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Archive for November, 2013

Weak Gold Prices an Opportunity of a Lifetime for Contrarian Investors?

November 29th, 2013 No comments

Stockcharts

Given the recent further weakness in the price of gold bullion, should investors be running for the exit doors? Some well-known “gold bugs” have recently turned bearish on the precious metal. But I’m on the opposite side of the spectrum; I see the pullback in gold prices as an opportunity of a lifetime for contrarian investors.

The gold bullion price chart below shows the long-term trend in gold bullion is still intact. Since 2001, the precious metal’s price has marched higher. Note there have been many pullbacks along the way, but in all cases, gold bullion prices recovered and moved higher after their pullback. And I believe we will see gold prices recover again from their current price correction.

From a fundamental point of view, demand for the precious metal remains robust. Many central banks have become net buyers of gold bullion over the last couple of years, and consumer buying in gold is very strong. So the question is: with so much negativity towards the precious metal, have we reached peak pessimism on gold bullion?

Just yesterday, Bloomberg ran a story saying hedge fund manager John Paulson would not be investing more of his own money in his gold fund at this time “because it’s not clear when inflation will accelerate.” (Source: Bloomberg, November 25, 2013.)

While investors seem to have turned very bearish on gold bullion, I see it as a bullish sign. If history has taught us one thing, it’s that when there’s increasing pessimism on any investment, a bottom is usually not far away.

So far this year, gold prices have fallen about 30% while the S&P 500 is up about 30%. I can’t see how this trend will continue in an environment where stock prices seem to be rising on nothing else but easy monetary policy. My wager is that in the years ahead, we will look back at 2013 and say, “What a great year that was to buy gold-related investments.”

Weak Gold Prices an Opportunity of a Lifetime for Contrarian Investors

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How China is taking over the world, one gold bar at a time

November 25th, 2013 No comments

Fantastic Infograph by the Real Asset Co. Read more here : How China is taking over the world one gold bar at a time

china-gold-history-infographic

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Gold has achieved a staggering 3,500% return since 1970

November 18th, 2013 No comments

iLarge_Gold

If you were an early investor in gold and have stuck by the precious metal for the past 43 years you will have made a small fortune.

A new report, released by the Centre for Economics & Business Research and CoinInvestDirect, an online precious metals dealer, has found that the gold price has soared by some 3,500% since 1970. This means an investor who spent £27,800 on gold and retained their investment ever since will today be a millionaire.

(In other words, during 1970 an ounce of Gold was US $35.00. In 1970 $45,000 would have bought you 1,285 ounces of Gold. Today, that same 1,285 ounces of Gold have a current US Dollar spot value of  $1,652,327!)

An investor with more modest sums would still be sitting on incredible gains. For instance, an investment of £10,000 would be worth £360,000 today.

However, the price of gold has had a rocky ride over this period, particularly in more recent years. Since 2001 the gold price has risen from $260 to trade at around $1,285 at present.

According to the report one of the main drivers behind gold’s success over the past decade is increased demand from emerging market economies. Fast growing countries, such as Brazil, Russia, India and China, have doubled their gold reserves since 2003. Because there have been more buyers than sellers, the gold price has been well supported.

Gold turns £27,800 into £1m

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Clarke and Dawe – Understanding the GFC

November 10th, 2013 No comments

A Golden Oldie but a goodie from Iva Bad Feeling.

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THE MATTERHORN INTERVIEW: John Butler Part 2- The Real Earthquake In Financial Markets Is Yet To Come

November 8th, 2013 No comments

In the second of two video interviews, London-based investment manager John Butler talks with German financial journalist Lars Schall about, inter alia: the collapse of the paper gold market; the prospect of trading nations refusing paper money in exchange for their exports; and why the euro was perhaps in principal a fine idea, but won’t survive in its current form.

By Lars Schall

John Butler, who studied economics, history, philosophy and international politics, has worked for over 15 years as an interest rate, currency and commodity strategist at major investment banks in North America and Europe. He was Managing Director and Head of the Index Strategies Group at Deutsche Bank in London, and Managing Director and Head of European Interest Rate Strategy at Lehman Brothers in London. He’s now the Chief Investment Officer of Amphora Capital, an independent investment and advisory firm in the City of London. In 2012 he published the book “The Golden Revolution: How to Prepare for the Coming Global Gold Standard,” published by John Wiley and Sons.

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THE MATTERHORN INTERVIEW: John Butler Part 1-The Dollar Reserve Equilibrium Is Breaking Down

November 8th, 2013 No comments

On behalf of Matterhorn Asset Management Zurich, London-based investment manager John Butler met with German financial journalist Lars Schall in Munich to discuss some of the major aspects of international affairs as they relate to the sphere of finance. In Part 1 (18 minutes) of this tremendous and informative video interview they focus in particular on the U.S. dollar and the challenges that may arise if China would back the yuan with gold. Butler: if gold would be remonetized in a historical proper fashion, its price would be a lot higher.

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