Switzerland is the Ultimate Safe Haven for Liberty and Wealth

http://www.acting-man.com/?p=37515

Is Gold No Longer A Safe Haven? Not According To Capital Economics: "Gold Will Surge When Euro Crisis Escalates"

http://www.zerohedge.com/news/gold-no-longer-safe-haven-not-according-capital-economics-gold-will-surge-when-euro-crisis-esca

This is another example of the Wall Street head fake, as manipulators shake out the weak hands.  The weak hands are either dumb--or just that--weak.  Selling gold into this market will prove to be ruinous, in my opinion. 

http://www.zerohedge.com/news/thank-you-swiss-national-bank-2000-gold

Gold: 40 years of turmoil

http://www.telegraph.co.uk/finance/commodities/8432970/Gold-40-years-of-turmoil.html

This is a good summary of the history of gold in the last 40 years--ever since President Nixon took us off the gold standard.  However, a big omission in this timeline is the huge 30% correction in gold that occurred in the aftermath of the financial meltdown in September 2008.  Gold prices plummeted to $675/oz. (silver dropped in tandem to $9/oz.) at the COMEX in paper trading--even while demand for physical bullion was soaring.  Of course, this presented a great entry point as that demand eventually drove both gold and silver to quickly rebound with intensity.

In a liquidity crunch, all asset sectors sold off after Lehman Brothers collapsed, but the markets quickly regained their sanity and bid up the price of gold and silver as safe haven assets.  In the next market sell off, I expect the precious metals sector to temporarily sell off again, and I again expect it to be a great buying opportunity.  Of course, I could be wrong, and the markets could have "learned" from the last sell off, and immediately rush toward gold and silver, whereby the temporary correction will never unfold, causing their prices to immediately shoot up.  As a trader, it presents a dilemma.  As a long-term holder of tangible assets, it will be prudent to watch from the sidelines or even add to one's positions.

See disclaimer in the side bar.

Disclosure:  long precious metals mining shares, Ag, and Au.

QE in Europe

http://www.guildinvestment.com/2010/11/23/just-a-few-points-before-this-holiday-week/

QE in Europe— the European sovereign debt situation

It is not surprising that Europe’s short embrace of austerity has been unsuccessful.  There is never a choice for austerity until all other alternatives have been exhausted.  History is replete with examples.  Why don’t some of these stock market commentators read some global economic history?  It is obvious now and has always been obvious that Europe will go for QE.  It does not matter what they say about austerity.  We have been advising investors to watch what they do.  They are bailing out Ireland; Portugal is right behind and will be followed by Spain, Italy, and even France in the future.  There is no solution that politicians will embrace other than QE [money printing] because a program of austerity means the end of their political careers.  They will put their careers above the national interest.

It is absurd to believe that the U.S. dollar will be a safe haven over the intermediate term

An even more absurd belief is the one that puts U.S. dollar and U.S. debt as a safe haven.  There is not any convincing economic evidence that the U.S. dollar is well managed, and there is no reason to believe that the dollar will rise in value.  In fact, it is the U.S. governments’ intention to devalue the dollar and to print money to avoid a deflation in the U.S.  Why do some global commentators see the dollar as a safe haven?  In our opinion, the only safe haven is precious metals, energy, food and other assets which will hedge against the inevitable inflation that the above policies create.

Gold as a haven

http://opinion.financialpost.com/2010/07/16/can-gold-be-a-haven-for-all-of-inflation-deflation-and-stock-crash/

Niall Ferguson again

I've posted about Niall Ferguson, Harvard Professor and historian, several times and this is a good interview on US fiscal policies, sovereign debt crisis, financial, political, and tax reform.



http://www.youtube.com/watch?v=03CB8pVJkI8&feature=player_embedded




http://www.youtube.com/watch?v=JmOSaAYb4Qk&feature=player_embedded

“Fiscal tightening is baked in the cake. Tax increases are coming and coming soon… The US has a kind of stay of execution while the European crisis unfolds, but at some point the nasty fiscal arithmetic will get everyone, including the U.S… Treasuries are a safe haven the way Pearl Harbor was a safe haven in 1941. It’s safe until it’s not safe anymore.”

Niall Ferguson on sovereign debt (repeat)

This is a repeat blog from last month, but I'd like to highlight one paragraph.

http://www.ft.com/cms/s/0/f90bca10-1679-11df-bf44-00144feab49a.html?nclick_check=1

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

John Embry of Sprott Asset Management, January 2010

http://www.sprott.com/Docs/InvestorsDigest/2010/01_29_2010%20Expect%20gold%20to%20gain%20more%20than%2030%20this%20year.pdf

Safe havens

The USDollar has been a safe haven asset since the Bretton-Woods agreement in 1945. To many, it still is, when all other assets decline in value in a risk-adverse investment environment. Don't be fooled by Wall Street's head fakes. The US government's finances are stuck between a hard place and a rock. We are not out of the woods--not even close.

Consider precious metals as a haven. Gold and silver got clocked today, much like every other asset. This is a knee jerk reaction as panic selling kicks in during a liquidity crunch. Cooler heads will re-discover gold and silver are historically reliable stores of value. Precious metals were the first to recover in the 2008 liquidity crisis. They'll be the first to recover in the future. Stay the course. Accumulate on dips, if you can. Go watch a movie, and stop watching the daily fluctuations. Because one day, when the debt crisis turns into a currency crisis, your purchasing power will still be protected.

Two good articles:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ay7aVAKL6qYw

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=97226&sn=Detail&pid=1

See disclaimers on the sidebar.

Disclosure: long gold and silver mining shares.

John Embry on 2010 prospects

John Embry of Sprott Asset Management is bullish on gold and believes the allure of the USDollar as a safe haven is misguided.

http://www.sprott.com/Docs/InvestorsDigest/2010/01_29_2010%20Expect%20gold%20to%20gain%20more%20than%2030%20this%20year.pdf

Emerging markets stepping up to the gold window

Foreign central banks are snapping up gold bullion for their reserves for several reasons. Foremost is their diversification away from the USDollar, as too much exposure to the sinking dollar has caused their asset values in reserves to decline. Their economies are stronger relative to developed countries, so they need to boost their gold reserves accordingly to reflect their newfound economic health. In other words, their strong currencies need to be backed by gold vs. the USDollar.

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=8970ea5d-3ab9-4ad2-87a8-f76cca63c961

In the past, central banks could sell their gold holdings, in order to suppress the price of gold, as low gold prices enable sovereign governments to borrow at low interest rates. This support allows governments to run perpetual deficits and reduces their debt obligations in the form of low-yielding bond issuance.

But with mounting fears that governments worldwide are reckless in their deficit spending--debasing ALL currencies in the process, gold as re-emerged as a safe haven for monetary store of value.

In another article, the Reserve Bank of India hinted at buying the balance of the IMF's planned 403.3 tons of gold, of which 201.3 tons remain. India purchased 200 tons two weeks ago in a surprise move, as most observers expected China to buy the bulk of the planned sale. However, purchase of the IMF gold by ANY central bank is bullish for the yellow metal, as it further validates central bank net buying--not net selling.

http://www.mydigitalfc.com/plan/india-plans-buy-more-gold-imf-410