For those of you who have not bought gold. DO IT NOW!!
Yes, especially for those of your who live in USA! Save your wealth. It is earn with blood and sweat. Don't let the FED cheat you of your wealth with the over issuing of US dollars.
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Sunday, December 30, 2007
Gold Forecast for 2008
by Michael J. Kosares
In a December 2004 interview with the Wall Street Journal, I predicted $525 for gold's high in 2005. It hit that $525 level the following December. For 2006, once again in a Wall Street Journal interview, I predicted a "breakout year" for gold with a top price of $760. Its actual breakout high came earlier in the year than I had anticipated (in May) and a bit lower than I had predicted -- in the $730 range (intraday Comex). In January, 2007, when gold was trading in the $625 range, in a forecast published in a NewsGroup Market Update through our USAGOLD website, I made $715 my minimum upside target and suggested that gold could hit the $800 level, or go as high as $875 if tensions escalated in the Persian Gulf; or if the quid pro quo with China broke down; or if the new Congress proved as anti-market as advertised; or if we got some surprises. Gold hit $840 in November and is trading at the $810 level as this is written.
Before I delve into where I think gold might find itself during the course of the upcoming year, let me revisit briefly the market drivers I listed in the 2007 prediction. Both the Persian Gulf and China did play direct roles in the price of gold in 2007. First, the Persian Gulf was a source of continued tensions which drove the price of oil from the low $60s per barrel to nearly $100. Second, the quid pro quo between China and United States did undergo some revision even if it didn't break down. Namely, China did begin to shed some of its dollar reserves. As a direct result, it did play a key role in running up commodity prices from copper to wheat and crude oil. What has really spooked the gold market though, and the biggest surprise of all, was the one no one saw coming - the credit crisis. Of my potential market drivers, the one that proved to be a non-starter was the anti-market Democratic Congress which proved itself too disorganized to truly pose a threat to the economy, the American people or itself.
2008 Gold Price Prediction
So what about 2008?
In 2008, my minimum target is $925 based upon a continuation of the trends already in place and mentioned above.
We could, however, see a spike to between $975 and $1025 if, in addition,
1. The credit crisis escalates and the central banks are forced to inject substantially more "liquidity" into the financial system than anticipated; or
2. If tensions escalate to red alert status in the Middle East, or if a decline in U.S. presence in Iraq rekindles religious tensions, the bombings and violence in general (with the consequent effect on relations with Iran); or
3. Suppy problems escalate in the physical gold market causing a gold crunch; or
4. If we get another major surprise like we did with the credit crisis in 2007 (Yes, something else could crawl from under the rock);
Note: There could be a sharp mid-year correction in the gold price, if we get a strong run-up from the $810 level in the early months of 2008. However, I believe, in the wake of such a run-up, support is likely to come in the current range or just below. Conversely, we could get an out-of-the-box price spike should we see three or more of the events mentioned above converge with their full ill-effect upon the economy and financial markets. These are indeed dangerous times, more dangerous than at any time since the gold bull market began.
gold portfolio
Reflections in a golden eye
I would be remiss as a commentator on the gold scene if I neglected to mention the rehabilitation gold has experienced in the public consciousness, not just in the United States but on a global basis. Gold is moving into the mainstream as an evergreen portfolio item, and this will prove to be a very important market development as we move into 2008. To some extent, this rehabilitation has been by default. Washington and Wall Street simultaneously have suffered declines in the public perception for well-known reasons - a situation from which gold has directly profited. The real benefits to this change of thinking have yet to be realized, and are likely to play out over the long term. As investors make the connection between central bank money creation globally and its ultimate result, price inflation, so too they will make the connection between gold ownership and portfolio safety. It used to be that the same tone set in New York's gold market on a daily basis was the tone that carried through to overseas trading for the rest of the day. That scenario has changed dramatically. Now, it is not unusual to see gold begin a strong move in Asia overnight only to be carried over to the New York session. This role reversal suggests a global undercurrent in the gold market that wasn't present even a year ago, and should be taken into consideration by all gold investors. There is now genuine worldwide competition for the available gold supply.
