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Time to buy for the long term.
So Much For The Sprott Silver Scare: "Every Dollar From PSLV Sales Was Reinvested In Silver Equities"
Submitted by Tyler Durden on 05/02/2011 19:09 -0400
http://www.zerohedge.com/article/so-much-sprott-silver-scare-every-dollar-pslv-sales-was-reinvested-silver-equities
Warren Buffett on Gold and some other (Silver) observations…
Submitted by Smart Money Europe on 05/01/2011 08:21 -0400
http://www.thedailycrux.com/content/7581/Warren_Buffett
Central Fund of Canada Shares Plunged: What You Need to Know
By Cindy Johnson
May 2, 2011
http://www.fool.com/investing/general/2011/05/02/central-fund-of-canada-shares-plunged-what-you-nee.aspx
I am back after a short time in GLD and SLV.
Good place to Put some Cheddar long term.
Metals going Higher on Dollar Devaluation...... Good hedge either way
I'm a very cautious bull at this point; I have already taken profits in my precious metals. Actually, I took profits way too early, but I was being very cautious.
In the above chart, I keep an eye on the RSI and would look closely at buying into CEF when it reaches 30, which is significantly below where is now rests.
Whatever you do, I would recommend not buying all at one price.
For me, I'm still on the sidelines on CEF.
sumi
Looking for an entry point on CEF...
Is anyone else thinking the same way?
Precious Metals Dearer Than Ever
On Wednesday October 20, 2010, 4:13 pm
http://finance.yahoo.com/news/Precious-Metals-Dearer-Than-cnbc-3112863205.html?x=0&.v=1
Financial advisors have long recommended that investors have some precious metals in their portfolios, but years of solid gains, as well as heightened interest in inflation hedges and safe havens, have made metals more alluring than ever.
What was once a 5 percent allocation is now as much as 10 percent, with some advisors even adding rarer metals like platinum to the usual gold-and-silver mix.
UBS, for instance, is recommending top clients hold 7-10 percent of their assets in precious metals.
"Paper has counter-party risks," says Paul Mladjenovic, author of Precious Metals Investing for Dummies. "Gold and silver are the few investments that retain value."
Every time the gold rally appears to have peaked, another leg appears. No wonder that gold is up 379 percent over the past ten years. Private ownership stashes now exceed what's in public gold vaults, as wealthy investors stock stock up on bars of gold during uncertain times.
In Abu Dhabi, it is as easy as using a gold ATM.
Meanwhile, silver prices have doubled in the past two years, while platinum is up 63 percent, as both metals also benefit from their growing commercial use.
"Resource scarcity is now entering our lives," says Jim Puplava, chief executive officer of money management firm PFS Group in San Diego. "More countries are competing for precious metals, driving up prices."
As alternative investments go, precious metals offer more than the usual ways to get in the game. There's bullion, mining companies, mutual funds, exchange traded funds, futures, coins and more.
Three Metals, Multiple Options
Many experts recommend owning the actual bullion. It's less volatile and it's a pure play. Puplava recommends buying American Eagle gold-bullion coins. Any bullion or coin dealer sells them.
The coins are sold at a premium of 5 percent to 10 percent above the spot gold price. They're affordable and come in half-ounce and quarter-ounce sizes. Another option is to buy 50- to 100-ounce gold bars and store them in a vault.
"People haven't bought so much gold since it was discovered over 5,000 years ago," says Jeffrey Christian, managing director of CPM Group in New York City, putting the rally in perspective.
There are now more than two dozen gold ETFs traded on exchanges in various countries.
Silver's current allure has been aided by its growing industrial use. It's the best metal for conducting heat and electricity, making it useful in electronic devices, such as cell phones.
Silver investors can opt for Silver Eagle coins or invest in the Silver Bullion Trust, which trades on the Toronto Stock Exchange and is offered by the holding company Central Fund of Canada (AMEX:CEF).
"They buy the actual metal and put it in storage," says Mladjenovic. "That's a safer play." Safer, he adds, than buying some silver or gold ETFs, which may hold futures contracts in their portfolio.
There are more than a dozen silver ETFs.
Investors can also buys shares in mining companies, such as gold producers Goldcorp (NYSE: gg) and Agnico-Eagle Mines.
Finally, platinum is usually a play on a strengthening economy, as it is used in the catalytic converters in automobiles.
It's sold as American Platinum Eagle coins and in bars, but there are only a few platinum ETFs. Two strictly for US investors-Physical Platinum (NASDAQ: pplt) and iPath DJ-UBS Platinum TR (NASDAQ: pgm)-launched earlier this year.
Puplava recommends a precious metals portfolio that is 50 percent gold, 40 percent silver and 10 percent into platinum, advocating dollar-cost averaging to compensate for some of the volatility.
"Platinum is the trickier investment of the three and silver is more volatile than gold," says Mladjenovenic. "Don't rely on a single precious metals investment. There are so many risk factors that are political."
Gold Prices Score Another Record, Silver Nearly Touches $25
by CoinNews.net on October 14, 2010
in Bullion Articles and Precious Metal Reports,Business News
http://www.coinnews.net/2010/10/14/gold-prices-score-another-record-silver-nearly-touches-25/
Its going to be a melt up like the tech bubble IMO
Price of Silver Expected to Rise
http://www.silver.com/article/price-of-silver-expected-to-rise/
I'll be ok - Im not in any stocks - trading futures and XAG/USD. I can afford to pay for my leverage and Im so far in the money that its ridiculous. I think this is going to 30 near term. JMO
Gold for Dummies: What's Driving It Now and How to Play It Safely
by: Cliff Wachtel October 07, 2010
http://seekingalpha.com/article/228876-gold-for-dummies-what-s-driving-it-now-and-how-to-play-it-safely
Are you able to take part of your profits now? Actually, I suggest that you protect your capital investment and hold free shares.
Just a suggestion, as I have missed the profit boat in the past.
sumi
Thanks for the input. Im leveraged 100:1 right now and am doing well but need to take profits somehere along the line. I am hoping for a quick move up to 30.00 and then get out. The momentum right now is in the longs favor IMO but getting too greedy has screwed me in the past. Watching price action like a hawk and not getting much sleep lately :)
Silver will become quite volitile with wild price swings but fundamentals do not really allow for any breather especially in the middle of a manipulation scandal.
How much higher do you think silver is moving up before we see a correction?? Seems to me that its headed up without much downside risk in the near term. I am thinking that 30.00 may be in the cards before we take a breather. I havent seen these kinds of moves since the tech bubble. What do you think??
GOLD THOUGHTS
by Ned W. Schmidt, CFA, CEBS
Schmidt Management Company
April 19, 2010
http://www.financialsense.com/editorials/schmidt/2010/0419.html
Silver Short Squeeze: Once in a Lifetime Opportunity?
April 16, 2010
Silver has been performing very strongly over the past month, has broken through previous resistance and continues to move higher despite the large concentrated short position by commercial traders (JPM and HSBC) on the Comex. There are signs that an increasing number of hedge funds and individual investors are demanding delivery of physical silver as the dangers of unallocated paper promises become more widely understood. So far this month, 453 silver contracts have been delivered on the Comex or 2.3 million ounces. There is a similar story with the ETF SLV in which nearly 15 million ounces of silver have been withdrawn since late February.
