The Gold Informant

J. Keith Johnson is head writer for The Gold Informant, one of the most comprehensive news sources for all things gold and silver related. The Gold Informant is sponsored exclusively by Goldco Direct and his articles can be found regularly on our website.

The Gold Capitol of the World

Thursday, 17 January 2013
Published in World Economy
Tagged under

If there’s a contemporary city capitol for gold, it’s Kerala, India. Some might think that New York should wear such a crown, with Wall Street, the Federal Reserve and other massive stores of wealth on the island. However, though such wealth is clearly evident in the Big Apple, the prevalence of gold among the populace doesn’t hold a candle to Kerala.

Not a small city by any stretch, Kerala’s 33 million residents represent2.76 percent of India’s entire population. Why then does the city consume 20% of the nation’s gold annually? In fact, with India being the largest consumer of gold in the world, claiming 30% of the total demand, Kerala represents 6% of total world consumption.


Japan Pension Funds Embracing Bullion

Thursday, 20 December 2012
Published in World Economy
Tagged under

Over a decade ago goldbugs were sounding the alarm, attempting to help others understand that gold had been ignored and the dollar had been debased for far too long. Since gold had retracted from its soaring heights in 1980, little movement had taken place. However, inflation had never abated, which offered what appeared to be a no-brainer when it came to gold.

At the time, what to buy was a big question. Some advocated bullion, others graded coins. With the euro seeming to gain new ground, many thought that European coins would be the next best thing, since they’d been largely ignored in comparison to their U.S. counterparts.


Of course, slabbed (graded) coins were part of the package as well, offering stability and confidence for the average investor. Still, one had to be careful since many dealers sold coins with claims of greater value than the current market would bear. And a couple of grading agencies started up that were far less scrupulous than PCGS and NGC.

Just when it seemed that the only way to own gold and silver was to either take delivery or pay for storage, ETFs started emerging. The most famous of these is GLD, with SLV offering silver. Basically, these offer the investor shares in gold stored in vaults. The idea is that it makes it easier to trade without the costs of shipping or risks of storing. However, unlike personal delivery or storage, neither of these vehicles ever has anywhere close to the amount of metals represented by their shares. Furthermore, both have decay built into their pricing in order to cover overhead. The decay is minimal, but present and must be considered.

When the financial crisis struck in 2008, pension funds around the globe took a substantial hit. Few of them were prepared to weather a storm of such magnitude, with the better ones experiencing losses of only 5%. Some saw losses in the neighborhood of 50%. Gold, however, managed to end the year with a slight gain, and hasn’t looked back since.
Since then, hedge funds have taken gold more seriously. The ETFs have added to this ability; however long-term holders are becoming more aware of their exposure to possible problems due to lack of allocated metals. Now we see a new customer lining up for gold – pension funds.

While private pension funds are noted for their ability to assess markets and diversify portfolios well, public pension funds are noted for wasting resources and focusing too much on bonds and other government issued opportunities. Perhaps that will never change.

What has changed is that we are now seeing Japanese pension funds turn toward gold in an effort to protect their portfolios. They’ve diversified in currencies for years. But today we find them including real money in the portfolios as well. Kosaku Narioka’s WSJ article offers this insight

“In some ways, Japanese pension funds are merely tracking a trend that has already been seen in other developed markets, industry watchers say. Gold's potential to offset inflation-linked losses has already prompted some U.S. and European pension funds to buy small volumes.”

With the trend becoming ever more obvious, investors should take note. While most do not have pensions, an IRA or 401K serves a similar purpose. And, thanks to the ability to hold allocated precious metals in self-directed IRAs, the average investor can obtain equal, or even superior, protection of their portfolios through allocated precious metals diversification.


Many expected it would happen.  Others swore it wouldn’t.  Stock market gurus hoped for it.  Hard asset traders warned against it.  But now its here.  It goes by different names:  QE3, Quantitative Easing, Monetary Easing …. Economic Stimulus.  Now we’re stuck with it.