Some might say I am pressing my luck by publishing a prediction for the 2008 gold market after calling the gold price in the three previous years, and I truly did consider, and mentioned to friends, clients and staff, that this year I might rest on my laurels. However, the trends which have pushed gold to the levels we have all enjoyed over the past several years are even more firmly in place now than they were at any time since 2004. Thus, I am emboldened and find myself in my traditional place this time of year. . . .out on the limb.
***As always, anyone who trades on these predictions does so at their own risk. There is as much chance I will be proven wrong as right. Those who are buying gold for long term asset preservation, though, pretty much view the prediction game for its entertainment value.
Last, consider this:
Given the perspective of 100 years from now, analysts might very well find currency inflation the common source for the rise in both the Dow and gold during their respective up-cycles. If currency inflation could take the Dow from 800 to 11,750 during its bull market, why couldn't it take gold from its $270 starting point to $4050? If gold were to achieve a price of $4050, it will have matched the roughly 1500% appreciation of the stock market during its bull phase. That makes the current price an attractive entry level.
Michael J. Kosares
In a December 2004 interview with the Wall Street Journal, I predicted $525 for gold's high in 2005. It hit that $525 level the following December. For 2006, once again in a Wall Street Journal interview, I predicted a "breakout year" for gold with a top price of $760. Its actual breakout high came earlier in the year than I had anticipated (in May) and a bit lower than I had predicted -- in the $730 range (intraday Comex). In January, 2007, when gold was trading in the $625 range, in a forecast published in a NewsGroup Market Update through our USAGOLD website, I made $715 my minimum upside target and suggested that gold could hit the $800 level, or go as high as $875 if tensions escalated in the Persian Gulf; or if the quid pro quo with China broke down; or if the new Congress proved as anti-market as advertised; or if we got some surprises. Gold hit $840 in November and is trading at the $810 level as this is written.
Before I delve into where I think gold might find itself during the course of the upcoming year, let me revisit briefly the market drivers I listed in the 2007 prediction. Both the Persian Gulf and China did play direct roles in the price of gold in 2007. First, the Persian Gulf was a source of continued tensions which drove the price of oil from the low $60s per barrel to nearly $100. Second, the quid pro quo between China and United States did undergo some revision even if it didn't break down. Namely, China did begin to shed some of its dollar reserves. As a direct result, it did play a key role in running up commodity prices from copper to wheat and crude oil. What has really spooked the gold market though, and the biggest surprise of all, was the one no one saw coming - the credit crisis. Of my potential market drivers, the one that proved to be a non-starter was the anti-market Democratic Congress which proved itself too disorganized to truly pose a threat to the economy, the American people or itself.
2008 Gold Price Prediction
So what about 2008?
In 2008, my minimum target is $925 based upon a continuation of the trends already in place and mentioned above.
We could, however, see a spike to between $975 and $1025 if, in addition,
1. The credit crisis escalates and the central banks are forced to inject substantially more "liquidity" into the financial system than anticipated; or
2. If tensions escalate to red alert status in the Middle East, or if a decline in U.S. presence in Iraq rekindles religious tensions, the bombings and violence in general (with the consequent effect on relations with Iran); or
3. Suppy problems escalate in the physical gold market causing a gold crunch; or
4. If we get another major surprise like we did with the credit crisis in 2007 (Yes, something else could crawl from under the rock);
Note: There could be a sharp mid-year correction in the gold price, if we get a strong run-up from the $810 level in the early months of 2008. However, I believe, in the wake of such a run-up, support is likely to come in the current range or just below. Conversely, we could get an out-of-the-box price spike should we see three or more of the events mentioned above converge with their full ill-effect upon the economy and financial markets. These are indeed dangerous times, more dangerous than at any time since the gold bull market began.
