in all countries.
--------VENEZUELA JANUARY 2002
Yo sabia que debia haber comprado el oro!
"I KNEW I SHOULD HAVE BOUGHT GOLD"
The price of gold denominated in Venezuelan Bolivars soared 800% in six years…that's +133% per year for 6 years.
--------ARGENTINA JANUARY 2002
Yo sabia que debia haber comprado el oro!
"I KNEW I SHOULD HAVE BOUGHT GOLD"
The price of gold denominated in Argentine Pesos soared 125% in less than TWO MONTHS.
--------VENEZUELA JANUARY 2010
Yo sabia que debia haber comprado el oro!
"I KNEW I SHOULD HAVE BOUGHT GOLD"
To be sure, the Venezuelan nightmare began 9 years ago. Since then the Bolivar value of gold has soared +1,240 percent, that's an average increase of +136% PER YEAR FOR NINE YEARS. See 9 year chart:
Consequently, one is either on-board...or left at the station with a bag full of fiat paper, wringing his hands and screaming his lungs out:
"I KNEW I SHOULD HAVE BOUGHT GOLD!"
"Yo sabia que debia haber comprado el oro!"
"Eu sabia que devia ter comprador ouro!"
However you want to say it, never leave home without some investment in precious metals. Your personal real wealth depends on it.
Unfortunately, by yearend some hapless investors who only listen to CNBC will be crying in their beer, mumbling, "I cudda, I wudda, I shudda..."
Tuesday, February 23, 2010
Einhorn Joins Billionaire Peers in Bets on Gold
Count David Einhorn, the head of Greenlight Capital, among the hedge fund stars betting big on gold.
The stake puts him in the company of luminaries like John Paulson and George Soros, who both reported large year-end stakes in gold-oriented equities.
Einhorn has also reportedly been seeing opportunities in the financial space, where he has joined real estate developer Stephen Ross and other investors in an entity that intends to bid on failing banks, according to Reuters.
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