We continue to have a wonderful dialogue with and frequent editorial submissions from readers and clients. Today, we have a thought provoking and important article that should greatly contribute to the debate on the merits of continuing to use artificial money. David Bryan draws on the genius of Einstein and uses science as the basis for policies that would end economic decay and rejuvenate local and national economies and indeed the global economy.
Einstein, Physics, Gold and The Formula To End Economic Decay
“It Can Be No Other Way”
By backing their productivity with artificial money, people have been tricked into giving banks a counter party claim to their wealth. The assets used or owned by their forefathers are now incorporated within vast corporations or pledged as debt in exchange for central banker’s script.
Einstein was the greatest mind of this century and when he states the formula for reality we should pay full attention to what he says. Beliefs spun into economic or social systems do not improve the economy or add to the social health of a nation.
“Everything is energy and that is all there is to it. Match the frequency of the reality you want and you cannot but get that reality. It can be no other way. This is not philosophy. This is Physics.” Einstein
Read David Bryan’s full essay here.
Today’s Gold Prices: USD 1,125.50, EUR 998.23 and GBP 730.99 per ounce
Yesterday’s Gold Prices: USD 1128.50, EUR 999.38 and GBP 728.91 per ounce.
Gold Outperforms All Assets In August
Yesterday, gold rose a marginal $0.20 to $1124.30 in New York. Silver rose 27 cents or nearly 2% to $14.45 per ounce.
Gold prices moved higher in Asian trade overnight and bullion for immediate delivery rose as much as 0.8 percent to $1,132.55 an ounce prior to selling in Europe capped gains.
Gold has declined 2.5 percent this week in dollar terms, the first weekly loss in three but importantly it remains nearly 3% higher for what was the volatile month of August (see table).
Earlier in the week, gold had breached the $1,150 level on safe haven demand as stock markets around the world plummeted on concerns about both the Chinese and indeed the global economy.
Gold in US Dollars – 5 Years
Gold then fell as sentiment improved and stock markets bounced from oversold levels.
The question is whether this is another correction and stocks will continue marching to giddy new highs in the coming months or whether this is a typical dead cat bounce prior to further losses and a new bear market.
We are of the belief that it is likely the latter and investors and owners of pensions who are overweight stocks and bonds should use rallies to reduce allocations to stocks and bonds and increase allocations to gold.
Gold remains very undervalued on a whole host of various measures (see analysis and charts in Commentary today) vis-a-vis both stocks, bonds and indeed many property markets internationally. Silver even more so.
In the last two weeks, gold has held its own nicely amid the stock market bloodbath. Indeed, the fact that it is higher despite market carnage bodes very well indeed for the coming months.
Gold is acting like a safe haven again -at a time when arguably financial assets and investors are facing significant risks and need a safe haven and wealth preservation most.
Frequently, gold is correlated with equities in the very short term and can fall when stock markets suffer sharp one day corrections.However, over the month and the quarter, gold has an inverse correlation with equities.
We are extremely busy and this was one of the busiest weeks of the year so far – both in terms of number of transactions and total volume in dollar sales terms. This increase in physical demand should lead to higher prices in the coming weeks. This has been the case for bullion refiners, mints and dealers all of whom say very high demand for physical this week.
Once again, gold and silver prices appear completely divorced from the reality of physical demand.
Paper and electronic selling of futures contracts and hedge fund and bank liquidations and trading machinations continue to dominate the price, for now.
As ever, it is vitally important to focus on asset performance and investments over the long term – months, quarters and of course years.
As month end approaches, gold has outperformed the vast majority of major assets (see table above) and is nearly 3% higher in August while leading stock indices have fallen by more than 6% and some crashed by 20% this week prior to the recent bounce.
Gold’s hedging and safe haven characteristics are being shown again and we believe this important safe haven importance of gold in a diversified portfolio will again become evident in the coming months.
Gold Up in Asia Trade – The Wall Street Journal
Gold Pares Biggest Weekly Drop in Month on U.S. Growth Concern – Bloomberg
European Stocks Decline, Erasing Gains in Roller Coaster Week – Bloomberg
Oil prices extend gains after biggest daily climb in six years – Reuters
Federal Reserve Increasing Scrutiny of Bank Payment Systems – The Wall Street Journal
Reflation threat to bonds as money supply catches fire in Europe – The Telegraph
Optimism for Africa despite threat from China downturn – The Telegraph
This Weird Story Suggests Gold and Miners Are Near a Bottom – Casey Research
Gold and Silver Have Never Been This Cheap – GoldSeek
Expect markets to fall 20 to 40 percent: Marc Faber – Yahoo Finance