Today I promised to cover the Australian price of gold. So I’ll do exactly that.
But first a look at what we’ve possibly got on the agenda for tomorrow. Right this moment we’ve got two choices. One is to give a slap across the chops to the Reserve Bank of Australia (RBA) and its part in pumping up the property bubble and its claims about the soundness of the Australian economy.
I mean, how is it that if the economy is in tip-top shape, that pawn broker and micro-lender Cash Converters has reported an increase in profit guidance and a 23% increase in the loan book of its Safrock pay-day loans business?
Oh, of course, we forgot, more debt is good for the economy!
Or, should we give a kick in the shins to ‘Stable Climate’ deniers for foisting a new tax on everyone to solve a problem that may not exist.
If you want to see how much this will cost you, look no further than the “How this affects your household” document from the Department of Climate Change.
The two important columns are the “Total assistance” and “Average cost of living impact.”
The “Total assistance” column details the increased benefits paid by the government to individuals to help cope with the increased costs of an ETS. In reality what this also equates to is the extra cost to the taxpayer – you.
And the “Average cost of living impact” column details the increased cost to the consumer.
Whichever way you look at it, it’s theft from the individual on a grand scale. Because remember, it’s not businesses that pay for this, it’s always the individual. You’ll pay for this through increased taxes plus increased prices.
While I’m on the subject, a quick update for you on our Climate Change education…
Based on what we’ve read so far on Climate Change, all roads lead back to the Intergovernmental Panel on Climate Change (IPCC). All other research is based on the findings of the IPCC. Therefore, if the IPCC have got it wrong, then all the other research its findings are based on is completely useless.
Which rather puts a hole in the argument about there being millions of scientists who have researched Climate Change and found it to be a problem.
Because they haven’t, they’ve merely created models based on inputs supplied by the IPCC, and then added in their own scenarios to spit out the results.
So, the IPCC reports are the next port of call on our Climate Change/Stable Climate education.
But you only have to look at the horse trading over the ETS between the crooks in government and the crooks aiding and abetting them in the Opposition.
We simply ask the following question: If Climate Change is so important that something must be done about it, why is the government allowing the biggest emitters of CO2 and pollutants to get off virtually scot free?
We can answer that question ourselves. It’s because the Climate Change argument is all about a massive tax grab and power grab. It’s got nothing to do with ‘saving’ the environment.
Unfortunately, the ‘Stable Climate’ deniers can’t see this because they’ve taken a massive dose of ‘Climate Change Rohypnol.’ They’re drugged up to the eyeballs on Climate Change spin.
Unfortunately for them, after the drug wears off they’re likely to wake up in ten years to find they and their wallets have been severely violated. Trouble is, it won’t just be them that will have felt the pain, everyone will have.
But, as I say, that’s on the table for tomorrow. Today we’re looking at gold priced in Australian dollars. Although it’s not just gold, but silver that’s making some headway too.
One of the frequent comments I get from readers is that the price of gold in Australian dollars has actually fallen in the last few months even though the US dollar price has risen.
You can see that on the chart below:
The Aussie dollar gold price reached a peak of around $1,550 in February this year before sliding to below $1,150 in the space of six months.
You could reasonably argue that in Australian dollar terms the price of gold crashed this year.
The simple reason for the ‘crash’ is due to the ever decreasing value of the US dollar. As you can see on the chart below the Australian dollar has climbed from 63 cents in March to 93 cents today, a near 50% increase:
It has been this ‘crash’ in the price of US dollars that has caused the Aussie dollar price of gold to fall.
The point is whether now is a good time to buy gold? I mean, as Money Morning reader Peter wrote to us yesterday:
“How do we know that “GOLD” being a safe asset is not in a bubble?”
That’s a pretty good question. And of course we can’t be 100% certain that it isn’t in a bubble. Although I’m 99.99% (gold bugs will like that reference!) certain that it isn’t.
But let me put it this way, if someone asked me which would be the best asset class to buy and hold over the next 30 years, my answer would be precious metals.
If you’re a subscriber to Australian Small Cap Investigator or Australian Wealth Gameplan, you’ll know that I believe buying and holding shares is the surest way to not make money.