These funds and investors seem to be following the lead of Greenlight Capital, which shifted their gold position from GLD to physical gold during July of 2009. Passport Capital has also signaled their intention to take physical delivery in its $1.2 billion Global Strategy hedge fund rather than owning the ETF GLD. When funds with this amount of capital begin to shift into a relatively small precious metals market that is overly leveraged by naked shorts, the potential for an explosive short squeeze increases significantly.
Given the massive leverage (as high as 100-1) used by the banks that are naked shorting silver with paper contracts on the Comex, speculation has increased that a group of wealthy investors, Asian traders or funds may look to exploit this long-running manipulation scheme. This would be accomplished by demanding a huge quantity of the physical metal be delivered all at once, thus forcing the naked shorts to scramble to come up with the metal that is known to be in short supply. The short squeeze would then send the silver price blasting dramatically higher. I won’t go off the deep end and give this outcome a high probability, but it is certainly higher than it was just a few months ago and prior to the widespread manipulation exposure given by CFTC whistleblower Andrew Maguire, GATA and most recently the New York Post.
All of this adds up to what could be a once-in-a-lifetime opportunity to generate massive returns in a short time period. If you are not already invested in silver, you just might miss the ride.
I believe it is a good idea to have physical silver in your possession first and foremost. A bird in the hand is worth at least 10 in the bush in this case. Please see my article “How to Buy Physical Gold and Silver” for more information on the best ways to purchase precious metals.
Once you have a base holding of physical silver, you might want to consider purchasing shares in select silver miners. This gives you additional leverage to the rise in the silver price and my strategy is to occasionally pull out a portion of the paper profits in order to increase my physical holdings. It has worked very well over the past decade and I believe will continue to be a prudent way to maximize your returns while building your safety net at the same time.
In terms of ETFs, I stay away from unallocated funds such as GLD and SLV that may or may not have physical metals to back up your shares. The custodians of these funds are the same banks that have huge naked short positions against silver, so the ETF strategy does not make sense to me. The exception would be the Central Fund of Canada (CEF), which holds your gold/silver in unencumbered, allocated, audited vaults in Canada. They do not lease out your metals and have a mandate to always maintain at least 90% of assets in gold and silver bullion, although it is typically 95% or higher.
I usually reserve individual stock picks for premium members, but have decided to share one of our most recent additions to the Gold Stock Bull portfolio – Alexco Resources (AMEX: AXU or TSE: AXR).
Alexco has a dual-focus business model in which they are engaged in a profitable environmental consulting/reclamation/mine closure business, but also own a project in one of the highest grade silver districts in the world – Keno Hill. The Keno Hill Silver District has produced more than 217 million ounces of silver with average grades of 40 oz/ton silver, making it the second-largest historical silver producer in Canada. Despite this impressive history, Alexco believes just 5% of the area has been explored. With low silver prices in 1989, the Keno Hill project was forced into government receivership and had huge environmental liabilities. Alexco was brought in by the government to clean it up, realized the value of the project and in December of 2007 became 100% owner.
Silver Wheaton (SLW) has since taken a stake in Alexco’s future production, which should give you further confidence in the potential of their properties. Alexco recently completed a $25.7 million financing for continued development of the Bellekeno mine, which is on track to commence production during Q3 of this year. In addition to this near-term production, Alexco has begun an aggressive exploration program for 2010 which has the potential to significantly increase their resources. I believe Alexco has blue-sky potential and could easily double in value over the next 12-24 months even if silver prices only advance modestly. If silver makes new highs by the end of 2010 as I suspect, shares of Alexco could see an astronomical increase.
Disclosure: I own shares of Alexco, but have not been compensated in any way to write about the company.
About the author: Jason Hamlin
Gold in a Bubble?--This writer doesn't think so.
http://www.preciousmetalstockreview.com/downloads/April%2010,%202010%20pdf.pdf
futr
Precious Metals Review~
Interesting discussion @ end.
http://www.preciousmetalstockreview.com/downloads/April%202,%202010%20pdf.pdf
futr
Gold at 2-week high, PGMs rally on investment flows
Humeyra Pamuk, LONDON
Thu Apr 1, 2010 6:18am EDT
http://www.reuters.com/article/idUSTRE62H1MP20100401
LONDON (Reuters) - Gold rose to a two-week high on Thursday and platinum group metals rallied to their highest in over twenty months on the back of fresh investment money poured into commodities, signaling another quarter of gains.
A shutdown this week of a smelter at the world's third biggest platinum producer Lonmin, has also buoyed platinum to its highest since August 2008 and palladium to its loftiest since March 2008.
Gold saw little support from the currency markets, where the euro was steady versus the dollar. The U.S. currency hit a three-month high against the yen while the market waited for U.S. macroeconomic data later in the day.
Spot gold rose to $1,118.75 an ounce, its highest since March 19 and was at $1,117.65 an ounce by 0901 GMT, versus $1,112.80 an ounce late in New York on Wednesday.
"Commodities as a group are extremely strong at the moment," said RBS metals analyst Stephen Briggs. "We had lots of quarter-end massaging going on and that has set us up for probably more money coming into commodities at the beginning of the second quarter," he said.
Bullion ended the first quarter more than one percent higher on buying driven by volatile currencies, firm stock markets and oil as well as euro zone debt but it has struggled to sustain gains since hitting a record above $1,200 an ounce last December.
BREAK ABOVE?
"I think gold should eventually break above $1,125 an ounce. Physical demand is still good and there's more investment money coming in," Afshin Nabavi, head of trading at MKS said.
Thai jewelers were active but physical dealers noted light selling by Indonesian consumers. India, the world's largest consumer, made some inquiries as the wedding season was about to start soon.
U.S. gold futures for June delivery gained $3.3 an ounce to $1,117.8 ounce.
Bullion markets in Singapore, Indonesia, India, Hong Kong and Australia will be closed for Good Friday but Japan is open and investors will be waiting for U.S. non-farm payrolls that could set the tone for currencies.
Analysts are expecting the government payrolls report on Friday to show the economy added 190,000 jobs in March, albeit aided by temporary government hiring for the 2010 U.S. Census.
Spot platinum traded at $1,656 an ounce versus Wednesday's $1,641.50 an ounce while palladium was at $488 an ounce versus $477.50.
Palladium and platinum ended the first quarter 17 percent and 12 percent higher respectively, surpassing the single-digit gains posted by gold and silver.
"We've been quite bullish on PGMs and we think their fundamentals look good. Obviously an accident at the Lonmin smelter helped but actually it's more of a general sense that the market likes the PGMs," Briggs said.
A recovering auto industry led by China is also another factor boosting the PGM prices. More than half of the world's output of platinum group metals is used in catalytic converters which clean exhaust fumes from vehicles.
Silver was at $17.66 an ounce, after hitting $17.70 an ounce, its highest in ten weeks and versus Wednesday's $17.46 an ounce.
(Reporting by Humeyra Pamuk, Editing by Keiron Henderson)
Is the IMF bluffing when it says it will sell more gold?
http://www.preciousmetalstockreview.com/downloads/March%2027,%202010%20pdf.pdf
futr
The Coming Flight to Quality R/E Hard Assetts~
http://www.gold-eagle.com/editorials_08/connor030710.html
futr
Thanks for posting these precious metals reviews; they are very helpful.
Someday the average investors will be flocking to the precious metals sector.
I still believe that precious metals will experience a big downturn if the economy goes south. This will be the point where China massively buys. The subsequent leg up will be spectacular, imo.
sumi
Gold was Lasr Decade's Best Performing Sector:
http://www.preciousmetalstockreview.com/downloads/March%206,%202010%20pdf.pdf
futr
Thanks for a timely update on the metals front.
