Monday, October 8, 2012
Because of a collapse of faith in sovereign obligations - fiat currencies/paper money – and an upcoming complete lack of trust in governments and financial institutions, gold is going to quickly become a core banking asset.
Gold is unique, the only non-Tier 1 asset to be universally regarded by investors the world over as a flight to safety asset. Meanwhile the BIS is considering moving gold from Tier 3 to Tier 1, where it will be competing as a safe haven investment against un-backed bonds yielding less than zero in inflation adjusted terms and issued by over indebted governments. Gold is set to become the new “good collateral.”
Central banks, while endlessly creating their own fiat currencies, continue to buy up, and hold in their vaults, the world’s gold. A few countries are buying up their domestic gold production - even the IMF is buying more gold to reduce their risk exposure. All of this gold buying is drastically reducing the number of gold ounces/grams available to the world’s citizens.
The world’s central banks and their respective governments are out of sync, monetary and fiscal policies are not being coordinated.
Governments can’t print gold, or silver, and no government controls them, that’s why precious metals are the only medium of exchange that have survived throughout history.
QE is not a rising tide that will take all boats. It is good for gold. Gold will move from one of the weakest commodities this year to one of the best performers over the next few quarters.
“The people who find gold and silver, and the companies they run, should be on every investors radar screen,” writes Mills. “Are quality management teams on yours?”.
Posted by Unknown at 8:56 AM