This article was originally published at The Daily Sheeple
On the heels of our recent article Gold Buyer Beware (In the Near Term) we present the potential other side of the gold story. Maybe, the tide has turned for gold in respect to its behavior in relation to other assets. There is a decoupling that is occurring on a global scale, but it’s not the decoupling of Western economies from those of China, Brazil and other emerging countries, because our global economy remains very much intertwined.
The gold decoupling which we and others have discussed previously is finally appearing as grass shoots, with the eventual outcome being that broader stock markets and gold disconnect.
One of the scenarios we’ve postulated is that if the financial markets experience another stock market crash, gold will follow much like it did in late 2008. However, in late 2008, many global investors had no idea that the world’s economies were in as bad shape as they are. We’re two years into the panic and uncertainty phases of the crisis and the sentiment across millions of people and scores of countries has reached critical mass. While most don’t realize what has happened just yet, or they simply choose to cover their eyes and hope it changes, those “in the know” are making serious moves into safety assets of last resort.
Is it possible that the next time financial markets take a serious dive, gold and other precious metals will flourish? Sure, there could be the short-term panic selling, but there are very strong support levels for the price in the event of a downward move. Countries have been buying the metal by the ton in recent months, as have individual investors the world over. If gold were to take a near-term hit, the number of buyers standing buy to scoop it up at 10% or 20% discounted rates may stop any decline in its tracks. And we may have a similar effect to what gold mining stocks did during the the end of 1931 – while the stock market collapsed, gold stocks began a meteoric rise. By 1935, as the Dow Jones struggled, Home Stake mining, one of the few gold stocks for which records survive, was up over 400%.
What would drive such a move? The common man and billionaires alike realizing that something is amiss. It’s no secret that doom and gloomers have been buying gold, food preps and survival gear in anticipation of a large-scale economic collapse and consequent social and political fall-out. Up until now they have often been dismissed by the mainstream media, neighbors and friends as quacks and fear mongers.
But when some of the world’s larger movers and shakers start doing the same thing, and the media reports on it, then the trend is entering the big time – mass market hysteria may soon follow.
We’ve previously reported about a well known billionaire who has a bug out plan at his Canadian/US border home and a hedge fund manager who’s stocking up to survive somewhere at an undisclosed location in Idaho. Earlier this year, financier George Soros took a large position in the GLD gold ETF.
UBS bank and other large investment firms are recommending to their high worth clients that they hold 7% to 10% of their portfolios in gold and/or precious metals assets, with some now recommending direct physical bullion purchases.
UBS reports that one couple recently made quite a large purchase, perhaps acting on the advice of economist and Gloom Boom & Doom publisher Dr. Marc Faber, who in an April 24th interview is quoted as saying, “If someone is rich they should buy a ton every month.“
Fears of a double-dip downturn have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.
“They don’t only buy ETFs or futures; they buy physical gold,†said Stadler, who runs the Swiss bank’s services for clients with assets of at least $50 million to invest.
UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,314.50 an ounce on Monday, near the record level reached last week.
“We had a clear example of a couple buying over a ton of gold … and carrying it to another place,†Stadler said. At today’s prices, that shipment would be worth about $42 million.
One can only surmise that the mega-rich, those in the know with connections within our political and financial systems, already have a good idea of what’s headed our way. And they’re not taking any chances with their wealth, or safety.
The near term outlook for gold may be uncertain, as is the outlook for global financial markets – both will be volatile and the moves may be violent in either direction. This is what happens when a failing economic system is in its death throes. But for gold,the long-term trend remains intact.
This article was originally published at The Daily Sheeple
OOPS, “ ONE FLEW OVER THE CUCKOO’S NEST !â€
GOOD FOR YOU, DUDE! HE REALIZED GOLD IS MONEY.Â
GOLD HAS PROVEN ITSELF AS VALUABLE THROUGH OUT ACIENT CIVILIZATIONS (Dynasties, Mornachy and Roman Empires and in Middle East, etc…..)
