Featured | Gold and Silver Blog

U.S. Mint Silver Bullion Coin Sales Hit Record High

November 13, 2013 by admin Leave a Comment

As discussed in a previous post, sales of the American Eagle silver bullion coins were on track to post record sales volume in 2013. It’s now official – sales of U.S. Mint silver bullion coins surged past the old record set in 2011 and are track to hit a record high of 45 million ounces in 2013.

According to the U.S. Mint year to date sales of the American Eagle silver bullion coins total 40,175,000. The previous record was set in 2011 when sales of the silver bullion coins came in at 39,868,500. Based on monthly sales volume, the U.S. Mint might sell an additional 5 million coins by year end.

The American public loves the American Eagle silver bullion coins and can’t seem to get enough of them. After an exuberant rise to almost $50 per ounce during 2011 silver has corrected in price to the low $20’s. Although the decline in silver has elicited numerous bearish commentary in the mainstream press, long term investors seem to be doubling down as the price of silver price has become irresistibly cheap. Yearly sales of the silver bullion coins have increased by almost 500% since 2008.

Total yearly sales of the American Eagle silver bullion coins are shown in the chart below with the 2013 total as of November 12, 2013.

2013-W Proof Silver Eagle

In addition to the silver bullion coins the U.S. Mint produces a proof silver eagle coin. According to the Mint News Blog the 2013-W Proof silver Eagle has already sold out and 2013 is the third year in a row that this popular product has sold out well before year end.

Sales for the 2013 Proof Silver Eagle originally began at the US Mint on January 24, 3013. Opening orders were slower compared to the prior two years, however the pace of orders remained brisk throughout the year. The coin typically represented one of the US Mint’s top sellers on the weekly sales reports.

Recently, weekly sales had spiked, with 29,613 units orders in the previous reporting period and an indication of 29,025 units ordered in the week just ahead of the sell out. Sales data shows total orders at 880,030 units. This is a bit higher than recent prior years.

In 2011, the individual proof Silver Eagle had sold out on November 22 after reaching sales of 850,000. In 2012, the sell out had occurred on November 13 when sales had reached 819,217.

The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint. The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint. The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public. The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

1881-CC-Morgan-Dollar

The U.S. Mint American Eagle silver bullion coins remain a popular method of building wealth with periodic purchases. The American public can’t seem to get enough of the bullion coins and the desperate actions of global central banks to keep the financial system afloat with a deluge of paper money can only cause more financial anxiety and more silver purchases going forward.

Filed Under: Bullion Sales, Featured, Silver, US Mint Tagged With: american silver eagle, american silver eagles, Silver, silver bullion, silver bullion coins, silver demand, Silver Eagles, united states mint, US Mint

The Hard Facts About Gold, the Fed, and the U.S. Government

November 7, 2013 by admin Leave a Comment

gold & bar Let’s back away from the “smaller” questions like:

Will the Fed taper or not?
Is Obamacare a disaster or just a huge problem?
Is the S&P 500 index due for a correction?
Is the U.S. economy improving?
Why is most of the rest of the world angry with the U.S.?
If inflation is so low, why are my expenses increasing so rapidly?
Is the NSA spying on everyone’s cell phone and computer?

Let’s look at the really big picture!

The Fed wants higher stock prices. The Fed serves the needs of the wealthy and the wealthy have a large chunk of their wealth invested in stocks.
The Fed wants low interest rates, which keep bond prices high, because the wealthy are heavily invested in bonds.
The Fed and the U.S. government need low interest rates so the U.S. government’s debt service costs remain low, real estate is attractive, credit is inexpensive, and investors are forced to reach for yield, buy stocks, and maintain the bond and dollar bubbles.
The U.S. government wants to spend money, lots of money, and avoid the consequences. Congress lives to buy votes, increase their power, and collect “contributions.” Lobbyists want a piece of the action for themselves. Corporations want to “influence” legislation to increase their profits. Business as usual. Spend. Spend. Spend!
Central banks, especially the Fed, and western governments want lower gold prices, so their unbacked paper money still appears valuable, so the U.S. dollar retains relative value against other currencies, and so the world will continue sending goods and commodities to the U.S. in exchange for paper dollars and T-bonds.

