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Archive for October, 2010

Investing in World Debt? …..or a real, tangible, physical asset?

Monday, October 25th, 2010

Invest with trepidation because most traditional ways like savings accounts, property, government bonds, shares, hedge funds etc are inevitably taking a risk by sharing someone else’s debt. Your investment helps them create even more credit and therefore fictitious money. This credit enters a worldwide cycle that continues to spiral upwards. World debt is out of control and nobody has an answer to “if” it can ever be paid. The so-called strongest economy in the world, the US, currently has an annual budget requirement of $3.5 Trillion. US Government income is $2 Trillion annually and this could decrease with decreasing tax revenues caused by unemployment. It therefore borrows $1.5 Trillion just to stand still.
Who is lending them this money?
What is it guaranteed against? (is it guaranteed?)
How much interest are they paying?
Can they afford the interest?
Can they ever afford to repay it all back?

Writing the questions is the easy part but finding coherent answers, well…
Truth is the US is fabricating at least $1.5 Trillion a year to balance their books and the money markets are complicit in this deceit as it’s also in their interest to carry on fictitious “credit trading” which is still making them money. One has to also imagine the amount of interest being paid for this level of debt and not forget that this significant amount has to be added to the annual deficit, therefore compounding it’s enormity.

There is not enough money in the world to cover current World debt and it’s increasing daily (as is the interest due on all of it).

World annually budget deficits are estimated at $6 Trillion a year.
Where is or who has this amount of money available to lend?
Historically paper money is created in line with National Gold reserves so all money should have a gold equivalent. This is no longer the case because the world needs $6 Trillion a year to stand still and cover it’s deficits but annual world production of gold only equals $100 Billion.
Every time we “invest”, pay our mortgage or simply put our salaries in the bank we are encouraging this cycle and allowing more debt to be created to apparently pay off the current debt. This is like paying off a credit card bill including interest with another credit card that has even higher interest. The first debt is paid by creating a second even bigger and more costly one.

Why would anyone want to invest in this?

Probably because their choice of options is limited to traditional methods by the very people creating the debt.
What they don’t want you to do is withdraw your money from the cycle because that hurts them. They don’t really care if your investment makes money eventually, just like pensions are eroded with excessive management fees & middle men commissions.
BBC’s Panorama recently revealed how HSBC took £99,900 from a £120,000 pension pot ie. 80%. Obviously their only interest is getting your money now and making excessive amounts themselves. We’ve seen too many examples of their excuses when honest folk realise a lifetime of paying in = heartbreak and “sorry” at term because their investment has evaporated in the system of debt.

Everyone except the Brits are doing it!

So where is the sanctuary for my money?
Well plenty of Central Banks, Corporate investors, Private fortunes and populations across Europe are turning to Gold. Why? Because it’s real, physical gold and at term will still be there and worth something. It is also NOT somebody else’s debt and therefore NOT reliant on some fund or company staying in business for however long. Gold is a real, tangible asset that has been valued by humans for over 6000 years. We can’t invent gold we have to mine it. There is a limited world supply and increasing demand year on year. Industry needs it, Dentists need it, Jewellers need it and Bankers need it to guarantee their currency and circulating money supply.

The truth is the World is bankrupt but nobody wants to admit it!
It’s time to hold on to your valuables to survive the next crisis and Gold has and will always be valuable.

Strangely enough the US has a big problem here because there is $15 Trillion in the banking system and only $0.35 Trillion of gold reserves to back it up.Technically there should obviously be $15 Trillion of gold. This means that if every dollar was taken back to the bank to be cashed in against it’s value in gold $14.65 Trillion would be worthless!!! Do you now see the problem? Even the less mathematically proficient can see this problem is so big it’s maybe impossible to fix – ever!
The economic model for this is simple and is based on GREED.

Gold is not somebody else’s debt!

If you really want to preserve personal wealth in a durable form for the future then the choice is simple:

1. Invest into the Black Hole of World debt?
2. Invest into a debt free, real, physical asset that you control and can manage how you wish?

Don’t be fooled by thinking that you can’t do something because you’ve never done it before or because the option is made difficult by those who wish to profit from you.