gold portfolio
Reflections in a golden eye
I would be remiss as a commentator on the gold scene if I neglected to mention the rehabilitation gold has experienced in the public consciousness, not just in the United States but on a global basis. Gold is moving into the mainstream as an evergreen portfolio item, and this will prove to be a very important market development as we move into 2008. To some extent, this rehabilitation has been by default. Washington and Wall Street simultaneously have suffered declines in the public perception for well-known reasons - a situation from which gold has directly profited. The real benefits to this change of thinking have yet to be realized, and are likely to play out over the long term. As investors make the connection between central bank money creation globally and its ultimate result, price inflation, so too they will make the connection between gold ownership and portfolio safety. It used to be that the same tone set in New York's gold market on a daily basis was the tone that carried through to overseas trading for the rest of the day. That scenario has changed dramatically. Now, it is not unusual to see gold begin a strong move in Asia overnight only to be carried over to the New York session. This role reversal suggests a global undercurrent in the gold market that wasn't present even a year ago, and should be taken into consideration by all gold investors. There is now genuine worldwide competition for the available gold supply.
Some might say I am pressing my luck by publishing a prediction for the 2008 gold market after calling the gold price in the three previous years, and I truly did consider, and mentioned to friends, clients and staff, that this year I might rest on my laurels. However, the trends which have pushed gold to the levels we have all enjoyed over the past several years are even more firmly in place now than they were at any time since 2004. Thus, I am emboldened and find myself in my traditional place this time of year. . . .out on the limb.
***As always, anyone who trades on these predictions does so at their own risk. There is as much chance I will be proven wrong as right. Those who are buying gold for long term asset preservation, though, pretty much view the prediction game for its entertainment value.
Last, consider this:
Given the perspective of 100 years from now, analysts might very well find currency inflation the common source for the rise in both the Dow and gold during their respective up-cycles. If currency inflation could take the Dow from 800 to 11,750 during its bull market, why couldn't it take gold from its $270 starting point to $4050? If gold were to achieve a price of $4050, it will have matched the roughly 1500% appreciation of the stock market during its bull phase. That makes the current price an attractive entry level.
Michael J. Kosares
Saturday, September 08, 2007
Gold settled at $700
Just checked this morning. Gold price has settled at $700. With the subprime problem and the rumours of China dumping US treasury notes, gold price is bound to rise more. When China dump their reserve in dollars but not converting it to Euros and other paper assets, what will they replace the reserve on??? The answer start with "G" and it beat paper money every single time in history of money.
Friday, September 07, 2007
Gold break USD$700!
Gold price is USD$703 at this moment. The highest since May 2006..It will go higher..
Nathan Mayer Rothschild's Gold
"I only know of two men who really understand the true value of gold, an obscure clerk in the basement vault of the Banque de Paris and one of the directors of the Bank of England. Unfortunately, they disagree," remarked Nathan Mayer Rothschild, the former owner and operator of England's Royal Mint Refinery, and the primary gold agent to the Bank of England in the early 1800's.
When the Bank of England's gold reserve was drained by the costs of the Napoleonic wars, down to 235,000 ounces (£1 million) against note issue liabilities of £15.5 million, it was Nathan who sent secret shipments of gold and silver to Wellington's army in Europe and financed the defeat of Napoleon. In 1825, it was Nathan who rescued the Bank of England and prevented the collapse of the entire British banking system, after a run on gold caused the collapse of 145 banks.
In 1919, the Bank of England, determined to restore London as the main gold market, reached an agreement with seven South African mining houses to ship their gold to London for refining, after which it would be sold through NM Rothschild at the best price obtainable, giving the London market and the Bullion Brokers a chance to bid.
The London Gold Fix was set at the London merchant bank NM Rothschild, from Sept 1919 until April 2004. NM Rothschild had profound influence at the London Bullion Market, where trading volume was 42 million ounces of gold per day (more than twice South Africa's annual gold production), including dealings in physical, leased, and forward sales.