Can the Fed and the U.S. government manage the markets to achieve low interest rates, higher stocks, low inflation, low gold prices, and a strong dollar, all while spending much more than revenues support and thereby running the national debt up to insane levels? My assessment is NO!

What does the data indicate?

Assume that the world changed around the 9th month of 2001. Stocks had peaked and crashed, the Twin Towers came down, government expanded, and the U.S. declared a War on Terror. There were bubbles to be inflated, massive debts to be incurred, no-bid contracts to be awarded, huge profits to be generated, and stories to tell.
Assume that the spending, increasing debt, bubble blowing, and military-industrial profit generating machine have been operating more intensely since 2001.
Assume that “this time is NOT different” and that our current fiscal and monetary trends will continue for several more years.

Gold and the S&P 500 Index

Graph 1 shows 25 years of the smoothed* monthly price of gold divided by the smoothed value of the S&P 500 index. The ratio went down from the 1980s to about 2001 and rose thereafter. Until 2001 investors wanted financial assets more than real assets like gold and silver. Since then the price of gold has risen more rapidly than the S&P 500 index. The Fed wants the S&P to keep rising and so we should expect QE will continue in the hope that it will levitate the stock markets. Unless this time is different, gold will continue to rise.

Gold and the National Debt

Graph 2 shows 25 years of the smoothed* monthly price of gold divided by the official national debt in tens of $Billions. The ratio went down from the 1980s to about 2001 and then started rising. Even though debt has been increasing rapidly since 9-11, the price of gold has increased even more rapidly since its bear market lows in 1999/2001. Knowing that politicians, corporations, and banks need the spending and debt to continue increasing, we should expect massive deficits and ever-increasing national debt – growing about 10 – 12% per year. Unless this time is different, gold will also continue to rise.

Gold and the Dollar Index

Graph 3 shows 25 years of the dollar index multiplied by smoothed monthly gold prices. In broad terms a higher dollar usually goes with lower gold prices (when priced in dollars) and vice-versa. The product removes most of the currency variation and shows the big picture trend for gold. Since about 2001 the trend has been upward. Unless this time is different, gold will continue to rise.

The Fed has incentive to continue QE – to levitate the stock and bond markets and keep interest rates low. But QE will eventually weaken the dollar with excess supply, reduced demand and reduced value. Expect gold to rise in price.

The politicians want to spend money, lots of money, and will borrow and print until they can’t. The national debt and the price of gold will increase.

Summary

Unless the financial world has materially changed, we can expect that an increasing S&P index will correlate with higher gold prices, and an increasing national debt will correlate with higher gold prices. Similarly, continued QE will correlate with a lower dollar and higher gold prices.

They say “don’t fight the Fed” and “don’t fight the administration.” Even if it looks like a train wreck during amateur hour, the incentives motivating both the Fed and the government all align with higher gold prices.

Maybe the Fed and the politicians can’t get everything they want, but we expect they will be happy with strong bond prices, higher stock prices, and more spending. Those conditions will co-exist with higher gold prices. Consequently we expect the Fed and the politicians understand that the price of gold must go much higher. Sacrifices, such as higher gold prices, must be made to maintain the “full steam ahead” status of our national train wreck in progress – deficit spending, ever-increasing debt, QE-forever, more wars and currency debasement.

Do you own a sufficient quantity of physical gold and silver?

More Thoughts:
Created Currencies…Are NOT GOLD

GE Christenson
aka Deviant Investor

Filed Under: Currency debasement, Featured, Gold, US Debt Crisis Tagged With: currency debasement, Debt Crisis, Federal Reserve, Gold, gold demand, money printing

American Silver Eagle Coin Sales On Verge of Record Shattering Year

November 4, 2013 by admin Leave a Comment

american-silver-eagle The American public’s love affair with the U.S. Mint American Eagle silver bullion coin continues unabated. Ever since the financial meltdown of 2008 there has been an explosion in demand for the silver coins. Average yearly sales of the silver bullion coins have increased by almost 500% since 2008 and sales for 2013 are on the verge of shattering all previous yearly sales records.

