Posts Tagged ‘silver’

If there was ever a maxim that lived throughout the ages of investing, sticking with “what everyone needs” certainly rings true today as it did 1000 years ago. That is, what “everyone needs” is basic necessities such as housing, food, clothing, healthcare products, and such items that people cannot live without for more than a few days. In economics we call this kind of item “demand inelastic,” which means that the demand for these kinds of items remains relatively the same as income decreases or increases compared to other items like cars, computers, and other luxury items like televisions and so on.

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The problem the US and Canada are facing is that a large portion of their manufacturing base has been off shored or sent to other countries in the past 20 to 30 years as so called trade agreements such as NAFTA, World Trade Organization, and other so called free trade instruments have been established which gave companies incentive to send middle class jobs to other countries which effectively stripped the parent coutnries of their bread and butter jobs, which eliminated or significantly reduced the spending power of the middle class.

Countries like Japan have, since the 70s to 1980s, pegged their currency to the dollar to take advantage of the manufacturing sector which gave incentive to US and Canadian producers to relocate to Japan or to allow more imports from Japan to be dumped into the US. Now we have a different problem: China, Mexico, Thailand, and Vietnam, but mainly China and its huge population base, extremely low standards, and manipulated currency.

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Since it is predicted that a large portion of the manfuacturing industry we have offshored in the past 20-30 years will return probable best way to attack this is to go back to Standard &Poor’s sector data for the time. However, it won’t be a very fine analysis as it would likely miss emerging industries. It is known that electronics were hot investments as the 1930s wore on– particularly radio, which was state-of-the-art at the time. Zenith Radio emerged as a leading producer: its stock languished until 1935 when it went from the range of 2-2 5/8 at the beginning of the year to 13 1/2 at the end of the year.

Many items, including stocks, reached a historic low in the early 30s.
Some never recovered, but others doubled from their low before the end of the thirties. Therefore we could be in a good buying position later this year, but it is assumed that large increases are unlikely from today’s position. Selling short would be smart before a crash later this year, but there is a fair chance weak prosparity will continue several more years, resulting in large losses for short sellers. So many things have changed since the 30s, and it is thought we won’t learn much, except that a disasterous crash is possible.

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Precious metals are where you can never go wrong since Canada has a large reserve of natural minerals, metals, elements such as uranium and paladium used in nuclear reactors and catalytic converts, respectively (not to mention other uses). Specifically, food and food production is pegged to become the next “big thing” in the United States as the world’s producer of food, or so the prediction goes.

In mainstream economics, the theory is that the primary sector is agriculture from where the development cycle begins for any country. After that comes the secondary sector (manufacturing) and then the tertiary one (services). USA is now sitting at the tertiary sector at the top of this value chain and China seems to be enjoying its manufacturing status. India just jumped from primary to tertiary because of its’ hopping on the information technology bandwagon.

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All one has to do is look at Canada and see fields of gold for there is tremendous potential in the prairies and the agricultural areas of the country including areas like Southwestern Ontario where there are areas full of tomatoe and other plant growing regions such as Leamington. In areas like this you will find millionaires already reaping the rewards of demand for quality produce that Canadian health standards enforce. It would be wise to agree with Mr. Roger’s views that farmers will become the next millionaires because as the previous paragraph explores, the economic theory is that the US and Canada are poised to shift back to an agricultural demand driven economy.

In addition to investing in commodities such as those found in the agricultural industry, the best additional bets would be to invest in essential metals like gold, silver, copper, and paladium because these metals will always be in need and will likely raise in price as the world consumes more of the latter two metals. Indeed, copper and paladium are increasingly being used in electronics and other modern applications.

Written by EconoChristian.com

This is a particularly good article that one of my former professors wrote a few months back.  In this article he describes how governments use crises like the 2001 terrorist attacks on the World Trade Centers to push certain agendas; notably the curtailment of civil liberties, economic freedom, and personal mobility.

