Lirik Lagu Sinopsis Film Gaya Hidup
Blackberry LG Mobile Nokia Samsung Sony Ericsson
Klasemen L.Italia Klasemen L.Inggris Jadwal Liga Italia Jadwal Liga Inggris
Resto Enak di Jakarta Resto Romantis di Jkt Hokben Delivery Bakmi GM Delivery PHD - Pizza Hut
Kamis, 15 September 2011 | 03.28 | 0 Comments

Gold is the only sane investment in an insane world

 You are receiving this email as a subscriber to Money Morning.
If you have not already done so, please click here to confirm your subscription.

Unsubscribe. To stop receiving Money Morning emails, please click here.

15 September, 2011
  • Gold is the only sane investment in an insane world
  • Recommended article: A stock that thrives on market volatility
  • Yesterday’s close: FTSE 100 up 1% at 5,227... Gold down 0.76% to $1,819.63/oz... £/$ - 1.5768
From John Stepek, across the river from the City

Dear Golden Jann,

John Stepek A French man, a German woman, and a Greek man sit down to a conference call.

It sounds like a bad joke. But this really happened yesterday. And while the punchline isn’t funny, it is absurd.

They all came out, and Nicolas Sarkozy and Angela Merkel said they’re “convinced” that Greece’s future lies in the eurozone. George Papandreou said Greece is “absolutely committed” to meeting its austerity targets in exchange for a bit more cash.

Everyone is lying through their teeth, and yet still the markets cheer.

There’s only one thing a sane investor can do at times like this – hang on to gold.


A special presentation from MoneyWeek's income specialist Stephen Bland...

"Why you don't need to worry whether the market goes up, down or sideways"

(Here's a PROVEN way you could make money from the markets for the rest of your life)

This is far too good to miss - watch the presentation here.

Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek independent financial advice if necessary. MoneyWeek Ltd. Customer Services: 0207 633 3780.

A solution to the eurozone crisis – forced borrowing

The finest minds in the world are tossing off solutions to the eurozone crisis left, right and centre – mainly in the pages of the FT.

Here’s the problem. The eurozone can’t print money to buy its own debt, like Britain and the US. The scale of austerity required to pay back the debts seems sure to cripple any economy attempting it. And writing off the debts would hurt the banks that everyone – unfathomably – is so keen to protect.

What can the eurozone do? A couple of those fine minds I mentioned – Jean-Paul Fitoussi and Gabriele Galateri di Genola – have a suggestion. “Forced borrowing.”

The great thing about being a sovereign state, you see, is that it’s possible to force taxpayers “to lend to their government”. California did it in 2009 by “adding a premium to the income tax withheld from paycheques, to be repaid the following year”.

All eurozone governments need do, is threaten to pull this ‘weapon of mass destruction’ out of the bag. That’ll “remind investors that sovereigns are not private borrowers: they need never default because they can always force-feed debt issues to their own residents”.

Reading that, how does that make you feel? I find it scary.

“Financial repression” – where governments use any option available to keep their borrowing costs low – is a fact of life. Inflation is used to rob citizens and investors on the quiet. It usually works because human beings are wired in such a way that we find dealing with ‘nominal’ returns a lot easier than ‘real’ (after inflation) returns, so we often forget we’re being robbed.

But there’s a line in the sand. Inflation works as a hidden tax for governments because it is silent, and those who really worry about it can usually find ways to get around it. It’s sneaky.

What’s worrying is when governments feel that circumstances are so extreme that they can start ripping up the rulebook, and confiscate wealth by increasingly obvious means.

Desperate governments are dangerous beasts

Merkel has described this financial crisis as a battle between governments and the markets. But that gets it wrong. It casts the government as the representative of the people, and the markets as some dark elite force trying to destroy democracy.

