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As we enter the New Year 2009 we will
continue to discover a great deal of changes.
Those bright sunny days of yesterday
with portfolios climbing to the sky and house prices reaching for the moon
are behind us. For the investment world there is no more bright sun. For
the interim period we shall experience a long dark night.
Don’t
worry. No cycle lasts for ever. Probably in another 15 or 20 years the light
of day may just break over the horizon. Ask the Japanese. I believe they
have been waiting about 20 years for their financial maelstrom to come to a
close. We have a new president now. A new administration and even this new
leader has been very honest in stating that what we are experiencing will not
be a quick walk in the park.
“Not too long ago, people who
warned about the collapse of the banking system were called
doom-and-gloomers. Nowadays, they're called central bankers. If you're
among the ranks of the petrified, you should consider investing in
gold.” “When paper dollars decrease in value, people put their
trust in real assets, such as gold.”“…gold has soared while
the value of the U.S. dollar has risen. Normally, the two move in opposite
directions. What gives? In a word: fear. “Although gold is an inflation
hedge, it's also a catastrophe hedge.” "The banking and financial
system is deteriorating," says Joe Foster, portfolio manager for Van Eck
International Global Investors Gold fund.” “In short, it's a
perfect time for gold, Foster argues. Even though prices are flat or falling,
fear of economic collapse has been propelling the yellow metal higher.”
“The government's response to the economic downturn — pumping up
to $1 trillion into the economy and pouring another $750 billion into the
banking system — could also be a boon for gold.”
usatoday.com/money/perfi/columnist/waggon/2009-01-22-investing-gold_N.htm
The major event that ended the
depression in the 1930s was the introduction of the Second World War. I
hate to think that for us we will need a third world war and major world
conflict to spur demand for material goods.
Bill Buckler – “What
financial and monetary officials in the US (and almost everywhere else) are
in the process of doing is acting to destroy the viability of their
"money" in an attempt to rescue their banks - the conduit for
getting their "money" into circulation without having to actually
"print" it. The end result of their actions will be a destruction
of the money as a viable medium of exchange and there is, as yet, nothing on
the horizon to suggest they are going to stop. In such circumstances, those
who foresee a "good year for Gold" are certainly doing so on very
good grounds indeed. The gyrations in the Gold price this week is just one
more indication that the ultimate choice about what to use as money is
getting closer.”
the-privateer.com/gold6.html
The long night. A new era has begun. We
have been in the midst of the transformation of this new era for the past few
years. But only in 2008 did things really begin to gel and shift into high
gear. And as we are watching every day the long tumble down just seems
to continue to crumble faster and faster. Companies are laying off simply to
prepare themselves for darker financial times. The American consumer has quit
spending…the life blood of the US economy. And how much longer
foreigners will continue to pump money into US securities is anybody’s
guess. Debt has become taboo and dangerous.
To simply hold onto and to preserve
ones capital is the dream of every investor. Forget seriously about making
money through normal conventional means…those days are past. Everyone
is making every attempt to transfer their assets into cash. Of course this
will really do a lot of good when inflation eventually takes hold and begins
in earnest.
“How can you tell that this is
yet another panic phase of the market? You can look at plunging stock prices.
But the recent surge in the price of gold really tells the story.” “Simply
put, gold does well when investors think the world is coming to an end. It's
a hard asset, which makes it a more stable bet than stocks, corporate bonds
and currencies.” "Where do you hide if you want to be defensive? There
are fewer and fewer places," said Axel Merk, president of Merk Mutual
Funds a Palo Alto, Calif.-based money manager specializing in currency
investments.” “…experts are starting to think that a return
[to] $1,000 gold is not out of the question.” "Over the next two
to three months, gold is very likely to break above the peak," said
Carlos Sanchez, associate director with CPM Group, commodities research firm
based in New York.” “But Merk points out that longer-term, he's
bullish on gold since he thinks that inflation, and not deflation as many
fear, will once again become an economic concern.” “That's because
he expects all the money the government has pumped into the system through
rate cuts, bailouts and lending programs will eventually lead to
inflation.” “But the cure to the disease will make gold go
up…”
money.cnn.com/2009/01/23/markets/thebuzz/index.htm?postversion=2009012316
An individual in my church who owned
10 paid for apartment units across the street from Bob Jones University just sold them to get into cash. And this individual makes an easy 150,000 a year
not even counting the rental income. The point being though is that his
instinct as a business man is to begin accumulating cash.
