Buying Gold And Silver Now Makes More Sense Than Chasing Stocks

Gold and silver have outperformed stocks so far this year and have a lot further to go as equities hit a wall of fast deteriorating geopolitics and weakening economies as we progress into the autumn.

Do you buy high and sell low? No. So why would you buy stocks close to all-time highs when you can still pick up gold and silver at a respective discount of 30 and 60 per cent off their 2011 highs?

Bargain prices

Would you rather not buy low and then be able to sell high later? It’s a fairly simple logic but then markets are no more than scales weighing supply against demand.

What will encourage demand for gold and silver to pick up again? Real assets like precious metals are a safe haven in times of trouble with no third party involved or the central banks. They are money that central banks cannot print, and what do you think they will do if financial markets tumble?

Why should they fall from current near record heights? Apart from gravitational forces you have something called economic fundamentals, i.e. oil prices. We saw what happened when oil hit $147 a barrel in 2008. It brought the whole house of cards down.

Overvalued financial markets and associated assets are in the same position again today. Don’t believe the nonsense about the Islamic State now growing like a cancer inside Iraq. It is not benign. It’s malignant and Baghdad is the next target and then the southern oil fields are a doozy.

Where we go to then is anybody’s guess. The Islamic State could attack Kuwait like Saddam Hussein as another easy target, or it could become embroiled in a second Iraq-Iran War. Eventually the US and its allies will have to put boots back on the ground.

Trade war

Meanwhile, the trade war developing over the Ukraine and a possible imminent invasion by Russian ‘peacekeepers’ is also bad for energy prices and global business. It’s destabilizing and reminiscent of the breakdown of global trade in the 1930s before the Second World War.

Global financial markets have become excessively complacent after such a long run up without a correction. Things have been going so well that they can’t possibly fail can they? Anybody who knows anything about market cycles must recognize such over-confidence as pride coming before a fall.

Buying gold and silver today makes sense because by prices will soar as this geopolitical conflagration plays out and prices are cheap now. Equities will go in the other direction.

Original Source

Something Seriously Wrong With Financial System

John Embry, Chief Investment Strategist at Sprott Asset Management, thinks gold price suppression is a key factor in global monetary policy. Embry contends, “If the gold price truly reflected what is really going on in monetary policy today, I think real interest rates would rise quite significantly. Given the amount of debt that is polluting the world banking system, to me, this is the end game, and that’s why it’s so vicious in terms of suppression right now. When this turns, it is going to change a lot of things. That’s why they are being so aggressive on maintaining pressure on the gold and silver prices. Silver is especially suppressed. I don’t think you can dig it out of the ground for less than $25 per ounce. It’s not like gold. There is not a huge above ground inventory.” Embry adds, “I have never seen it any more intense in terms of pressure in the paper market, which indicates we are near the end, and there is something seriously wrong with the system.”

Deutsche Bank: The Bubble Must Go On To Sustain The "Current Global Financial System"

"The bubble probably needs to continue in order to sustain the current global financial system and the necessary future deleveraging. However with yields moving ever lower in many parts of the world in recent times, partly due to weak growth, and with debt levels still moving higher, the chances are that most government bondholders are unlikely to achieve a positive real return over the medium to long-term from this starting point. Inflation or even the risk of sovereign restructuring will likely prevent this."

- Source, Zero Hedge

Western Policies Are Doomed, Gold is Going Higher

Right now the West is content in trying to drive up paper stock prices and keeping the price of gold suppressed. But the future for the West will be very bleak if our central planners continue to play games by manipulating major markets. None of this is good for the West. In fact, it is setting the stage for a bad outcome, and the longer this goes on, the worse the outcome will be.

The U.S. should be doing what the Chinese and the Germans are doing. These countries are making long-term plans. This is why you have to be buying gold and silver if you are in the West because once the world does begin to change, that change can come incredibly fast.

If anything, the situation is getting worse for the West and better for the East. Unfortunately that really is the big picture. So for investors, the core of their wealth should be in physical gold and silver because the West’s policies are doomed, and this is how they can protect themselves and their families from the coming financial turmoil the West will have to endure.

- Stephen Leeb via King World News

A Gold Standard Will Emerge in the East

“Clearly the world is a mess right now. We have the chaos in Ukraine and the Middle East. As far as the situation in Ukraine goes, Russia won. They got exactly what they wanted. They have stopped fighting and they are now in a position where eastern Ukraine is not going to be part of Russia but they are going to be more or less independent....

It’s a very big deal that Putin won in Ukraine. You also see Russia moving closer to China, forging a strong alliance. Now we see that China is moving to have closer ties with India. Chinese President Xi is skipping a trip to Pakistan and heading to India instead.

So we are seeing this move to consolidate an alliance in the East. China is going to want to have a lot more control over how much energy it buys and at what price, which also means some sort of gold standard will emerge in the East."

- Stephen Leeb via King World News