Rather, share investors should be active with their portfolios taking advantage of high prices to sell and cheap prices to buy. It doesn’t mean you have to be a day trader, it just means taking more responsibility over your investments rather than letting the fund managers cream you.
And as for property, well, it goes without saying that property is in a monumental bubble caused by rampant government and central bank manipulation – invest in property at your peril!
As a long term buy, hold and ‘forget-about’ investment, gold – and silver – wins hands down.
In fact I’m so convinced of it that last month I took the unusual step of recommending a precious metals stock to subscribers of Australian Small Cap Investigator. Precious metals are something I normally leave to Dr. Alex Cowie over at Diggers & Drillers, but this was an opportunity not to be missed.
When you consider what gold is – money, real money – then it’s not hard to see the fundamentals of investing in the yellow metal are sound. Even despite the rally in the US dollar price of gold this year.
That’s because investors in the US especially are seeing the value of the Greenback permanently eroded as their government and central bank pile up debts and create more and more money. The consequence of this is the more paper or electronic money that is created the less valuable the money that is already in circulation becomes.
But because gold cannot be so easily created, the value of it rises.
US based gold investors have naturally seen their ‘gold wealth’ increase as their ‘dollar wealth’ has decreased.
In Australia, gold investors will have seen the opposite – their ‘gold wealth’ decrease and their ‘dollar wealth’ increase.
But that’s part of the attraction of buying gold. It’s not necessarily to make your fortune from it, rather it’s best use can be to preserve some of your wealth over the long term. Although it could make you a fortune compared to others who are seeing their wealth eaten away by inflation.
Like any investment the price of gold won’t rise or fall in a straight line. As an investor in gold for the long term you’d naturally want to buy at as cheap a price as possible.
But as you can see from the two charts above, over the last month the gold price has soared over $100 in Australian dollar terms even though the exchange rate has remained within a range.
That perhaps tells you that even more investors are beginning to lose faith in easily ‘counterfeited’ paper money when compared to the real value of gold. Consequently, if/when confidence is lost in the value of Australia’s currency it’s more than likely gold will appreciate even further in Australian dollar terms.
An even better example is that of British pound sterling which has traded in a wide range for the last six months…
While the price of gold in pound sterling has soared…
As I say, as a true long term buy and hold investment, gold is an investment that should at least protect your wealth over a 30-plus year period.
There is little doubt in your editor’s little mind that gold is the best way of doing this.
And that’s whether you calculate it in Australian dollars, US dollars, British pounds, or even Zimbabwe dollars!
Cheers.
Kris.
60-Second Market Round Up
by Shae Smith
The S&P/ASX200 finished the day at 4,722.20 up by 37 points. The US had a positive trading session overnight, and as a result the Aussie market has opened higher.
The Dow Jones Industrial Average closed at 10,464.46, up 30 points. News that house sales rose 6.2% and signs that unemployment is starting to decrease helped the Dow finish in the green, despite the thin trading volumes.
However, Thompson S. Phillips Jr. is waiting for a pull back from the market. “We’re certainly overdue for something”, he said, “The market doesn’t just go up.”
In the UK, the FTSE100 ended the trading session at 5,364.81 higher by 0.77%.
The Nikkei finished in positive territory, despite reaching a four month low during the session. It closed at 9,441.64, up by 40 points.
Once again, gold has reached a new high of USD$1,193.30 in the US. The next target is USD$1,200 per ounce. Demand for the precious metal has increased by 88% over the past ten months in the US. The United States Mint has suspended sales of American Eagle gold bullion coins as the supply has been exhausted.
The price of spot gold in Australian dollars is trading at $1,280.15, while in US Dollars it is trading at $1,192.20. The price of silver in Aussie dollars is $20.24 and in US Dollars it is $18.85.
