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USAGOLD NewsGroup Archive
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European NewsGroup February 27th: Stagflation in America poses
risks in the Eurozone
Euro pushes
to new highs above $1.51
William L. Watts & Lisa Twaronite - MarketWatch - 27-Feb-08
"The dollar was battered
across the board Wednesday, falling to a new low of $1.5144 against
the euro after the one-two punch of downbeat durable-goods data
and hints from U.S. Federal Reserve Chairman Ben Bernanke that
more interest rate cuts are on the way."
"The euro notched a new
high against the dollar in North American trading late Tuesday,
topping the old high of $1.4966 set Nov. 23, on new fears the
U.S. economy may be flirting with stagflation -- a combination
of stagnant growth and high inflation."
USAGOLD Comment: With recent indications of both soaring
inflation and slower growth in America, fears of stagflation
- the toxic combination of high inflation and little or no economic
growth - are mounting. The US Fed seems to fear the latter over
the former and therefore is expected to continue on their path
of easier monetary policy, inflation be damned. Meanwhile, recent
Eurozone data has been encouraging with respect to growth, suggesting
the ECB has been on the right track, placing greater weight on
price risks and maintaining a neutral to hawkish tone. However,
if the US economy melts-down (see the next article), Eurozone
growth risks could resurface with a vengeance. In this environment
of spiraling global inflation and risks to growth simmering just
below the surface, buying gold offers our European clientele
the best opportunity to protect themselves against any number
of eventualities. And the surging euro makes gold comparatively
inexpensive!
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America's economy
risk mother of all meltdowns
Martin Wolf - Financial Times - 19-Feb-08
"In all, argues Roubini:
'Total losses in the financial system will add up to more than
$1000bn and the economic recession will become deeper, more protracted
and severe.' This, he suggests, is the 'nightmare scenario' keeping
Ben Bernanke and colleagues at the US Federal Reserve awake."
"The US, however, is a
debtor. It must keep the trust of foreigners. Should it fail
to do so, the inflationary solution becomes probable. This is
quite enough to explain why gold costs $920/oz."
USAGOLD Comment: This article walks us step by step
through a domino-like series of events that could unfold and
ultimately lead to a full-scale meltdown of the American economy.
It is worthy of inclusion in this NewsGroup because the negative
impact on the Eurozone could be significant if even a portion
of this scenario comes to pass. It makes a strong case for a
flight to safety (wherever you are in the world) and as the author
writes, explains nicely the rising gold price.
______________________________
Kosovo is not
independent, it is an EU protectorate
Interview with Dusan Reljic - Der Spiegel - 19-Feb-08
"Kosovo's declaration
of independence has been recognized by many Western countries,
but Serbia claims the move is illegal. Kosovo expert Dusan Reljic
tells SPIEGEL ONLINE about his concerns that the move will undermine
international law, pave the way for future disputes and prevent
longterm peace in the region."
"I don't really see a
possibility for a normal functioning relationship between the
Serbs and Albanians in the region. This outcome has been imposed
on one side, and it simply undermines any kind of long term peaceful
coexistence in the region."
USAGOLD Comment:This interview with Balkans expert
Dusan Reljic offers a clear and concise summary of the implications
of Kosovo's declaration of independence. The powerhouses in the
EU have already recognized Kosovo's independence, highlighting
rifts within the Eurozone. Violence and protests have occurred
on both sides of the boarder. Serbs within Kosovo have recently
requested the return of Russian troops. While the governments
in both Belgrade and Pristina have voiced their opposition to
the use of military force, the EU is going to have their hands
full trying to keep this tinderbox on the continent from flaring.
Gold is the classic hedge against geopolitical tensions.
-- Pete Grant
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February 26th: Stagflation
quietly becoming a reality?
stag·fla·tion [stag-fley-shuhn] - noun
an inflationary period accompanied by rising unemployment and
lack of growth in consumer demand and business activity.
11 Reasons
Bernanke's recession will last until 2011
Paul B. Farrell- MarketWatch - Feb 25, 2008
"Forget paper money and
IOUs. Commodities are the world's new 'currency': Hard stuff
like oil, grains, metals, gold."
USAGOLD Comment: Few have come right out and said, "we
are in a recession" with as difinitive an argument as Farrell
puts forth in this interesting article. He hedges slightly by
saying, "you make your own prediction," but the nature
in which he presents his 11 reasons infers his true beliefs.
Farrell makes the argument that a recession of this magnitude
will certainly have a negative impact on equity values. He indirectly
encourages diversifying one's assets, and in the process, makes
quite the strong case for gold.
Energy, food
push January's PPI 1% higher
Greg Robb - MarketWatch - Feb 26, 2008
"Year over year, the PPI
is up 7.4% -- the fastest pace since 1981. Also on an annualized
basis, the core PPI is up 2.3%."