The fact is, this is more of a clash between the forces of change, and those who would rather maintain the status quo – in banking and politics – regardless of how flawed it is. The old models that gave rise to the financial crisis no longer work (including the financial models, as my colleague Tim Bennett will be discussing in this weekend’s video tutorial). But no one in power wants to accept that.

The problem is, when governments start looking desperate, you don’t know what they’re going to do next. This is one of the main reasons why markets are so jittery. Nothing is safe.

Here’s an example. As you no doubt know, we’re keen on big blue chip stocks that pay decent dividend yields. I’m not about to change that view. However, as my colleague Merryn Somerset Webb is fond of pointing out, our reasons for liking big blue chips are also the very reasons why desperate governments might see them as honey pots. They throw off lots of cash. Why shouldn’t governments help themselves to a bit more of that cash?

It’s not far-fetched by any manner of means. ‘Windfall taxes’ on unpopular businesses – such as oil production – are common, even in the UK. (Note that the business has to be unpopular: I never heard anyone calling for a windfall tax on property profiteering, even although that was far less socially useful than your average North Sea oil explorer.)

In a world of ever-changing goal posts, you never know when your ‘safe’ investment might turn risky overnight. As Adrian Ash of BullionVault points out, this is all part of the reason why buying gold is perfectly rational, despite what economic theorists and the more snobbish financial journalists might argue.

Sure, even at that, gold can be confiscated. Gold can have its price fiddled with by the government. Gold could be taxed. But in extremis, in its physical form, it’s a piece of portable wealth that has never, in the history of the world, gone to zero. You can’t say that about shares or bonds or property.

I’m not saying you should hold all of your wealth in gold. But I certainly think that even at this price, you should have some as insurance. I read a price target for gold of $10,000 an ounce from Dylan Grice at Société Générale yesterday.

Let me just emphasise that Grice wasn’t saying that gold would definitely hit that price. His point was that demand for ‘honest’ money will only grow as our ability to trust in the value of other assets continues to decline.

The point is: if gold was to hit $10,000, you wouldn’t be thinking “wow, look how much money I’ve made”. You’d be thinking: “look at what a godawful mess our world is in.” And as long as our leaders continue to deny that we need to make some big changes, that outcome becomes ever more possible.

Got a comment on this article? Leave a comment on the MoneyWeek website, here.

Until tomorrow,

John Stepek

Editor, MoneyWeek

Our recommended article for today...

A stock that thrives on market volatility
- With markets so volatile at the moment, it's tough to find a stock that pays a reliable return. But this company thrives on volatility, says Bengt Saelensminde. And with a blistering year of growth forecast, it could make you great profits: A stock that thrives on market volatility.

And for yesterday’s market update, see below...


MoneyWeek – claim 3 free issues

Claim the next 3 issues of MoneyWeek, Britain's best-selling financial magazine, FREE

In the last 12 months, some MoneyWeek readers made a fortune from our money-making tips, advice and recommendations.

Now find out how MoneyWeek can protect and grow YOUR money in 2011… and beyond.


MoneyWeek magazine is an unregulated product published by MoneyWeek Ltd.

Market update

Click here for the latest stock market news and charts.

The FTSE 100 made further gains yesterday as investors were encouraged by a possible single bond for the eurozone. The index closed up 1% at 5,227.

Banks were again in demand. Lloyds headed the sector up with a gain of 5.3%, while RBS rose 4.2%, Barclays gained 2.5% and HSBC added 0.5%.

Retailers were also on good form. Next was the highest climber of the day, up 6.3% after beating forecasts with its first-half profits. Elsewhere in the sector, Burberry added 5.6%, Marks & Spencer rose 2.5% and Kingfisher gained 2.4%.

In Europe yesterday, the Paris CAC 40 rose 55 points to 2,949, and the German Xetra Dax was 174 points higher at 5,340.

In the US, the Dow Jones Industrial Average rose 1.3% to 11,246, the S&P 500 added 1.4% to 1,188, and the Nasdaq Composite was 1.6% higher at 2,572.