By Lloyd Brown-John, Special to The Windsor Star December 5, 2008

At best, it was perversely amusing and at worst, it was sheer hypocrisy. Big Three automaker executives pleading before a U.S. Congressional Committee for support for their industry. The auto industry is in crisis so to whom do pontificators of the free market system turn? Why, to government, of course.

What BJ does not mention is that there really is no so-called “free market” in that the financial and economies of the world are still very heavily controlled by governments thru the influence of big business.   Yes, big businessmen often rotate between public and private roles; hence, this is how corporations get their lobbying interests passed thru (the politicians often leave the private sector for the public one).

All over Canada and U.S., those who preach for reduced government involvement in the economy and society are suddenly in the face of perceived crisis making appeals to governments for bailouts, guarantees and enhancements.

Yes, of course they are, because bailouts, guarantees and enhancements are pretty much free public money to be dumped into private corporations’ pockets by the hand of their public-sector buddies who often have very well-knit connections thru lobbying.  Who wouldn’t want free money?  What corporation wouldn’t want more regulation with the effect of choking out competition as regulations do?

I am neither disputing either their right to make appeals or even that such appeals should go unheeded. Rather, I want to illustrate a point and that is that even the most conservative business executive, when faced with a crisis over which they apparently have little control, can become implorers of government intervention into the free market system.

It should be noted again that the author of this article is a public administration professor;  basically a shill for government involvement and intervention in the supposed free market.  It wouldn’t be too much of a stretch to say that his interests lay in promoting government public administration as the saviors rather than leaving the economy to private interests (where it should be).

Crisis does that to people. Crisis brings forth subdued resources and talents. Persons who risk their lives to save people in a burning home rarely are able to explain their behaviour in rational terms. None of us is trained to deal with emergencies, but some are exceptionally capable of handling crisis situations. Others falter and, in neither instance, are most able to explain their actions. Likewise, governments are ill-prepared, yet fully-equipped to engage in macro-crisis management.

Yes, governments are fully-equipped to handle macro-economic management like a bulldozer is equipped to perform fine gardening on a sunday afternoon.  Governments time and time again have been proven to be extremely wasteful, inefficient, and cannot possibly forecast or manage an economy as well as private interests can.  When I say “private interest” I mean the pricing signals generated by millions of people buying and selling on an open market.  When government intervention comes in, it makes a mess of the natural signals given off by millions of people; it heavily distorts the market.

Unfortunately when a public crisis emerges, almost invariably, we presume that in some form government will shoulder responsibility and manage the crisis. We absolve ourselves and turn to governments.

This mind set has been prevalent especially so since the advent of Keynesian economics which highlight government intervention, insane spending, and economic control of the market.  Would we not have had Keynesian economics’ (or ‘the government will save us’ mindset among the public) stranglehold on the mind set of politicians and bureaucrats, things would have been much different and people would not look for help from the government.  The problem has always been that government has been controlled by a few wealthy people who have pushed for control of the market and people thru the hand of government.

Our financial and automotive corporate executives have more or less said, “Yes, we made the financial mess but you — government — will have to clean it up.”

Yes, they say this because they want more regulation and control imposed on the “evil free market” because these regulations restrict and impose new barriers to entry into business for small-time players.  As an example, carbon taxes have been touted by big oil companies to be a good thing for everyone, but the real truth is that oil companies want these so-called environmental regulations because it restricts competition. (link)

Naturally, we all should appreciate that governments alone have a capacity to universally impose solutions to problems during periods of crisis. After all, governments in democracies exercise virtually absolute legitimate authority. The recent minority Conservative government’s throne speech offered insights both into how a refreshed government proposes to deal with an economic crisis and how, to some extent, that same government will employ the crisis to pursue its own conservative agenda.

Governments exercise absolute legitimate authority because they have a monopoly on the use of force through the judicial and law enforcement systems, especially through the military.  When’s the last time a politician has truly listened to and taken their electorates’ opinions into consideration and implemented plans for the common man?  Governments are violent thugs and have been proven to be all thoughout history.