The Rothschild empire helped to establish and finance oil giant Royal Dutch Shell, cemented De Beer's control of the world's diamonds, and following World War II, invested in vast areas of resource rich properties in Canada, and in base metals giant Rio Tinto. Legend has it, that the Rothschild fortune measures in the trillions of dollars. Rothschild's huge stash of gold and natural resource shares is tailor made for the day when the public wakes up to the fraud of fiat currency.
When the Bank of England's gold reserve was drained by the costs of the Napoleonic wars, down to 235,000 ounces (£1 million) against note issue liabilities of £15.5 million, it was Nathan who sent secret shipments of gold and silver to Wellington's army in Europe and financed the defeat of Napoleon. In 1825, it was Nathan who rescued the Bank of England and prevented the collapse of the entire British banking system, after a run on gold caused the collapse of 145 banks.
In 1919, the Bank of England, determined to restore London as the main gold market, reached an agreement with seven South African mining houses to ship their gold to London for refining, after which it would be sold through NM Rothschild at the best price obtainable, giving the London market and the Bullion Brokers a chance to bid.
The London Gold Fix was set at the London merchant bank NM Rothschild, from Sept 1919 until April 2004. NM Rothschild had profound influence at the London Bullion Market, where trading volume was 42 million ounces of gold per day (more than twice South Africa's annual gold production), including dealings in physical, leased, and forward sales.
The Rothschild empire helped to establish and finance oil giant Royal Dutch Shell, cemented De Beer's control of the world's diamonds, and following World War II, invested in vast areas of resource rich properties in Canada, and in base metals giant Rio Tinto. Legend has it, that the Rothschild fortune measures in the trillions of dollars. Rothschild's huge stash of gold and natural resource shares is tailor made for the day when the public wakes up to the fraud of fiat currency.
Wednesday, May 02, 2007
Gold Could Reach $3,736.13 Per Ounce
From 1982 to 2000, the Dow Jones Industrial Average went from a bottom of 776.92 to a peak of 11722.98. This represents an annual compound return of 16.8% over the course of 17 years and 5 months. Ironically this rate of return is almost identical to the annual rate of return gold is delivering in its current bull market run. If we say for argument sake that the gold bull market lasts the same amount of time as the previous run in the DJIA from 1982 to 2000, we can project a gold price of $3,736.13 per ounce of gold by 2016.
Gold bottomed at $252.80 on July 20, 1999. 6.81 years later on May 12, 2006 gold peaked at $725 per ounce. This represents an annual rate of return of 16.7% which is only .1% off from what we determined the DJIA’s annual rate of return during its bull run from 1982 to 2000. Based upon the 16.7% annual rate of return this is how we came up with the $3,736.13 per ounce figure by 2016. This is actually a conservative figure considering that the last phase of the past two bull markets both the 1970’s precious metals bull and the DJIA bull from 1982 to 2000 ended in mania. The general public entered the markets which meant there were no more buyers and subsequently the long term bulls ended. We could very well see the same thing happen at the end of this bull market in precious metals. It would not be out of the realm of possibility to see gold go up to $5,000 or $10,000 in such a situation. I believe this to be a possibility considering that unlike the 1970’s we have China and India as factors as well as a chronically devaluing USD thanks to our friends at the Federal Reserve.
Using this same analysis we can also roughly determine a peak in gold for 2007. Based upon a 16.7% rate of return compounded for 8 years we arrive at a gold price of $869.64 sometime this year.
