Bagi para pelabur yg menghadapi masalah, kami di Rangkaian Niaga Sax-Gold boleh membantu anda untuk berbincang apakah plan anda seterusnya. Kami cuba segala daya untuk menunjuk jalan bagaimana untuk mengurangkan masalah anda. Itu pun bergantung berapa lama sudah anda menyertai program2 tersebut.
Anda juga boleh merujuk kepada En Syukor di laman web Jutawanemas. Kami boleh terangkan sedikit sebanyak langkah2 yang perlu anda ambil. Kami hanya membantu dari segi nasihat dan pendapat sahaja. Jika melibatkan kewangan, kami meneyerahkan sepenuhnya kepada anda utk membuat keputusan. Ada pelbagai kaedah dan plan yang diatur utk mengurangkan kerugian atau membuat keuntungan. * bergantung kpd situasi masing2
Di antaranya adalah:
1. Transformasi Goldbar kpd barang kemas (baru @ usegold) 2. Mengeluarkan barangan di Ar -Rahnu utk mengelak membayar upah simpan yg tinggi 3. Membeli emas secara bijak 4. Dll yg dirasakan berkaitan
Ini adalah produk silverbar yg terkini. Walau bagaimanapun ia masih dalam proses "last touch" yang mana kami sedang menggunakan mesin untuk menjadikannya lebih licin dan cantik.
Untuk tempahan boleh menghubungi kami dalam masa 1 minggu. Ini kerana kami akan memperkenalkan sekali 10 Dirham sulung kami yg akan berada di pasaran tidak lama lagi.
Nantikan sedikit masa lagi. Belilah keluaran tempatan pertama jongkong dan Dirham.
Some analysts in the past took the performance of the oil price as a direct guide to coming gold prices. We have believed that at best its influence was and still is indirect. It pointed a general direction when growth and speculation, prior to August 2007 was such that the oil price rocketed to $145 a barrel. As the bubble popped the oil price fell back to $35 a barrel, but gold didn’t fall. Now with Russia trying to sell as much as it can and OPEC keen to hold prices around $80 the oil price is ‘under the control’ of oil producers. In time, once the global economic recovery is established, growth in Asia together with the recovery maturing in the West will see demand outpace supply, taking the oil price up to new territory. But, until then its function as an indicator of future gold prices has been undermined.
The Dollar: Euro Exchange Rate
For most of this year and years before, the Dollar: Euro exchange rate was taken particularly by short-term traders as a direction finder for the gold price with, at times the gold price cleaving to the rate. Many times the gold price decoupled from the Euro as it rose against both, but on a day to day basis the Dollar still triggers moves in the gold price. Why? Inside the U.S. speculators and traders see this rate as being a measure of the value of the Dollar. It harps back to when currencies were complete measures of value. When the Dollar weakened, it was seen in isolation to other currencies, particularly the only other really major currency, the Euro. But now the true picture that the Dollar is the trunk of the tree that all currencies stem from is becoming clear. Consequently gold now has a record of moving up against all currencies. This is symptomatic of the structural faults in the monetary/currency systems. At the turn of the century the Euro price of gold was well below €300 and took some years to rise through this level, but now it has just broken through Euro800.
With China rising from insignificance to growing prominence the tensions rising from a Dollar-pegged Yuan and greater trade tensions on the way the time for another global currency to barge into the world scene has come. This promises some ruptures and ructions to the extent that it is now prudent to retain and or buy gold for national reserves and for investment protection against currency swings. A future of uncertainty and lack of global cooperation is on the horizon. So what relevance does the Dollar: Euro exchange rate, have on this scene? Why should the gold price move with the Euro?
The breaking away from this ratio is more significant than gold’s relationship with oil. This break takes gold away from all currencies and places it as a measure of the entire system.
While we do expect the markets, particularly in the short-term, to take time to be weaned off this relationship, it has, is and will happen.
This leaves gold in a new world. This was what drove the gold price up to $850 the first time. This time those central banks, which control the world of money are now turning back to gold. Where will they be happy to see gold? And in what role? We will have to wait and see.