You have posted up a lot of stories on gold lately mac and there is nothing wrong with that. All the scary stories of collapse serve a purpose, but they don’t offer the reader any hope, not for their future security and happiness. We all need hope for the future and gold gives us that hope I believe.
Sure a cabin in the woods stocked with supplies is a much better hope. But in reality only a fraction of the people reading your blog will ever attain that freedom. Most here will continue to live in their suburban houses, continue in their daily jobs, hoping that the government, the president or perhaps God Himself will intervene and save their lifestyles. As each day passes, as each new story of collapse comes forth, that hope must surely die a little more.
Gold gives us hope, the hope that if all our conventional financial resources fail, at least we will have something of value that we can fall back on. something that with each passing day gins a little more in value.
Gold has many functions and those who don’t understand gold usually focus on just one or two aspects of it to deride gold and support their pet theory about the future. In our modern era we see gold fulfilling one of it’s rarer functions, a function it is usually called upon to provide only once in a persons lifetime. That is the ultimate survival tool, the ultimate form of energy storage.
Yes it will buy you food when nothing else will. It will guarantee you safe passage past the hostile boarder guards. It will buy you the last seat on a chopper out of the war zone. It will hire you an arm if you have enough of it.
British pilots in WWII carried gold sovereigns to buy their passage out of foreign lands when shot down. Jews used it to buy passage out of Germany. Argentinians used it in 2001 and Zimbabweans use it today to buy food and fuel.
If you think that just because you live in America or Australia or England that gold will function any different than everywhere else in the world you had better have more to back up your belief than the opinions of a few radical internet survivalists and a handfull of died in the wool deflationists.
Wow Wooba! Ring the bell…..Â
Comments….. Moving gold out from the US.. ? It`s like buying
from LMBA or COMEX (and get the physical stuff).
Nah …. . UAE royals, maybe….
buy one half troy ounce american gold eagles -no counterfeits yet and low ounce premium is not much.
Wooba, great comment:
“the ultimate form of energy storage.”
Very insightful!
I know I’ve been on the gold bandwagon lately, but only because there are so many questions surrounding it. I think this may be the last article on the subject for a little bit – at least until something serious happens with gold in one direction or the other.
When the top tier wealthy buy 42 million in gold and takes physical possession of it, THAT is an alarm bell ringing loudly.
SHHHHHH..don’t tell anybody, but silver is actually the PM that will see you through the darkest economic times predicted for less of an upfront cost, it may save your life, and if you’re lucky and have enough of it, may turn you into one of those millionaires that always rise from the ashes of disaster.
It is still ridiculously below inflation adjusted highs.
It is at historic lows relative to its ratio to gold. Normal is 16-1 gold to silver value ratio. You do the math as to what the ratio is now.
It is rarer than gold now as it is actually consumed by industry.Â
You can buy it in bulk in small denominations (90% silver pre-1965 U.S. dimes, quarters, and half dollars.) These small denominations will be VERY useful for purchasing items if we ever get to that point. Good luck getting proper change for your 1 ounce gold eagle when buying a loaf of bread.
And if things were to get bad enough and medical care was severely reduced, you can use it in a colloidal silver generator to be used to fight infections, etc.
Another few points regarding coinage. It may have been discussed here before, not sure, but it is worth mentioning again.
Save ALL your coins. Sort out your copper pennies (pre 1983) as the amount of copper in each penny is actually worth 2-4 cents depending on recent market prices.
Sort out your nickels as the amount of nickel in each coin is almost about the 5 cent value of the coin and is expected to exceed that.
And keep the rest of your change, because in the past, when countries have devalued their money and had a reissuing say at 10 to 1 (turn in 10 old dollars , get 1 new dollar back), often they have NOT re-minted coins due to the cost, so their value remains the same.
Example: If you have $100 in paper money, you turn it in and will now have $10. You have $100 in coinage, after the new dollar issue, you will still have $100 in coins
Mac,
Gold’s up 21 bucks this morning as the dollar index slides under 78.
At this rate, Jim Sinclair’s long held prediction of 1650 gold by mid January 2011 isn’t going to miss the mark by much, if any.