According to the U.S. Mint, sales of the American Eagle silver bullion coins totaled 3,087,000 ounces for October up slightly from September monthly sales. Demand for the silver coins has remained robust throughout the year and total annual sales at the end of October reached 39,175,000 million ounces.

The all time yearly sales record for American silver bullion coins was 2011 when sales hit 39,868,500 ounces. Based on current monthly sales the total number of silver coins sold in 2013 should be in the neighborhood of 45,000,000 ounces or almost 13% higher than the record hit in 2011.

Total yearly sales of the American Eagle silver bullion coins are shown in the chart below with the 2013 total through the end of October.

The market value of all silver bullion coins purchased since 2000 is $5.9 billion. We know that silver prices will fluctuate over the years. We also know that the “all mighty government” cannot produce silver coins by the trillions like they do with the U.S. dollar. Based on the irresponsible financial conduct of both the Federal Reserve and the Federal government, is it any wonder that citizens are voting with their pocketbooks and moving into real stores of value such as silver?

SILVER DOLLARS The American Eagle silver bullion coins cannot be purchased by individuals directly from the U.S Mint. The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of silver and a markup by the U.S. Mint. The authorized purchasers sell the silver coins to coin dealers, other bullion dealers and the public. The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

Filed Under: Bullion Sales, Currency debasement, Featured, Silver, US Mint Tagged With: american silver eagle, american silver eagles, currency debasement, money printing, record silver coin sales, Silver, silver bullion coins, silver demand, united states mint, US Mint

U.S. Mint Gold Coin Sales Soar 273% in October

November 4, 2013 by admin Leave a Comment

gold-bullion Although sales totals vary from month to month, annual sales of the U.S. Mint American Eagle gold bullion coins are running at triple the levels prior to 2008 when the wheels came off the world financial system and central banks began an orgy of money printing.

From 2000 to 2007 the average yearly purchases of the American Eagle gold bullion coins totaled 341,500 ounces per year. From 2008 to 2013 annual purchases of the gold coins have spiked by 300% to an average annual rate of 1,011,000 ounces.

After lackluster sales of gold coins in the slow months of August and September sales soared in October as investor demand for physical gold surged. Total sales of the American Eagle gold coins for October 2013 came in at 48,500 ounces, an increase of 273% over the September total of 13,000 ounces. October sales of gold bullion coins for the comparable prior year period totaled 59,000.

The U.S. Mint American Eagle gold bullion coins remain the premier method of building wealth through periodic purchases. The American public can’t seem to get enough of the bullion coins and the desperate actions of global central banks to keep the financial system afloat with a deluge of paper money can only cause more financial anxiety and more gold purchases going forward.

2013 sales through October 2013

With two months still remaining in 2013, investors have already purchased almost the same amount of gold bullion coins that were sold for all of 2012. Year to date sales of the American Eagle through October total 752,500 ounces compared to 753,000 ounces for all of 2012.

Gold Bullion U.S. Mint Sales Since 2000

Year		Total Ounces
2000		164,500
2001		325,000
2002		315,000
2003		484,500
2004		536,000
2005		449,000
2006		261,000
2007		198,500
2008		860,500
2009		1,435,000
2010		1,220,500
2011		1,000,000
2012		753,000
2013		752,500

TOTAL		8,755,000

(above 2013 totals through October 2013)

The American Eagle gold bullion coins cannot be purchased by individuals directly from the U.S Mint. The coins are sold only to the Mint’s network of authorized purchasers who buy the coins in bulk based on the market value of gold and a markup by the U.S. Mint. The authorized purchasers sell the gold coins to coin dealers, other bullion dealers and the public. The Mint’s rationale for using authorized purchasers is that this method makes the coins widely available to the public with reasonable transaction costs.

gold-buffalo

The public is allowed to purchases numismatic versions of gold coins directly from the U.S. Mint. One of the most popular numismatic gold coins is the American Buffalo, available in both one ounce gold reverse proof and one ounce gold proof.

