probably a few years away from China threatening to dump the US$, but I
think the FED has set us up for China to pull off that feat in either
year 2016 or 2017….so long as China’s economy doesn’t collapse first
from its massive housing bubble. Lots of laughs! But the world’s central banks have been tinkering where they shouldn’t go! …and the balance sheets of most of the world’s economies are not in great shape.
I did notice that China struck a
new oil deal with Russia…so, they will be doing more trading without
need for using the US $ as their intermediary exchange.
commentators fail to notice or comment on is how much stronger Russia’s
economy and government balance sheet is….also, Russia has one of the
world’s best net gold per capita ratios in the world, meaning in a true
currency meltdown or bond collapse, Russia could come out smelling like a
The nay-sayers against gold and silver argue that these metals don’t provide any income; they are not “productive” assets. Well, that’s likely true, but what will you do if the US (or world) economy should suffer another collapse like in 2008? Keep in mind that the governments and Central Banks of the world absorbed the losses of the private market in 2008. But who will bail out the governments and central banks in the next crisis? Also, please notice that in the aftermath of the 2008 collapse, the US Congress passed a law that no longer allows the government to bail out money market funds, like it did in 2008. Money markets are practically the lifeblood of the day-to-day economy. Those blips in your bank account could deflate into the ether of a broken computer economy?
The same nay-sayers believe that owning gold and silver is akin to living in a cave or a bunker, and that the world is too advanced to ever go back to that. I agree with that point….but these same people fail to understand that gold is part of the modern economy. Why do central banks own it as a reserve of money? Our own US central bank owns a huge chunk of gold bullion….other countries like China and Russia are accumulating it. In essence, the world is moving back toward using gold again as an anchor to their currencies. Indeed, the International Monetary Fund (IMF) is moving toward creating a new currency for the world known as Special Drawing Rights (though this name may change when it comes time to make it a new currency for every day use).
For now, gold has been getting pummeled by the machines that trade off algorithms–as other countries like Japan continue to de-base their currencies faster than ours…and economies like Europe implode from incongruous remedies over their member nations. Throw in a few good things in the US economy, and suddenly gold looks like a bad bet…or so some would have us believe.
So, the fear mongers are telling us to abandon gold and silver….Yet, the long term chart dynamics are still in place (mainly trend lines), and gold and silver are at very good buy points right now, in my opinion.
Now, you might ask why I favor CEF over, say the GLD? There are reasons for that, and that basically has to do with how governments will attempt to restrict gold as an investment during times of financial crisis. Gold within the confines of US jurisdiction could be confiscated in a full-blown crisis, as it was in the 1930s. CEF represents gold and silver held in the very safe borders of Canada, not the US. Silver is likely to become the immediate day-to-day currency in a full-blown crisis until the crisis subsides….CEF has roughly half of its investment in silver bullion.
…and for about the past 10 years, one of the very best
investments has been the Central Fund of Canada (an ETF that invests in
gold and silver bullion)…I have a Long Term stake in CEF, and I think it will
still be a stand out investment over the next 5 years or more…on the
P&F Chart which tends to have a longer view of things, it still has a
Price Objective that’s about 75% higher than today’s price….at under
$20, it’s a good entry price, if you ask me!