Dear Reader

Some days, when reading through the international news on Gold and Silver, I can only describe the journalistic atmosphere as one of confusion.
 
From the start of this week alone, the Wall Street Journal has headlined with, “Gold Prices Fall on Upbeat U.S. Data” while The Telegraph leads with, “Doomsday clock for global market crash strikes one minute to midnight as central banks lose control.”
 

The Week leads with, “Gold Demand fell to six year low” while Kitco headlines with, “Gold Up on Safe-Haven Demand, Weak U.S. Economic Report.”
Unless one is very clear headed and has made ones’ peace with the inevitable winds of confusion in impending times such as these, the typical human response is to therefore do nothing. The deer in the headlines approach. 
 
So, which is true?  Is the demand for Gold up or down? Is the dollar strong or weak?  We at Bleyer believe that during times of great economic turmoil, Physical Gold and Silver are a safe haven of traditional value. This is the case whether you have a large portfolio or only a few hundred to spare once in a while.  When markets collapse, it affects everyone – from those who work in government and private sector funded jobs, to the price of bread and food, to the price we thought we had stored in our housing capital. 
 
I often find that when life is smooth and simple most people agree with each other.  But when people instinctively sense something big is coming, they veer to either one extreme or the other, usually out of a desire to deny or face the fear that the impending difficulty presents.  Those that face it always fare better. If something difficult is categorically going to happen, it is much, much easier to run through plans of action and take measures before the crisis hits, than during. During an event it is usually impossible to act, precisely due to the speed and severity of the event. Crises are precisely that because they come without warning.  Think of a large earthquake. But, like an Economic  Seismologist, I am trying to warn our readers that we, like California, are overdue a big one! We may get a few warning jolts, then the earth we thought was secure shakes like never before.
 
Physical Gold and Silver can be for everyone, not just the wealthy. Please read on to find out why we are highlighting – along with many others around the globe – a coming financial collapse and asking our readers to research the benefits of owning your own Phyiscal Gold and Silver.  A Silver 1 oz coin can currently be bought for around £15, which is historically a “sale” price for pure Silver. The stock market crashes of 2001 and 2008 are nothing to the monetary crisis which I believe is right under our feet.
 
Let’s begin by briefly exploring both viewpoints in the Wall Street Journal and The Telegraph articles and unravel the confusion head on, because which one we believe to be true will affect our decisions and actions on Physical Gold and Silver:
 
The Wall Street Journal states that, “old traders have been bailing out of the market in recent months amid expectations that the U.S. central bank will soon raise interest rates for the first time in nearly a decade. The continued improvement in the labor and property markets suggest the economy no longer requires the emergency measures enacted by the Fed in the wake of the 2008 financial crisis. This is bad news for gold, which has an easier time competing with Treasury bonds and other interest-bearing assets while rates are pinned near zero.  A stronger dollar, which gained after data showed U.S. housing stats rose 0.2% in July, weighed on gold prices. Gold is traded in dollars and becomes more expensive for buyers in other countries who use weaker currencies to fund their purchases. Gold traders are also bracing for the release of the Fed’s meeting minutes, due out Wednesday afternoon. Investors hope to get more insight into the Fed’s thinking on monetary policy and officials’ assessment of the economy from the minutes.  Any change in language that suggests December is now a more likely date for the Fed to act than September would likely be sufficient to get gold back up to the $1,135 area,” said Leon Westgate, a metals analyst with ICBC Standard Bank, in a note to clients.”
 
 
So, if we ignored the headline, the actual rational is that, because “housing” build figures rose 0.2% in July (the well known housing market high point)  the Fed may rise interest rates and if they do, Gold is predicted to fall. But if they don’t, which we may know this evening (U.K. time), then Gold will recover from its marginal fall.  That is quite a different story than the headlines suggests.  It seems shortsighted to base one’s view of a timeless commodity on a momentary piece of “U.S. data” of 0.2%, while ignoring the massive debt of the U.S., the inability of the U.S. to ever pay back that debt and the wider global economy slowdown. More on that later.  But how many people actually, first, read and analyse the whole article and secondly, then compare what is written with other sources?  What actually surprised me was that this article was written in the Wall Street Journal, not the liberal New York Times or U.K.’s Guardian. An odd anomaly or a symptom of the growing panic and confusion mentioned above?  
 