To be fair, some governmental, collectivist programs may be considered to be beneficial to populations, but when looking at the whole picture, many of these peograms are doomed to fail because the way monetary system is structured, it becomes apparent that the entire system is doomed to fail.  For instance, fiat currency has been implemented and distorted by government with the abolishment of hard money standards (gold, silver).  No longer does capitalism work for the common man (as it was intended to do).

Employing a crisis to manage a specific policy agenda is not new. Throughout the world, post 9-11, governments employed — and still employ — the threat of terrorism to impose constraints on individual rights and freedoms. Many governments, already inclined to authoritarianism, used self-serving interpretation of crisis management to further restrain their citizens.

He makes a good point here for sure.  I highlighted this in the first paragraph.

Fragile freedoms and modest rights were further eroded not only by enthusiastic regimes in many countries, but they were also aided and abetted by a rapidly developing technological industry where the rewards are extensive for innovative and creative ways of watching, snooping and hiding from citizens.

It is this industry which has given us a technology to completely hide an active battlefield tank and its heat imprint behind a curtain of reflective materials. It is the same high technology industry which now offers airport security the opportunity to evaluate your personal body parts as prospective security threats.

I believe he is describing the military-industrial complex that former President Eisenhower warned us about many, many years ago, but the author of this article probably didn’t want to spook people with so-called “conspiracy theories” when in fact it has been proven that the military-industrial complex is responsible for wars and bloodshed with profit and control as the main motivator.

Soon we may have Ontario drivers’ licences which will contain details of your existence which details eventually should be available to anybody either with a scanner or exceptional hacking ability. Crisis offers opportunity and many technology industries are jumping at those government-induced opportunities. Of course, there is a symbiotic relationship as high-tech security related industries induce governments to consider even more invasive forms of “security” systems.

Throughout history would-be dictators, despots, and politicians have used “terrorism” (notably false-flag terror) to create events where citizens acquiesce and beg their so-called representatives to “save them” from the disaster that unfolded. When false-flag terror is mentioned, this is often a pseudonym for the often planned events necessary for citizens to give up their freedom. It has been used time and time again throughout history by dictators looking for easy ways to control and decimate populations.

Notable events in history which have been proven to be planned and conspiratorial in nature have been the burning of the Reichstag Building in Germany by supposed communists, when in reality it was proven that it was secret agents commanded by shadow governments to carry-out terrorism and blaming it on a created enemy.

This rush to encase our lives in alleged security networks is one issue. The other is a broader approach which the throne speech signalled to employing an economic crisis as a base from which new, unrelated, policy initiatives may be launched.

The warning, for example, to federal public servants that the government would legislate solutions to ongoing collective bargaining was very quickly followed by an agreement between the treasury board and public service unions. The throne speech warning appears to have been heeded.

Yet there remains a multitude of opportunities for the minority Conservative government to pursue specific policy objectives under a pretext that they are in some manner related to managing the economic crisis.

The very term “public interest” is regularly employed as a guise for specific government policy actions.

I would not dispute the current federal or even provincial government’s right as a governing party to pursue its own particular public policy agenda. Policy initiatives will be couched in terms of “public interest” and, whenever possible, cloaked in current crisis management spin. That is the prerogative of any government temporarily imbued with legitimate authority and political power.

What I urge, however, and based upon experiences after 9-11, is that we as a public always view with some skepticism claims both that a policy initiative is invariably “in the public interest” and, more specifically, that it is part of the government’s overall plan to manage the economic crisis.

Crisis is opportunity.

The Vietnam War was another notable event, specifically the Gulf of Tonkin Incident where “rather than being on a routine patrol Aug. 2, the U.S. destroyer Maddox was actually engaged in aggressive intelligence-gathering maneuvers — in sync with coordinated attacks on North Vietnam by the South Vietnamese navy and the Laotian air force. ‘The day before, two attacks on North Vietnam…had taken place,’ writes scholar Daniel C. Hallin. Those assaults were “part of a campaign of increasing military pressure on the North that the United States had been pursuing since early 1964.” (link)

The opportunity for you, the reader, is to become more aware that the currency you are issued by your government is destined to become worthless because history shows that fiat money eventually becomes worthless as politicians cannot help themselves but to spend it out of existence.   Gold and silver are the only reliable alternatives to fiat money in this day and age of hyperinflation and deflation.

