Bullion Vault
"He who goes a-borrowing, goes a-sorrowing…"

Read more….

Bullion Vault
Standard & Poors’ equity analyst on where gold’s headed next…

Read more….

Bullion Vault

Rome’s long decline, now repeated by the United States…

WARREN BUFFETT famously says that people do not make money by betting against the US economy. But two years ago we decided to take a chance, writes Bill Bonner in his Daily Reckoning.

“We are short the United States of America,” we announced from the comfort and safety of our headquarters in London.

“Sell its stocks. Sell its bonds. Sell its money. Sell its real estate. Sell the equity. Sell the debt. Sell everything.”

What we saw was an over-stretched empire getting ready to snap. But we were also allowing ourselves to be lazy. Rather than deconstruct the capital structure of the world’s largest economy, we decided to sell the whole damned thing.

All hell broke loose in September 2008. Since then, US stocks have gone down about a third. Real estate too. Unemployment has doubled. Consumer prices are going down at the fastest rate since the ’50s. And the economy is in the worse recession since WWII.

Meanwhile, Americans’ per capita wealth has fallen from $172,000 in September from $212,000 two years earlier. And the UN reports that the quality of life in America has gone down too…from No.5 on its list in 2000, it fell to No.13 in 2007. No doubt it is below No.20 now.

Buffett has lost billions betting on the US economy while our Gold positions are handily up; gold was the most profitable major asset over the last ten years.

So you see, we were right; America was a sell two years ago.

Read more….

Bullion Vault

Did cutting silver out of the money system lead to killing the Gold Standard…?

RECENTLY Tom Jeffries of HoweStreet.com spoke to David Morgan of Silver-Investor.com about the role of gold and silver as units of money and currency.

HoweStreet: Everybody’s talking about gold’s place in the “new world order”. But let’s not get spooky, folks. How would you expect silver to act in the event of a world oligopoly, David?

David Morgan: I think that, as I wrote so many years ago in Silver Investing Rules, no one likes to be a prophet of doom, but silver is the money of last resort, and I still believe that. However, gold certainly has a higher monetary aspect to it as basically a store of wealth, a store of value, and a safe haven. Silver has those qualities because it’s an industrial metal as well.

But from a practical perspective, silver is the one that you’d be actually using in times of crisis. Not that you wouldn’t use gold, but if something happened and you needed to get a loaf of bread, a gallon of gas, pay rent, or keep your landlord off your back, and you had some silver coins, that would be a lot more advantageous to you than a Gold Bar, which would be pretty hard to divide up and pay your landlord or whatever.

So silver really has been money in more places for longer periods of time than gold has, and whenever I make that statement it seems to get some people upset, but it’s a fact, it can’t be disputed. Through all of recorded history, silver has had far more functionality as money than gold.

Howe Street: I guess that begs the question, what will central banks and those wily governments out there do to resist the allure of silver for the average investor?

David Morgan: It’s a tough one. To really get an in-depth answer, you should go to Silver-investor.com and go into the archives and read everything Charles Savoie has written for the last decade. Readers get an eye-opener on how important silver is as money, what the central banks really think of it through history, and why they basically demonized and demonetized silver as their main concern so many years ago, hundreds of years ago, really.

You’re looking back to, say, the Crime of 1873, some 130 years ago. And once that was accomplished, we went to the gold-only path. And then you had a monetary metal that was much easier to control, because the banks had most of the gold anyway. So if the banking community and financiers got rid of silver, you didn’t have a problem with the people (or the peons and underlings, as the bankers view us), and you just had gold, and they owned it, so they could make the rules.

As you know Tom, but very few do, The Wizard of Oz was basically a metaphor for going to the gold-only standard. There’s a good article on the Gold-Eagle website about how the gold-only standard eventually leads to the fiat system, but when you have bi-metallism, which is where you have both gold and silver circulating freely – and not necessarily in ratio fixed by government, but what the market could decide – you have a much freer and safer system.

You have a lot more stability in the system than you have on a gold-only standard, but very few people know that, very few people believe it, very few people study it. And if this is the government of the United States, supposedly of the people, for the people, and by the people, you should look at what the people use as money and why they use it.

Of course I take that perspective and because of that, I’m very, very biased toward silver being not only a monetary metal but also probably the most high-tech industrial metal required for today’s world.

Read more….

Bullion Vault

Comparing the cost of Gold ETFs with BullionVault…

ONE OF the largest shareholders in the New York-listed SPDR Gold ETF, until recently, was noted hedge fund manager David Einhorn’s Greenlight Capital, writes Julian Murdoch at Hard Assets Investor.

But last week, we learned that he’d sold all of his shares in the SPDR (NYSE Arca: GLD) in favor of physical bullion.

How much? About 4.2 million shares of GLD, or roughly $390 million. And why? “At a minimum, this will provide some savings as the costs of storing gold are less than the fees” of the SPDR Gold ETF, Greenlight told investors in a client letter.

So does Einhorn know something we don’t know? Is the 40 basis points charged by GLD each year for the privilege of owning their shares a rip-off? Or a great deal?

Let’s put some of the moving parts on the table, and compare the costs of trust-fund gold with ownership of the physical stuff itself.

If you are going to buy physical gold, you first have to decide where you’re going to store it. But sticking a few hundred thousand dollars of Gold Bullion in a safe deposit vault at your bank is a bad idea, for one big reason: If you’re buying large quantities of gold, the bars you buy will be serialized. They have provenance, and their acceptance as a thing worth a few hundred thousand dollars is based on an unbroken chain of ownership inside approved vaults. Most bars never leave the big gold vaults; ownership simply moves from one buyer to another.

How much does this custody cost? Well, that varies, but on the cheaper end of the scale, you can go to BullionVault.com, an online gold exchange that custodies just over 18 tonnes at the moment for its users. BullionVault charges 12 basis points per year to users holding more than $40,000 in gold. [Ed. Note: Below that, it's $4 per month flat...]

Once you decide where custody of your gold will be, you actually have to buy it, which means dealing with spreads and commissions in the variable precious metals market. Spreads in particular can vary massively in the precious metals market. If you’re a primary dealer on the “over the counter” (OTC) market, trading in 10,000 ounce blocks, your spread could be as low as 50 cents an ounce. For retail investors looking at pooled gold programs, a quick survey of available quotes suggests a spread of about 25 basis points is the norm.

Read more….

Bullion Vault

As the US fights deflation, credit inflation is alive and well in China…

The INVESTMENT COMMUNITY is divided at present as to whether the world economy faces hyperinflation or deflation, writes Puru Saxena of Money Matters and Puru Saxena Limited in Hong Kong.

Some observers are convinced that the central banks’ printing press will take the world towards hyperinflation whereas others believe that the ongoing contraction in American private-sector debt will result in outright deflation.

But what will the future bring? It is my contention that we will get neither hyperinflation nor deflation.

What is more likely is that, over the coming months, we will get another deflationary scare. Any sell-off in the markets later this year will be met by an even larger stimulus from the policymakers and this will ultimately result in high inflation.

So I maintain my view that due to the unprecedented policy responses around the globe, the world’s economy will face high inflation over the medium to long-term. And the general price level will double over the coming decade.

In the near-term however, we will probably get another period when the market will (once again) become concerned about the prospects of a lengthy economic contraction. It is conceivable that the ‘green shoots’ hype currently doing the rounds will soon be replaced by more economic worries as a second wave of foreclosures hits America later this year.

It is therefore possible that before year-end we will witness large corrections in stocks and commodities. Conversely, we are likely to see big rallies in US government bonds, the US Dollar and Japanese Yen.

Read more….