QE 4... its only a matter of time!

The ending of QE3 money printing by the Federal Reserve and the announcement of QE9 by the Bank of Japan knocked the price of gold and silver back to levels not seen for four years last week, a logical reaction if you genuinely think US interest rates are now on the way back up.

That’s the official position, of course. The US bond market is still saying that this is going to be impossible. America is stuck in a deflationary slump and low interest rates will persist. It is therefore only a matter of time before QE4 to counter this deflation and prevent a debt deflation trap.

Commodity prices slump

Interestingly the commodities’ market agrees with the bond market. Oil prices have fallen as low as $79 a barrel. The US shale producers are closing down capacity and close to bankruptcies. Copper and iron ore prices are on the floor. The Russian ruble and Australian dollar are imploding. Why do you think Japan is doing QE9? This is not a global economic recovery speaking. It’s a slump. 

History will not judge QE3 kindly. The Fed’s balance sheet has more than tripled in just over five years to $3.7 trillion, six times larger than QE1. It’s created massive inequality by bailing out the one per cent and condemning 47 million Americans to living on food stamps, the modern equivalent of the soup kitchens of the Great Depression. Savers and pensioners have been impoverished and the real unemployed taken off the register.

Is the Fed wrong to judge the US economy strong enough to stop QE3? Almost certainly. Consumer spending figures for last month already confirm that the 3.5 per cent GDP hike in the third quarter was a passing aberration due to unrepeatable increases in defense spending. The two per cent fall in GDP originally reported for the first quarter should not be so quickly forgotten. 

If you want to know what the future holds then look to the land of the rising sun. Japan first got itself deep into a financial mess back in 1990 and fell into a hole that it is still trying to exit. They’ve had nine successive rounds of QE and they are still at it. 

What the Japanese government is now about to do is to create a hyperinflation to destroy debts that can never be repaid. It will happen. The only thing central banks can do, or not do, is print money. 

So if you are Japanese and you want to shift your money into something that will keep its value what do you do? Buy the US dollar? That might seem good in the short term as many are doing the same thing and that is pushing its value up. 

US dollar safe haven?

But with US bond prices so high and yields this depressed? Where’s the risk-reward? And that at a time when so many US dollars have already been created and when the economy is on the edge of the precipice and not set to boom at all?

Surely instead you would go down the Chinese and Indian route and buy precious metals as a money that no central bank can print. Then as the central banks inflate away the value of paper money and their debt mountains you will hold the only money everybody can still trust to have value.

Buying gold and silver at current prices is a no-brainer before the Swiss gold referendum on November 20th. Switzerland is about to become the first country to turn its back on the madness of QE money printing and go for a new gold standard. The Swiss will have first mover advantage in the coming global reset.

Then just watch the price of gold and silver move higher, and the gold-backed Swiss franc.

Robert Kiyosaki on – Investing

It will be no stranger to most that Mokarimakka is a great friend of the Kiyosaki philosophies, indeed, it is after reading publications from the Rich Dad/Poor Dad franchise that paved the way for my own investing.

In an interview with Forbes in 2013, Robert Kiyosaki is asked on his opinion investing and investors, and particularly how he would invest in 2014.  Heres what he had to say:

How would you invest $10’000 in 2014?

I am asked that question a lot… and looking ahead to 2014, this is how I would allocate my investment dollars:

Equities – 5%

Real Estate – 40%

Precious Metals – 25%

Oil – 20%

Cash -10%

With Gold and Silver prices heading down, I would be acquiring a larger position in physical Gold & Silver.  When the stock market goes down, panic will set in and Gold & Silver are likely to hit new highs.

Where would you avoid putting your money in 2014?

I would definitely avoid paper assets such as stocks, bonds, mutual funds, and ETFs and the reason is these are paper assets, not real assets.
Think of the story of the Three Little Pigs: The first pig built his house out of straw, the second pig built his house out of sticks, and the third pig built his house out of bricks.

Here’s my spin on that story: The first pig represents the poor. Poor people build their house out of paper. They work hard for cash and save cash. Their strategy is to work hard, live below their means, and save money. When the big bad wolf appears, huffing and puffing, these pigs are wolf food. The second pig represents the middle class. They build their houses out of illusions, believing in job security, benefits, owning their home, saving money, and investing in a retirement plan filled with stocks, bonds, mutual funds, and ETFs.