Silver and gold are and always have been a popular investment in times of uncertainty, but also in times of avarice. Smart investors know that keeping a small or medium sized amount of hard metal in any portfolio is keen thinking. The following article explains in detail what it is meant by investing in hard metals.

Bob Prechter on Silver & Gold
April 2, 2009

By Nico Issac

In case you hadn’t noticed: Over the past year of financial turmoil, the “safe haven” premium of precious metals has offered about as much support as a rubber ducky in a tsunami. Despite a string of powerful rallies, silver and gold remain well below their March 2008 peaks.

It goes without saying that the greatest opportunities in precious metals were not had by those who played the “disaster hedge” card; but rather by those who timed the trends as they developed, regardless of the fundamental backdrop.

Bob Prechter is in the latter group. Amidst the buzz and whirl of the most bullish backdrop in precious metals’ recent history, gold and silver prices soared to new, all-time highs and calls for a “New Gold Rush” and “$30 Silver” flooded the mainstream airwaves. Yet Bob alerted subscribers to an approaching top in the March 14, 2008 Elliott Wave Theorist.

“The wave count [in silver] is nearly satisfied, though ideally it should end after one more new high. If this analysis is accurate, and silver does peak and begin a bear market, gold is likely to go down with it.”

In the days that followed, prices in both metals fell off a cliff. In turn, Bob was asked to address his exceptional call for a turn down in a March 19, 2008 Bloomberg interview. Here are of excerpts from that conversation:

Bloomberg: “Why did you put out that call on Friday (March 14) about a peak in precious metals?”

Editor’s Note: You can download Bob Prechter’s 5-page report, Gold & Recessions, free from Elliott Wave International. It features 63 years of historical analysis that reveals how gold, T-notes, and the DJIA have performed in recessions and expansions.

Bob Prechter: “One of the reasons is that it seemed like an absolutely sure thing. We track several indicators of sentiment. One of them is the Daily Sentiment Index (DSI). That reached 98% bulls on a one-day basis going into this last high. We were tracking silver as well… as it is clearest in our minds. Now, at the time, we needed one more slightly new high. That happened Monday morning and silver dropped 15% in 48 hours. That’s a heck of a reversal and I think it’s real.”

“Real” indeed: From their March peaks, gold prices plummeted 34%, alongside a 60% sell-off in silver before hitting the breaks in October. Here, the October 2008 Elliott Wave Financial Forecast prepared for a corrective rebound and wrote:

“Silver traced out a five-wave decline from its March peak…Gold should also rally as silver pushes higher. Once silver’s rise is exhausted (initial target: $15.15), the larger downtrend should resume for both metals.”

A powerful, four-month bounce ensued in both metals: Gold prices came within kissing distance of its March peak before turning down on February 20; silver followed suit — a fulfillment of this bearish, near-term insight presented in the February 23 Elliott Wave Theorist:

“Silver has been clear as a bell. Silver is due to turn back down, and gold, which is back at $1000/oz, is likely to follow.”

Since then, it’s been a steady march lower for both metals. Obviously, EWI’s forecasts do not always prove this accurate. Yet in this case the analysis speaks for itself.

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For more metals analysis from Bob Prechter, download Gold & Recessions a free 5-page report from Elliott Wave International. It features 63 years of historical analysis that reveals how gold, T-notes, and the DJIA have performed in recessions and expansions.

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Robert Prechter, Certified Market Technician, is the founder and CEO of Elliott Wave International author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

This is a brief explanation of what happened during the last Great Depression and what government, society, and individuals did in attempts to stave-off massive financial loss and collapse. Also, provided is some advice as to what you can do to stave-off financial ruin.