Life really isn’t simply about
starting over. We live really more a marathon that requires a start and then
a finish. We may run fast and successfully at times and then there are the
times our run turns into a struggle and a crawl. That’s about where we
are today…crawling to keep our jobs and struggling simply to pay the
next monthly mortgage payment. We might live in different houses. Our jobs
may be something different every few years. Our marriage may dissolve,
but the marathon of life continues. Our choice often is not several different
paths in front of us but to merely continue on the path we began when we were
born. The long haul from birth to death. And everything that comes in
between.
"We are experiencing an
unprecedented economic crisis that has to be dealt with and dealt with
rapidly," Obama said during the meeting. "How does that stimulate
the economy?" “…White House Press Secretary Robert Gibbs
countered: "There was a lot of agreement in that room about the notion
that we're facing an economic crisis unlike we've seen in quite some time...
that we must act quickly to stimulate the economy, create jobs, put money
back in people's pockets."
nypost.com/seven/01232009/news/politics/prez_zings_gop_foe_in_a_timulating_talk_151572.htm
Personally, I do not think these
stimulus packages are going to be successful at creating new long term jobs
or building factories and overall improving our status of living which is now
deteriorating. It’s not a matter of being pessimistic but
truthful. In the 1930s it took the introduction of a Second World War to
really get the economy on its feet again and moving full steam ahead. I fear
long term that will be the situation again that repeats itself. Millions will
have to die again in war to bring prosperity. But at least all political
parties are in agreement that we are experiencing a long slide down hill that
will not correct itself in just a few short years. I believe the Japanese
will continue to remind us that some economic falls can last for over ten
years and longer. A long time to wait for prosperity’s return.
“President-elect Barack Obama
predicted Tuesday that the nation could see "trillion-dollar deficits
for years to come," but said the country needs to continue spending
taxpayer dollars to get the economy back on track.” “…we've
got trillion-dollar deficits for years to come…”
foxnews.com/politics/2009/01/06/congress-convenes-confront-economic
Considerable inflation is coming. Washington has yet to learn who the real enemy will ultimately be…inflation. This is
why gold will continue to hold its own and have a future. Gold bullishness is
coming. Inflation will raise its ugly head again to parallel the double
digit inflation of the 1970s. We are indeed living in interesting times.The
world's economy is collapsing. Many are convinced that the harm done to
the world's financial system is so great that the hope of a recovery in the
foreseeable future is an impossibility. The big mystery for 2009 is just how
far and how fast the world financial system will collapse.
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We’ve just completed an article
recommending six gold stocks whose prices have been driven to a ridiculous
low. These are quality mining companies with the gold in the ground. And
their market cap is less than their cash in the bank? Buy! These are
the type of companies to acquire that have the potential to make a lot of money
as the precious metals market turns around.
Inflation is coming.
Massive. It’s inevitable. And
inflation is the best scenario for higher gold prices. Speculate only what
you can afford to lose. Gold is still going to be around even after all this
economic mess settles down a bit in twenty years. Gold mining stocks now are
a life time opportunity. Be brave. Buy low. Sell higher.
“The United States has no
monopoly on currency devaluation. It’s a global phenomenon, and
most countries are participants. Only one currency cannot be
devalued by governments: gold. Unlike fiat currencies, it is not
vulnerable to the best laid plans of mice and men.” “The
fundamentals also look strong on a micro level. I’m not referring
to a discounted cash flow analysis or anything like that. Rather, I
mean that it is cheaper for the majors to buy juniors at these levels than it
is for them to explore and develop new properties.” “The junior
miners are trading well. Most junior miner stock charts show positive
patterns. In the aggregate, they seem to indicate a modest return of
speculative interest to the sector.”
microcapspeculator.net/
David Vaughn
Editor,
Gold Letter, Inc.
www.goldletterdv.com
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