This might seem a bit high but considering the lack of interest in the precious metal markets at this moment in time, I don’t believe that to be the case. I still consider this a good time to buy gold and gold stocks simply because of the perceived lack of interest by general market participants. If we examine the traffic ranking of Kitco’s web site which is by far the most visited precious metals site on the Internet, we can see that traffic has bottomed out since the May 2006 peak. What’s even more interesting about this is the gold price isn’t too far off from that May 2006 peak and if we use Kitco’s web site traffic ranking as an indicator, the public has little interest in gold right now. As far as I’m concerned this means we still have a buying opportunity at current levels.
One ratio I follow religiously to determine if gold stocks are fairly priced in relation to the price of gold is the gold to XAU ratio. Amazingly, the gold to XAU ratio is currently at 4.81 which means that gold stocks are still cheap compared to the price of gold. That might seem hard to believe considering the recent run up in both gold and gold stocks, but when gold retraced back to $640 we believed that the market was vastly over sold. At that time the gold to XAU ratio was at 5.00 which I personally have never seen in the past few years that I’ve followed that ratio. That marked a strong buy signal for gold stocks and since that point in time we have seen a surge in gold mining stocks.
On a short term basis I do believe that we will be seeing some more resistance around the $700 level simply because of the market psychology involved with round numbers. We will also likely encounter resistance at the May 2006 peak. Once gold successfully breaks these levels we should see it make a move much higher. If we don’t hit our 2007 price target of $869.64 based off of our analysis, we should definitely see the gold price hit that mark in 2008.
Tuesday, May 01, 2007
Gold Rise, Dollar Drop and E-Gold is being targeted.
I used to be able to exchange US$1 for 3.8 Malaysian ringgit 6 months ago, but now I can only get 3.42 ringgit. Gold meantime has risen from USD$250 3 years ago to USD$680 range today. Something is wrong with US financial condition. Too much of money is being printed maybe is one of the reason. US government now has started their witch hunt on e-gold to prevent it to go main stream, as it can really threathen the main stream banking system, which rely on issueing paper money. Dear visitor to this blog, buy more gold to protect yourself from financial disaster. I am no expert, but from historical data, paper money always failed and those who hold gold has a better chance to survive. Here is the full statement from e-gold regarding the government witchhunt against them:
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e-gold® Founder Denies Criminal Charges
April 30, 2007
Melbourne, FL
On April 24, 2007, a Federal Grand Jury handed down an indictment charging e-gold Ltd., Gold & Silver Reserve, Inc., and the Directors of both companies with money laundering, operating an unlicensed money transmitter business, and conspiracies to commit both offenses.
Dr. Douglas Jackson, Chairman and Founder of e-gold, speaking on behalf of his fellow Directors and both companies vigorously denies the charges, taking particular exception to the allegations that either company ever turned a blind eye to payments for child pornography or for the sale of stolen identity and credit card information.
Dr. Jackson states, "With regard to child pornography, the government knows full well that their allegations are false, yet they highlight these irresponsible and purposely damaging statements in order to demonize e-gold in the eyes of the public. During the Inquisition, accusations of witchcraft and heresy were used to sanctify torture and seizures of property. In post 9-11 America, child porn and terrorism serve as the denunciations of choice. e-gold, however, as a matter of incontrovertible fact, is the most effective of all online payment systems in detecting and interdicting abuse of its system for child pornography related payments. e-gold Ltd. is a founding member of the National Center for Missing and Exploited Children's (NCMEC) Financial Coalition to Eliminate Child Pornography. e-gold is the only member institution to demonstrate with hard, auditable data a dramatic reduction of such payments to virtually zero, while billions of child porn dollars continue to flow through other (heavily regulated) payment systems. [Most members, that is, all the banks and credit card associations are utterly unable to even provide an estimate of the volume of such payments processed by their systems. eBay's PayPal subsidiary, who may have the ability to make such a determination, has refused to do so and has indicated they destroy payment records after two years.] What is worse, until August 2005 when NCMEC courageously broke ranks with US law enforcement agencies and began directly notifying e-gold of criminal sites via the CyberTipline, component agencies of the US Department of Justice purposely concealed their knowledge of child pornography abuses from e-gold's investigators, subordinating actual crime fighting to a policy agenda designed to dirty up e-gold."