The stock market crashed, banks went belly-up, big-time deflation set in big time, and for a period of time, prices on everything dropped as  business dumped inventory to stay afloat.  Then, as government tried to intervene (as they always do) there were years of hyper-inflation and depression.  History will tels us that the inflated prices of goods never came back and that those who held lots of cash at that time were hit the most. 
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Capital was only preserved by those who — early in the deflationary part or before — changed cash into objects of lasting value — things like hard assets including gold, silver, housing, and so on. Unfortunately did not understand the advantage of accumulting such property until the inflation was far along. by that time the prices of all goods had risen so much that there were no bargains and plenty of shortages.

As analyst Harry Schultz pointed out in a New York Times article in 2004, when gold prices are low the financial press calls gold a commodity. When prices are high, they call it a currency. Investors cannot afford to sit idly by while their dollar accounts lose another 30% in value, so the rise in demand for gold is hardly surprising. (http://www.lewrockwell.com/paul/paul221.html)

Cash became an asset that miserably decreased in value. Even if the magnitude of this depression is only as bad as the last depression, holding cash makes no sense. Also, if this time is worse than the Weimer republic of Germany, personaly property will become a valuable barter commodity in a system that may arrise from the rubble/aftermath.

So, for you and your family’s sake, stock up on guns and ammo; reloading parts; ammo of all flavors; gold and silver; land; coffee, tobacco, and liquor (even if you don’t use them); lumber, hardware, and tools of all sizes. Gasoline can be stored in drums and stabilized. You will also need drugs, painkillers and pharmaceuticals and other toiletteries.

What we can say is that the inflation from inflation scare from the price highs a year ago was a cyclical turning point for the economy and is profoundly deflationary.

Most economists believe that deflation is a problem in a modern economy because of the danger of a deflationary spiral. Deflation is also linked with recessions and with the Great Depression. Additionally, deflation also prevents monetary policy from stabilizing the economy because of a mechanism called the liquidity trap. Wikipedia

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Deflation comes first as the world’s banks deleverage, but when this process has wound itself out, then inflation will heat up again. Nobody believes this now, but when oil was approaching $150 per barrel, nobody was talking about deflation. Now that it’s approaching $50 per barrel, nobody is talking about inflation. Perhaps gold is telling us something here? Perhaps there’s a trading opportunity or two out there? (George Kleinman)

It’s been said that when the United States sneezes, Canada gets a cold. We will explore the ramifications of the upcoming Greatest Depression and how it will affect Canada.

The whole world is suffering right now for 2 reasons: America is the world’s biggest debtor; meaning the creditors they owe money to will likely not get their money back, but also because the world is propping up the US economy. As the US government finances more debt for all the stimuluses and government expenditure, the rest of the world must loan more money for the US. THis is crowding out credit that could be more productively used. If they simply abandoned support of the US currency (like countries who peg or band their currency to the US dollar), and if they understood that they coiuld let the dollar fall, the US economy would suffer, but their currencies might improve.
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This might all seem very anti-American, but the real truth is that these countries subsidizing the US economy (like China’s pegging/manipulating their currency and buying US debt) are spoiling the US economy with easy money. They are like the drug pusher who keeps giving money to the US addicted to cheap, easy money. What the US needs is tough love.

It is predicted that the Canadian dollar will rise while the US dollar keeps deteriorating. The questions is, how will it do against other currencies around the world like the Australian dollar which is doing well? How will it do against the Euro? It’s difficult to say. The Canadian dollar will definitely rise against the US dollar and be weaker against the Asian currencies, for sure.

Looking at an acquaintance who owns about 2 million dollars worth of real estate in the Canadian market: should someone with much real estate liquidate their assets? Many predictions show that real estate is about to drop significantly and will not stop anywhere in the near future. Indeed, a recent report by Macleans Magazine has tuned into the predicted 20-25 percent drop in real estate prices as evidence. New data on the plunging housing market suggests that those relatively upbeat assessments are wrong, and Canada could see a 20 per cent drop in average house prices between now and late 2011. If sophisticated investors are correct, it might be close to a decade before we once again see prices as high as they were last summer. (http://www2.macleans.ca/2009/02/23/the-shocking-truth-about-the-value-of-your-home/).