"That report stirred fears
among some economists that the economy could be returning to
the stagflation of the late 1970s. Stagflation is shorthand for
sluggish growth coinciding with high prices."
USAGOLD Comment: This news is as inflationary as it
gets. I don't think the fed can reasonably contend that inflation
continues to be benign with these numbers. This will undoubtedly
affect policy decisions moving forward. If the Fed continues
to cut rates as we head into a possible recession, a repeat of
the 70's stagflation is almost certain. If they don't cut rates,
the magnitude of this recession could increase dramatically.
Gold's ability to protect the average investor in either scenario
makes the strongest case for its addition to any investment portfolio.
America's economy
risk mother of all meltdowns
Martin Worlf - FT via Business Day - Feb 22, 2008
"In all, argues Roubini:
'Total losses in the financial system will add up to more than
$1000bn and the economic recession will become deeper, more protracted
and severe.' This, he suggests, is the 'nightmare scenario' keeping
Ben Bernanke and colleagues at the US Federal Reserve awake."
"The US, however, is a
debtor. It must keep the trust of foreigners. Should it fail
to do so, the inflationary solution becomes probable. This is
quite enough to explain why gold costs $920/oz."
USAGOLD Comment: This article walks step by step through
a domino-like series of events that could unfold and ultimately
lead to a full scale meltdown of the American economy. It makes
a strong case for a flight to safety and as the author writes,
explains nicely the rising gold price.
February 14th: Will the
IMF gold sales move gold higher?
"Big" news hit the
market over the weekend as the G7 gave the greenlight on Saturday
for the sale of 400 tonnes of gold by the International Monetary
Fund (IMF). While this news at first glance might excite some
of those hoping to add to their positions at lower prices, most
will be suprised to hear that IMF gold sales (or the threat of)
usually have the opposite effect. As the lender of last resort
for virtually every country but the United States, the IMF's
decision to liquidate its best performing asset is seen by many
as desperate act. The market appears to be looking right past
the immediate price impact of this sale, and moving onto the
deeper, more unsettling problems developing in the international
monetary and financial systems.
Peter Brimelow:
Gold's path to $1000 now clear?
CBS Marketwatch - February 11, 2008
"This past weekend, yet
again, the International Monetary Fund announced it would like
to sell some gold. Since gold went bullish in 2002, official
sector noises of this type have often appeared just as gold began
an important move up. Further back, the IMF gold sales in 1978-80
heralded the great gold surge of that time."
USAGOLD Comment: Is "The Gordon Brown Gold Rally
Indicator" going to kick in again? Some of you may recall
a commentary we published last April discussing
the past market affects of Brown's push for IMF sales. On
three separate occasions, Brown's urgings have precipitated dramatic,
sustained upward movements in the gold price. Even though Brown
isn't behind the latest talks for IMF gold sales, we're curious
whether or not the past trend will repeat itself, as Brimelow
suggest in the article linked above.
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Legendary funds manager Julian Robertson
discusses weak dollar
and foresees a recession that's a "doozy"
 CNBC interview via YouTube - January
11, 2008
"I think that the Federal
Reserve and our government will trash the dollar until such times
as there is some turnaround in the economy or until they realize
that policy is self-defeating. ... Devaluing the dollar is a
huge factor. And when you devalue the dollar, the best way to
do it for the economy is just sort of print money. And I think
they're doing that. And I think they are cognizant of what they're
doing, and I often wonder, if I were chairman Bernanke, if I
wouldn't be doing the same thing. He's sort of trapped in the
sins of his forefathers. [...] I think he's doing exactly what
he can do -- is ease, ease, ease, cut, cut, cut, print, print,
print."
USAGOLD Comment: Although this interview was given
in October, it remains relevant, and sobering to say the least.
Regardless of what the future holds, this article reminds us
of the single most important, undeniable function gold holds
in your portfolio. Protection.
If you'd like to revisit our
historical commentary on the Nightmare German Inflation, and
learn how gold protected those fortunate enough to own it, click
http://www.usagold.com/publications/german-hyperinflation.pdf
______________________________
Platinum, gold
and silver all surge in strong week for the metals
Frank Tang and Atul Prakash - Reuters - February 9, 2008
"'I just think gold is
going to explode. There is big fund buying in all months in the
futures market' including the December and June contracts, Jossen
said."
"Gold also jumped on strong
fund buying as rising prices triggered chart-based buy stops.
The news of the world's top gold miners AngloGold Ashanti and
Buenaventura reducing their hedge-books also boosted prices."
USAGOLD Comment: Even though this article is a bit
outdated, its been included to convey one very important point.
As the power problems in South Africa play out, mining companies
might have to reduce their hedge books moving foward as their
capacity won't be able to meet what they've promised to sell
in the future. There are rumblings that the IMF sales could be
a response to this potentially explosive problem. Next week's
newsgroup will focus on the ongoing problems in the mining industry,
and the potential long term impacts on the gold market.
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