‘It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time’.
This quote from Sir Winston Churchill is something of a surprise given that he was a lone voice opposing the appeasement of Nazi Germany prior to WWII. He did have a point about forecasting though. Few leaders seem capable of considering the consequences of their actions - especially the unintended variety. Reaction rather than action appears prevalent.
26th September 2011
The last week has witnessed one of the greatest tests in living memory for investors in precious metals. Gold endured its worse two-day slump since 1983. Silver likewise took its biggest tumble in 31 years. To put this into context, 1980 witnessed a spectacular price collapse once the Hunt Brothers' plan to corner the physical silver market was thwarted.
23rd September 2011
You will no doubt be aware of the current sell-off in financial markets. This is having a contagion effect on the likes of precious metals which is of course an area of interest for you. The reason for this is three-fold
Investors are fleeing to the US dollar, erroneously called a flight to quality. Now that the Swiss have tied the Franc to the sinking ship of the Euro, there is little choice for liquid funds.
Fiddling with the Thermometer
As the author of The Final Crash; Addictive Debt and the Deformation of the World Economy (published 2007), one is often asked for further forecasts. Investors are swiftly directed to two specific chapters: ‘2020 Vision’ and inevitably one about precious metals. Instead of the usual hysterical titles like ‘Become a Bullion Billionaire’ the latter bears the more moderate heading of ‘Antidote’.
For beleaguered British investors, bullion has not been the safe haven most expected. The combination of a declining bullion price has been exacerbated by a rare rally in Sterling. The slash and burn in public spending has provided a fillip for the Pound during what may prove to be a honeymoon period with the City. Warren Buffett’s view on buying stocks should be the opposite for gold investors, namely sell when there’s fear and buy when there’s complacency.
The topic of precious metals is a contentious one; provoking extreme and often entrenched reactions. The Depression-era economist John Maynard Keynes once described gold as a ‘barbarous relic’. This was in part due to its ancient role as a currency but also because its restraining effect on money supply when the economy was on its knees. With good stewardship there should be no place for using metals as money but the human desire to live beyond our means has been our undoing.
Name: Toby Birch
Position: Managing Director
Company: Guernsey Gold Limited
While Soros has made some great calls on markets he has also made some major bluners – he is only human. His arguments against gold are based on the belief that an increase in interest rates is coming as the world economy has supposedly emerged out of recession. If you look through the propaganda and use common sense, you will understand that the so-called growth is simply government spending which is piling up the debt levels and of course the interest bill attached to it.