Dear Reader,
I live in beautiful Devon. Before that, for many years, I lived and worked in London and the South East. One day, while walking in the Devonshire hills with my family, we came across a field of sheep. Coming from the city, I’d never seen what was about to happen before but the impression has stayed with me, firstly because it was so funny and secondly, because it showed me, in living, breathing action, a universal truth. As we walked near one of the sheep it became scared. So, it froze. It stood completely and utterly still, mid-chew. A little silly perhaps, as that would only allow any real threat an advantage. But what happened next amazed us. In under what felt like a second, that false signal had travelled through the entire field of sheep, even the ones in the distance. Like an invisible wave, every single sheep froze, instantly. The entire field of sheep just stood completely and utterly still, in mesmerizing silence. We all laughed, which probably made the sheep hold still for even longer. So, we stood still and they stood still. Eventually, the moment passed and we walked on. And then, again for no real reason, the sheep in a wave decided we were indeed no threat whatsoever and began to move. The communal statue dissolved away.
But I will never forget the instantaneousness of that “group freeze”, and the fact that the sheep farthest away from us were “frozen” within seconds, just because their neighbouring sheep and their neighbouring sheep and so on, decided to freeze.
When I read of the news that the interest rate in the U.S. might go up soon and so the price of gold has gone down this last week, I think of sheep. Money-sheep. Because nothing has really changed. The U.S. Debt ratio to GDP is still monstrously the same. Russia is still humming around Syria. Turkey still doesn’t like Russia and vice versa. The Euro project is still monumentally bankrupt. House prices are still in a bubble. Nothing has truly changed. Except an announcement of the “possible” rise of rates. And the group-think belief is that if rates go up, alternative investments that bring returns in interest are more attractive than Physical Gold and Silver. So their price has fallen…. but before the interest rate hike… that doesn’t actually change anything!
But, this is precisely what many investors in Physical Gold had been hoping for… a price drop to allow more buying. Why? Because nothing has changed except a momentary reaction in the financial field of “money-sheep” and Physical Gold and Silver remain historical safe havens in times of collapsing paper economies.
Leaving to one side the views of whether an interest rate hike by the U.S. Federal Reserve is a wise move or not, the truth is stated beautifully in a 45 minute financial documentary, with striking production quality, which I watched this week. It is called “Overdose: The Next Financial Crisis” by Journeyman TV. Here is the trailer and here is the link to the full film and if you have a spare evening I recommend a watch. The premise is that: “This is the story of the greatest financial crisis of our time, the one that is on it’s way.” What is particularly haunting is the conclusion, that we can do something about it but only if we act now, as “the clock is ticking and time is not working in our favour.” It is haunting because that was filmed in 2012. We are now four years deeper into a more terrifying reality of impending collapse.
In this film, various economists talk about precisely the point above, that nothing has really changed:
“They never actually cured the crisis,” says Peter Schiff “They just give alcohol to a drunk. It doesn’t sober him up, it just sets him up for a bigger hangover. That’s what we’ve done. At some point, you kill the patient, you can’t drink anymore; you just reach the end of it.” Schiff continues, “we’ve got drunk on all that Fed Alcohol.”
What he means by “Fed Alcohol” is all that quantitative easing, all that extra fake created “money” in the system that makes the world fiat currencies believe they are richer than they are, all those low interest rates, all those bail outs. But it makes America way more vulnerable than the East, because at the moment, at least, oil is sold the world over in the dollar. Change that and the American economy collapses.
In a devastating statement, because of its truth, he says that “People still don’t want to think that the worst is yet to come. It’s easy to think of these predictions as much too gloomy. But that is exactly what people said the last time, when these experts predicted the 2008 crisis. They were laughed at in the media.”
I did some research and found this absolute corker of a 3 minute piece. In it, on Fox News in December 2006, Peter Schiff, the same man who is predicting a massive economic crash is on its way – even worse than 2007/2008 – is laughed down by five other financial commentators and the host of the segment. Yet absolutely everything he said came to pass; from house prices to borrowing to lack of savings to lack of lending standards, all that then happened within a year of this news interview. It’s not only that the other “money-sheep” disagree with him, they mock him and laugh at him.
What I find incredibly interesting is within the last year, Schiff went on record to identify economies which he felt had some stronger points than the U.S. and listen to this list; “I like Switzerland, I like New Zealand, I like Singapore, I like Hong Kong, certain emerging markets, Australia, Canada.”
Not only is this a list of Commonwealth countries doing very well outside the E.U. but Switzerland is the only country in the continent of Europe that rejected membership of the E.U.:
“After a Swiss referendum held on 6 December 1992 rejected EEA membership by 50.3% to 49.7%, the Swiss government decided to suspend negotiations for EU membership until further notice. However, its application was not formally withdrawn. In 1994, Switzerland and the EU started negotiations about a special relationship outside the EEA. Switzerland wanted to safeguard the economic integration with the EU that the EEA treaty would have permitted.”