It is incumbent on all of us who follow the gold price and its influences to re-address these changes in the gold market and to adjust to this new shape and new future.
We have talked about a complete change of tone and shape in the market place in the last few weeks that has altered the future of gold. It has taken 10 years for this to happen, but it is here at last.
Conditions When Gold Last Peaked
When gold was floated off from the Dollar and the U.S. refused to exchange U.S. Dollars for gold, gold was considered to be money, still. The message didn’t sink in to the public for some years. The gold price rose from $42.35 to $850 in a series of neat moves. But all Central Banks had subscribed to the U.S. inspired change in the monetary scene before it hit $100. No, they didn’t accept the Special Drawing Right of the I.M.F., but they did accept the Dollar as the sole global reserve currency when it became apparent that this was the only currency they could use to buy oil with.
First the U.S. sold gold, then the I.M.F. both sales failing to discourage investors, but the campaign was then changed to accelerated sales of gold from producers to overwhelm keen buyers, which it did successfully [through a scheme to lend producers gold ahead of new production of gold, with which they repaid the loan. Quite a time before the gold priced peaked at $850 investors became wary of buying gold shares, letting the bullion price run by itself, to the peak. Gold shares and bullion were considered very acceptable institutional investments by all ahead of this change.
Gold itself gradually went off investor’s screens and into the shadows as a barbarous relic. It took years before the world accepted the fact that central bankers, including European ones, were against gold and were following policies that undermined the gold price. Even gold shares were treated with disdain. For the next 15 years gold from around 1985 gold was sidelined.
The negative perception and undercurrent of potential central bank sales militated against a rise in the gold price. This situation lasted right up until 1999 and the announcement of the “Washington Agreement." Oddly enough this was an Agreement to sell gold by European Bankers [they had not done this before] but turned the gold price around to the positive side. At the time the gold price was at $275. From there it slowly rose. What changed the scene?
It was the statement that gold was a valued reserve asset in the eyes of central banks and that the sales were limited to specific quantities. This immediately removed the perception that gold sales would continue until all central bank held gold would be sold into the ‘open market’. Supply could then be measured accurately.
It was clear that demand could now overcome supply eventually. Producers slowly realized that the days of falling gold price were over and they were vulnerable to losses, [through the scheme that accelerated gold production] if gold prices rose above the proceeds they hoped to achieve over years from their previously hedged positions. They started buying gold to cover their exposures.
But just as the market took a very long time to realize gold prices were going to go down, again the market has taken nearly 10 years to realize that gold was coming back onto investor’s screens. With the three central bank gold agreements still in front of us, the common perception still remains that central bank’s are sellers. It has taken most of this year for the market to accept that central banks have stopped selling and are now net buyers.
Institutional acceptance from central banks through Sovereign Wealth funds through the many types of funds down to individuals, is now gold’s path into the future. The implications of this for the gold price are enormous. These changes must form the foundation of our approach to gold from now on, with all other factors affecting gold subordinated to this. Right now Asia is leading the way in this appreciation.
Saya mengambil peluang ini utk berkongsi bersama rakan2 yg mungkin agak susah hati dgn berita terbaru (atau rumors yg lebih tepatnya) yg menyelubungi fikiran dan perasaan anda. Ya... berita mengenai agensi pajak berlesen yg berkemungkinan tidak lagi menerima goldbar atau coins utk dipajak. Memang benar, orang kecil macam kita ini akan menghadapi masalah. Masalah untuk "rolling' perniagaan atau investment emas yg baru diceburi oleh kebanyakan drp kita. Bagi yg tahap "dewa atau gaban" sudah pasti tidak merasainya lagi, sekurang-kurangnya buat masa yg terdekat ini. Perahu kecil, kalau dilambung ombak pasti akan tenggelam, paling kurang goyah sudah pasti. Namun, bagi jangka masa yg panjang... pasti mereka akan terbabit jua.