I'm waiting for my junior metals stocks to eventually fund a worthy position in CEF.
The U.S, debt clock really has me concerned:
http://www.usdebtclock.org/
sumi
That was an encouraging post; I expect CEF to go way in price whenever the world economies heat up again.
All of this fiat money has to eventually set off an inflationary time bomb and a resultant acceleration of precious metal prices.
sumi
Trend Analysis & Charts for Precious Metals~
http://www.preciousmetalstockreview.com/downloads/February%206,%202010%20pdf.pdf
futr
THE PROBABILITY OF A CRISIS WILL BUILD DURING 2010
13 January 2010 by TPC
http://pragcap.com/the-probability-of-a-crisis-in-2010
Gold May Gain on Demand for Dollar Alternative, Survey Shows Share Business Exchange
By Nicholas Larkin
http://www.bloomberg.com/apps/news?pid=20601091&sid=aNIc2GnjJQD4
Jan. 15 (Bloomberg) -- Gold may gain as investors seek an alternative to a weaker dollar, a survey showed.
Twelve of 19 traders, investors and analysts surveyed by Bloomberg, or 63 percent, said bullion would rise next week. Five forecast lower prices and two were neutral. Gold for delivery in February was down 0.3 percent for this week at $1,135.30 an ounce at noon in New York yesterday.
The dollar fell to a four-week low against the euro on Jan. 13 after declining in 2009 for a third year in four. Gold, which last week posted its first weekly gain since November, climbed 24 percent in 2009 as governments cut interest rates and spent trillions of dollars to prop up economies and central banks in nations including India and China boosted bullion reserves.
“The fundamental question is has anything changed?” said Adrian Day, chief executive officer of Adrian Day Asset Management in Annapolis, Maryland. “Investors continue to be nervous about paper money, and newly enriched central banks want an asset of real value in their reserves.”
The red bars on the attached chart are derived by subtracting bearish forecasts from bullish estimates, with readings below zero signaling that most respondents expect a decline. The green line shows the gold price. The data shown are as of Jan. 8.
The weekly gold survey has forecast prices accurately in 170 of 294 weeks, or 58 percent of the time.
This week’s survey results: Bullish: 12 Bearish: 5 Neutral: 2
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
Last Updated: January 14, 2010 19:01 EST
How does the U.S. $ really affect the gold price?
Excerpts from GLOBAL WATCH
The Gold Forecaster by Julian D.W. Phillip | January 15, 2010
http://www.financialsense.com/editorials/phillips/2010/0115.html
Inflation 101
by Puru Saxena
Editor, Money Matters
January 15, 2010
http://www.financialsense.com/editorials/saxena/2010/0115.html
Paul Tudor Jones: The Great Liquidity Race & Gold
November 01, 2009
As part of the The Smart Money Series, a look at what the world’s most successful institutional money managers and hedge funds are doing, Anomalous Investments (“AI”) highlights some selective excerpts from the October 15th letter of legendary investor, Paul Tudor Jones and his Tudor Investment Corporation.
Its market outlook and macro perspective was entitled The Great Liquidity Race: Wall of Money Climbs Wall of Worry.
General Comments
The forceful policy response to avert depression tail risks posed by the financial crisis has likely unleashed a wave of liquidity which is probably greater than that of 2001-2003.
Tudor’s job is to identify the best performing assets of this “Great Liquidity Race”. At present, those assets are gold, emerging market equities denominated in local currencies, and commodity related stocks.
View on US Dollar
The US dollar will continue its path lower as global flows seek high yielding assets and sovereign reserve managers diversify their growing US dollar-based reserves. Reserve accumulation and diversification trends will be persistent and mutually reinforcing with the direction of the dollar.
View on Gold
During times of overt monetization, hyperinflation, or when questions arise about the stability of the banking system, gold prevails as a more reliable store of value. Gold has an economic value even in the worst of times.
Compared to the long-run average, gold appears to be cheap. Gold’s value should increase as its scarcity relative to printed currencies increases.
On the demand side, much of the recent move to record prices in gold reflects continued strong investment demand for physical gold in the face of heightened macro uncertainty and unprecedented, globally-coordinated monetary stimulus. The historical drivers of investment demand for gold seem to have simultaneously come together in 2009 and, in Tudor’s opinion, will continue to stimulate high levels of demand on a sustained basis going forward.
Gold Price Outlook
Tudor’s proprietary econometric model, which evaluates the impacts of inflation, M2 growth, and real rates on the price of gold, suggests – under the baseline macro scenario – that gold is 20% undervalued over the next 24 months.
In Tudor’s opinion, the scope for increased investment demand over the coming years is much stronger than the potential for new supply. As a result, incremental new demand must buy gold from current holders. With a macro backdrop that suggests gold is undervalued, the transfer of gold from current holders to its new owners will likely not occur at, or near, current prices.
Summary & Implications
The views of Tudor Investment Corporation are similar to those heard recently from other prominent hedge fund managers and institutional money managers such as John Paulson of Paulson & Co., and David Einhorn of Greenlight Capital.
In this environment, investments in liquid gold securities and exchange-traded funds are, and will continue to be, in high demand.
A review of SEC filings by Anomalous Investments of several prominent money managers shows that the following equities are the most popular amongst the bullish managers:
SPDR Gold Trust (GLD)
I Shares COMEX Gold Trust (IAU)
Power Shares DB Gold Fund (DGL)
Central Fund of Canada (CEF)
Additionally, in the gold mining equities, prominent hedge fund managers including Paulson and Einhorn, have invested in the following:
Market Vectors Gold Miners ETF (GDX)
Kinross Gold (KGC)
Finally, because the investable gold sector is relatively small, and because there is a scarcity of quality, liquid, gold mining companies, some are even willing to venture into Africa-focused miners including the following:
AngloGold Ashanti (AU)
Gold Fields (GFI)
Harmony Gold (HMY)
In summary, in The Great Liquidity Race, the smart money is clearly increasingly bullish on the prospects for gold.
Disclosure: The author owns shares in GLD, CEF and DGL
On Inflation, Precious Metals and the Mayan Calendar
Marc Courtenay
October 25, 2009
Many of us wonder if inflation is going to take off anytime soon. That, as well as the devaluation of the dollar has moved billions of dollars into precious metals ETFs like GLD and SLV.
Even the Central Fund of Canada (AMEX:CEF), which is selling for about a 10% premium above its net asset value (NAV), has a market cap of over $2.5 billion. It's a closed-end fund that actually buys, stores and insures the gold and silver it uses to establish the NAV for the shareholders.
ASA Ltd (NYSE:ASA), a relatively small closed-end fund which invests in many "things" related to precious metals as well as the metals themselves has seen their market cap rise to over one-half billion dollars, and since the lows of November 2008 its share price has more than doubled.
Folks usually buy precious metals for 3 reasons. First, as a hedge against inflation. Secondly, as a "substitute currency-buying power protector" when confidence in paper currencies are eroding. The third reason is as "insurance" against the unseen catastrophe, disaster or financial panic.
That brings us to the Mayan Calendar. There's a growing group of unique people who think that the Mayan Calendar, and a few other exotic symbols, predicts some enormous global changes in the year 2012. There are even some financial gurus who buy into that kind of thinking (remember Y2K).