 
Now, let’s turn to The Telegraph article. It states that, “When the banking crisis crippled global markets seven years ago, central bankers stepped in as lenders of last resort. Profligate private-sector loans were moved on to the public-sector balance sheet and vast money-printing gave the global economy room to heal.  Time is now rapidly running out. From China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.  The FTSE 100 has now erased its gains for the year, but there are signs things could get a whole lot worse. China was the great saviour of the world economy in 2008. The launching of an unprecedented stimulus package sparked an infrastructure investment boom. The voracious demand for commodities to fuel its construction boom dragged along oil and resource-rich emerging markets.  The Chinese economy has now hit a brick wall. Economic growth has dipped below 7pc for the first time in a quarter of a century, according to official data. That probably means the real economy is far weaker. The great props to the world economy are now beginning to fall. China is going into reverse. And the emerging markets that consumed so many of our products are crippled by currency devaluation. The famed Bricks of Brazil, Russia, India, China and South Africa, to whom the West was supposed to pass on the torch of economic growth, are in varying states of disarray.”  The article includes a very short video, which I recommend if you don’t have time to read the whole article.  It even uses a headline, which we at Bleyer wrote, three weeks ago, entitled “Dominoes Begin to Fall.” Please see, “China: The Stock Market Dominoes begin to fall” Bleyer Blog, 29 July 2015.

 
So, is The Telegraph right?  Are emerging markets really tumbling?  A little searching and we found some staggering facts: “23 Nations Around The World Where Stock Market Crashes Are Already Happening.” (ZeroHedge) “You can stop waiting for a global financial crisis to happen.  The truth is that one is happening right now.  All over the world, stock markets are already crashing.  Most of these stock market crashes are occurring in nations that are known as “emerging markets”.  In recent years, developing countries in Asia, South America and Africa loaded up on lots of cheap loans that were denominated in U.S. dollars.  But now that the U.S. dollar has been surging, those borrowers are finding that it takes much more of their own local currencies to service those loans.  At the same time, prices are crashing for many of the commodities that those countries export.  The exact same kind of double whammy caused the Latin American debt crisis of the 1980s and the Asian financial crisis of the 1990s. As you read this article, almost every single stock market in the world is down significantly from a record high that was set either earlier this year or late in 2014.  But even though stocks have been sliding in the western world, they haven’t completely collapsed just yet. In much of the developing world, it is a very different story.  Emerging market currencies are crashing hard, recessions are starting, and equity prices are getting absolutely hammered.” So, why aren’t we hearing about this in our mainstream media?  And why is it so important to note in regards to taking the plunge and finally buying some Physical Gold and Silver?
 

To help with research, we’ve found a half hour of easy listening to a great audio-video which explains this. Please click the link here to listen to “Gold Breakout and Stock Market Collapse” by Jerry Robinson.  Although the mainstream media headlines sometimes scream “Gold is down”, Jerry Robinson calmly points out these moments are actually “buy signals.” We cannot recommend researching the real situation in the markets and Gold and Silver enough at this point.

By highlighting the warnings of an imminent stock market collapse, particularly over this last month, we are also trying to highlight to you the buy signals in the Physical Gold and Silver market. August is often a time when we don’t pay so much attention to the markets. We’re often on holiday, our U.K. government is in recess and we all relax into a “go slow.”  But the build up to the stock market collapse is sadly not going to take notice of the summer weather. The last two major Stock Market Crashes in America happened in the September/October months. As Tyler Durden of ZeroHedge muses, “A global financial crisis has already begun. So those that were claiming that one would not happen in 2015 are already wrongOver the coming months we will find out how bad it will ultimately be. Sometimes I get criticized for talking about these things.  There are a few people out there that don’t like all of the “doom and gloom” that I discuss on my website.  Apparently it is a bad thing to talk about the things that really matter and we should all just be “keeping up with the Kardashians” instead.” 

I couldn’t agree with him more. There are so many forms of entertainment to keep the public distracted, we at Bleyer hope in some small way that our blogs help our readers to maintain an alertness to the current financial and geo-political climate.  Enjoy a BBQ and a holiday but we recommend browsing our website and giving us a call at the same time!
 
We offer a wide range of Gold Bars and Coins, together with Silver bars and coins to cover all budgets. We have had clients buy hundreds of thousands of Gold coins and bars and customers buy about £100 of silver a month, much like a savings account, where we send their bars out to them every three months to help lower costs on small purchases. Bleyer also offer Secure Storage. I have also personally taken great care to spend time with clients on the phone running through the many issues to think about, from V.A.T. to Capital Gains Tax, to exit strategies to personal collection to postal deliver to a place of work if that is more convenient. Please call now to discuss your thoughts and needs. Don’t assume the purchase of Physical Gold and Silver is just for “the rich.”  Since 2012 the majority of our new clients have been average members of the British public looking to store their modest wealth in a pot other than the banking system.
 