Dari soal selidik yg saya buat tempoh hari Kaji selidik Emas saya dapati, hampir 80 % adalah dari kalangan yg baru mencebur di dalam masa kurang drp setahun. Selebihnya pun, tidak melebihi 2 tahun. 99% yg mengambil bahagian adalah dari kalangan bumiputera yg sebelum ini tidak pernah pun mengetahui apakah itu "pelaburan emas". Jadi, jika pihak berwajib masih hendak meneruskan perkara ini terjadi, maka akan hilang lah semangat, moral dan iltizam anak2 muda generasi baru ini ingin menabung, melabur dan berjinak-jinak dgn emas ini, setanding dgn rakan bangsa kita yg lain. Punah harapan mereka selama ini, yg mana baru menyedari akan kepentingan peyimpanan emas ini selari dgn kehendak agama dan rasullullah.
Mengapakah, bangsa2 asing atau agama lain selain Islam sedang dan telah mengumpul logam mulia ini. Hatta, sehinggakan kerajaan mereka pun menggalakkan rakyat menyimpan emas dan perak. Sebagaimana contoh negara China. Mereka antara pengeluar utama emas dunia, masih membeli drp luar negara. Bukan itu sahaja, malah tidak membenarkan hasil keluaran emas ini keluar drp negara mereka. Di tambah pula, sekarangi ini pihak kerajaan China telah membuka sistem pajakan utk logam Perak pula..... bayangkan, galakan drp kerajaan mereka agar rakyat sedar dan menyimpan logam2 mulia ini. Sehinggakan, di kaca televisyen, sering kali disiarkan agar rakyat membeli dan menyimpan logam2 mulia ini.
Bayak lagi fakta dan hakikat yg berlaku sekarang yg ingin saya tuliskan di sini. Tetapi bacaan berat spt ini, masih tidak lagi menjadi budaya kita...Persoalannya sekarang... bagaimanakah caranya kita ingin mengumpul kekuatan, agar impain, azam rakan2 kita yg selama ini dipendam lama akan menjadi kenyataan. Persoalan kita, bukanlah hanya bertanya mengapa perkara ini boleh berlaku..tetapi bagaimana mengatasinya.
Jika benar, bahawa benda ini kan berlaku. Kita sekurang-kurangnya perlulah membuat persediaan serba sedikit. Jangan sampai sehingga "last minute" baru lah nak membuat persiapan. Sediakan payung sebelum hujan. Tapi bukannya membuat sesuatu keputusan terburu-buru. Berfikir secara rasional, dan perbincangan di dalam forum atau chatbox adalah satu petanda baik. Banyak informasi berguna segera diketahui. Saling mengingati juga adalah perlu, bukan hanya memikirkan keuntungan semata2. tetapi lebih kepada penerapan nilai murni serta akademik. Jika kesedaran akademik tinggi di kalangan kita, sudah pasti tidak akan berlaku skim2 yg sebelum ini diperkenalkan.
Oleh itu, kesimpulannya.. jika anda mempunyai masalah bagaimana untuk mengatasi perkara ini. Bolehlah berhubung dgn Rangkaian Rakan Niaga Omar, Shamsul atau Piji yg mana mungkin mereka mempunyai jalan penyelesaian mereka sendiri. Bagi pihak Rakan Niaga Omar dan saya, kami memberi peluang untuk anda Tranformasi Golbar kpd rantai tangan.. Semoga sedikit sebanyak dapat membantu meringankan beban utk menyimpan d dalam bentuk jongkong. Kami juga bersedia membantu utk menebus dan memberi khidmat kaunseling atau perunding jika terdapat mana2 rakan2 di luar sana yg masih mempunyai masalah dgn pajakan goldbar di Ar rahnu. Jikalau kami tidak mampu, kami akan panjangkan kepada rakan2 kita yg lain yg mempunyai network sendiri spt Shamsul, Piji dn lain2 yg ramai hanya 'low profile".
Cara-cara atau kaedah pengiraan Trasnformasi Goldbar kdp R. tangan boleh dilihat di sini Omar atau Sax-Gold . Namun begitu, ramai lagi rakan2 niaga yg di"link'kan drp blog2 ini seperti Adam, Samurai, Yomida, Ismail, AliKB, Wantwo dll yg tak disebut di sini.