Filed Under: Bullion Sales, Currency debasement, Featured, Gold, US Mint Tagged With: american gold buffalo, american gold eagle, currency debasement, Gold, Gold Buffalo, gold bullion, gold demand, Gold Eagles, record gold coin sales, united states mint, US Mint

Yellen Will Make Bernanke Look Like an Amateur When It Comes to Printing Money

October 30, 2013 by admin Leave a Comment

Axel Merk, Merk Investments

Fed Chair nominee Janet Yellen will take over where her predecessor Ben Bernanke leaves off. Not just operationally, but also philosophically. To understand where the Fed and the U.S. dollar may be heading, we take a closer look at where Bernanke and Yellen are coming from.

Bernanke has always considered himself a student of the Great Depression. He argued many times that one of the biggest mistakes made during the period was to raise interest rates too early. When faced with a credit bust, major deflationary forces are unleashed; in our assessment of Bernanke’s thinking, he believes the right policy response is to push back with accommodative monetary policy. But there’s more to it than low short-term rates.

Notably, Bernanke was faced with a crash in home prices, leaving many homeowners owing more on their homes than they were worth. Such “under water” homeowners had a couple of choices:

Downsize to homes they could afford. While this approach might be the best for long-term sustainable growth, it’s politically the most difficult one, as it embraces foreclosures and bankruptcy as a necessary evil.
Pay down their debt. That’s more easily said than done in an era where real wages stagnate.
Cross fingers in hopes the Federal Reserve would help to push up the prices, so fewer homeowners are under water.

To help push up home prices, the Bernanke Fed worked hard to lower longer-term rates by:

Talking down interest rates
Lowering interest rates
Purchasing Treasuries & Mortgage-Backed Securities
Engaging in Operation Twist
Introducing an inflation target
Introducing an employment target

Each one of these policy moves is an escalation from the previous one. Most notably, the introduction of an employment target signals to the market that rates may not be raised until employment has picked up sufficiently. In theory, longer-term rates stay lower the longer investors expect short-term rates to stay low, the introduction of an employment target to keep mortgage rates and other longer-term interest rates low is akin to using a sledgehammer to hang a picture frame.

At the end of this road then came the “taper” talk. Even though “tapering” merely referred to a pause in additional easing, markets, never shy of jumping to conclusions, immediately started to price in a complete unwinding of the nonstandard policy measures. Since then, Bernanke’s taper talk has been tapered. Bernanke’s strategy hasn’t been helped by the fact that communicating an employment target isn’t all that easy, given the array of metrics, such as the labor force participation rate, that help provide a picture of how healthy an economy truly is. The most important market based gauge, the relationship between short-term and long-term rates (the yield curve), is so manipulated by the Fed, that policy decisions are ever more “data dependent.” And to make matters worse, the government shutdown has made access to reliable data a scarce resource.

With Bernanke out of ideas, out of steam, and out of data, it’s time for fresh blood. Yellen does not need to look back to the 1930s to arrive at her policy goal. It’s her starting point. In her speech accepting the nomination to succeed Bernanke, the first goal she stated was maximum employment.

Starting with an employment target is really much more than a signal interest rates will stay lower for longer. Historically, the Fed’s realm is monetary policy, controlling levers such as interest rates and/or money supply. However, once the Fed started to buy mortgage-backed securities (MBS), it started allocating money to a specific sector of the economy. That’s supposed to be in the realm of Congress. When the Fed engages in fiscal policy, powerful dynamics may be unleashed, not least of which is political backlash.