Slice it any way you’d like, or continue to argue the issue. But The Fed Printing Presses are officially turned on and cranking.  And, according to all reports, they’ll be moving along at quite a clip … until at least 2015.


Here’s The Nifty Plan

In its announcement, The Fed made it very clear that what it’s targeting with its third round of Monetary Easing is the sluggish economy at large, the country’s abysmal employment picture, as well as its anemic business investment figures.  To turn all this around, the Central Bank will be purchasing mortgage-backed securities at a rate of $40 billion per month. It will be doing this at will at least until “the labor market improves substantially.”

Here’s The Problem With The Nifty Plan

Not all economists agree with this course of action.  Even within the Fed itself there remains disagreement about the plan’s effectiveness. Jeffrey M. Lacker, economist and president of The Federal Reserve Bank of Richmond voted against it.  He doesn’t like the idea of paper asset purchases.  Nor does he like the idea of the Fed’s publishing an open-ended time table for the program.
And who can blame Lacker? Like all the stages of monetary easing that precede it, QE3 is all about printing paper money.  It feels good at first; but when the chickens come home to roost, what the economy will be stuck with is a lot of paper, and no visible change in productivity.

And there’s a word for it when too much paper floats through the economy without an increase in productivity.  That word is “inflation.” 

What Inflation Means To You

With too much paper money in circulation, the value of that paper declines.  And prices rise to keep up with the rate at which paper money is printed.  So try as you may to save more, you wind up with less.  And try as you may to keep up with an increase in prices, you fall flat on your face.

Your Way Out of The Quagmire – Got Gold?

Have you checked the price of gold lately?  After the Feds announcement, the yellow metal made a surge of $33.40 per ounce. It now sits at $1,773.00 per ounce.  Just a few short weeks ago, investors were waiting on the sidelines wondering whether gold would budge from the mid-$1,600 per ounce mark.  You wait, you wonder, you miss the train. 

Since the year 2000, gold has been experiencing the greatest bull market in history.  Had you invested in gold on January 4, 1999, you would have paid approximately $287.00 per ounce.  Today your gold would be worth over 6 times the amount you paid for it. 

Talk about inflation.  The cost of housing is now 33% higher than it was that same year, transportation 42.1% higher, education 29.6% higher and medical care a whopping 59.7% higher. 

Now just imagine that all your dollars were gold back then… well, let’s not go there.  Woulda, shoulda, coulda is not a promising investment strategy, is it?  Let’s look to the future instead.

Now For The Good News

According to Reuters, gold is up 13 percent year-to-date after its 10 percent rally in August since world central banks stimulus initiatives.  With the the Fed’s third round of monetary easing in place until 2015, and the European Central Bank’s own stimulus in place, do you really doubt that the price of gold will reach $2,000 or beyond by the end of the year?
You may not be able to change the rate of inflation we’re likely to see from the Fed printing presses, but you can do something very sage and sensible with your dollars before it’s too late.

Call GoldcoDirect at 855-848-GOLD or Click Here to find out more information.

  Still have any doubts?  When the world’s bond king, Bill Gross of PMCO, recommends buying gold over bonds, maybe it’s time for you to ask yourself how much gold you need in your portfolio. 


Paper gold ain’t as good as gold

Thursday, 16 August 2012
Published in Gold Investing
Tagged under

In today’s international market of pirating videos, phones, computers and other brand name goods, we’ve become somewhat accustomed to the reality that it’s going to happen. And there’s a whole plethora of knockoffs out there, some legal and some not. And, quite often, the knockoff actually performs as well as, or even better than, the original. Read more...

Banks count gold as money again?

Thursday, 23 August 2012
Published in United States Economy
Tagged under

In 1971, for the first time in history, every major currency in the world became fiat. With the signature of President Nixon, the gold-backed dollar became the greenback, forever backed by the promises of the Federal Reserve and U.S. Treasury. Initial reactions were negative, sending the dollar downward. Read more...

When we look at markets, we tend to suffer from severe myopia. Rather than looking at the bigger picture, we want our fix today so we can enjoy the inflation buzz for a few more months … or maybe days. Read more...