Well, my crystal ball only predicts things slightly past the end of my nose, so that is why I tend to invest with 2 major criteria. First, I want to be buying or selling what the "Smart Money" and the "Exchange Specialists" are buying and selling. Secondly, I do like a hedge against uncertainty and those random "Black Swan events". With that second criterion in mind, I'd like that hedge to have historically intrinsic value and be very much in demand.
That's why I like to own precious metals and the proxies for precious metals. I even like the stocks and ETFs of the precious metals producers. That's why I own a small amount of GDX, Silver Wheaton (NYSE:SLW), Compania de Minas Buenaventura (NYSE:BVN), Freeport McMoRan Gold & Copper (NYSE:FCX) IAM Gold (NYSE:IAG) and I'm trying to buy a little Silver Standard Resources (Nasdaq:SSRI) below $20 a share.
Back to the subject of inflation, frankly I don't see much in the near-term. I see quite a bit of over-supply, whether we look at housing, natural gas or automobiles. There's a lot of oil stored out there too, and although the price of oil is high right now, it's hard to understand why it should stay this high. $70 a barrel ought to be the near-term average from the supply figures I'm reading.
Inflation is coming in the future and the monetary policies in the G-20 countries virtually assure it. Black Swan events and the rise and fall of the dollar will factor into the deflation versus inflation debate over the next few years as well. How soon inflation will be a major problem is a tough call.
My colleague Terry Coxon who is an editor for the Casey Report and who has a great deal of experience and insight on investing, put this whole topic into perspective Friday and I'll conclude this article with his words:
Investment Implications
The big plus about the Mayan calendar is that, right or wrong, it is very definite about things. Human civilization will come to an end, I'm told, on Dec. 21, 2012 – not on the 20th and not on the 22nd. There was no room for monetarists in those step-sided pyramids, but there still are few what-to-do implications from the monetarist findings.
1. When you hear would-be opinion leaders cite the current absence of rising prices at the supermarket as proof that all the new money isn't a source of inflation, don't believe them. It is much too early for the inflation bomb to be going off, even though the powder has been packed and the fuse has been lit.
2. If the large and growing federal deficits and the Federal Reserve's unprecedentedly easy policies tempt you to leverage up on inflation-sensitive assets, such as gold, give the idea a second thought. It likely will be a year or more until price inflation becomes obvious and undeniable (which is what it would take to bring the general public into the gold market). In the meantime, your inflation-sensitive assets could get paddled rudely as the deleveraging that began last year continues.
3. Read points 1 and 2 again to make sure they have sunk in.
For at least the next year, the simple, fire-and-forget strategy is 50-50 gold and cash – gold for what looks to be inevitable but on its own schedule, cash to be ready for the bargains that may show up while we're waiting for the inevitable to arrive.
DISCLOSURE: I own GLD, SLV, CEF, GDX,SLW, BVN, and IAG.
I kind of assumed that the price of this stock would correspond roughly to the price of gold and silver and therefore rise and fall accordingly. Although it has risen recently , the pattern seems different to that of the precious metals. Anyone know why?
Will the Dollar get an “Arab oil shock”?
author of Full Spectrum Dominance: Totalitarian Democracy in the New World Order
by F. William Engdahl
October 7, 2009
http://www.financialsense.com/editorials/engdahl/2009/1007.html
Arab oil producing nations and the some world’s largest oil consumers including China and Japan are reliably reported to be secretly planning a long-term exit from pricing their oil trade in dollars. If true, it would spell the death knell for the dollar as world reserve currency, and for the USA as “the” global economic power.
Ever since Washington tore up the Bretton Woods treaty in August 1971 and went onto a “dollar paper reserve system” instead of a dollar backed by gold, the United States, as the world’s most powerful military power, has been able to dictate financial terms to the world. Nations like Japan and later China, dependent on US export markets, would dutifully invest their trade surplus dollars into US Government debt, in effect financing wars such as Iraq or Afghanistan they opposed. They saw no choice. Arab oil producing countries, under US military pressure, were forced to sell oil only in dollars, a direct prop to the dollar when the US economy was in terminal decline. That may be rapidly about to come to an end.
According to a leaked report from Arab Gulf oil producers, there have been a series of secret meetings in recent months between the major Arab oil producers, including Saudi Arabia, and reportedly also Russia, together with the leading oil consumer countries including two of the three largest oil import countries—China and Japan.
Their project is to quietly create the basis to end a 65-year long “iron rule” of selling oil only in US dollars. Following the 400% oil price shock of 1973, which was deliberately blamed by US media on “greedy Arab Shiekhs,” a senior US Treasury official made a secret trip to Riyadh to tell the Saudis in blunt terms that if they wanted US military defense against potential Israeli attack, that OPEC must privately agree never to sell oil in currencies other than the US dollar. That “petrodollar” system allowed the US to run staggering trade deficits and remain the world reserve currency, the heart of its ability to dominate and control world financial markets, until the crisis of the sub-prime real estate securitization in August 2007.
The participants in the oil pricing project reportedly envision using a basket of currencies reflecting producer-consumer trade relations, one backed by gold as a solid backbone. It would not initially be a new currency as some have surmised, but rather an arrangement that would eliminate the risks of pricing oil sales in fluctuating and likely depreciating dollars.
Iran announced recently that in the future it would sell its oil for euros not dollars. According to these reports, the basket of currencies would include a mix of yen, euros, Chinese yuan, gold. Brazil would reportedly join as both a producer and consumer country.
The secret plan was first reported by Middle East correspondent, Robert Fisk, in the UK Independent.
I have confirmed from very senior and well-informed Gulf sources that the talks are in fact real. The oil producing countries have been fed up for years about having to price their oil in dollars or face US reprisals. They are steadily losing as the dollar depreciates against other currencies and against gold. As most Gulf Arab oil countries depend on imports for much of their economy, dollar pricing de facto introduces serious inflation into their economies as well. Most of their trade is with the EU or other countries outside the US, but now that trade must be mediated through a sinking currency, the dollar.
Following the US declaration of the War on Terror by the Bush Administration after September 11, 2001 most leading Arab oil producing countries privately saw US policy as being aggressively aimed at them. The un-justifiable US invasion and occupation of Iraq in 2003 merely confirmed that as well as subsequent US threats against Iran.
Initially various governments involved in the leaked plan have publicly denied vehemently such a plan. That in no way invalidates that such moves are afoot. The participating countries are well aware that the United States as a wounded tiger can be far more dangerous. The leak of the plans in the world media, whether every detail reported by Fisk is true or not, feeds what is an inevitable decline in the dollar as a reliable reserve currency for world commerce.
What is not clear is what the potential response of Germany and France, the two pivot powers within the EU will be. If they decide to cast their lot with oil producing and consuming countries, they open their doors to vast new trade and investment potentials from the countries of Eurasia. If they cringe from that and decide to remain with the British Pound and US dollar, they will inevitably sink along as the dollar Titanic sinks.
With that decline of the US dollar goes the lessening of the political power of the United States as sole economic and financial superpower. We face very turbulent waters ahead and gold not surprisingly is gaining in this uncertainty.
Copyright © 2009 F. William Engdahl
O Canada (Part II): There's Gold in Them Thar Hills - and Plains
October 07, 2009
Amber Waves of Grain
Canada is one of the largest agricultural producers and exporters in the world. Blessed with rich soil, excellent growing conditions, and abundant water, Canada is – per capita – the biggest exporter of agricultural largesse in the world.