Yellen’s frame of reference, we believe focusing on an employment target suggests the Fed will be willing to cover for perceived shortfalls of fiscal policy. Of course, such “perceived shortfalls” are in the eyes of the beholder. Not being accountable to voters to make such decisions is, in our assessment, problematic. Needless to say, our elected officials appear to be at odds on how to run this economy. In fact, we would argue that our elected officials would only get their act together to engage in serious entitlement reform if pressured to do so. As voters appear to veer towards ever more populist politicians the one power that has shown effective in Europe to convince policy makers to engage in structural reform, is the power of the bond market. Once the bond market started to act up, governments in the Eurozone made tough choices to cut costly benefits that were no longer affordable.

I’m hopeful we will engage in structural reform in the U.S. as well, but it may also take the pressure of the bond market to convince policy makers it’s time to act to make deficits sustainable. With the Fed pursuing extraordinary measures that pressure may not come as quickly as it might otherwise, allowing policy makers to squander time bickering over a discretionary budget. The discretionary budget may matter little in a few years, as the cost of serving the nation’s debt along with entitlement spending may entirely crowd out the discretionary budget.

An employment target encourages social engineering. Yellen appears to be encouraged to pursue growth-oriented policies to help those that have not yet been able to participate in the economic growth of late. Never mind that substantial distortions might be caused in other segments of the economy, where those that have benefitted may be encouraged to engage in ever more speculative investments.

Investors may want to consider diversifying out of the dollar to see how this unfolds. Unlike the Eurozone, the U.S. has a current account deficit. That means should the bond market impose reform, the greenback might be more vulnerable than the euro has ever been. And in case Yellen keeps a lid on yields, the valve may well be the dollar. Just look at Japan: what will happen should yields rise? Will the Bank of Japan stand by, allowing the government to drown in its debt? In the U.S., while debt levels aren’t as extreme as in Japan, the ultimate dynamics may be related should central banks be increasingly lured into financing government deficits.

Please subscribe to Merk Insights and follow me on Twitter to learn how the “mania of policy makers” impact investors.

Axel Merk
Axel Merk is President and Chief Investment Officer, Merk Investments,
Manager of the Merk Funds

Filed Under: Currency debasement, Featured, US Debt Crisis Tagged With: currency debasement, Federal Reserve, money printing, U.S. dollar

Gold and Silver Are the Answer to Endless Fed Printing

October 30, 2013 by admin 1 Comment

By: GE Christenson

THE SETUP

A century ago bankers created the plan for a U.S. central bank, bought enough votes to get it passed into law, encouraged deficit spending, government debt, and extracting the interest payments from taxpayers. The process has worked well for the bankers.

After several expensive wars and the expansion of social programs the U.S. had created considerable debt. In fact, debt and the money supply had increased so much that inflation became a serious problem in the 1960s. Further, the U.S. trading partners no longer wanted dollars but wanted gold instead since they could see that dollars were being created indiscriminately and were losing their value. Nixon (August 15, 1971) did what was good for the financial industry, severed the remaining connection between the dollar and gold, allowed the money supply and debt to increase to never-seen-before levels, and planted the seeds of self-destruction for the dollar and the US economy.

THE CRASH

The process continued until 2008 when the debt and derivatives bubbles had grown so massive that the economy could no longer sustain them. The economy and stock market crashed and financial and political leaders stared “into the abyss” of deflationary collapse, reduced Wall Street income and bonuses, loss of votes, and did what they perceived as necessary: printing money, Quantitative Easing (QE), injecting liquidity, bond monetization, extend and pretend, and so on.

Courtesy: coinupdate.com

THE “SOLUTION”

The choice was made to “solve” an excessive debt problem by creating more debt – Quantitative Easing (QE) and increased deficit spending. Deficits were increased to a $Trillion or so per year while the government bailed out the bankers and politicians and the public watched Reality TV. It appeared to work, somewhat, for a while.

