My name is Shawn Ozbun, and our goal is to keep you up to date with what’s going on in the world of Gold and Silver by providing you with current news and precious metals pricing.
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Welcome back to the SilverTowne Vault Cast, I am excited to be here speaking to you again on this Thursday morning. I got a great response from Monday’s show. I love to point out the lies and the deception when it comes to gold and silver and apparently all of you do to. Thank you for all the comments, and the feedback. I love interacting and responding to comments from all of you.
Today we are going to talk a little bit about the Gold & the Yuan standard and what I think that could mean for our future, and also we are going to read an article about Gold 101 that I just thought drove home some great points.
Before we get into all of that, let’s look at today’s precious metals pricing.
Gold - $1384.70 Down $3.84
Silver - $21.76 Down $0.01
Platinum - $1452.00 Down $23.50
Palladium - $740.75 Down $14.25
Gold & the Yuan Standard
CHINA seems likely to encourage moving pricing of some internationally-traded energy products and commodities into the Yuan, writes Julian Phillips atGoldForecaster.
This would promote use of a "Yuan Standard" for both hedging and borrowing transactions and, over time, would lead to both exporting and importing countries using Yuan in their foreign currency reserves.
Already China will trade oil with Russia for roubles and Yuan. We see this form of trading spreading to the nations that value China as a trading partner wherever they may be in the world. This will ensure that a growing percentage of Yuan will find their way into global reserves, in place of the Dollar. In turn, the US will attempt to tighten its grip on nations that value it as a trading partner. The implication, over time, is that the oil market will feed the western-oriented world taking Dollars for oil and Asian markets, taking the Yuan for oil.
It is the impact of such changes that will create tensions, instability and uncertainty regarding the value of currencies. As it is, the US relies on the Dollar's value through its hegemony in the global economy. The breaking of that grip will damage the current monetary system, just as a crystal glass is very different when cracked.
Asia, in time, will become the dominant economic bloc with more than half the world's population. The huge changes this implies cannot be made without tremendous pressures affecting currency values the world over.
With the Yuan not present in the table of global reserve currencies, it can only rise at the expense of the US Dollar and the Euro. The desire to diversify will weaken the two main currencies. The currency crises may follow the pattern set by the Pound Sterling in the early 1970s for these demanding Capital Controls until the adjustments have been made.
Certainly if China decides that it is to its advantage to build a substantial store of gold, then it will ensure it can be used to lessen liquidity constraints, internationally and mollify currency crises that emanate from them.
We believe that it may well insist that other nations use their gold in the same way. Read More...
Gold 101
Gold is arguably in one the of the biggest bull markets in history, with inflation and the Fed fanning the flames with quantitative easing. Gold has had an astonishing run over the last 10 years, as I've pointed out in a lot of my bearish sentiment articles.
As I've stated in a couple of recent articles, gold remains a great hedge against financial meltdowns. The purpose of this article is to go over the basics of gold again, and identify some interesting characteristics of gold that people may not have thought about or considered. As time moves on and the Fed starts its QE tapering (in my opinion, it starts in mid- to late 2013), people are going to start looking into gold as a safe haven for their money again. My question is: Would you pass Gold 101?
One of the first things that I found out as a novice investor was that gold stocks are much riskier than gold itself. ETFs that include gold mining companies often move with much wilder swings than the underlying commodity. Individual stocks are even riskier.
It's important to remember that gold stocks can go under even when the underlying commodity does not.
Gold remains the perfect hedge against financial meltdown. As early as the 1970s, gold was being used as a major hedge against inflation and it was working effectively. During the beginning of 2011, gold had a massive rally on the news of the U.S. debt being downgraded and economic issues overseas. The fact that gold never really moves in direct correlation to stocks or bonds makes it a great place for a permanent small part of your portfolio.
Buying actual gold isn't just safe -- it's pretty cool. If you find a dealer or broker that has been established for many years and has small premiums, you can easily build a physical gold position. Take a cue from the way that the large banks operate. The same way that banks hold the precious metal in reserve is could be used as a macrocosm of how you hold gold in reserve. Why not take a small physical position and store it in a home safe or security box at your local bank?
Physical gold is great because it's known worldwide, and will always have some sort of value because it's non-renewable. The small list of cons of physical gold basically revolve around the inconvenience of having to physically buy and sell it, as well as having a secure place to store it. Also, gold doesn't pay dividends or have any guaranteed yearly yield.
So, there is some short-term risk associated with gold, although this investor sees the risk decreasing with the longer you intend on holding your gold position. Since gold has peaked in 2011, it's been down nearly 35%. I contend that these short-term pullbacks are normal, as analysts (for whatever reasons) continue to upgrade and downgrade gold. Corrections are fine when the long-term price trend is steadily heading upward, like gold continues to do. Savvy investors that are long gold see these dips as a chance to add to their respective positions on the way up.
I would argue that this is the perfect time to take a position in gold, due to it being 35% off its highs and due to its long-term appeal. Read More...
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[Disclaimer] Shawn Ozbun is not a licensed financial adviser, there is risk associated with all investment including gold and silver. You should seek advise from a licensed financial expert before making a purchase.