Jangan segan silu utk hubungi kami. Sekian. Semoga kita akan bersatu agar cita2 dapat direalisasikan.
Pakej : 1 100g Bar 999 Kepada Barang Kemas 916 100g 999 <> 100g 916 Ketulenan 100g 916 = 94.5g 999 (Kilang Nilaian) Upah = Rm5/g
menukar Bar Kepada barang kemas ini adalah pengiraannya. Anda akan mempunya extra pulus setiap penukaran tersebut. Untuk 100g 999 =100g 916 (Upah) Anggran Rm50-Rm200 Di Kembalikan.
Pakej 2: 100g 999 Bar Kepada 100g 999 Barang Kemas 100g 999 <> 100g 999 (Upah)
Kesimpulan Untuk 1 Pcs Rega Upah Agak Tinggi (Makluman) Normal Upah (Rm5/g) 100g Bar 999 => 95g(+-1) Barang Kemas 999 Lebihan Pulus akan dikembalikan. Juga Anda Boleh Pilih untuk>> 1) Tukar Kepada Barang Kemas Terpakai 2) Tukar Barang Lama Dan Baru 3) Upgred Nilai
Kempen Tukar Goldbar kepada Rantai tangan Mampu Milik
Kepada sesiapa yg mempunyai goldbar, dan susah utk rolling semula akibat tidak diterima oleh Bank utk pajakan.. Sila hubungi rakan niaga Omar di seluruh Malaysia. Warga Kelantan dan Kota Bharu boleh hubungi saya di email @ sms
Anda boleh membuat 3 pilihan berat yg berbeza iaitu 10 gm, 15 gm dan 20 gm.
In a world of paper currencies and paper promises, I can think of many reasons right off the top of my head why the price of gold will continue to go up in the long term, however since this essay's length is limited, I'll just mention 5 of them. In short, while it may feel like a bubble to some, I believe we are just warming up.
1. The smart money is already piled into gold. Some of the world’s savviest money managers have taken large positions in gold. I mentioned John Paulson, David Einhorn, Paul Tudor Jones and Jim Rogers I forgot to mention George Soros, who increased his holding in gold in the third quarter with gold mining stocks and with the SPDR Gold Trust ETF (GLD). This week the Wall Street Journal reported that John Paulson, who I did mention last week, is launching a new gold fund, which will include $250 million of his own personal investment.
Other well-known fund managers publicly piling into gold include Bill Gross, Kyle Bass (Hayman Capital), Paolo Pellegrini (PSQR), John Burbank (Passport Capital), Evy Hambro (Blackrock), Donald Coxe (Coxe Advisors), and David Tice (Prudent Bear Fund). I would expect other major mutual funds, hedge funds and pension funds to follow their lead.
2. Central banks are net buyers of gold for the first time in 22 years. This is a major secular change. According to a report by precious-metals research firm GFMS, for the first time since 1987, central banks around the world bought more gold in the second quarter than they sold. India recently bought 200 tons of gold from the IMF and China is expected to purchase the other 200 tons offered for sale.
3. In June there was an item in Bloomberg about Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer, having bought gold for the first time the company’s 152-year history. According to the report, the insurance company has accumulated about $400 million in gold. I would expect that other insurance companies might follow suit.
4. China holds $2 Trillion in Foreign Currency reserves and only 2% in gold, vs. a 10% worldwide average. The Chinese are seeing the value of their foreign currency reserves turning to dust every day. If China makes the logical move to increase its gold reserves and reduce its fiat currency exposure to even just the worldwide average, gold prices could move substantially higher.
5. Gold is scarce. The gold industry has not replaced gold reserves mined in over a decade meaning near term shortages. We might get to a situation where there is simply not enough physical gold available to cover the massive quantities of gold that has been pledged. This situation could push the price of gold to the stratosphere. Hong Kong has recently pulled all its gold holdings and deposits from London and brought them home. While investors chase gold to get into something more stable than the dollar, producers aren't keeping up. Gold production was down 3% last year, and it was flat in the most recent quarter. Although mining companies are spending more on new production, especially in China and Russia, that is not enough to offset dwindling output from mature mines. Central banks hold a lot of gold. But they are not interested to sell and in any case, they are bound by an agreement that imposes limits on sales.