So the economy (financial industry) and government are desperate for QE, and similar to being hooked on “meth,” they find it difficult to kick the habit and get off the “drugs” of QE, money printing, and central banking. As Gold Stock Bull says,

The economy is addicted to QE and reliant on central bank stimulus to stay afloat. The world now understands that the FED cannot end the bond-buying program and has no intention of doing so anytime soon. If anything, we are likely to see increased quantitative easing in the future, just as a drug addict must up their dosage in order to have the same impact. This monetization of debt increases the bullish outlook on gold, as the gold price has historically trended higher along with the FED balance sheet.

Marc Faber and Deepcaster:

“The question is not tapering. The question is at what point will they increase the asset purchases to say $150 [billion], $200 [billion], a trillion dollars a month…”

“The Fed has boxed itself into a position where there is no exit strategy (and created) a colossal asset bubble…”

Continue QE and you get hyperinflation…”

“Halt, or even taper, QE and the markets crash.”

The picture, sans Fed propaganda, is increasingly clear. QE is necessary to supplement the financial industry and the voracious appetite of the U.S. government for more spending. Merely slowing QE will probably cause markets to crash, interest rates to rise, the government’s expense for interest on past debt will increase while tax revenues decline, and consequently the government needs more, not less, QE.

Of course there is always a way out – the “nuclear” option – let it crash and burn! But no one wants a crash as everyone will be hurt by that choice. Consequently the Fed and the U.S. government (the powers that be – TPTB) scramble desperately. What are the options?

More QE buys time. Less QE might well cause a crash. So TPTB choose more QE.
More spending keeps the big corporations (who make LARGE donations to congress) happy. If the government spends less, “everyone” complains. So TPTB choose more spending, more deficits, and more QE.
Higher interest rates mean that the interest expense for the U.S. government increases. More interest expense means larger deficits and so TPTB are forced to choose more QE.
Foreign purchases (China, Japan, Russia, etc.) of newly issued U.S. treasury debt are decreasing while some countries are actually reducing their current holdings of treasury debt. This forces the Fed to be the “buyer of last resort” and purchase, via more QE, the debt that normally would have been purchased by China, Japan, Russia and others. Fewer foreign purchases necessitate more QE.
A weaker economy and fewer people employed means less economic activity, diminished tax receipts and larger deficits. Those larger deficits guarantee more borrowing and more QE.
Obamacare will create more government expenses and less disposable income for average Americans, which means less consumer spending and therefore less tax revenue for federal, state, and local governments. There is no choice here – it is already law and we are going DOWN that road to much higher consumer costs, lower government revenue, and more government control. The result will be a government desperate for more revenue and more QE.

It does indeed look like a “QE trap.” So ask yourself:

More QE will weaken the dollar, on average, because more supply indicates less value for each dollar. What will that do to consumer prices for food and energy when the inevitable inflation works its way into the consumer economy?
What will happen to the prices for gold and silver when the realization finally hits the populace that interest rates are rising, QE is here forever, congress will never balance the budget, and the dollar will continue to weaken. (Hint: There is no fever like gold fever.)
It is clear that other countries increasingly dislike the U.S. dollar, U.S. treasury debt, and the current policies of the U.S. administration. How much will the prices for imported oil, gold, and silver increase as a consequence of the above?
What will a dollar collapse do to the prices of gold and silver?
Knowing the policies of the Fed, the congress, the administration, and the inevitability of QE, do you own enough gold, silver, platinum, land, diamonds, collectible art and other non-paper assets such that you can sleep well at night?

CONCLUSIONS

The U.S. government has spent itself into the “no-win” position whereby more QE is both necessary and dangerous. Most current policies, such as congressional gridlock, inability to pass a budget for five years, Obamacare, weakening economy and tax receipts, declining relations with foreign nations, massive deficits, declining total employment, inability to reduce spending, ongoing wars, probability of future wars, and more, suggest that QE must continue and probably increase.

Stocks may protect you but gold and silver are the safer choice given the inevitability of more QE and a potential dollar collapse.

You decide!

