Posted by Wealth Wire
The debt-based monetary system creates an illusion of wealth. It allows for claims on real goods to significantly exceed the actual amount of real goods. You then have a number of people believing they have wealth, since they have claims (pieces of paper or tokens) showing that they have these real assets, whereas, in reality, if everyone was to claim the real goods, there would not be enough to go around.
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Interview With Ted Butler
Ted Butler is one of the better-known silver analysts (and longtime silver bulls) in the world. The founder of Butler Research, a monthly publication focused on precious metals, Butler has been pounding the table on silver since way back when it was trading for $4/ounce.
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By Marc Davis, BNWnews.ca
With potash prices spiking higher in response to surging global foods costs, the world’s most advanced “independent” potash project is in the cross-hairs of an increasing number of deep-pocketed suitors.
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Author: Brian Sylvester
Austerity programmes across Europe, continued debt problems in the US and further political uncertainty all point to a continued uptrend in gold prices, says Brien Lundin. A Gold Report Interview.
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By Michael Brush, MSN Money
Recent dips are giving us another chance to get in on the great gold rush. The factors driving the metal higher -- broken governments and fragile economies -- aren't going away.
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Author: Lawrence Williams
Speaking at GATA's sold-out Gold Rush conference in London, Eric Sprott affirmed his strong views on gold and his even more positive thoughts on silver.
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Edmund Conway
That's right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone's guess how much longer it will last.
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By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Silver has always been seen as less precious than gold, but it has certainly proved itself worthy of investors’ attention — and demand for it as a hedge against the world’s financial woes is likely to grow.
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Edmond J. Bugos
After launching the Shanghai Gold Exchange in October 2002, the exchange’s principals announced a three-part plan to liberalize trading: 1) establish a deferred delivery service (as physical transactions are settled pretty much the same day); 2) create gold-related investment products in order to promote domestic investment demand and create liquidity; 3) integrate the exchange into international markets – which includes expanding import/export licenses and allowing foreign entities to become members.
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Author: Amanda Cooper (Reuters)
Analysts believe that gold stocks could well take the upper hand after a long period of underperformance in relation to physical bullion as the flow of cheap money from the U.S. slows
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By The Economist
Striking gold is generally considered a slice of good luck. Owning it, however, is a sign that you fear the worst. Some people buy the yellow stuff because they think it looks pretty, to be sure. But the quintessential gold bug is an investor who expects every form of paper wealth to collapse, along with civilisation itself.
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By Marc Davis, www.BNWnews.ca
Though Nevada’s world-famous gold fields have historically yielded over 150 million gold ounces, they are still proving to be geologically fertile hunting grounds for exploration-minded junior mining companies. Two good examples are Auex Ventures and Fronteer Gold.
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By David Galland, Casey Research
While there are many reasons that gold and silver are going to keep moving higher as the fiat currencies trend lower, at our recent Casey Research Summit in Boca Raton, faculty member Mike Maloney pointed out a fact that, while obvious in hindsight, I had never heard mentioned previously.
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Author: Fayen Wong
SHANGHAI (REUTERS) -
London specialist consultancy GFMS reckons Chinese gold imports could exceed 400 tonnes in 2011 with silver, too, expected to exceed domestic supply.
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By William Mbaho, BNWnews.ca
Heightened global demand for vanadium especially from China, is prompting the global steel industry to aggressively seek out new supplies, especially in the U.S. where this 21st century metal is becoming increasingly indispensible. Even U.S. President Obama is championing this metal’s promise for green energy applications.
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Author: Geoff Candy
The yellow metals performance in the face of silver's washout last week was rather impressive and an addition to the factors why UBS expects gold to continue going higher this year.
Gold's performance last week, in the face of a drop of around 30% in the price of silver was rather impressive and, could be an indicator of things to come.
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By Marc Davis, www.BNWnews.ca
The quest to commercialize one of Latin America’s last undeveloped major gold deposits is one major step closer to a prospectively big pay day for its unlikely owner – a small gold explorer named Exeter Resource.
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By Debbie Carlson
Of Kitco News
After a sharp drop in prices this week, the outlook is hazy for precious metals price direction, but some analysts believe the metals could see the slide ending next week, at least for gold.
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Author: Lawrence Williams
Some observers think gold is in a bubble, but silver has been rising far faster. Can this momentum be maintained or is now the time to take at least some profits as the price closes on $50.
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Author: Jan Harvey (Reuters)
Silver rose to its strongest since 1980 and Gold hit five week highs on the back of growing unrest in the Middle East
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By Marc Davis, www.BNWnews.ca
Silver promises to become the next big buzzword among investors in 2011 and beyond, according to one of the investment industry’s most prescient and successful experts on precious metals.
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There are some bizarre things going on in the silver market at the moment, reminiscent of the supply shortages and high premiums witnessed in 2008. For starters, silver is currently in both short-term and long-term backwardation, suggesting there is higher demand for silver NOW than in the future.
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The Economist
Rising commodity prices both reflect and threaten the world’s economic recovery.
