News That Moves Markets

Demand for physical gold is increasing at a serious clip.

Supply has been declining for quite some time as new discoveries have been limited and production hampered by rising costs combined with the manipulated suppression of gold prices by Central banks.

Central banks are manufacturing copious amounts of worthless paper currencies in a desperate attempt to hold back the tide of inevitable economic hardship.

This type of reckless currency creation will lead to currency devaluation which is commonly referred to as inflation. Beware of those who try to argue this simple fact. They are part of the ‘this time it’s different’ crowd who offered the following opinions:

At the top of the tech. bubble in 2000 they recommended buying YHOO, target $400, because they were sure ‘this time is different’

When real estate values skyrocketed in 2005-2006 they forecasted continued double digit annual property value growth because they knew ‘this time is different’

When Oil hit $150 a barrel last year they called for $200 oil because obviously ‘this time is different’

Now, in their infinite wisdom they offer the sage advice ‘inflation will be contained and (wait for it…don’t laugh too hard) governments will be able to reduce the stimulus at the right time to avoid inflation because this time is different.

So I now pose the question: Should gold represent a significant portion of your portfolio?

Gold investors add 43% to holdings of bullion – Daily Telegraph
Daily Telegraph reports BullionVault, which says it looks after more gold than many of the world’s central banks, reported 43% growth in its clients’ physical holdings of the metal in the first half to more than 18 tonnes or $553 mln worth. The addition of almost 5.5 tonnes, or $166 mln worth, was almost twice the growth in BullionVault’s clients’ holdings in the same period last year and was equivalent to 70% of the growth seen over the whole of 2008. Adrian Ash of BullionVault said: “While politicians argue over ‘green shoots’ in the economy, the number of private individuals buying physical gold continues to grow. “Central banks are responding to the worst financial crisis in 70 years with an unprecedented experiment in money creation. But there’s no evidence yet that quantitative easing has sparked a self-sustaining recovery.” He added: “With global interest rates now at zero or near, cash savers are joining stock market investors in seeking a strong crisis and inflation hedge.”