However, the road to the top will not be a straight line, and since that is the case it makes sense to take advantage of the inevitable corrections. Let's examine the chart (charts courtesy of http://stockcharts.com) of gold to check if we are close to another buying or selling opportunity. In this essay, I will focus on the precious metals stocks.
What happened in Dubai just over a week ago was the bright flash, and the media have used the intervening period before the shockwave hits to reassure everyone that everything is going to be just fine - "You just relax, nothing will come of it, it's only $60 billion down the drain or whatever - have a cup of tea". The trouble is that it's not $60 billion at all - the reality is that this is a default on a massively larger scale. Dubai was a vast sinkhole into which western banks and governments unquestioningly poured not just billions but trillions of dollars which was then leveraged enormously by means of derivatives enabling Dubai to build itself up into a latter day Rome, with a level of opulence and extravagence that would have made Caesar green with envy.
When people think of Dubai the things that come to mind are the massively extravagent 7-star hotels, the towering record breaking skyscraper, palm-shaped island resort complexes etc and forests of new office buildings and apartments etc. What the vast majority don't realize is that the stupendous leverage afforded by derivatives has in addition enabled Dubai to create an immense global empire of businesses, most of the elements of which are broke, having racked up staggering levels of debt. Dubai is the nexus of the derivatives pyramid and it is flat, stony broke. Where did all the money come from to pay for all these things? - why from taxpayers and pension fund contributors the world over of course, but especially in the US, with Wall St acting as a giant conduit sluicing a torrent of cash into Dubai. The interesting thing is that there was never any accountability - countries and companies vied with each other for the privelege of pumping money into the exalted kingdom, seduced by its supposedly limitless oil wealth, and requesting or requiring guarantees was regarded as impolite. Now that Dubai is broke, the Dubai government has suddenly distanced itself from Dubai World, and the attitude towards the Western banks and governments who have poured trillions into Dubai is "Tough luck - you lose, suckers". What this means is that trillions of dollars which are now counted as assets on the balance sheets of banks worldwide and especially in the US are actually liabilities. So what do you think is going to happen to the stock prices of these banks - and stockmarkets generally, when the world wakes up and acknowledges this reality - when the shockwave hits?? Small wonder that the charts for Goldman Sachs and J P Morgan look very like the market charts before the '87 crash, but that was "small potatoes" compared to what is coming down the pipe this time.
It's amazing what a $50-per-ounce drop in the price of gold does nowadays.
The decline is front and center in the financial papers. CNBC hosts are grilling every analyst they can find with drivel like, "What a drop! Is the gold rally now dead?" Our advice to the nervous gold owner: Sit back and take the "long view" of gold. Remember, no bull market rises in a straight line to the sky. And gold regularly experiences wild swings in price.
Gold is the "odd man out" among financial assets. It's not like a rental property, where you can say, "I'll pay eight times annual rent for this." Or a blue-chip stock, where you can say, "I'll pay 10 times annual cash flow for this." Gold represents real wealth and crisis protection. Folks go through periods where they'll dump this protection... or buy it with both hands. This leads to lots of volatility, like we've seen in the past few days.
It could even lead to a bigger drop in gold. But as you can see from today's five-year chart of gold, the yellow metal could drop all the way down to $850 an ounce and still remain in the confines of a big bull market. This sort of drop is unlikely, but anything can happen in the gold market... so be prepared.
Salam semua, dengan harga emas yg jatuh sekarang ini... Pasti ada yg berasa bimbang dan risau apakah yg akan berlaku selepas ini. Namun begitu, percayalah... Harga emas ini akan terus meningkat dari semasa ke semasa. Kejatuhan harga pasti akan berlaku, tetapi adalah dalam jangka masa yg terhad dan ianya adalah dalam kadar yg minima.