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Cheap, Industrial Silver is an illusion
From the beginning of the financial crisis in 2008, contrarian investors began murmuring about getting into gold and short term Treasuries. It was almost a mantra: gold and Treasuries… gold and Treasuries. Something missing?
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The Economist
Commodity prices are surging at a very early stage of the cycle
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By Frank Holmes
Wall Street has been calling gold a bubble since 2005 when it hit $500. Some media naysayers remained negative even as they wrote the headlines proclaiming record highs and saw gold rise almost 30 percent in the past 12 months.
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By Marc Davis, www.BNWnews.ca
The ‘Holy Grail’ of renewable energy – grid scale power storage – appears to be finally within reach. So is the ability to make electric cars far more practical or user-friendly.
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by Egon von Greyerz - Matterhorn AM
We now live in a world where governments print worthless pieces of paper to buy other worthless pieces of paper that combined with worthless derivatives, finance assets whose values are totally dependent on all these worthless debt instruments. Thus most of these assets are also worth-less.
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The One-handed Economist
The establishment argument against gold comes down to the statement that it is a collectable that earns no yield. Art, rare coins, stamps and gold and silver bullion do not earn a yield. Stocks, bonds and real estate earn yields, so the prudent investor should focus on these assets rather than gold or precious metals.
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With gold well into record territory, investor enthusiasm is boiling over.
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If we continue down the same economic path that we have been following for the last four decades - and there is no indication that we won't even if we wanted to, or could, at this point - it is mathematically inevitable that gold and silver will approach infinity in U.S. dollar terms at some point in the future. Yes, approach infinity!
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Surging Commodities
The Economist
Commodity prices are surging at a very early stage of the cycle
Subprime mortgages may have dominated the headlines in 2008 but high commodity prices played a significant part in the economic turmoil of that year. So it is striking to note that The Economist’s all-items commodity index is now even higher than it was back then.
Admittedly, our index excludes oil, which is more than $50 below its 2008 peak. Nevertheless, at around $90 a barrel, oil is high enough to prompt petrol prices of more than $3 a gallon in America and record pump prices in Britain, where tax plays a much larger role.
The strength of raw-materials prices raises three vital questions. Given that the global recovery is at a very early stage, do high prices indicate that the world faces significant supply constraints, which will be a problem for years to come? Will such constraints lead to prolonged inflationary pressures and cause central banks to tighten monetary policy? Or are high prices simply a bubble, the result of speculative activity in the futures markets?
On the speculative front, 2011 began with record numbers of long futures positions for commodities on American exchanges: some 1.85m contracts, according to Ole Hansen of Saxo Bank. (That seems to have caused a bit of profit-taking in the first few days of the new year.) But it is still hard to pin all the blame for high prices on investors. Studies have shown that commodities that are not traded on exchanges have tended to rise as fast, and be as volatile, as those that are.
In any case, it seems likely that investors and commodity consumers are motivated by the same factors. Prices rebounded in the second half of 2010 after clear hints from the Federal Reserve that it would pursue a second round of quantitative easing. That might have caused speculators to pile into the market; it might equally have prompted companies in America and elsewhere to stop worrying about an economic double dip and to start rebuilding their inventories.
Over the long run, investing in commodities has not been a great bet. Companies use the term “commodity business” to describe humdrum, low-margin activities. In real terms The Economist’s commodity-price index has gone backwards since 1862, falling by around half since then. People have become more efficient at growing, finding or refining raw materials. As Dylan Grice, a strategist at Société Générale, remarks: “When you buy commodities, you’re selling human ingenuity.”
One would expect commodities to be anchored by the cost of production. A market price well above that level will cause new supply to be brought on stream; too low a price will cause mines to be mothballed or arable land to be switched to other crops. In turn, the cost of production is cyclical since it requires a good deal of other commodities (such as oil) in the process. Higher grain costs, for example, feed through into cattle prices.
Clearly, at the top of the economic cycle, consumers will be so desperate to get their hands on raw materials that they will pay well over the cost of production. So the current surge in commodity prices, at a time of spare economic capacity in the rich world, suggests one of two things is going on. Either the needs of the developing world are causing demand growth to outstrip supply for an extended period, or new sources of supply can be found only at higher cost. Both explanations add weight to the idea of a “commodity supercycle”, a long-term surge in prices that might last for 15-20 years.
In the short term this is bad news for the developed world which, in aggregate, is a commodity consumer, not producer. Higher prices may cause a surge in headline inflation but their main effect will be to act as a tax on consumers. For many parts of Europe, this tax is being levied at a time when the spending power of consumers is already being squeezed by the efforts to eliminate the fiscal deficit. Unfortunately for the Europeans, their own demand may be inconsequential in setting the global price, which is more dependent on America and China.
The inflationary impact is clearer in the developing world, where raw materials are a bigger proportion of the shopping basket: Indian food prices, for example, have risen by 18% over the past 12 months. The only cause for comfort so far is that rice, the most important foodstuff for Asian consumers, has not shown the same strength as other food prices. Nevertheless, Asia is starting to tighten policy; China pushed up rates last month.
If the Chinese economy slowed sharply, then commodity prices would slump. But that is not an outcome that the developed world should hope for.
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