When the big bad wolf, also known as the Next Recession or New Depression, hits sometime between 2015 and 2035, these pigs will also be food for the wolf. The third pig builds his house out of tangible assets. These pigs are entrepreneurs and professional investors who study and invest for their own future, investing in real assets, not paper assets. When the big bad wolf comes, in that 20-year window between 2015 and 2035, those who have built houses of “bricks” are likely to get richer.

They become richer because they built with bricks, investing in tangible assets such as real estate, gold, silver, oil, food, and businesses they control.  Rather than save cash, they save gold and silver. If you must invest in paper, learn to be an options trader. Then you will know how to make money whether the markets are going up or down.
So there you have it, straight from the big man himself, the question is which little pig do you want to be?


Mokarimakka

Gold & Silver Price Fall = Buying Opportunity

Precious metal bulls with strong stomachs for wild market swings should NOT be concerned; these swings are intentional for Bullion Banks to make the most profit!  Just think for a minute, if you had the influence to depress a commodity ‘at will’ and then inflate those prices when you saw fit, when would you do most of your buying and selling of that commodity? This is called market manipulation.

Silver has fallen from a $50 high in 2011, to an astonishing low of less than $17 O/z, in a market where demand has been continuously rising for the past 10 years culminating in a record 250 Million Oz (Moz) in 2012.  You don’t have to be John Maynard Keynes to understand the rules for supply and demand; (but just in case you didn’t know) when demand shifts higher, price is higher, when demand is low, prices are low, illustrated beautifully in this ‘Supply and Demand Curve Chart’.

http://www.owen.org/blog/2757

But why should I invest in Gold & Silver?

Recent Silver price falls are being monitored daily, and analysts have had a fair idea of these lows for some time; Silver right now is sitting on a strong ‘Fibonacci Support’ level (technical term used by technical traders).  Interestingly, this is the same level that Silver was at immediately prior to its 300% rally up to $50!

In an extract from www.arabianmoney.com (and they know) ‘Those with an eye for the next big speculation will undoubtedly now be looking at Silver…. There are other reasons to believe in Gold as a safe haven asset in another major global financial crisis led this time by China and Japan.  Silver is always leveraged to the Gold price so speculators might want to get in now rather than wait for the storm… why would [wait] any longer to make the shift to Silver?

When it goes public, the price goes parabolic!

Regular readers to Mokarimakka know all to well that I have said once this information becomes generally accepted by the public, demand will outstrip supply multiple times over.  My assertion has not changed;  indeed there is further evidence that supports my previous posts that the general public are being ever more exposed to an alternative commodity for which to invest their currency and protect their wealth.

The Royal Mint is now selling Bullion Gold direct to the public, a massive shift in its modus operandi.

Although this article is written by a short sighted pessimist, (who uses an example of if you invested £10’000 in 2011, then you would only have £6’440 left today, as his case study) I would like to offer an alternate example using the same data sample chosen by this journalist and say, ‘with more credibility’ -

If you invested £10’000 at the beginning of the market crash…. (Which is precisely when you would choose to invest in metals, and not during a market recovery, simpleton!) based on actual exchange

GBP/USD exchange rate – 1.9

£10’000 = $19’000

= 27.14 Oz of Gold

At the highs of 2011 that our Daily Mail journalist uses your original £10’000 would be worth : c£31’265 not bad!  (Gold price £1152 or $1883)

And just as a belt and braces approach, what would that be worth today?

GBP/USD exchange rate – 1.6

£10’000 = $16’000

Your original £10’000 would be worth : c£20’355 still not bad! (Gold price £750 or $1200)

I will not embarrass any retail bank and ask them what amount of interest would have been generated over the same period if a customer invested £10’000, ill allow all of my readers to make that calculation themselves.

So thanks daily mail journalist, and please don’t bother in future!

Investors, precious metal is a long term investment, don’t be influenced by short term swings, pick your moments for entry and exit.

It wasn’t raining when Noah build the Ark.

Mokarimakka

You may be too late!

The Gold Rush is coming, I have maintained that by the time this goes main stream public the prices will explode!

Mokarimakka