You haven’t lived until you’ve been to a Lobster Feed in the Canadian Maritimes. And from the bounty of seafood, potato and dairy from New Brunswick, Nova Scotia, and Prince Edward Island, crustaceans and fish from Newfoundland and Labrador, to the endless (I’ve driven it – when I say endless I mean endless) wheat fields of Saskatchewan, Manitoba and eastern Alberta, to the sunny, lush valleys of British Columbia ripe with fruits and wine, this is a nation blessed by Mother Nature. And what isn’t perfect for crop production does just fine as grazing land for cattle and buffalo.
The great central plains of Canada and the US are an agricultural breadbasket the envy of the whole world – and one which they will certainly come to in times of need. Our financial industry may be screwed up (unlike Canada – see “Investing in the World's Soundest Banking System,” part one of this trilogy) but the agricultural and water resources of the US and, especially, Canada, are both nations' foundation sources of true wealth. Would you rather starve while taking pride in having the cleverest day-traders in the world or enjoy good food and good health in a nation with bounteous amounts of the same?
China is the #1 producer of wheat in the world with over 100 million metric tons a year. The US is 3rd with 60 million. And Canada ranks only 6th, with just under 30 million. Of course, while China has more than three times the production, they also have 40 times the number of mouths to feed! And the US, with double the Canadian output, has 10 times the population. So which nation has grain to provide to others, do you suppose?
In different proportions, but in relative amounts across the board, the same also holds true for soybeans, potatoes, corn, cattle, milk, chickens, and other staples of a stable high-protein diet.
So which Canadian companies will benefit most as the world’s population grows, people in emerging nations move up the protein chain, and demand for Canada’s agricultural output skyrockets?
Highest among them, I believe, will be Potash Corp (POT). As any home gardener knows, fertile well-aerated soil watered deeply but not too frequently yields the best crops. To make the soil “fertile,” you need “fertile”izer. And Potash is the world’s largest supplier of potash, phosphate and nitrogen, the three most important elements in that fertility. POT's size and flexibility give them pricing power. Right now, their stock is down from a high of 121 (TTM) and up from a low of 47 in December when everyone just knew the world was coming to an end. It's 88 right now. At that price it is selling at 11 times earnings. I don’t care who you are or where your farm is – if you are producing crops, you need what Potash produces.
I would also play Canada’s grain surpluses and the likelihood of continuing increases in exports via their two biggest railroad companies – because that’s how you transport grain from all those farmers to the shipping terminals on the seacoasts. Canadian National Railway (CNI) and Canadian Pacific (CP), which was in our core portfolios for more than 10 years, are fairly priced today. But on any pullback, I’d be an aggressive buyer.
Then there’s water. I wrote about Canada’s huge water resources and what a blessing that will prove to be in Positioning For When Water Runs Out. Canada has the most water per capita of any major world nation, some 91,000 cubic meters of Internal Renewable Water Resources (I.R.W.R.) per person. You can’t beat that. There will come a day when that resource may prove as precious as the most precious gems.
Below (click to enlarge) is an updated map of those nations which are experiencing or soon will experience a scarcity of water:
I have warned repeatedly on this site, in our financial letter, and in presentations to investor groups that those singing the Sirens’ call for “emerging markets” are missing the point. They are looking at today’s news and extrapolating straight-line growth into infinity. The Real World doesn’t work that way. Water is the most precious commodity on this earth. Without potable water, we die of disease. Without fresh water of any sort, we die of thirst. Take a look at the water resources in the emerging nations. Then take a look at Canada, the US, Europe, Russia and Japan. Even if there were no current correlation, there will be one going forward.
That’s why I choose to invest in those companies in those nations that supply what the emerging markets need, rather than in the emerging markets themselves. The cream always rises to the top. And Canada, with a low but highly literate, educated and skilled, population, incredible natural resources, and the most water per capita of any big nation on earth, now rises to the top.
Golden Threads and Silver Needles
If you believe that inflation is a constant in our lives and the likelihood of even greater inflation increases in direct proportion to the size and intervention into our daily lives of the national government, you want to own some precious metals. If you believe the US dollar, given these wastrel policies, will decline in value, you need to own some precious metals. If you’d like a store of value you can trust not to change with every political wind, you must own some precious metals.
Among the biggest gold producers in Canada are Barrick (ABX), Goldcorp (GG), Kinross (KGC), Agnico Mines (AEM), Yamana Gold (AUY), Lihir Gold (LIHR), IAMGold (IAG), Eldorado Gold (EGO), and Franco-Nevada (FNNVF.PK). In addition, if you’d rather own the physical metal without the headache of storing and insuring it yourself, you may want to consider the Central Fund of Canada (CEF). Some of my fellow advisors have taken me to task for recommending a metals fund that sells at a premium, believing that ETFs like GLD offer a better deal.
Maybe. But I haven’t seen GLD through 40 years of investing like I have CEF. If CEF says their gold and silver is actually in those vaults, and the regulators overseeing them say it’s there, I believe it’s there. I’m willing to pay a slight premium for that kind of ability to sleep at night.
Of the big producers mentioned above, I wouldn’t touch ABX with a 10-foot pole. I don’t trust their management to be honest and above-board. I like GG a lot and have owned it for years, own KGC but only recently, and believe that AUY probably has the best potential of all the major producers in Canada. And for a “royalty trust” situation where the firm owns royalty rights but does no (or little) actual mining, my favorite in gold is FNNVF. I mean, any outfit that has Nevada in its name has to be OK, right? Especially when its assets are in my part of the state, the part with wild horses, good hunting, open spaces and great skiing, not that other place down south! Finally, if you like the idea of a royalty trust, I like Silver Wheaton (SLW) for the silver side of the house!
Bonus Section: Golden Voices
In addition to golden metal (and base metals, as well, in the form of nickel, zinc, copper, iron, rare earth metals, etc.) and golden fields of grain, I leave you with this list of just a few Canadians who have brought great song to our continent as singer/songwriters. This is only partly tongue in cheek – I’ve spent a good bit of time in Canada, even fought forest fires there as a young whippersnapper, and I’d like to do my part to overcome the notion some have that Canada is a vast wasteland filled with extractable and exploitable resources but not much else. In fact, Victoria, Vancouver, Toronto, Montreal, and Quebec are vibrant, thriving cities, and there are thousands of beautiful smaller towns and villages mixed in among all that gorgeous scenery. And as this partial listing shows, they do OK in producing their share of cultural icons, as well…
Bryan Adams
Paul Anka
Leonard Cohen
k.d. lang
Avril Lavigne
Gordon Lightfoot
Kate & Anna McGarrigle
Alanis Morissette
Joni Mitchell
Robbie Robertson
Buffy Sainte-Marie
Ian and Sylvia (Tyson)
Celine Dion
Neil Young
If the much-ballyhooed “decoupling” of other nations’ economies from the USA ever takes place, I believe that decoupling is less likely to come from Brazil, Russia or China than it is from nations like Australia and Canada – which can be loyal friends and allies and still have their economies less dependent on the US than on feeding and supplying the energy and infrastructure needs of the developing world.
Full Disclosure: Long POT, GG, KGC, AUY, CEF and FNNVF.
The Fine Print: As Registered Investment Advisors, we see it as our responsibility to advise the following: We do not know your personal financial situation, so the information contained in this communiqué represents the opinions of the staff of Stanford Wealth Management, and should not be construed as personalized investment advice.
Also, past performance is no guarantee of future results, rather an obvious statement if you review the records of many alleged gurus, but important nonetheless –our Investors Edge ® Growth and Value Portfolio has beaten the S&P 500 for 10 years running but there is no guarantee that we will continue to do so.