In December 2005, the Secret Service (USSS) deceived a Federal Magistrate judge with bogus testimony in order to obtain search and seizure warrants authorizing the government to seize the US bank accounts of Gold & Silver Reserve, Inc. The seizure, which netted the government about $ 0.8 million, was designed to put e-gold out of business without due process, since G&SR serves as the contractual Operator of the e-gold system. At a subsequent emergency hearing, the government made no effort to defend their (sealed) allegations of lurid criminality, falling back to a position that their action was warranted because of a licensure issue. At the hearing, G&SR described its ongoing dialog with the Department of Treasury, initiated by formal request of the company in Spring 2005, to determine a possible basis for regulating the company's activities, since it was patently clear to competent authorities that G&SR's exchange service was not encompassed within any existing regulatory rubric [subsequently re-confirmed by experts at the Federal Reserve]. The US Attorney for the District of Columbia, responsible for the prosecution, was completely unaware of this orderly proceeding, as well as Treasury reports issued the same week that acknowledged e-gold as an innovation not meeting definitions of a money services business or a money transmitter.
Since this time, the government has been confronted with overwhelming evidence that the USSS had made a horrible mistake in its attack on the e-gold system and its repeated defamatory claims in the media that e-gold is anonymous, untraceable, and inaccessible to US law enforcement. They have concealed the fact that Dr. Jackson had personally arranged to come to USSS headquarters to train the USSS cybercrime squad in December 2004 (along with agents of the UK's National High Tech Crime Unit, and the Australian Federal Police) on advanced techniques, particularly in the area of efficient interaction with e-gold's in-house investigative staff, but was prevented when senior USSS management learned of the initiative and forbade the training on the grounds of a policy declaring e-gold as their designated boogey man.
The Department of Justice has had to determine whether to continue to stand behind their component agency. Their decision to close ranks has directly resulted in a gross misallocation of resources, with the result that vicious criminals who might have been brought to justice remain at large. An example of this is the Shadowcrew investigation, hyped by the USSS as a major success in disrupting international credit card thieves. The USSS did not subpoena records from e-gold at any time in their investigation, or engage with e-gold's superb in-house investigative staff, with the result that the sophisticated hierarchy of the ring was unmolested and probably strengthened while the USSS hauled in the low hanging fruit, "a dime a dozen and relatively easy to track down and pop".
Similarly, there is compelling evidence that the international cartel of commercial vendors of child pornography continues to operate because the FBI Innocent Images Unit and Special Agents within the Immigration and Customs Enforcement Agency have been forbidden to follow investigative protocols developed by Dr. Jackson, apparently for fear of further belying the party line that e-gold is itself a nefarious operation.
With regard to allegations of money laundering, Dr. Jackson notes "G&SR's online exchange service, OmniPay, has for years followed stringent customer identification procedures and an absolute policy of only accepting money payments by bank wire. If bank wires aren’t already "clean" then what is? Furthermore, e-gold Ltd. can scarcely be construed as a money launderer since it does not accept money payments from anyone in any form and has never owned a single dollar, yen, euro or any other brand of legacy money. As far as the possibility of a criminal successfully obfuscating a money trail, e-gold is a closed system. The only way to obtain e-gold is by receiving a transfer from someone who already has some. e-gold is also the only payment system accessible by the public that maintains a permanent record of all transfers."
