Friday, 9 December 2011

invest in precious metals...ask me...

Hi everyone...


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The outlook for Gold is bullish for 2012

hi everyone...just nak share with everyone an article that i read today....

The outlook for gold is bullish for 2012. The European debt crisis, which dominated 2011, will continue to hang over markets in 2012. I’m extremely bearish on Europe. The political and financial systems are inadequate to deal with the serious fiscal and sovereign-debt problems the old continent faces.

Europe and gold
The risk of contagion is large and the safety mechanism is convoluted (too many countries with too many conflicting interests). Europeans don’t have a handle on the situation; some banks and countries are already insolvent. The situation is extremely precarious.
Europeans will keep kicking the can down the road until it can’t be kicked any longer. When that happens, it’s going to get very ugly very quickly.
In this environment, gold should retain its safe-haven status. Investors will seek to protect their assets by using gold, one of the only currencies that’s a store of value that central banks can’t print at will. The volatility caused by the European markets will push gold prices as high as $2,500 in 2012.
Five reasons why 2012 will be golden for investors:
Gold is an institutionally underowned asset. While investment demand for gold has been increasing year-over-year, the yellow metal is still drastically underowned by many institutional investors. In fact, gold represents only 1.5 percent of all total global assets including equities, fixed income, private equity and real estate.
Increased market volatility boosts gold’s safe-haven status. Following the global turmoil that has been with us since September 2008, volatility has become a permanent staple in the markets. As measured by the VIX index, volatility is at historic highs. This increased volatility is pushing investors toward the safety of gold, which will continue in 2012 and for years to come.
Central banks starting to load up on gold. One of the biggest shifts we’ve seen in the Gold markets is central bank purchases of gold. Up until 2010, global central banks were net sellers of gold assets. Beginning in 2011, many of the world’s leading central banks began aggressive and active purchasing programs to buy gold. Gold purchases in 2011 are up more than 160 percent from the previous year. Indeed, the central banks of Kazakhstan, Mexico, Russia and South Korea all went to the open market to buy gold to diversify away from their dollar holdings.
Emerging market jewelry demand remains very strong. More than 50 percent of gold goes toward the manufacturing of high-end jewelry, and the majority of these purchases are made in emerging markets; particularly in India, China and the Middle East. While these economies could slow down as a result of a European crisis, the amount of wealth creation over the last decade has been staggering, and the high-end consumers who purchase gold should continue their purchases into 2012 and beyond.
Supply extremely tight, accompanied by rising production costs. In addition to all the bullish demand factors, the actual physical supply of gold is draconically tight. Yes, high prices incentivize miners to produce more, but that’s not enough: Ore-grade levels are at historic lows; it takes several years (5-7 years) for a new mine to start producing at commercial levels; and extraction costs are increasing dramatically (labor, energy and environmental costs are all higher). All this means that there’s only 1.5 percent of new gold coming online each year.
When you add up the tight supply scenario with all the bullish demand factors, gold prices have only one place to go, and that is higher.

Wednesday, 7 December 2011

It's Time to Think in Terms of Gold

Hi guys...this is an article that i read in my email this morning..... "It's time to think in terms of gold" by Jeff Clark, Big Gold....

A young woman - let's call her Andrea - inherited some money from her father in late 1997. She was only nineteen at the time. Not knowing the first thing about investing, she kept the money in stocks and bonds as her father had, wanting to hold on to it until she really needed it. She played it "safe."
She got married last year and so began to withdraw the money. She was pleased to see a chart from the broker that showed her portfolio was up about 20%. While admittedly not a great return over 12 years, her account had nevertheless survived both the 2000 tech crash and the 2008 market meltdown. She knew not all investors could not say the same thing.
Andrea began spending the money, thankful that she'd saved the money to start a family. But a cruel reality slowly began to set in: the money didn't seem to be going very far. She couldn't quite put her finger on why, but it all clicked when she saw the lofty price of a new SUV she wanted. She remembered her Dad's favorite vehicle back in the day - a Ford Ranger pickup - and recalled him boasting that he paid only $8,500 for it in 1992. A comparable vehicle today costs more than twice as much.
It hit her like a slap in the face. While the number of dollars in her portfolio was greater than what she inherited, they bought less stuff. It was such a revelation that she actually uttered the words out loud...
"My investments didn't keep up with inflation... I LOST money!"
Gold Is the Benchmark
Whether they realize it or not, the same thing is happening to most people's investments. Over time, real returns are diluted because of inflation. The only reliable way to measure the value of investments is in terms of a financial intermediary that cannot be inflated: gold. That way, investors can tell how they're doing in real terms.
This has practical ramifications for all of us. Someday, we (or our heirs) are going to spend some of the wealth we are accumulating. How much we can actually buy with our gains will directly depend on how hard inflation has hit whatever our investments are denominated in. A 15% gain in dollars is only 9% in real terms if USD inflation was 6% during that time frame. A money-market return of 1% is a losing investment if denominated in something inflating at 3%. In Andrea's case, by keeping all her funds in dollars, her 20% gain turned into a 16% loss in purchasing power.
In other words, since most people don't adjust for inflation, their investments are not doing as well as they think.
In contrast, if Andrea had kept part of her inheritance in gold, that portion would have grown 332% (from December 1998 to June 2010, when she got married). More importantly, she would have lost no purchasing power during that time. In fact, after inflation and taxes, Andrea could've bought 50% more in goods and services than in 1998, if purchased using liquidated gold. She could buy two small pickup trucks today with the same number of gold coins it took her father to purchase the Ford Ranger in 1992. (This all while gold went nowhere for those first three years and lost a third of its value in the fall of 2008.)
With gold as her savings vehicle, she could have completely sidestepped the erosion in the dollar.