Today, Switzerland is the E.U.’s 4th largest trading partner but with the sovereignty over her own laws and not a member of the E.U. So, all that scaremongery that Great Britain would be at the “back of the queue” if we left the disastrous euro-project and finally returned to a Sovereign Nation, is just rather panicking hot air. If Switzerland, the world’s 19th largest economy can do it, then contrary to scaremonery, the E.U. will be falling over itself to make a Free Trade Agreement with Great Britain, the world’s 5th largest economy. And we can then go and enjoy Free Trade Agreements with all the commonwealth countries who are in a far better position financially than the sinking euro ship. Don’t forget, Obama wants to push through the Transatlantic Trade deal with the E.U., so he desperately wants Britain to remain part of that for his own sake. But the U.S. is also in grave economic territory, so I say it would be far, far better to get on the life raft into financial and political independence, and get a safe distance away, before the entire titanic-sized economic disaster of the E.U. and the U.S. markets suck all connected economies down with them.
And the economic divide between Great Britain and her ailing European counterparts is widening, as many researchers believe Great Britain could become the world’s 4th largest economy, if we can limit our exposure to weaker European economies: “Europe’s largest economies will struggle to remain members of the world’s elite economic club as the UK races ahead, finds new report. Britain will reach the “giddy” heights of the fourth largest economy in the world, leapfrogging Germany and Japan over the next two decades. The UK is set to become the best performing economy in the western world over the next 15 years, boosted by its leading position in global software and IT sectors, according to a report by the Centre for Economics Business and Research (CEBR). By contrast, the stagnant Italian and French economies are set to be replaced in the world’s new economic order by growth giants of the emerging world – India and Brazil.
Britain’s fortunes are in sharp contrast with France and Italy, which face “exclusion” from the grouping of the world’s advanced economies, said the CEBR. Europe’s third and fourth largest economies will be replaced by India and Brazil in the G8 over the next 15 years, as they fight years of low growth and ageing populations, warned the report. The CEBR said France’s “dire” economic prospects will see it fall from the world’s 5th to 9th largest economy by 2030.” (The Telegraph, Booming Britain to become world’s fourth largest economy as France and Italy face G8 exclusion, December 2015)
Like many of our readers, I watched the BBC’s “Paxman in Brussels: Who Really Rules Us?” and was amazed at the shiny, city within itself that was the E.U. parliament, council and commission in both Brussels and Strasbourg. No wonder the politicians would like to stay in. They’d have to give up that lifestyle, if all that expense was instead spent on Britain!
And how does all this affect Gold? I stumbled upon this little gem of a video, in that it gives an angle not often explored; that of Gold Mining and what affects the profits of actually getting raw physical gold out of the ground. After watching it, I wondered in retrospect about the oil price drops when the price of gold went down over 2014/2015. Were they indeed connected to keep the gold mines operating by cutting a large part of their fuel and operational costs? There is no doubt that failing oil prices kept many mines from going under while the Gold price corrected.
I watched the video because I was researching expert opinions on what people believe causes a fall in the gold price. In this piece, an expert in the field of Gold Mining responded to the question; “What do you think is pushing Gold prices down then?” Listen to what he says:
“At the moment I think it is negative investment sentiment toward gold, which is causing sales out of E.T.F.’s and general sales of physical gold and indeed paper contracts as well, out into the market and I think that is in expectation that this is a normal recovery from a normal sort of recession and therefore the next thing that’s going to happen is interest rates are going to rise.
And I stand against that. I don’t think that’s going to happen. I think this is not a normal recovery from a normal recession. I don’t think there is much scope for interest rates to rise. First of all you’d have to say, Why would they rise? And they’re not going to rise, in my opinion, unless inflation starts going up and even so, can either banks or governments afford interest rates to rise. And probably the answer to that is “No.” It’s less obvious to me that interest rates are going to rise than, if you like, recent history would suggest. But I think it’s that expectation.
Some of your questions have alluded, if you like, that gold is probably a less productive asset for an investor in times of positive real interest rates and on the other hand, the reverse is true in negative real interest rates. So I think there’s that expectation that we’re going to return to a status quo ante, if you like, and therefore that’s caused investors to sell ahead of that expectation and I think that has been a lot of the reason. And of course you have the tapering of the quantitative easing in the U.S. and that was less of a tale wind behind gold.
But I think that process has gone too far, too far! And as I say, I think the risks and opportunities are now asymmetrically placed. And I don’t think it’s going to be as easy for the future to play out in that way that we expect.