Gold is Good
Debt is Bad
Gold will still be real
When the paper debt’s been had!

It is true that the value of Gold can go up and down but remember we live in a different world since the sub-prime and Banking crises. Observe the trends in Gold prices over the last ten years at http://www.kitco.com/charts/livegold.html and judge for yourself!

References:
Thanks to Jason Hommel at

http://www.24hgold.com/english/news-gold-silver-low-inflation–massive-gold-rise-.aspx?article=3160143892G10020&redirect=false&contributor=Jason+Hommel#Commentaires1_tableCom

BBC Panorama “Who took my pension?” 04Oct 2010

http://www.smartmoney.com/compoundcalc/

Eric Cantona’s French Revolution!

Friday, October 22nd, 2010

It’s worth a thought – a revolution without a drop of blood, a shot, any forms of arms and not even a mass gathering or peaceful march on Parliament. Then how I hear you ask. Well according to our well-loved french sage Eric Cantona nothing could be simpler or more powerful. In a recent interview now viewed widely on youtube Eric suggests a novel yet ultimately effective and poignant way for the French to draw the attention of their unfeeling and uncaring President Sarkozy. He suggests that people should quietly go to their bank and withdraw all their cash. He reckons that this may be the best way to get the establishments attention by bringing down the banks who are at the heart of the system and he may just have a point. The only language that the politocrats understand is money and plenty of it for themselves. At a time when Sarkozys pushing through crushing reforms of the average pension he is currently due to net at least a cool €18,000 a month (and rising) from the state when he decides to retire. He has absolutely no concept of the reality of everyday existence for most of his “subjects” yet he expects them to always pay the price. Remember how having gained the presidency he immediately gave himself a huge pay rise. Is it just a case of “Well I’m alright Jack!”? – I think so. Maybe Eric has got a point. Maybe we should all take ownership of our cash so the banks can no longer use it for their own profiteering ends. Maybe it’s about time they realised enough is enough and maybe it’s about time real people took back control of their own destiny.
Vive Eric, Vive La Révolution!!

Ps.What do the French do with all this money? – probably what they’ve always done when a crisis looms they buy Gold coins to preserve the value of their wealth. Their favourite is the beloved Napoleon and there are signs recently that these are in high demand and the prices are rising. Their rationale is that Gold has and always will see them through the hard times because it has always been the reference we use to value currencies or when they fail commodities.

Transcription and translation
Nantes 8th October 2010

I don’t believe that we can …. I don’t believe that we can be completely happy when we see poverty all around us. Or we’re living in a cocoon, sealed off from everything … but there is a possibility and something we can do Well, it annoys me a little that there going … oh it doesn’t really annoy me at all Today it’s important to defend ourselves
But today to go out into the streets, what’s that? Today to go out protesting in the streets – what’s that? They turn everything back against you.
Today it’s no longer the way we have to do things.
It’s great to speak of Revolution and taking up arms but you can’t go around killing people

The revolution is really simple to make. The System , what’s the System’s , the System’s built around the Banks …The System is built on the banks
So if you want to destroy the System you do it by taking down the banks
So instead of 3 Million people being in the street waving their thingys, these 3 million people should go to their bank and take their money out, then the banks collapse!

3 Million, 10 Million, 10 Million People, everyone, and then there’s a true threat, and then there’s a true revolution, a revolution should be against the banks, it’s not complicated. Instead of going on the street and doing kilometres in the car to get there, go to the bank, in your village and take your money out – and if loads of people take their money out the banks collapse – no weapons no blood nothing at all, just like Spadgeri (a guy who robbed a large bank through the tunnels one night), it’s not complicated , and then, they’re going have to listen to us differently, Unions… you have to help them with ideas sometimes!!!!

Gold, an alternative Currency of Confidence?

Monday, October 18th, 2010

Where would we turn to if the known currencies of the world suddenly devalued and became worthless in real terms?
Throughout history there have been instances when all faith has been lost in the official currency usually because it has become worthless and therefore all confidence has been lost. However, people have always looked for an alternative to maintain commerce and everyday survival. This has sometimes taken the form of bartering but its limitations are often in the assignement of some recognisable value to a wide range of goods and services. There has to be some common denominator and unit value that is commonly recognised and therefore allows the cycle of trade to turn.
During the French revolution the state coffers were completely empty and so the emerging Constitutuional Assembly created a system based on “assignats” which gained their value through selling off assets of the church. These “assignats” would be guarenteed by the state and the objective was to reconstruct a functioning economy. However, they became greatly over subscribed to the tune of 47 billion causing inflation, zero rates of interest and ultimately ended in collapse.