$1400 & $25 spot. Don’t think we will have to wait long…. “Ultimate form of energy storage”, that’s what gave me pause where I had to back up, (beep, beep, beep,) & re-read. Real money is what would keep us free. The day is coming where gold will continue to increase in value no mater what the U.S. dollar index is displaying. Riding the bull is just starting to get fun! Once you hold it you don’t have to hang on, you just have to enjoy the ride. The cost to ride is still only a silver dime or even a war nickel.Â
I just wanted to share 2 technical price points regarding gold/silver.
One is that the last technical level silver had to break through was 22.38. It did that this morning and in fact blew right through it. According to stellaconcepts (yt channel), it is now primed to challenge the 30 year price target of $50/oz.
Second, this is the first time I have seen the gold/silver ratio below 60 (since I’ve been watching it). It is now at 58 something. Silver is starting to make the bigger move IMO (now watch it get obliterated later in the week!).
Cheers
Wooba has great point, and I did just that. Traded 11 1oz Gold Eagle for FRN’s and bought two acres in the woods of rural TN. Traded a couple more to get power and water there and rent a backhoe. (I know maybe wasted that money, but you gotta hope.) Traded a couple more and 160 1oz Silver Eagles and bought a 32′ Camper and a F250 to tow it. I just teased my wife about the price of Gold and Silver just now. Of course I didn’t get these prices, BUT I would rather have what I now have than the metal. I do have 60 1oz Silver Eagles and quite a bit of junk silver left to trade with if needed. I have plenty of ammo for my M-4 and AK along with my pistols. I move out of Nashville end of Oct. S0 long at TS Doesn’t HTF before Nov 1.
Wow, 4 1/2% up in AG today, AU up also. Coin going for 1400 plus. USD index down is why. Looks like both are doing their job to keep up with gov. induced inflation but nothing to see here. Stage 3 isn’t showing yet.
I have so little to add to the bullet point reasoning for silver above. Very well stated, and so true. There is so much talk of gold, but not enough for silver. Gold is portable, yes. Handy for larger purchases, yes. Beyond that, why would you NOT be focusing your greater attention on silver right now? Gold is at a 1:58 ratio to silver. And it is heading DOWN! Meaning, every dollar placed in silver, will return so much more than gold. Even if gold (hypothetically) goes to 10k. Sounds great! Put a realistic 1:20 ratio to it, and you have $500 silver, all for the price of a 23-25 dollar investment today!
Silver will be instrumental in day-to-day transactions. Silver IS rarer, as stated above, as it has been consumed in all of our iPods and celphones. And there is no feasible way to remove it!
Silver ETFs are being sold at 100:1 paper to physical. That means 99/100 people ain’t gettin’ their metals! What do you think that will do to the price? Admittedly, the same is happening to gold. But the math is still 100% in favor of Ag.
I was in the coin shop I deal with today (always in cash, no receipt), and a woman was buying some gold because of the rise in price this morning. Another customer asked her if she might put some of it into silver? She said, “Yeah, but it gets too heavy.” WOW! We should all have such problems! All of us stood with mouths agape. Respectfully, of course. More weight, more wealth!
Think about it, but don’t wait. This week will see some serious pressures on the ETFs as people start converting their paper into REAL money, and soon, many will be left out to dry, as their paper investments will be worth just that.
Willie Wonka, very smart.Â
I find it amusing that BOJ (Bank of Japan) is giving away money for a tick above free! Must be a test case for feds to watch instead of admitting Where as the individual has to prove that they don’t need a loan to get a loan but doesn’t want a loan but is being offered a loan. Dudley (Fed NY Res. President) knows this is going to end badly. 20 times face for junk silver coming soon.
Bubbles, bubbles everywhere…gold & silver must be in a bubble — hehehhe all the way to the bank!
Beans, bullets and band aids…if you don’t have’em by now, don’t wait much longer to get them!
Here’s my question: How does one buy gold, or any other precious metal, without having to worry that the fed will find out and confiscate it at some point in the future?
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