It should not be assumed that investing in any securities we are investing in will always be profitable. We take our research seriously, we do our best to get it right, and we “eat our own cooking,” but we could be wrong, hence our full disclosure as to whether we own or are buying the investments we write about.
>
What China Could Do to the Price of Gold
Bill Bonner - Tue 15 Sep, 2009
http://www.financialsense.com/metals/main.html
The Chinese Have the Money and the Motive
“I’m Brazilian. I have gold. And I’ve just arrived from Rio richer than anyone...”
Thus sang one of the characters in an operetta by Jacques Offenbach. But that was in the mid-19 th century.
But hey... what goes around...
Guess what happened last year? According to a study from Boston Consulting Group, the only area of the world that got richer last year was Latin America... led by Brazil!
The rest of the world got poorer. By 11%, according to BCG. Down in the rum and sun zone, on the other hand, they got 3% richer.
So maybe our investments in South and Central America will turn out all right after all.
Meanwhile, back in the developed world... what’s going on? There are two main schools of thought. Ours. And theirs.
Who’s right? You decide.
They say – the crisis is over. We can thank our lucky stars – and the feds.
Now, we’re getting back to ‘normal’... or maybe a ‘new normal,’ with lower growth rates than before. Janet Yellen, San Francisco Fed governor, says the recovery will be ‘tepid.’ Others say it will be weak... soft... drawn out.
“The slowest recovery since 1945,” says a Bloomberg report.
It may be slow, they say, but it’s sure. The stock market proves it.
Stocks are up 65% worldwide, with the US a laggard... stocks in the US are up barely 40%. The Dow rose 21 points yesterday – still a long way to go to get to the 50% rebound mark, at 10,300.
Gold closed down, but still over $1,000. And the dollar continued falling – reaching $1.46 per euro.
In our view, there is no recovery. None. All of the improvement in the economy can be traced directly to bailouts. None of it – not a single penny – is organic, natural or durable. When the subsidies for new cars go away, for example, so do auto sales.
We wrote a book, with Addison Wiggin, several years ago. In it we predicted that the US would follow Japan into a long slump. We thought it would begin after the tech crash of 2000. We were wrong about that. But it seems to be beginning now. And the government, predictably, is doing the same things the Japanese government did – despite Bernanke’s assurances that he won’t allow the country to fall into the Japanese deflation trap.
One thing the Japanese did was to reduce interest rates... practically giving away money to anyone who would borrow it. But Japanese consumers didn’t want to borrow; they wanted to save. They had speculated on the bubble and lost money. Then, with retirement approaching they wanted to replenish their savings and rebuild their balance sheets.
So, the Japanese government put out money... and it was taken up by speculators, not by the real economy. The speculators borrowed yen, at very low interest rates, and then reinvested the money in go-go sectors elsewhere – such as the US dot.com bubble. The yen became the world’s “financing currency.” If you wanted to build a factory in China or speculate on Argentine bonds, you could begin by borrowing cheap money from Japan. Thus, Japan contributed to a huge boom all over the world. But not in Japan. The land of the rising sun never seemed to get up in the morning. Property investors lost 80% of their money. Stock market investors lost as much. Even now, nearly 20 years later, they’re still 75% down.
And now, along comes the United States of America with super-low lending rates. But who’s borrowing? Not the moms and pops of Middle America. They don’t have anything to borrow against. And the banks won’t lend to them. The banks need money for themselves. Besides, everybody knows the average household in America is losing income.
What’s more, mom & pop don’t want to borrow. They’ve been through 10 years of losing money on Wall Street. Stocks are no higher now than they were a decade ago. And their houses – on whose rising prices they had counted for their retirements – have gone down 20% - 40%. And they’re still going down.
The poor moms & pops can’t seem to get a break. They’re now desperately saving for retirement – at the worst possible moment, when jobs are scarce and wages are falling. But what else can they do?
Spengler, in Asia Times:
“An aging population increases its purchases of securities and decreases its purchases of goods as it saves for retirement. Americans have saved nothing for the past 10 years, and the capital gains that they considered savings-substitutes have vanished. That means that an enormous savings deficit accumulated over more than a decade has been exposed, and that Americans must attempt to correct it quickly and under the worst of circumstances. Americans will work more, spend less, and save more. America may have the worst of both worlds: currency devaluation and price deflation, as in the 1930s.”
*** So, the feds push money into the economy, but it’s hot money. It’s money that speculators use to place bets on gold... or on Brazilian bonds... or on oil exploration companies. The money never ends up in consumers’ hands. It never bids for consumer goods. It never pushes up consumer prices.
As in Japan during the ‘90s, America’s hot money may go all over the globe. It may turn the entire world into a casino. But it won’t bring about a real recovery...
...if cheap money from the government were all it took to bring prosperity Zimbabwe would be richer than Switzerland. Obviously, it doesn’t work that way.
But here’s the shocker. While we know easy money policies don’t create prosperity, you may be surprised to learn that they don’t necessarily cause inflation either. In other words, government may be incompetent, even at what it does best.
So, why is gold rising?
Ah... we were afraid you were going to ask. We’ve been doing a lot of thinking about it. Partly because our family office partners are smart fellows who ask smart questions. And partly because we’re wondering what to do with our own gold. Buy? Sell? Do nothing?
We spent half the night drinking and meditating on the subject. Finally, we’re not sure we had a clearer idea... but at least we were able to sleep.
We’ve already unveiled the idea to you. The feds can cause speculation in gold; but they can’t easily cause consumer price inflation. As explained above, they can get cash into the hands of speculators, but not into the hands of consumers. Not in the middle of a major consumer retrenchment.
The Roosevelt Administration was faced with the same problem. But back then, gold and the dollar were linked. Roosevelt could devalue the dollar by edict. The Japanese couldn’t do that. Nor can the Obama Administration.
In a deflationary credit cycle, you may only be able to cause consumer price inflation by resorting to extraordinary Zimbabwe-style money printing. You can drop money from helicopters, as Ben Benanke promised. But as Zimbabwe demonstrated, that cure is far worse than the disease it is meant to heal.
All of that said... gold can rise... partly because people are betting on it as an antidote to inflation (not realizing that consumer price inflation may be a long way off)... and partly for other reasons.
Lately, one of those other reasons may be heavy buying by the Chinese. The Middle Kingdom wants to diversify out of the dollar. It also has a central bank with very little in gold reserves. What better to do than to diversify out of the dollar by adding gold to its central bank reserves? Word on the street is that it is buying steadily.
The Chinese have made a number of announcements on the subject. We don’t really know who’s in charge there, so we don’t know whose comments to weight most heavily. One Chinese official has said that the government is buying gold and intends to buy more. Another says they will buy “when people don’t expect it.” Another says the Chinese expect gold to go to $3,000 an ounce.
The Chinese have the money and the motive. They alone could move the price of gold to $3,000 if they wanted to. And maybe they do.
Until tomorrow,
Bill Bonner
The Daily Reckoning
The New CBGA: Neutral for the Price of Gold?
August 16, 2009
On August 7, the European Central Bank (ECB) and 18 other central banks signed an extension of the 5-year Central Bank Gold Agreement (CBGA). The current CBGA caps sales at 500 tons a year and expires on September 26. The new CBGA extends the agreement for another 5 years—through 2014—with a ceiling of 400 tons per year. The ECB issued a press release on the agreement at their website.