The Aussie dollar versus the US dollar is trading at USD$0.9322, and against the Japanese Yen JPY81.47
Crude oil closed at USD$77.80
For the biggest movers on the market yesterday click here…
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AND THE GUT FEELIN” i have ……………….
is no matter how logical to run “here or there”
gold ,property,super,shares, jobs,rabbit warrens ,watever
somehow……………….
these “BIG FILTHS” up there are going to find a way to get their fingers in there ,,one way or another
in other words ,i just dont think, almost anything ,monetarily,is or will be safe ,anymore,,,
I agree, etch. Whatever they cannot take from you through the share maket, they will grab it through taxes. Especially this new one, through much higher prices on everything.
but i’m hearing gold isnt safe cos the ..is it the long people will take it b4 the shorts ?, and in the end unless u have it PHYSICALLY its still just a worthless bit of paper
,money in the bank isnt safe cos the banks are leveraged to their scalps ,property is overpriced & could burst
super could be confiscated by gov??
The Russian central bank was selling gold half a dozen years back between $300 and 390 …. now they are buying it back at $1,000 plus… I feel that demonstates the ninkunpoopery of central banks.
And gold stayed low in the 90′s because the central banks flooded the market with the yellow devil in order to protect their fiat currencies.
I would have thought that the US was smart enough and underhanded enough to be printing money now to buy gold,whilst the planet still accepts the greenback as a currency …. good way to start a war I suppose.
I will sell my house for 1000 ozs of gold.
And not a shakel less.
lol, etch. Well, it is messy. You have to take stock of your assets, and devise plausible and promising strategies to protect each one’s purchasing power from a variety of risks and other evils, ranging from theft, insurable events, such as fire and storm damage, political risks, such as government regulations and wars, episodes of deflation, episodes of inflation, all sorts of shysters and scamsters, and last, but not least, the taxman.
And, yes, if you don’t go down to the bullion dealer to pick up your metal, you do risk not seeing either your money, or your metal, if the counterparty holding it for you loses it, or spends it on whores, coz then you will be lucky man to receive apology: sorry ’bout yer gold, buddy, she was hot for me lightning rod. hahahaa
If you bother to buy gold, must buy and hold physical. Otherwise, you better buy gold mining companies, or the gold ETF, in the form of shares – pay money for promises, piece of paper receipts, which they will hopefully make good on later. But only hopefully, as there is a risk that paper receipt won’t be good even in toilet, whereas if you got the metal, you have been paid, and will be able to spend it and pay with it whenever for whatever catches your fancy.
thanx cb
just really makes u wonder whos driving this economy the way it is & why????
BUSHES nephew????????
http://www.youtube.com/watch?v=cKNzEvK_5u8&NR=1&feature=fvwp
thanx cb
just really makes u wonder whos driving this economy the way it is & why????
BUSH’S little nephew????????
http://www.youtube.com/watch?v=cKNzEvK_5u8&NR=1&feature=fvwp
CB,
I know what you’re saying about GOLD ETF, even though I’ve done alright out of them since 05. It’s hard to know when to dump them before they collapse. As for gold mining stocks, I own a Japanese miner with ops in southern Japan and Alaska that is under-performing. There’s an excellent Japanese company that recycles gold from consumer electronics that I’m also interested in.
Well, JC, if you are going to own any shares, then the gold related ones are probably among the most likely ones to actually be making money going forward. If the megatrends in fiat currencies and gold continue, as they seem set to do, then gold related stocks will be amongst the top performers in the market, but will always carry the typical risks of bad luck and bad management, as any stock does, and the only way to avoid these risks (assuming that a certain portion of your money you do not want to expose to such risks), is to own the cash equivalent of real money: gold and silver bullion itself.
To be fair, the ETF GOLD is probably a hybrid between gold company shares and gold you hold at home. It is, after all, physical gold, held for you by someone else. Or at least that is what it is supposed to be, and your risks here are fraud, or government confiscation, for if the government wants your gold, as it happened before elsewhere, they will first go where they know you have it.
If they make owning the gold you have at home illegal, and tell you to turn it in to be paid in paper money, or digital money, instead, then you will have to make a decision whether to be a good boy and take it in to them, or tell them to shove it, you have yours, and they should get their own. But hopefully, things will never get that ugly, unless the entire global fiat money financial system comes crashing down, and internation trade can only be settled in gold. If it comes to that, then gold cannot just be printed out of thin air, and governments will try to grab and collect all the gold they can in the national interest. After all, everything they do, is claimed to be in the national interest.
Well here is a little piece of advice I have for the PM and Turnbull, and the IBC they are so keen to serve, all in the national interest, of course: JUMP.
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