The biggest problem with paper money is that it can be created at will; and history shows that whenever paper money is disconnected from gold, it is eventually printed until it is worthless. Sometimes its destruction comes quickly, some over decades. The second biggest problem with paper money is that it can be cancelled by
The primary reason for owning gold and silver is the expectation of price inflation. Inflation, of course, comes from money creation at the Fed. However, as what is now often called the World Financial Crisis showed, gold and silver do well in times of financial crises. Here, though, let’s look at a very good indicator
The official federal government debt now stands just a tad over $19.5 trillion. Yet few talk about it, and even fewer are concerned. Off-balance sheet liabilities (commitments that have been made but funds not set aside for) are some where north of $100 trillion dollars. Rarely talked about.
From Dow Theory Letters, September 21, 2016: “Good news today from both the Fed and the Bank of Japan (BOJ). The Fed announced no rate increases for now, though hinted (or teased, to be honest) that one would come later in the year. In Japan, the BOJ said it would continue an easy monetary policy
Gold and silver have enjoyed huge upside moves so far in September, despite falling short of posting new highs for the year. Still, gold is up 24% on the year and silver 40%. One of the reasons for renewed interest in the metals is the failure of the European Central Bank’s €80 billion a month
Fed Chair Janet Yellen’s July proclamation that “the case for an increase in the federal funds rate has strengthened,” was nullified by a weaker than expected August jobs report. Only 151,000 jobs were added, short of the 180,000 forecast by economists and far short of the 275,000 added in July.
Despite gold’s stellar performance so far this year, The Financial Times (August 24, 2016) chose to headline a front page article “Gold loses shine as Fed decision looms.” In the Commodities Section, a second piece was titled “Gold heads for monthly drop after investors turn anxious over rate rise and weaker demand.” Regardless gold’s performance,
Metals prices surged Wednesday–as they should have–after the Fed announced no rate hike. Gold jumped 1.6%, silver a whopping 3.7%. The Fed decision was a reaffirmation of a continued loose monetary policy. Gold and silver investors need to keep in mind that the world’s monetary and fiscal policy makers have fully embraced loose money and
as precious metals surge, says the Financial Times, July 7, 2016. In a glowing report, the Times noted that while “Gold has done predictably well in the wake of Brexit. . . The real star of the show has been silver.” In dollars, silver is up 16% since the Brexit vote but is up 45%
The dollar is a favorite refuge for money seeking safety as the European banking crisis again dominates financial news. Consequently, 10-year US treasury bills are now yielding a record low of 1.39% as money pours into them. (As bond prices are bid higher, yields drop.)