Overnight in Asia, Japan's Nikkei 225 rose 1.8% to 5,668 and the broader Topix index gained 1.4% to 751. In China, the Shanghai Composite rose 0.2% to 2,479, but the CSI 300 slipped 0.2% to 2,729.

Brent spot was trading at $111.85 early today, and in New York, crude oil was at $88.42. Spot gold was trading at $1,812 an ounce, silver was at $40.33 and platinum was at $1,795.

In the forex markets this morning, sterling was trading against the US dollar at 1.5773 and against the euro at 1.1457. The dollar was trading at 0.7263 against the euro and 76.70 against the Japanese yen.

And in the UK, retailer Kingfisher, which owns DIY brands B&Q and Screwfix, saw a rise in first-half sales of 3.8%, with like-for-like sales up 1.6%. Pre-tax profits rose 24% to £439m.

Top 20 spread betting accounts compared HERE
Don't miss out on account opening offers like these:

£1000 offer | Free charts | Zero spreads | Free iPhone app

image MONEY MORNING™ is the free daily email service brought to you by MoneyWeek. For a 3-week FREE trial of the MoneyWeek magazine & website, click here now:

Sign up for a 3-week FREE trial of MoneyWeek

Or if you prefer to place your order over the phone, just call 0207 633 3780 and one of our Customer Service representatives will take your order for you. Please quote reference number EMYK M906 to get your special discount and free issues.

Know someone who'd like to receive the Money Morning email themselves? Simply forward the following link to anyone you think could benefit from our daily service:

Sign up to the Free Money Morning email here

© 2011 MoneyWeek Ltd. All Rights Reserved. The content of this email may not be reproduced without the written consent of MoneyWeek Ltd. Registered Office: Sea Containers House, 7th Floor, 20 Upper Ground, London, SE1 9JD. Registered in England No. 04016750. VAT No. GB 629 7287 94. MoneyWeek and Money Morning are registered trade marks owned by MoneyWeek Limited.

Past performance and forecasts are not reliable indicators of future performance. Shares are by their nature are speculative and can be volatile. Your capital is at risk so you should never invest more than you can safely afford to lose. Information in Money Morning is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Appropriate independent advice should be obtained before making any such decision. Money Morning is an unregulated product published by MoneyWeek Ltd. MoneyWeek Ltd is authorised and regulated by the Financial Services Authority. FSA number: 509798.

The Fleet Street Letter is a regulated product issued by MoneyWeek Ltd. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek independent financial advice if necessary. 0207 633 3780.

If you want to email us with a query, simply reply to this email and our Customer Services team will deal with your request. Alternatively, you can contact us by telephone on 020 7633 3780, Monday to Friday, 9.00am - 5.30pm (Wednesday, 9.00am - 2.00pm only).

If a link doesn't work...
Please note: if you use a web based email service such as Hotmail, you may need to copy and paste hyperlinks into your browser's address bar for them to work properly.

Email address change?
Please contact our customer services team on 0207 633 3780 or email to change your details.

If you'd like to put Money Morning articles on your website, for free, please email - IMPORTANT We do require that: 1. You ask permission first, 2. That you do not use our articles until we have confirmed that you can, and 3. That you clearly attribute any article you use to us, and paste a link back to .

Make sure you get Money Morning every day...
Unsolicited, unwanted advertising e-mail, commonly known as "spam", has become a big problem. Most email services and internet service providers have put blocking or filtering systems in place, or created 'blacklists', in order to protect users. Unfortunately, this may mean that emails you have requested - such as Money Morning - are sent to your 'spam' or 'bulk email' folder, or are blocked entirely. To ensure you get Mone yMorning to your inbox every day, please follow our whitelisting instructions .

To change your details, please contact our customer services team on 0207 633 3780 or email

To unsubscribe please click here


Copyright Terjago © 2010 - All right reserved