It’s hard for many so-called “elite” economists to think about gold as an asset, probably because they’ve devoted so much of their careers to trying to justify fiat money systems. But N. Gregory Mankiw, a somewhat famous Harvard professor and the author of some very popular economics textbooks, grudgingly acknowledged the logic of holding gold in an investment portfolio. In a New York Times editorial, Mankiw wrote of the benefits of gold as a portfolio counterbalance. An important element of an investment portfolio is diversification, and here is where gold really shines — pun intended — … [Read more...]
Gold, Silver, and Currencies
Young Research & Publishing has been providing research and insights on precious metals and currency markets to institutional investors, corporate financial officers, business owners, and individual investors for over four decades. Richard C. Young started Young Research & Publishing in the 70s to publish the authoritative Young's World Money Forecast, a 50-page monthly investment report on the precious metals and currency markets. Today, our research on gold, silver, and currencies is geared toward investors in or nearing retirement who are looking to preserve and protect wealth.
How to Lose Money Fast
Don’t waste your money with stop-losses. There’s no promise that you’ll like the bid you’re forced to take like the recent EUR/USD squeeze. FXstreet.com (Barcelona) - In what seems to have been an absurdly exaggerated move up, the EUR/USD is currently trading at 1.3137 after posting a fresh 2-week high at 1.3203. The catalyst on today's moves is a combination of a market overly long the USD, twilight liquidity on the transition from NY into Tokyo, and obviously, Fed Chairman throwing cold water on QE taper this September, saying that inflation, jobs signal more Fed stimulus is … [Read more...]
Escalating Currency Wars an Imminent Threat
With the cabal of central bankers and finance ministers once again denying at the G-20 meetings last weekend that the world’s largest economies are engaged in clandestine currency wars we are reminded of the famous Groucho Marx quote, “Who you gonna believe, me or your lying eyes?” [expand title="Click here to read more."] It should be self-evident to even the casual observer that the world’s largest central banks are engaged in currency wars. Pick up the morning paper and you are bound to see evidence of this. From yesterday’s Financial Times: “But the central bank governor, Graeme … [Read more...]
Covert Global Currency Wars
“The lessons for the present are clear. Today most advanced industrial economies remain, to varying extents, in the grip of slow recoveries from the Great Recession. With inflation generally contained, central banks in these countries are providing accommodative monetary policies to support growth. Do these policies constitute competitive devaluations? To the contrary, because monetary policy is accommodative in the great majority of advanced industrial economies, one would not expect large and persistent changes in the configuration of exchange rates among these countries.”—Federal Reserve … [Read more...]
Like a Rolling Stone
Japan’s stock market is up 9.3% this year (chart 1). But in US dollar terms it’s up only 0.6% (chart 2). As you can see, attempts at currency debasement are not a road to prosperity. Even with extraordinarily loose monetary policy for decades, Japan has not been able to devalue its currency compared to the dollar to boost its flagging economy with cheap exports (chart 3). It’s a quick fix to an economy with structural problems that will eventually be reflected in the stock market (chart 4). It’s a recipe for an economy that’s like a rolling stone—with no direction home (chart … [Read more...]
Insanity: The $1 Trillion Platinum Coin
If you haven’t heard of the latest ploy to monetize America’s debt, read onward. In the last few weeks an obscure idea has come on with a vengeance. Supported by left-wing politicians, economists, bloggers and even some people formerly considered rational, the idea of the $1 trillion coin as an answer to America’s debt problems is spreading like wildfire. If you’re not already wary at the mere mention of a coin valued at $1 trillion, it’s a sign of the sorry state of the country. Birth of a Bad Idea According to WIRED magazine, the idea was first broached in 2010 in what the … [Read more...]
Gold Today, Gold Tomorrow
In the last five years the price of an ounce of gold has increased 93%. Easy monetary policies and the downgrade of many sovereign debt ratings, including that of the U.S., have contributed to the high demand for the safe-haven precious metal. Since May 16, in the lead up to September’s Federal Reserve announcement of QE infinity, the market pushed the price of gold up by 12.6%. The price of the yellow metal has been consolidating but could break out at any moment. Gold should be a component of all investment portfolios today as a hedge against profligate fiscal and monetary policy because … [Read more...]
Who is Buying Gold?
In 2012 there were stunning trends in gold buying. Perhaps the most stunning was who was buying gold to lower risk from economic turmoil. … [Read more...]
Time to Buy Gold?
It’s the question most frequently asked by customers over the last week: Is now a good time to buy gold? My answer is that I like gold. Who doesn’t? But I don’t buy it hoping it goes up. I buy it and hope it goes down, because most of the stuff I own in my portfolio goes up when gold goes down, as should be the case in yours. But if you have invested in gold over the last 10 years, you’ve beaten the pants off the Dow Jones Industrial Average total return. Look at the chart below for a comparison. The chart shows you what $100 invested in the Dow or gold on December 31, 1999, would be worth … [Read more...]
Stimulus Speculation Goes Global
We have commented thoroughly on the stimulus programs being signaled or implemented in the United States and Europe, but market speculation has broadened its horizons. Now anticipation of stimulus efforts from developing countries is moving prices. Speculators saw the weak foreign trade data announced Monday morning by China as cause for optimism when it comes to the prospect of future fiscal stimulus. China’s imports declined by 2.7% compared to the year before, and exports only grew at—what is for China—a very modest 2.7% over the year. The average annual growth for imports and exports … [Read more...]
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