“Quantitative Easing.”   It’s a very lofty-sounding phrase, isn’t it?  You may have heard it uttered by a news anchor in a special report or by Ben Bernanke in one of his most recent speeches. 

Or maybe you hit upon QE while surfing the net, and made up your mind to look into what the phrase means when you had a few minutes.  The busy person that you are though, it slipped off your radar.

Now Let’s Call It By Its Real Name

No problem.  Let us help bring you up to speed. First things first:  let’s translate Econo-speak into English.  What quantitative easing comes down to is “easy money.”  Let’s rename it just that then:  easy money.  And instead of using the secret codes QE1 and QE2 to indicate the successive phases of easy money, let’s use lettering more appropriate to our new (English) name:  EM1 and EM2. And when its new day dawns for us very soon, that phase will be known as EM3. Make no mistake though.  Easy money is exactly what we’re talking about here.  QE EM works like this.  After the Fed lowers interest rates to almost zero, if the economy doesn’t respond with robust lending to businesses and a marked decrease in unemployment, the Fed turns to Quantitative Easing Easy Money as a stimulus of last resort.  The Fed launches an ambitious bond buyback program to saturate financial institutions with liquidity.  Let’s look at the dollar figures for the first two phases of Quantitative Easing Easy Money.


Fateful Dates of Easy Money

  • QE1 EM1 Implemented  - January, 2009 ……………….. $500 Billion
  • QE1 EM1 Continued       - March, 2009 ………..……….. $1.25 Trillion
  • QE2 EM2 Implemented  - November, 2010 ……………..$600 Billion

Yes, you read it right.  That’s an additional $1.825 Trillion poured into circulation. Dollars grounded by absolutely no new productivity.  Just free-floating paper.  Currency that debases over time because there’s too much of it around, and because it just happens to be Easy Money.  That’s the disastrous news for all of us.

Much Better News For Gold Investors

But for those who own gold, the news is much better.  At times like this, stealthy investors move over to gold.  It’s the asset you can rely on when the value of paper money declines and prices inflate.  Want proof?  Let’s look at those QE EM figures again, this time with respect to the price of gold.

  • QE1 EM1 Announced   November, 2008 ...................................... Gold --- $820/oz                        
  • QE1 EM1 Implemented January, 2009................$500 Billion..........Gold --- $920/oz
  • QE1 EM1 Continued      March, 2009..................$1.25 Trillion........Gold --- $1,118/oz
  • QE2 EM2 Implemented   November, 2010............$600 Billion.........Gold --- $1,150/oz
  • Fed Chairman Bernanke hints at possibility of QE3 EM3..................Gold --- $1,694/oz

    August 31, 2012
  • QE3  EM3 Implemented...............................................................Gold --- $2,000+/oz ?

Make no mistake.  That $1694.40 price of gold on August 31 was neither a fluke nor a mere technical move.  It was a direct response of a wary financial market to Fed Chairman Ben Bernanke’s speech at Jackson Hole Wyoming.  According to HSBC precious metals analyst Jim Steel:

“The tone of his comments was taken as reaffirmation of the Fed’s bias towards further easing.  Mr. Bernanke also said the costs of nontraditional policies appear to be manageable.”

Clearly Mr. Bernanke feels that The Fed has a mandate – a mandate it can implement at its own discretion.  And it all comes down to our central bank’s right to issue Easy Money.  You may have no say in the matter.  But you do have the right to trade dollars for gold.  But don’t wait until The Fed turns on the printing press for QE3 EM3.

To find out how you can benefit from QE3 EM3, call (855) 848-GOLD (4659) and ask for a Goldco Direct representative.  Your financial future hangs in the balance.


Odyssey Marine learns that finders aren’t keepers

Friday, 10 August 2012
Published in World Economy
Tagged under

Odyssey Marine Exploration Inc. [OMEX] appears to be an exciting company. Its employees get to do what young men dream of doing — search for hidden treasure. From old galleons to cargo ships sunk during WWII, if there’s treasure to be found, they’re all about finding and retrieving it. Read more...