Now, onto business...
First off, we have an absolute must read post over on ZeroHedge for those interested in understanding Why The European Union is Doomed. In short, a combination of factors, but at its foundation was the advent of "Neoliberal Capitalism", where:
Markets are opened specifically to benefit the central State and global corporations, and risk is masked by financialization and then ultimately passed onto the taxpayers...profits are privatized, losses are socialized, i.e. passed on to the taxpayers via bailouts, sweetheart loans, State guarantees, the monetization of private losses as newly issued public debt, etc.
This is a colonialism based on the financialization of the smaller economies to the benefit of the big banks and their partners, the Member States governments, which realize huge increases in tax revenues as credit-based assets bubbles expand.The fact that the Euro is ultimately headed to failure should come as no surprise to many of you -- it's been obvious since late 2008 that the economic policies of the EU are simply unsustainable in the long-term, and that an eventual collapse of the Euro is the only possible outcome. When this happens, the dollar will no doubt surge as panicked European investors flock to the "safety" of the USD. Precious metals should also surge, as major European investors who no longer trust the stability of the USD will flock to their only remaining refuge: gold and silver. If the collapse of the Euro happens before the end of this year, then it will likely happen just after the summer, and we will likely see gold at levels exceeding $2000/oz and $75-100/oz for silver.
In the gold market, gold finished 0.65% lower than Friday's close, it's 3rd consecutive decline, after a report on U.S. consumer spending indicated that everything is back to normal, and the financial meltdown has been averted. Seriously though, if you believe that the United States can spend its way out of debt, then please stop reading my blog.
In silver news, I happened to catch a rare gem from CNBC, explaining that silver is undervalued compared to gold. Really?!?! Are you SURE?!?!?!(sarcasm)
Silver is about 16 times as plentiful in the earth’s crust as gold, according to John Stephenson, author of the “The Little Book of Commodity Investing.”I don't know how the editors at CNBC.com let this one slip by, but clearly someone was asleep at the wheel. If the above weren't good enough, the article went on to tell us:
Yet, the price of gold per ounce currently trades at about 38 times that of silver.
According to the basic laws of supply and demand, especially given that the two metals are quite similar, the price gap between the two metals should be much smaller.
“It basically has the same physical characteristics of gold as a store of value and it also has an industrial kicker,” said Stephenson, a portfolio manager for FirstAsset Management in Canada. “For my money, the trade of the decade will be in silver. Gold was the best investment over the last decade, but in the future, silver will be the go-to investment for investors looking to ride out the current storms in the global economy.”
Historically, gold sells for about 30 times the price of silver. Since gold is currently selling at about 38 times, silver is undervalued by about 27 percent and should be closer to $47 an ounce instead of $37.
“In a world where the amount of paper fiat currency is staggering and increasing as governments from U.S. to Europe keep printing, it may be time to start looking at the poor’s man’s gold,” said Stephenson, who pointed out that while gold has exceeded its record price during the 1980s, silver is still way off the $68 per ounce level it reached during that time.Of course, this should come as no surprise to those of us in-the-know, but the mere fact that CNBC -- usually a relentless Wall Street shill -- actually managed to report some factual data on precious metals, seems to indicate that a very deep and dark level of uncertainty is creeping up on Wall Street.
Silver has done very well so far this year, returning nearly 20% since January 1st, and I expect that this will continue for quite some time. Silver still stands alone as the single best performing asset for going-on the 3rd consecutive year. Something to think about when you suddenly find yourself with some extra cash...
That's all for tonight, so I'll leave you with the numbers for our investments:
Results upon NY close of trading -- March 28, 2011:
- Gold closed at $1,420.90 per oz, down $9.30 and -0.65% from last week. Silver closed at $37.15 per oz, down $0.17 and -0.46% from last week.
- VFINX closed at $120.64 per share, down $0.34 and -0.28% from last week.
Investment #1, Precious Metals:
- Percent return for the day: -0.55%
- Profit for the day: $-534.77
- Total percent return: -3.4%
- Total profit: $-3,419.21
Investment #2, Vanguard 500 Index:
- Percent return for the day: -0.28%
- Profit for the day: $-283.56
- Total percent return: 0.7%
- Total profit: $658.86
Advantage: Vanguard 500 Index, by $3,859.98
This was my favorite part of today's post:
ReplyDelete"Of course, this should come as no surprise to those of us in-the-know, but the mere fact that CNBC -- usually a relentless Wall Street shill -- actually managed to report some factual data on precious metals, seems to indicate that a very deep and dark level of uncertainty is creeping up on Wall Street."
You've really got this stuff figured out. I'm impressed, as always.