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One of Canada’s top economists, who spoke on condition of anonymity, says that he questions a lot of the numbers coming out of the real estate sector in Canada. “There’s clearly a lot of spin,” he says. Even the CMHC, which promotes home ownership and depends on home sales to sell mortgage insurance, has an interest in seeing the market prosper. “There is quite a lot of uncertainty regarding the market in general right now, and there are too few uninterested parties who are giving any sort of reasonable analysis on that outlook.”

It’s important that you not only own gold, but also important to own it out of the United States, because they might confiscate it as they did during the 1930s. If the US government does make it illegal to own gold, and you have a safety deposit box, you likely will never get it out.  Indeed,  the The Executive Order 6102 required most people to deliver on or before May 1, 1933 all but a small amount gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve. Under the Trading With the Enemy Act of October 6, 1917, as amended on March 9, 1933, violation of Executive Order 6102 was punishable by fine up to $10,000 ($166,640 if adjusted for inflation as of 2008) or up to ten years in prison, or both. Because of this forced immediate sale of gold to the Federal Reserve at the government set price of $20.67 per troy ounce, this Executive Order is often referred to as the Gold Confiscation of 1933. Shortly after this forced sale, the price of gold from the treasury for international transactions was raised to $35 an ounce; the U.S. government thereby devalued the U.S. dollar by 41%.
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Order 6102 specifically exempted “customary use in industry, profession or art”–a provision that covered artists, jewelers, dentists, and sign makers among others. The order further permitted any person to own up to $100 in gold coins ($1,664 if adjusted for inflation as of 2008; a face value equivalent to five troy ounces of Gold).

Gold and Silver, as is all of creation, are from God, and given to man for good use, for a useful purpose. (Genesis 1:28, Gen 2:12.) Gold, silver, seed, and flour, were all used as money. (Lev 27:16, 2 Kings 7:1) The vast majority of the time that gold and silver are mentioned in the Bible, it is in reference to the wealth of the kings of Israel or to the wealth of the temple of the Lord. Gold and silver were used in the workings and furnishings of the ark of the covenant, and the vessels in the temple. Therefore, gold is definitely the approved by God for men to use as money and as a store of wealth.

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With that, my advice for you is to purchase a vault — like people used to own prior to 1971 — and store your precious metals in it so the government cannot easily confiscate your assets as if it were sitting in a vault in the bank.

Godspeed.

This is extremely frightening indeed. The United States appears to be losing its hegemonic status as the currency to which the majority of the world trades their goods and services, notably crude oil since 1971.

Now is the perfect time to purchase more silver and gold. Silver is very reasonable these days compared to the hype gold is given by hard-money enthusiasts.

At G20, Kremlin to Pitch New Currency
17 March 2009

By Ira Iosebashvili / The Moscow Times

The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.

The International Monetary Fund should investigate the possible creation of a new reserve currency, widening the list of reserve currencies or using its already existing Special Drawing Rights, or SDRs, as a “superreserve currency accepted by the whole of the international community,” the Kremlin said in a statement issued on its web site.

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Well, it looks pretty bad for the United States of America and especially the rest of the world who depends on the US dollar as a reserve currency (and have invested their savings in American debt).

The United States was once the most powerful industrious powerhouse in the world, but has fallen from these highs ever since Nixon took office (and possibily earlier than that). I mention Nixon because he took the US dollar off the gold standard and began the issuance of “fiat currency” based solely on the US dollar as the “standard” (traded on oil) around the world. “Fiat” means “government-issued” currency, but in the case of Nixon’s overseeing of the change of the Bretton Woods agreement, the US dollar virtually replaced gold or other hard metals as the reserve currency of which a majority of governments held significant quantities of.
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