One other major point we would like to highlight this week is to tie together last week’s blog on “Currency War: China, the Dollar and Gold” with a point raised in the original Wall Street Journal article. There was one line in that article which stated, “Gold is traded in dollars and becomes more expensive for buyers in other countries who use weaker currencies to fund their purchases.”  This fact is true.  So, this begs the very reasonable question, What happens to Gold and Silver if the dollar collapses?  “Recent history confirms the close association of the gold price with the value of the US dollar. The weakness of the dollar in the late 1970s was associated with rising gold prices, as was substantial dollar weakening that began in 2002. By contrast, the strong dollar of the mid-1980s and late 1990s was associated with relatively low gold prices.” (pg 8) If you have some summer time on your hands and enjoy a little deeper research, I highly recommend this Oxford Economics paper entitled, “The impact of Inflation and Deflation on the Case for Gold.” It was written in 2011, before the last price high of Physical Gold and Silver. None of the fundamentals of the factors which affect Gold and Silver have changed since then, as they are in essence timeless, regardless of dramatic headlines or the winds of mainstream media spin.

So, when the dollar collapses, the price of Gold historically goes up. And linking this point to last week’s blog as mentioned, the dollar is not just being weakened by the years of Quantitative Easing but by external events too.  What happens if China and Russia actually succeed in overthrowing the dollar as the world reserve currency? I know that is a difficult East/West paradigm shift for many of us to grasp, but What If? And if international trade is no longer made in dollars, then what will inevitably happen to the price of Gold?  And before we think this scenario is just too far fetched, are we aware of how many countries are dumping the U.S. Dollar as their trading currency of choice?  The hidden facts are staggering. Over the last year, mostly hidden from the financial headlines of mainstream media, countries around the globe have been dumping the dollar. In one month, Russia dumped 20% of its dollar holdings, and Russia is joined by China, India, Japan and most notably Iran. Libya’s Gaddafi announced he would trade oil in gold, not dollars, in 2011 shortly before his regime was overthrown.

In addition, years of Quantitative easing have ensured when the dollar collapses, and it will, there will be no where else to go: “People say everything is fine again—nonsense.  You had a panic in 2008… The system was on the brink of collapse.  The Fed and the federal government did everything in their power to prevent it.  They pushed things into the future, but they didn’t do anything of substance to address the underlying problems. So, are we going to have another panic?  Yes, and that is the type of thing that can break at any time, and you just don’t have the options you had in 2008 for buying time into the future.” (John Williams, U.S.A. Watchdog)

Coins are a great way to jump in to owning Physical Gold and Silver. In March 2015 we wrote a piece specifically on our coin selection and we highly recommend a re-read. “The Bullion Coin Collectors Guide.” While these collectors coins are highly transportable and easy to store in terms of size, many of our clients also like to use our preferred custodians in terms of value and rarity, for safe, secure, fully insured bullion storage facilities of their gold bars and coins. Whilst coins tend to cost very slightly more than bars they may carry the added advantage of being not only VAT free but also CGT (Capital Gains Tax) free. We offer gold bullion coins from around the world.  All investment gold is exempt from VAT and many gold coins are exempt from Capital Gains Tax. If you are considering buying gold for your SIPP bars are a cheaper alternative.  Bleyer are approved for the purchase and storage of SIPP Pension or SSAS Pension Gold.

Please also consider Gold’s lesser sister, Silver. “Silver is the new Black.”  “The price ratio of Gold to Silver as of today is a staggering 74/1. That means Gold is selling at 74 times more than the price of Silver.  Yet this is on the extremely high side of history and is in many ways an anomaly that draws attention to itself.  In our house we sometimes call paper currency ‘monopoly’ money. It’s not actually ‘real’ but it is useful for trading, as long as everyone else agrees on the value attached to it.  But if the goal is to gain the greatest return over time in that monopoly money, it makes logical sense to at least consider investing in a metal that – sure isn’t as glamorous as gold but – holds a much bigger spring-back potential to its historical ratio value. To put it in perspective, if silver were priced in accordance with its historical value, a 1oz Britannia coin would be priced around £56 each, not £20.55.  So if Silver were to revert to its historical price ratio of Gold today, that would be a 272% increase in price.  Take off the 20% VAT charged in the UK for most Physical Silver investments and that’s still a return of 252%. Against the backdrop of painfully low interest rates for High Street investments, I wonder why half the country isn’t buying Physical Silver as if it’s going out of fashion.  Add in the advantage Bleyer offer of our low VAT/ VAT Paid Silver Shop and the lowest UK price on 1kg silver coins and we would encourage you to call one of our team to find out more.” 

Call now on 01769 618618 or email sales@bleyer.co.uk

 

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