Observers suggest that the agreement is positive for the price of gold because it removes the risk that central banks in Europe will sell bullion indiscriminately, flood the market, and drive the price down. However, based on recent actions, signatories to the CBGA do not seem anxious to sell their gold reserves too quickly. Actual gold sales by signatories to the CBGA in 2008 were 343 tons, well below the 500 ton per year ceiling.
According to GFMS, sales by all central banks were 39 tons for the first half of 2009, well below the 2008 pace. The largest sellers during this period were France and the ECB. Moreover, CBGA signatory Swiss National Bank has indicated they have no plans for any further gold sales in the foreseeable future. Switzerland, with gold holdings amounting to 1,040 metric tons, is the 7th largest government holder of gold in the world.
The International Monetary Fund (IMF) is not a signatory to the agreement and is reportedly intending to sell 403 tons or 12 percent of its 3,217 tons of gold to central banks. The IMF is the third largest official holder of gold in the world. Speculation is that nations with considerable U.S. dollar reserves like China or middle eastern oil producers might buy large portions of the proposed IMF gold sales.
The CBGA is more neutral than bullish for the price of gold because it represents a very high ceiling on annual gold sales relative to recent actual sales. The new agreement, combined with the large proposed sale of gold by the IMF, results in official gold sales levels that are roughly in line with the previous CBGA. Though not bullish for bullion, the agreement does provide a theoretical and unknowable floor for the price of gold because of the limit on sales.
Central Fund of Canada Limited Enters Into Underwriting Agreement
Press Release
Source: Central Fund of Canada Limited
On Thursday August 6, 2009, 9:37 am EDT
http://finance.yahoo.com/news/Central-Fund-of-Canada-iw-1641194335.html?x=0&.v=1
TORONTO, ONTARIO--(Marketwire - 08/06/09) - Central Fund of Canada Limited (TSX:CEF.A - News)(TSX:CEF.U - News)(AMEX:CEF - News) ("Central Fund") of Calgary, Alberta announced today that it has entered into an underwriting agreement with CIBC, as underwriter, under which the underwriter has agreed to buy and sell to the public, in Canada (except Quebec) and in the United States under the multijurisdictional disclosure system, 11,040,000 Class A Shares of Central Fund. The offering will be made under a fifth and final prospectus supplement to Central Fund's U.S.$750,000,000 base shelf prospectus dated March 31, 2008.
The purchase price of U.S.$11.90 per Class A Share is expected to result in gross proceeds of approximately U.S.$131,000,000. Substantially all the net proceeds of the offering have been committed to purchase gold and silver bullion for settlement at closing, in keeping with the asset allocation policies established by the Board of Directors of Central Fund. Any additional capital raised by this offering is expected to assist in reducing the annual expense ratio in favour of the Shareholders of Central Fund.
Closing is expected to occur on or about August 13, 2009.
Central Fund has filed a base shelf prospectus and registration statement with the Canadian securities regulatory authorities (except Quebec) and the United States Securities and Exchange Commission ("SEC") for the offering to which this communication relates. Before you invest, you should read the base shelf prospectus and prospectus supplements and any other documents Central Fund has filed with the securities commissions in each of the provinces and territories of Canada, except Quebec, and the SEC for more complete information about Central Fund and this offering. You may obtain a copy of the base shelf prospectus and prospectus supplements filed in the United States from CIBC World Markets Corp., 425 Lexington Avenue, 5th Floor, New York, New York 10017, by fax at 212-667-6303 or by e-mail at useprospectus@us.cibc.com. You may obtain a copy of the base shelf prospectus and prospectus supplements filed in Canada from CIBC, fax 416-594-7242 or request a copy by telephone at 416-594-7270.
Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Central Fund's actual results could differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those risks detailed in Central Fund's filings with the Canadian securities regulatory authorities and the SEC.
Central Fund of Canada Limited (est. 1961) is an exchange-tradeable, refined gold and silver bullion holding company. Class A Shares are qualified for inclusion in many North American regulated accounts. Central Fund's bullion holdings are stored unencumbered in allocated, segregated and insured safekeeping in Canada, in the treasury vaults of the Canadian Imperial Bank of Commerce. The gold and silver bullion are physically inspected by Ernst & Young LLP in the presence of Central Fund's Directors and Officers as well as bank officials. Class A Shares are quoted on the NYSE Amex LLC, symbol CEF and on the TSX, symbols CEF.A (Cdn. $) and CEF.U (U.S. $).
Contact:
Contacts:Central Fund of Canada Limited
J.C. Stefan SpicerPresident and CEO905-648-7878
info@centralfund.comwww.centralfund.com
Central Fund Announces Proposed Offering
Press Release
Source: Central Fund of Canada Limited
On Wednesday August 5, 2009, 4:06 pm EDT
http://finance.yahoo.com/news/Central-Fund-Announces-iw-1956577073.html?x=0&.v=1
TORONTO, ONTARIO--(Marketwire - 08/05/09) - Central Fund of Canada Limited ("Central Fund")(TSX:CEF.A - News)(TSX:CEF.U - News)(AMEX:CEF - News) of Calgary, Alberta announced today that it plans to offer Class A Shares of Central Fund to the public in Canada (except Quebec) and in the United States under its existing U.S.$750,000,000 base shelf prospectus dated March 31, 2008 and filed with the securities commissions in each of the provinces and territories of Canada, except Quebec, and under the multijurisdictional disclosure system in the United States pursuant to a proposed underwritten offering by CIBC. Central Fund will only proceed with the offering if it is non-dilutive to the net asset value of the Class A Shares owned by the existing Shareholders of Central Fund.
The remaining amount of approximately U.S.$131,000,000 of the original U.S.$750,000,000 provided for in the base shelf prospectus is available for this offering.
Substantially all of the net proceeds of the offering will be used for gold and silver bullion purchases, in keeping with the asset allocation policies established by the Board of Directors of Central Fund. Any additional capital raised by this offering is expected to assist in reducing the annual expense ratio in favour of the Shareholders of Central Fund.
Central Fund has filed a base shelf prospectus and registration statement with the Canadian securities regulatory authorities (except Quebec) and the United States Securities and Exchange Commission ("SEC") for the offering to which this communication relates. Before you invest, you should read the base shelf prospectus and prospectus supplements and any other documents Central Fund has filed with the securities commissions in each of the provinces and territories of Canada, except Quebec, and the SEC for more complete information about Central Fund and this offering. You may obtain a copy of the base shelf prospectus and prospectus supplements filed in the United States from CIBC World Markets Corp., 425 Lexington Avenue, 5th Floor, New York, New York, 10017, by fax at 212-667-6303 or by e-mail at useprospectus@us.cibc.com. You may obtain a copy of the base shelf prospectus and prospectus supplements filed in Canada from CIBC, fax 416-594-7242 or request a copy by telephone at 416-594-7270.
Statements contained in this release that are not historical facts are forward-looking statements that involve risks and uncertainties. Central Fund's actual results could differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those risks detailed in Central Fund's filings with the Canadian securities regulatory authorities and the SEC.
Central Fund of Canada Limited (est. 1961) is an exchange tradeable, refined gold and silver bullion holding company. Class A Shares are qualified for inclusion in many North American regulated accounts. Central Fund's bullion holdings are stored unencumbered in allocated, segregated and insured safekeeping in Canada, in the treasury vaults the Canadian Imperial Bank of Commerce. The gold and silver bullion is physically inspected by Ernst & Young LLP in the presence of Central Fund's Directors and Officers as well as bank officials. Class A Shares are quoted on the NYSE Amex LLC, symbol CEF and on the TSX, symbols CEF.A (Cdn. $) and CEF.U (U.S. $).