GE Christenson
aka Deviant Investor (see full article here)

Filed Under: Currency debasement, Featured, Gold, Silver, US Debt Crisis Tagged With: currency debasement, Debt Crisis, Gold, gold and silver, gold price, inflation, money printing, Silver

The Top 10 Biggest Gold Producing Countries in the World

October 29, 2013 by admin 1 Comment

pygmy-possum-coin The Perth Mint presents a neat infographic on the world’s top 10 gold producing countries.

China, which loves gold more than anything, came in as the number one producer with annual output of 370 metric tons. According to the latest official numbers from the IMF, China holds the world’s fifth largest reserves of gold with holdings of 33.9 million ounces. Unofficially, many analysts say that actual gold reserves held by China are far larger than the “officially” reported numbers.

The second largest gold producer in the world is Australia (home of the Perth Mint) which produced 250 metric tons of gold in 2012.

The United States came in at third place with annual production of 230 metric tons. As a dubious consolation for those who hate to see the U.S. come in third, keep in mind that the United States still reigns supreme in the number one spot for production of paper currency.

The Perth Mint, which has been producing gold coins since 1899 has produced (in my opinion) some of the world’s most artistic gold and silver coins.

Filed Under: Currency debasement, Featured, Gold, Perth Mint Tagged With: Gold, gold and silver, Gold Coins, gold producing countries, Perth Mint, precious metals, world biggest gold producer

Ron Paul Talks About Economic Collapse and Lack of Federal Reserve Transparency

October 29, 2013 by admin 1 Comment

In an interview with CNBC, former GOP presidential candidate Ron Paul endorsed the efforts of his son, Senator Rand Paul, to hold up the nomination of Janet Yellen as Federal Reserve Chairman until laws are passed requiring more transparency from the Fed.

Senator Rand Paul has introduced legislation for an “Audit the Fed” bill which would require the Federal Reserve to disclose the details involving trillions of dollars the Fed has provided to both domestic and international financial institutions.

According to Ron Paul, “We don’t know the details of the trillions of dollars that were used to bail out banks and central banks around the world and corporations during the crisis. The numbers that they give you I don’t think are all that revealing.”

Ron Paul has been one of the few voices in the American government pushing for financial responsibility by both the Federal government and the Federal Reserve.

After the most recent capitulation by Republicans to reduce the exponential increase in Federal government debt and spending, Ron Paul lamented the hypocrisy of the deal to end the government shutdown.

The latest spending-and-debt deal was negotiated by Congressional leaders behind closed doors, and was rushed through Congress before most members had time to read it. Now that the bill is passed, we can see that it is a victory for the political class and special interests, but a defeat for the American people.

The debt ceiling deal increases spending above the levels set by the “sequester.” The sequester cuts were minuscule, and in many cases used the old DC trick of calling reductions in planned spending increases a cut. But even minuscule and phony cuts are unacceptable to the bipartisan welfare-warfare spending collation. The bill also does nothing to protect the American people from the Obamacare disaster.

Members of Congress and the public were told the debt ceiling increase was necessary to prevent a government default and an economic crisis. This manufactured fear supposedly justified voting on legislation without allowing members time to even read it, much less to remove the special deals or even debate the wisdom of intervening in overseas military conflicts because of a YouTube video.

Congress surrendered more power to the president in this bill. Instead of setting a new debt ceiling, it simply “suspended” the debt ceiling until February. This gives the administration a blank check to run up as much debt as it pleases from now until February 7th. Congress can “disapprove” the debt ceiling suspension, but only if it passes a resolution of disapproval by a two-thirds majority. How long before Congress totally abdicates its constitutional authority over spending by allowing the Treasury permanent and unlimited authority to borrow money without seeking Congressional approval?

Hopefully, those of us who understand sound economics can convince enough of our fellow citizens to pressure Congress to make serious spending cuts before Congress’s reckless actions cause a total economic collapse.

