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Future - The gold owner's guide to 2013
by Michael J. Kosares
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By the time we get to the end of 2013,
we will forget much of what shaped 2012. Yet, as we look back at 2012,
there are some fundamentally disheartening, if not disturbing, trends
that are likely to play a determining role in all financial markets for
some time to come, including the gold market.
– The first is the inability of the political sector
to deal with the “economic problem” on a global basis. From Jinping’s
Beijing flowing west to Putin’s Moscow, from Merkel’s Berlin to
Hollande’s Paris, from Cameron’s London to Obama’s D.C. and finally
Abe’s Tokyo, the world’s great nation- states are locked in a web of
acute and alarming political disarray. The question is no longer
whether or not stability can be achieved. It is to what degree the instability
can be restrained – a circumstance not unfamiliar to the student of
history, but one for which the modern investor is generally unprepared
and lacking in defenses.
- The second is the global
predisposition to print money. Compliments of the disastrous events
following the 2008 financial meltdown, vote-buying politicians globally
have defeated usually conservative central bankers in the battle of
the printing press. Ben Bernanke’s stewardship of the Federal Reserve
has not only been emblematic of the trend, it has served as a bad
example and dangerous precedent for other central bankers. You cannot
slide a sheet of paper between the monetary policies of Ben Bernanke,
Mario Draghi and Mervyn King (soon to be replaced with the even more
dovish Mark Carney). Shinzo Abe, who was just elected Japan’s prime
minister, has threatened to nationalize the Bank of Japan if it refuses
to print money. It is as if John Law were reincarnated simultaneously
in every major nation-state in the world.
- The third comes to us via Raoul Pal,
the highly-regarded hedge fund manager who once co-managed one of the
world’s largest hedge fund groups, GLG Global Macro Fund in London. It
has to do with the persistent nature of the debt crisis that began in
2007 and never really went away. Pal outlined the problem at a seminar
in Shanghai this past summer for other hedge fund managers — a
presentation ZeroHedge called one of the “scariest ever.” In it he
predicted a cascading sovereign debt collapse and default that would
begin in Europe, jump the Channel to London, then move progressively
through Japan, South Korea and even China. Finally, it would envelope
the United States. The problem, he says, is that $70 trillion in G-10
sovereign debt is collateral for $700 trillion in derivatives.
“You have to understand,” he explains,
“that a global banking collapse and massive defaults would bring about
the biggest economic shock the world has ever seen. There would be no
trade finance, no shipping finance, no finance for farmers, no leasing,
no bond market, no nothing. The markets are at the frankly terrifying
point of realizing that LTRO (long term financing operations), EFSF
(European Finance Stability Facility) and QE (quantitative easing) etc.
are not going to prevent this collapse.”
(Note: A synopsis of Mr. Pal’s seminar was the most popular post for 2012, and all-time, at the widely-read ZeroHedge website. Recommended.)
I do not know if Raoul Pal is correct.
I don’t know if he’s even close. I can tell you that he was
successful enough as a hedge fund manager to retire to Spain’s Valencia
coast at 36 years of age and that he’s one of those guys like in the
old commercial: When he speaks, people listen. I can also tell you
that something is in the air — a sea change in investor psychology, of
which we should take note. I pass this along as someone who has
experienced several similar shifts in investor sentiment over the
course of a forty-year career in the gold business.
In the last two months of 2012, we
experienced volumes at USAGOLD not unlike those of 2008 and 2009 — and
those were record volume years. The U.S. Mint confirmed our own
experience by reporting that U.S. Gold Eagle sales in November and
December hit their highest levels in two years. Also, demand for
historic, pre-1933 gold coins surged — an important indicator because
it tells us the safe-haven investor is back in the market. Since
safe-haven investors tend to run ahead of the herd, this bodes well for
gold demand as we move into 2013. Wholesalers tell us that the market
for British sovereigns, Dutch 10 guilders, Swiss 20 francs, etc. is
running very strong both in the United States and Europe. In
particular, British sovereign supply has dried up. If I am reading the
signs correctly (and I am big believer in letting the market speak for
itself), 2013 could turn out to be a very good year for gold.
To read full article
Gold 2012 - 2013
New year outlook & review
New year outlook & review
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Michael J. Kosares, the editor of USAGOLD News, Commentary and Analysis, is the founder of USAGOLD and the author of "The ABCs of Gold Investing - How To Protect and Build Your Wealth With Gold."
Jonathan Kosares graduated cum laude
from the University of Notre Dame with a dual major in Finance and
Computer Applications. He has been with USAGOLD since 2002, and
currently holds the position of Executive Vice President of Sales and
Marketing. He is the moderator of the USAGOLD RoundTable series, has
authored numerous articles on the gold market and manages client
activity for the high net worth division as well as the USAGOLD Trading
and Storage Program.
Peter Grant spent the majority of his
career as a global markets analyst. He began trading IMM currency
futures at the Chicago Mercantile Exchange in the mid-1980's. Pete spent
twelve years with S&P - MMS, where he became the Senior Managing FX
Strategist. The financial press frequently reported his personal market
insights, risk evaluations and forecasts. Prior to joining USAGOLD, Mr.
Grant served as VP of Operations and Chief Metals Trader for a
Denver-based investment management firm.
This newsletter is
distributed with the understanding that it has been prepared for
informational purposes only and the Publisher or Author is not engaged
in rendering legal, accounting, financial or other professional
services. The information in this newsletter is not intended to create,
and receipt of it does not constitute a lawyer-client relationship,
accountant-client relationship, or any other type of relationship. If
legal or financial advice or other expert assistance is required, the
services of a competent professional person should be sought. The Author
disclaims all warranties and any personal liability, loss, or risk
incurred as a consequence of the use and application, either directly or
indirectly, of any information presented herein. Opinions expressed by
contributors are strictly their own and publication here does not
represent endorsement by USAGOLD.
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