Alternative Currencies are not new!

Around the world there are numerous examples of local currencies which have been introduced to promote local business, local produce, customer loyalty and awareness to trade issues and climate control. They all tend to be run in parallel to the national currency but are based on creating a thriving local, fully functioning economy incentivised by promotions and discounts. In recent years they have been launched in the UK as part of the Transitions Towns initiative and these include the Totnes Pound, The Brixton Pound, The Stroud Pound and the Lewes Pound. Lewes had previously had introduced its own currency in 1789 which lasted until 1895. These pounds are obtained by exchanging pounds sterling for equivalent face value “local” pounds. Various denominations have evolved such as th 5, 10 and 21 Lewes pounds issued in 2009. There have also been schemes in the US such as the BerksShares in Massachusets which are bought for 95 cents yet worth $1. These are available in 1,5,10,20 &50 denominations. Similarly there have been examples in Canada with the Toronto Dollar, the Calgary Dollar and also in Australia with the Baroon Dollar. Most of these initiatives have been launched since 2006 or later and may well be a local solution in the fightback against the worldwide economic problems. They are viewed as trustworthy currency with real value to the local economy and in certain cases well-meaning because of the positive impact they have on local services and properity. Although these models function locally they do demonstrate a widening appeal for taking control of currency and introducing stability to the functioning of an economy.

Are National Economies really functioning?

If they are then for who are they functioning- surely not the majority?
What’s happened to the Utopia of Globalisation?
One has to ask where we are heading with the daily drivel of mixed messages to suit the medias demand for sound bites and politicians short term ambitions for themselves far outweighing the long term requirements of the National interest (daily or decades of proof – take your pick!).

What can be said of today’s global currencies which are currently being prostituted by their governments in a global exchange war to meet their “protectionism” objectives by stealth. Who is controlling their value and to what end?

The “trust” in these currencies is gradually being eroded to the point that Central Banks and the big ”clever” money of investors are seeking sanctuary in what may be the only true trustworthy currency – physical gold.
This is fine for the multi-billionaires of this world like George Soros who can afford vaults of the stuff but what about the smaller investor.
A clue may be in Switzerland where Faude & Hauguenin, celebrated goldsmiths, have recently produced 2,000 Goldhans for a private customer who is a swiss businessman with specialist expertise in the gold market. These beautiful pîeces are 99.99%, 31.1g of pure gold with an individual value of 1,400 swiss francs ( £915 ). Was this really his own idea? He is in negotiations with several banks about the purchase of Goldhans and he’s even considering a move to make them official currency and legal tender. Is this a statement of intent regarding the lack of confidence in the Euros, Dollars or Swiss Francs he would normally use – obviously for him the value of Gold is a sure one. Is it a statement of intent regarding the destiny of any paper currency that has lost the market confidence its value is based on?

Is it time to think that Gold may well become the only currency we can truly rely on?

It may also be time to consider exactly what is a trustworthy currency for the future and will it be issued by central banks or entrepeneurs we can trust?
For the moment it’s not possible and the Swiss National Bank forbids the circulation of all “new” money. These Goldhans are not yet ready to take the place of the Vreneli and in legal terms they are merely round ingots with serial numbers in a limited edition.
So why raise this example? Well it demonstrates the interest that some may have in creating a “private” money or currency of confidence at a time when traditional currency is losing its appeal on a daily basis in the unpredictability of ever fluctuating foreign exchanges around the world.

So, could this Swiss busineesman’s Goldhans one day become a type of alternative to the so called real currencies? A Currency of Confidence with ongoing real lasting and meaningful value? A dream or reality? We shall see……. when the austerity measures around Europe are judged, deficits reduced or not and belief in the status quo of currency and its current custodians is ultimately maintained or evaporated.

Paul McGOWAN