In looking over the last several stock market incidents, Black Monday in 1987 and the stock market crash in 1929 there is much to be concerned over the fall of 2012. Both stock market situations occurred in the fall of their respective year. If we look at the trend that developed with the financial crisis in the U.S. we see its origin was in the fall of 2008.
There just seems to be something about the fall in any year that brings out the worst in the financial markets. Certainly Middle East tensions have also played a major factor in the global economies and their deflationary struggles.
It is now more important than ever that focus be on preparing for anything of which occurs next with the global fiat currency situation. One good approach is to have a contingency assessment should matters progress to economic collapse of nations.
In looking over options for securing investment and financial positions one stands out through all major conflicts and financial historical events. Gold.
Out of the Top 10 Important Events in US History we see the event in which occurred and the the price of gold during or on that event:
• The American Revolution – 1775–83, $19.39/oz.–$20.66/oz.
• Louisiana Purchase, April 30, 1803; $19.39/oz.
• Civil War – 1861–1865; $20.65/oz.-$20.65/oz.
• Lincoln Assassination, April 14, 1865; $20.65/oz.
• Manhattan Project, August 13, 1942; $33.85/oz.
• Vietnam War, November 1, 1955 – April 30, 1975; $35.05/oz. – $161.02/oz.
• Assassination of John F. Kennedy – November 22, 1963; $35.09/oz.
• Apollo 11 – July 20, 1969; $41.76/oz.
• September 11, 2001; $287.00/oz
• Death of Osama bin Laden Benazir Bhutto announcement November 2, 2007 OBL murdered in 2001; gold $271.04/oz.; media – May 02, 2011; gold $1510.44/oz.
Looking over these events there is one distinct point that surfaces regarding gold and historical events. Gold spot pricing on the US Market has increased and gives the prospective investor the message that owning gold is a smart, liquid and a safe investment.
Should all of us be running to our pocketbooks or billfolds over the next advertisement for gold or gold bullion? The answer requires good initial assessment in considering the product which should lead to an educated response. Gold offerings are everywhere, internet, television, newspapers and some even on radio. The advertisement is not the deciding factor the product offering is. How pure the offering is, is there CAC/PCGS certification, who is the product being offered by, and their reputation are all factors in making an assessment. Included is the rare gold product, is it backed by a government are there any additional considerations which will determine whether the gold product is right for you.
One thing is certain is that gold has performed extremely well during its bull runs and also during short term actions of Fed stimulus. Gold output has also been somewhat declining in the gold producing nations as the Chinese demand has increased to the level of over 78 million ounces. Gold producing nations output levels has been affected by recent events of banking systems wavering toward the edge and concern where they will end up.
According to Jeff Nichols – Managing Director of American Precious Metals Advisors and Senior Economic Adviser to Rosland Capital presents the current gold position in terms of the U.S. Federal Reserve situation. “Gold shed more than $50 an ounce in a blink following last Wednesday’s news from the Federal Reserve that America’s central bank would not, at least not now, initiate another round of quantitative easing, opting instead for more muted monetary stimulus by extending its “Operation Twist” through year-end.”
In addition Nichols mentions, “the recent correction in gold and silver prices has some precious metals pundits already writing obituaries for these metals. Last week, gold in New York was off more than three percent, falling from a recent high near $1,627 to $1,570 – just about giving up all of this year’s gains and, worse yet, down some 18 percent from its all-time high last September. Meanwhile, silver fell by more than six percent from $28.75 an ounce to $26.90 – and at week’s end silver was off some 3.4 percent for the year to date and more than 45 percent from its April 2011 peak.”
Nichols then asserts his position with precious metals, “This backtracking in gold and silver does not signal a new bearish phase for precious metals prices. At worst, it calls for more patience from investors and savers holding these metals as they await the next major move up in a still very much intact bull market. More importantly, the current weakness in gold and silver prices simply gives smart investors and fearful savers more time to buy the protection and financial insurance offered by these metals.”
Most gold investment holders have maintained that over time gold has proven to be a good secure investment of wealth. There can be short term gains out of bull markets which leads speculators to seeing the volatility of the market and leading to the expected price. The soaring price predictions are not based on the belief that gold will result in speculative gain but rather there will be significant declines in fiat currencies on the world market. So the gain expectation to gold on the market is in relationship to a similar decline of the fiat currency. With the higher speculative gain expectations of precious metal prospects, they are basing on a collapse of the fiat currency.
In Europe should the Greek situation evolve into a currency default the fact they are a small economy would not be a serious event for the eurozone. However, with larger nations like Italy or Spain, a default would mean a collapse to the banking system in Europe.
The bailouts with Greece have been for the sake of buying time in hope that there will be economic arrangements as a solution while examination is currently being done to determine what the impact would be should a default occur. Basically buying time and floating debt under current circumstances.
The American position on the situation in Europe is not one of watch and see what comes next since there are a number of variables in the eurozone which will affect the U.S. economy and its banking systems. The global banking system is directly connected to the U.S. and what occurs in one does impact the other leading to failures felt abroad. The next edition of Quantitative Easing may not necessarily be directly in relationship to a nation’s banking systems but to those in Europe. There may be an impact from money being injected into a banking system to provide immediately stability but in the long term it is digging a deeper hole in the national debt.
Nicholas adds to this message, “Despite yet another round of funding for Europe’s sickest economies and banks – and regardless of whatever decisions are taken at the European summit this week – the Eurozone will continue to unravel. There’s just no way that citizens of the peripheral economies will continue to accept austerity, collapsing economies, rising joblessness, and deteriorating living conditions for years to come.”
“Sooner or later, I expect an impending if not actual default by one or another sovereign borrower or failure of one or another major European bank (what some are calling a “Lehman” moment recalling America’s 2008 banking crisis) will trigger an unprecedented flood of new money from the Fed, the European Central Bank, and other central banks in Europe and Asia – assuring that gold and silver once again shine brightly.”
There is a statement that can be said from Nicholas and that is out of the impact of gold and silver pricing and its performance is significant in terms of central banks in order for them to maintain their control in their regions. It will be seen as the standard for which the fiat currencies can then be measured and provide some degree of control.