Contact:
Contacts:Central Fund of Canada LimitedJ.C. Stefan SpicerPresident and CEO905-648-7878info@centralfund.comwww.centralfund.com
BOOMERS – WINTER IS COMING
by James Quinn
July 13, 2009
http://www.financialsense.com/editorials/quinn/2009/0713.html
>Good post; it happened once with gold under FDR. I do not rule out a outlawing of the private ownership of gold again. But it will be much harder than before. The people know more and the media would make a big deal about it.
sumi
The Top 10 Reasons to Hold Gold: Part 1
By Christopher Barker
May 26, 2009
Within the inflation debate, few investment topics stoke such contentious discussions as gold. Whatever Fools think about the metal, they hold those views strongly. As the relevance of gold in the context of macroeconomic developments grows even clearer, I offer this consolidated treatment of the top 10 reasons to hold gold through the next several years.
1. Awash in a sea of trillions
First, retire the notion that gold is a commodity. With its pedigree as an ancient and universally recognized physical store of value, gold is held by central banks as a reserve currency. Gold remains a crucial anchor for the planet's relatively short-lived and frankly unimpressive experiment with unbacked fiat paper money. While paper money can become encumbered by debt, obligations, and the ravages of a printing press, gold cannot.
Still clinging to its role as the de facto reserve currency of the world, the U.S. dollar continues to provide the clearest indications of gold's trajectory. The present bull market for gold and silver began not when Bear Stearns crumbled, but back in 2002, when the U.S. dollar index (USDX) abruptly reversed course, shedding 40% of its purchasing power before rallying in 2008.
Fools seeking to place gold's roughly $1,000 price-level in context are reminded that since that mark was first reached in March 2008, the U.S. fiscal response to the crisis has ballooned to more than $13.5 trillion in pledged or potential outlays. The Congressional Budget Office sees $9.3 trillion in total budget deficits through 2019, bringing the debt-to-GDP ratio to a whopping 82%. This scale of indebtedness not seen since World War II erodes confidence in the underlying currency, and triggers a most unfortunate domino effect, contracting the nation's credit line as dollar-denominated debt assets lose their appeal.
2. Derivatives
The housing meltdown was not the true epicenter of the global financial crisis -- merely the trigger. The unregulated expansion of derivatives to more than $1 quadrillion in notional value represents the single greatest scourge upon humanity ever devised by the financial industry. Warren Buffett was absolutely correct to call the products of this leveraged market "financial weapons of mass destruction."
Whether as originators or counterparties, banks are heavily exposed to derivatives. I believe that the $587 billion in potential derivative losses conceded by the five largest U.S. banks last year -- including Citigroup (NYSE: C) and Bank of America (NYSE: BAC) -- is merely the tip of the iceberg. And I view the stress test as little more than a public relations blitz that permitted the banks to raise capital through equity offerings at elevated share prices. Of course, derivative losses will not be contained to just the banks, as even Berkshire Hathaway (NYSE: BRK-A) shareholders can attest. To understand why gold will move higher, Fools must study the implications of this monumental house of cards.
3. The declining domestic revenue base
For the first time in 26 years, the U.S. Treasury ran a monthly deficit during the month of April, when tax revenues come pouring in. With unemployment and underemployment on the rise, and corporate earnings impaired, the Treasury faces a contracting domestic revenue stream, just as spending is going stratospheric. One might conclude that tax rates will have to rise as a consequence, but that sets up a negative feedback loop of its own. The takeaway here is that Americans have a reduced capacity to fund government spending.
4. The slippery slope of quantitative easing
Simply stated, quantitative easing occurs when a nation funds the creation of new money by purchasing debt directly from its own central bank. For nations like Zimbabwe, such policies have not ended well. The U.S. officially embarked upon quantitative easing with a plan to purchase $300 billion in Treasury securities. Given stated government spending objectives, the declining domestic revenue base, and a reduced appetite for U.S. debt abroad, the printing press may just be warming up. For major holders of U.S. debt, including China, quantitative easing is an unwelcome development, and it contributes to an emerging crisis of confidence in the world's reserve currency.
5. The longer-term dollar decline
Part II will look more closely at the dollar's reception on the world stage. For now, with the dollar smacking a four-month low against the euro, the unfortunate outlook for the greenback provides an appropriate bookmark that incorporates each of the points above.
With the balance sheet of the Federal Reserve exploding into unchartered territory, a national debt of $11.3 trillion (and climbing fast), and printing presses running hard to pump liquidity into a veritable black hole of toxic derivatives, the U.S. dollar has deteriorated quite frankly into a structurally impaired currency. Financial gurus like Warren Buffett, Nouriel Roubini, Jim Rogers, and Peter Schiff all share concerns either about the dollar, or for the consequences of inflation. Foreign central bankers have also expressed their concern. Since the dollar and gold move inversely over the long term, gold offers protection from this currency decline.
Four ways to hold gold
Physical bullion is the most straightforward vehicle for gold exposure, and the American Precious Metals Exchange (APMEX) is a reputable source, in this Fool's view. The majority of investors appear enamored of gold bullion ETFs, but I have consistently recommended the Central Fund of Canada (AMEX: CEF) instead. High-quality gold miners like Yamana Gold (NYSE: AUY) and Agnico-Eagle Mines (NYSE: AEM) offer leverage to gold price appreciation, while a royalty company like Royal Gold (Nasdaq: RGLD) incurs less operational risk. As the dollar folds, the bold hold gold.
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Central Fund of Canada Ltd.
Address:
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Phone: (403) 228-5861
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INVESTMENT PYRAMIDS
A Beginner's Guide To Investing In Gold
http://www.moneyweek.com/file/23315/a-beginners-guide-to-investing-in-gold.html
INVESTMENTY PYRAMID FOR GOLD
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AUDIOS AND VIDEOS
Metals Outlook: Gold Headed for First Weekly Drop in Three Weeks 10 03 08
http://fr.youtube.com/watch?v=9k2atYeA7sM
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GOLD AND SILVER LINKS
THE GOLDEN KEY
http://www.investorshub.com/boards/read_msg.asp?message_id=19976151
Bill Cara On Gold
http://www.billcara.com/gold/
GoldSeek.com
http://www.goldseek.com/
SilverSeek.com
http://www.silverseek.com/
Junior Mining Companies: Other People's Money
http://biz.yahoo.com/seekingalpha/070220/27435_id.html?.v=1
Financial Sense Online resource Page: Precious Metals
http://www.financialsense.com/metals/main.htm
Financial Sense Big Picture Archive
http://www.financialsense.com/fsn/2007.html
Financial Sense Newshour Roundtable Archive
http://www.financialsense.com/Experts/roundtable/archive.html
GoldRadio.fm & Howe Street Video
http://www.howestreet.com/
Gold Statistics and Information
http://minerals.usgs.gov/minerals/pubs/commodity/gold/
Invest.com - Gold Section
http://www.investcom.com/moneyshow/gold.htm
Invest.com - Silver Section
http://www.investcom.com/moneyshow/silver.htm ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
FSN/JIM PUPLAVA AUDIO INTERVIEWS
Update on the Current Credit Crisis: Worse Than Expected 09 27 08 Doug Nolan
http://www.financialsense.com/Experts/2008/Noland.html
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Bureau of Labor Statistics http://www.bls.gov/news.release/empsit.t15.htm
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