On April 27, 2007, the government served seizure warrants on G&SR ordering it to freeze, liquidate and turn over to the government the operating e-gold accounts of G&SR and e-gold Ltd. The value seized, about $762 thousand worth of e-gold from e-gold Ltd. and about $736 thousand worth of e-gold from G&SR [on top of the $0.8 million seized from G&SR in 2005, and the approximately $1 million spent by G&SR so far in its defense] constitutes the bulk of the liquid assets of both companies. Perplexingly, a post-indictment restraining order states "Nothing in the provisions of this restraining order shall be construed as limiting the e-gold operation's ability to use its existing funds to satisfy requests from its customers to exchange e-gold into national currency, or its ability to sell precious metals to accomplish the same once approval has been obtained." Having taken virtually the entire operating funds of G&SR and e-gold Ltd., that is, the e-gold in both companies' own e-gold accounts, it is unclear if the government has even a basic grasp of the operations it has been investigating for three years at a taxpayer expense in the millions.
The most remarkable element of the restraining order is that the US government deputizes e-gold with plenipotentiary powers to act as judge, jury and executioner against any account user e-gold itself has deemed to be a criminal: "It is further ordered that upon receipt of this order the defendants are required to freeze, that is, not conduct or allow any further transactions in e-gold accounts that the e-gold operation itself has identified as being used for criminal activity". Although not accompanied by an outright letter of marque, this commission (the financial equivalent to double ought status?) would appear to be an acknowledgement that e-gold's 'Know Your Customer' prowess far exceeds that of any regulated financial institution, who would be obliged to rely on court orders or other legal writs to determine if freezing an account is warranted.
Concurrent with this latest attempt to knock e-gold Ltd. and G&SR out of business and thereby effectively deny them due process, the government also attacked other prominent exchange services that deal in e-gold; IceGold, The Bullion Exchange, Gitgold, Denver Gold Exchange, AnyGoldNow, and Gold Pouch Express, plus a sophisticated and secure alternative payment system called "1MDC". All of the listed exchange services also follow stringent Customer Identification Programs congruent with what would be required of a currency exchange business, if the law supported such a classification. Two of the services, IceGold and AnyGoldNow, are located in Europe and deal primarily with non-US customers. As a direct and immediate result of the seizures, these companies, all of who had built a reputation for honoring their obligations to customers in a timely fashion, have been disrupted, and, at least in the case of Gitgold, checks to customers issued in fulfillment of exchanges have bounced. This is a repeat of what happened to G&SR as a direct result of the 2005 seizure, when over 200 checks to customers bounced and refunds had to be sorted out with severely crippled liquidity and without a US bank account.
It must not be overlooked that the search warrant obtained by misrepresentations before a magistrate judge in 2005 resulted in the government helping themselves to the financial records of hundreds of thousands of American citizens [plus citizens of virtually every other country] who had not been accused of any wrongdoing. Since the initial raid, the prosecutor has caused the Grand Jury to order complete dumps of the e-gold data base on three additional occasions.
This case has nothing to do with criminal activity, at least not on the part of e-gold Ltd., G&SR, the named individuals or these other exchange services of high reputation. It is about a Department of Justice that is out of control, cognizant of having made a horrible mistake but determined at all costs to preserve its turf. In a meeting at the US Attorney's office in Washington on December 29, 2006, a Chief Assistant US Attorney told us that the United States knew we weren't "bad guys" and that the United States had no interest in sending any of us to prison or causing e-gold to go out of business. This was in virtually the same breath as proposing that the current defendants plead guilty to Federal felony charges.
The plain fact is that the repeated statements and actions of the government since 2001, especially the USSS, are directly responsible for crippling e-gold's ability to market its service to mainstream businesses and consumers, slowing [but fortunately not stopping] e-gold's continuous development of advanced anti-crime capabilities, subordinating US law enforcement's cybercrime fighting efforts to the forlorn hope of destroying e-gold, driving market share to non-US based alternative payment systems and making the US law enforcement community the laughingstock of competent cybercrime fighting agencies worldwide because of its obstinate inability to back down from the USSS's longstanding e-gold vendetta.
All inquiries should be directed to the law offices of:
http://www.fuerstlaw.com/Wednesday, April 11, 2007
Gold's Performance During Recessions
Much has been made recently about gold's use as a hedge against poor stock market returns. Unfortunately, this strategy has some holes in it. While it is true that gold tends to perform in the opposite direction as stocks during secular markets, it tends to perform similarly to stocks during shorter cyclical time periods.