You know, if you like, the analogue would be with the early 80’s, where the U.S. did put up interest rates to defend the value of the dollar, which was then heavily under pressure, partly as a result of negative real interest rates and that started a period of twenty years of negative returns from gold and positive returns, by and large, for financial assets. And I think the world is now anticipating that. But I think they may well find that they’re wrong.”
The man speaking is one of whom hardly any of us will have heard. His name is Charles Gibson: Head of Mining at Edison Research. So, he is a business leader at the raw face of the real physical Gold (and Silver) markets.
He makes so many salient points. Firstly, Status Quo Ante means “the pre-existing state of affairs.” Clearly, he believes, as do we at Bleyer and many, many other commentators, the likes of whom were laughed at before the 2008 financial collapse, that the world’s economies cannot return to what they were before.
Secondly, when he says that risks and opportunities are asymmetrically placed, I believe he is alluding to the fact that the price of gold won’t behave as the “money-sheep” expect in relation to interest rates. If the previous expectation is therefore that if interest rates go up, gold goes down, then an asymmetric view is that gold will go up and interest rates will go up.
This describes only one economical scenario. Hyper-inflation. I believe this is to what he is referring, because historically, hyper inflation follows deflation. And I believe that fact won’t be lost on such an erudite commentator.
Today’s headlines cover the latest massive bail-out deal for Greece from the IMF. “Creditors finally agree to unlock billions in bail out loans.” Except they didn’t “unlock” it – as if billions have been hiding in the IMF and Eurozone secretly for months – they just created it. It’s just a further injection of created “funny money” into a country and project that is bankrupt. This move by the IMF is being heavily criticized by wiser investors and rightly so:
So, that’s another £7.8 BILLION pounds spent to keep a failing economy afloat, but which will be impossible to repay, because Greece now owes 180% of it’s GDP. That is as insane as mortgage lenders giving 180% mortgages! Well, Barclays Bank is now giving away 100% mortgages, so the crazy has spread into some financial sectors already and before the 2008 collapse there were hundreds of 125% mortgage deals on offer. How can the IMF act in such a way that the average person would never be allowed? What’s more, the IMF doesn’t even have to contribute themselves, although they might, they haven’t decided! They’ll just tell the other European nations that they have to. Germany isn’t pleased. (BBC, 25 May 2016)
If we saw 180% mortgages in this country we would know that a crash of epic proportions was on its way, imminently. A bail out of a European country by the IMF of the same proportions is an equally valid signal, just on a larger, Europe-wide scale!
So, this latest bail out doesn’t unlock money, it steals it from others.
I don’t believe during my time in the Gold and Silver markets over the last five years, that I have seen such a window of a buying opportunity. As the Head of Mining said, the only thing that is dropping prices is an expectation that things will be the same. And I too don’t believe they will be.
And finally, a look at the facts. The Gold price may have pulled back 3.45% in the last 3 months but it has gained 7.7% over the last year. Tha’ts an increase of £59.85 an ounce even with the recent pull back. Silver has seen a 3.69% increase in the last 3 months and a 2.3% increase over the last year, so a more steady rise; so Gold and Silver are behaving in many ways like the other – historically Silver’s rises and pull backs are a little more bumpy than Gold’s. And let’s conclude by looking at the price of Physical Gold and Silver over the last ten years; Gold has risen 143% or a very satisfying £499 an ounce! And Silver has risen 64.26% or £4.3 an ounce.
We at Bleyer encourage our reader’s to do their own research. After examining the facts, both historical, economic and geo-political, we would enjoy hearing from you. We offer a variety of Gold and Silver investment bars and coins at competitive prices with professional and personal customer service. Call us to move your money out of the fiat system and into your own Physical Gold and Silver now! Don’t get caught with your money locked in the bank or property as things unravel! Caroline Peers, Bleyer’s C.E.O. explains, “The first step is to pick up the phone to one of the team. We’ve built a small, approachable team who know a great deal about what is feeding this price rise and what the different products can offer. Some bullion coins for example, are Capital Gains Tax free while Gold bullion is V.A.T. free. So it’s worth talking with us before you buy. A troy ounce Gold bar or coin can cost from around £834 with Bleyer offering a variety of sizes and prices. Silver has historically sat at about 16th of Gold’s value. At present silver is about 1/75th the price of Gold which is seen as “a buying opportunity.
Other services Bleyer Bullion offer include:
- Fully insured delivery or secure storage
- Owning Gold as part of your pension (S.I.P.P.)
- Free Newsletters on factors moving the Gold and Silver price
- Buy back facility, typically between 95%- 98% of daily spot price
Whether you are a member of the public new to the Physical Gold and Silver market or even an I.F.A., contact Bleyer to find out more. We encourage our readers not to be mislead by the money-sheep and to enjoy a high level of thinking for yourself.
01769 618618 or email sales@bleyer.co.uk