Sound advice Mr. Paul, but the odds of preventing an economic collapse decline with each additional dollar borrowed by the government and each additional dollar printed by the Federal Reserve. Debt at all levels is out of control and has overcome the ability of the nation to service the debt. Ironically, the only way to prevent a collapse today is through the Ponzi scheme method of further printing and borrowing which puts off the day of reckoning.

Realistically, Ron Paul has been ignored by the public and his fellow legislators for decades. The odds of controlling the growth of debt by the U.S. and other major industrialized countries is almost zero since legislators are elected based on promises to extend the social welfare state and serve special interests.

The odds of central banks reducing quantitative easing is even more remote since an absence of money printing would hasten the economic collapse Mr. Paul warns about. The future collapse predicted by Mr. Paul seems inevitable at some point and the only concern of an investor should be finding a safe haven for wealth preservation.

Filed Under: Currency debasement, Featured, US Debt Crisis Tagged With: currency debasement, Debt Crisis, Economic collapse, Federal Reserve, money printing, Ron Paul, sovereign debt crisis, wealth preservation

Gold’s Bad Luck With the Number 13

October 28, 2013 by admin Leave a Comment

red deer Gold has been on a rampage since the early 2000’s with yearly gains for 12 years in a row. Nothing lasts forever and the number 13 is starting to look very unlucky for gold. Barring a major upset in the world financial system, it looks increasing likely that gold will decline in the 13^th year of its long rally in the year 2013.

Bloomberg’s Julie Hyman and Michael Purves, chief global strategist at Weeden & Co. take an interesting look at the factors impacting gold prices on Bloomberg Television.

Mr. Purves notes that the “flash crash” of gold in April correlated to a stronger dollar in the first half. The strong dollar in the first half of the year has reversed and we have seen a weaker dollar so far in the second half of the year with a rebound and stabilization in gold prices.

Further evidence of healthy consolidation in gold prices can be seen by gold’s refusal to break to new lows as was widely predicted by consensus analysts. Mr. Purves expects that the current consolidation in gold prices is building a base for a future advance. As to the impact of a more restrained Federal Reserve monetary policy, Mr. Purves expects any tapering to be “measured and conditional.”

A strategy recommended by Mr. Purves to take advantage of expected continued volatility in gold prices is the option strategy of selling a November 127 put on the GLD and buying the 133 call.

The consensus opinion for gold remains one of bearishness or guarded optimism – and everyone knows that when the crowd is leaning in one direction, don’t be surprised if the consensus turns out to be wrong.

Courtesy: kitco.com

Filed Under: Featured, Gold, Gold Stocks Tagged With: Gold, gold demand, gold price, gold stocks, precious metals

Marc Faber’s Surprising Gold Forecast

October 28, 2013 by admin Leave a Comment

remembrance In an interview with Barron’s, Marc Faber, editor of The Gloom, Boom & Doom report gives his take on where the gold market is headed and why certain investments related to gold might be very risky.

Marc Faber, never at a loss for a good soundbite, says gold is “in a correction mode” but seemed at a loss to explain why gold has dropped by over $400 per ounce over the past two years.

Faber talks about the paradox of weak physical gold prices even as demand for physical gold remains robust. Although gold has declined in price and commentary on the gold market is extremely bearish, Faber notes that countries such as China is buying 2,600 tons of gold per year “which exceeds annual production.” The gold market is currently in a “bottoming out process” and gold will see higher prices in the future according to Faber.

Courtesy: kitco.com

Many of the senior gold mining stocks represent good values but in a surprising comment Faber warns investors that many exploration companies “won’t make it so buy companies with cash reserves.” Current gold prices mean that “few projects will get done.” Faber’s bearish commentary on the smaller exploration companies seems to imply that he does not foresee a rapid short term recovery in the price of gold.

With central banks printing money at a rate that would have been unimaginable five years ago and huge demand for physical gold in Asia, the price of gold may recover to new highs faster than Faber expects.

Filed Under: Featured, Gold, Gold Stocks Tagged With: Gold, gold demand, gold forecast, gold price, gold stocks, Marc Faber