From 1966-1982, when the S&P 500 did nothing, gold went from $35/oz. to over $800/oz. During this secular commodity bull market, stocks certainly performed in opposition to gold. However, when breaking down these 16 years into shorter time frames, it is noteworthy to understand when gold made its biggest runs. Between 1970-1973, the stock market performed decently well, while the gold market performed very well. However, in the 1973-1974 time frame, both markets took a strong beating, with the S&P losing some 40% and the gold market being cut in half. Once the carnage was complete, both markets recovered in late 1974, and began rising in conjugation once again. Stocks rose a little, while gold rose another 800%. While their rise certainly was not symmetric in nature, it is important to understand that both the gold and US stock markets rose and fell in tandem. After 16 years, the sum total of all that those cyclical markets showed gold up 2000% with the S&P unchanged.
Something similar is likely to occur during this commodity super cycle, and in fact, it has already begun. Gold's rise from late 2002 to today is far superior to the overall market's returns. However, when the US market falls, and the economy follows suit, it will likely bring the gold market down with it. This not only makes sense fundamentally, but is backed up by historical precedence. In Gorton and Rouwenhorst's paper published in 2004, gold's performance since 1959 mirrored the performance of stocks during any given part of the economic cycle. Gorton and Rouwenhorst showed that the early recessionary period was the worst time frame for both stocks and gold, while both sectors performed very well during the late recessionary period.
For those investors wanting a hedge against stock market volatility, gold may not necessarily be the right investment. Gold's performance is highly correlated with the stock market's performance during cyclical 3-5 year periods, and better hedges exist, such as agricultural futures or even TIPS (Inflation protected bonds. Yes, the government lies about inflation, but at least it provides some hedge). Passive investors willing to ride out the storm for 10-15 years may find gold to be an excellent market hedge. Until then, however, expect gold and stocks to rise and fall in tandem.
From 1966-1982, when the S&P 500 did nothing, gold went from $35/oz. to over $800/oz. During this secular commodity bull market, stocks certainly performed in opposition to gold. However, when breaking down these 16 years into shorter time frames, it is noteworthy to understand when gold made its biggest runs. Between 1970-1973, the stock market performed decently well, while the gold market performed very well. However, in the 1973-1974 time frame, both markets took a strong beating, with the S&P losing some 40% and the gold market being cut in half. Once the carnage was complete, both markets recovered in late 1974, and began rising in conjugation once again. Stocks rose a little, while gold rose another 800%. While their rise certainly was not symmetric in nature, it is important to understand that both the gold and US stock markets rose and fell in tandem. After 16 years, the sum total of all that those cyclical markets showed gold up 2000% with the S&P unchanged.
Something similar is likely to occur during this commodity super cycle, and in fact, it has already begun. Gold's rise from late 2002 to today is far superior to the overall market's returns. However, when the US market falls, and the economy follows suit, it will likely bring the gold market down with it. This not only makes sense fundamentally, but is backed up by historical precedence. In Gorton and Rouwenhorst's paper published in 2004, gold's performance since 1959 mirrored the performance of stocks during any given part of the economic cycle. Gorton and Rouwenhorst showed that the early recessionary period was the worst time frame for both stocks and gold, while both sectors performed very well during the late recessionary period.
For those investors wanting a hedge against stock market volatility, gold may not necessarily be the right investment. Gold's performance is highly correlated with the stock market's performance during cyclical 3-5 year periods, and better hedges exist, such as agricultural futures or even TIPS (Inflation protected bonds. Yes, the government lies about inflation, but at least it provides some hedge). Passive investors willing to ride out the storm for 10-15 years may find gold to be an excellent market hedge. Until then, however, expect gold and stocks to rise and fall in tandem.
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