Untuk pengetahuan semua, dlam sedikit masa lagi kami (Rakan niaga Omar dan Silver Network) akan mengeluarkan produk barang kemas baru dgn harga yg kompetitif. Dengan Motto Harga Mampu Milik, sudah pastilah ramai golongan yg kurang modal dapat membelinya nanti. Usaha dan rancangan sudah berjalan dan ia dalam proses terakhir iaitu perlaksanaan. Insyaallah dalam sedikit masa nanti, anda boleh menghubungi rakan niaga kami utk mendapatkan produk tersebut.
Selain drp barang kemas, kami juga akan mengeluarkan produk silver bar yg mempunyai sedikit kelainan iaitu dari segi "hallmark' atau jenama tersendiri. Tidak itu sahaja, syiling dirham keluaran pertama di Malaysia mungkin akan di"realisasi' dalam sedikit masa lagi dengan nilai komersial 10 dirham bersamaan (30gm).
Untuk itu, nantikan dari semasa ke semasa berita selanjutnya drp kami. Harga Mampu Milik addalah motto kami agar semua golongan dapat merasai keistimewaan Emas dan Perak ini.
Indeed most forecasts will be wrong on the lower side. Why?
Because the signals being given on 'Official' fronts are that times are here where global cooperation on the monetary front will dissipate leaving tensions and pressure that will hurt exchange rates and currency values in unpredictable but crisis making ways. Gold will really become the safe-haven it has been in history again. China and U.S. currency tensions are but the start of this.
Repeat of last week's commentary: - President Obama is about to go to China where he will face their leaders. What does he want and expect? He wants China to let its currency rise [this won't happen]. He wants friendly cooperation between the nations. But very much to the point he then says that, "if we don't solve some of these problems, then I think both economically and politically it will put enormous strains on the relationship." They didn't solve those that affect gold!
A look at the two very different national interests shows that there cannot be cooperation on these issues. Political pressure therefore has to rise in the days ahead. Bear in mind that the battlefields are not on land but in the banking and currency worlds, where all economic exchanges happen. So here is where the influences on the gold price will be most keenly felt.
Already the U.S. has seen a decimation of its manufacturing base, a feature that President Obama realizes. In recognizing this he has said, "It is particularly important for us when it comes to Asia as a whole to recognize that in the absence of a more robust export strategy it is going to be hard for us to rebuild our manufacturing base and employment base in this country,"
Take this to a global view, where last year the G-20 expressed a desire to find global cooperation of monetary and economic issues and what do we now see? Central banks and government intentions are now subsiding, and coordinated activity among member states is being replaced by more unilateral, nationalistic decision making by individual countries. As gold is now a 'tacit' currency, gold is benefitting as the prospects for collective action on currencies is included. Now, as we have expressed before, the overriding objective of nearly all members is to maintain some level of currency competitiveness all of which makes a weaker U.S. $ likely and benefits gold. With national interests becoming more selfish as the pressures grow, political tension between East and West must grow. In this way we are moving towards 'extreme times'. This is when gold becomes money and the possessor of that gold is empowered.
Such tensions are as significant as the change from summer to winter. Investors who recognize this first will be the biggest beneficiaries.
More Announcements to come from the I.M.F.
After the buying by Mauritius, there remains 201.3 tonnes to go. China remains the favorite, but who else is anybody's guess. So we wait and see.
One pertinent observation is that it is the emerging East that is most keen to buy gold. This is because in those cultures gold has been and always will be, money. The U.S. $ doesn't strike a chord like gold does. Gold has no government, currencies do.
As each announcement is made, it rings another vote of confidence in the metal as a form of money. If the I.M.F. doesn't want this to happen, it would do well to save the balance of the announcements until all the gold is sold and make one announcement and hope its effect will blow away quickly. Alternatively, as they should be maximizing the proceeds of the sales, they do well to stagger the announcements and sales to raise the price up?
It took a few days for the market to understand the impact of the Indian Reserve Bank's purchase of 200 tonnes of the I.M.F.'s gold sale of 403.3 tonnes, but eventually the market did respond. Since then, one of several announcements has been made, concerning the balance of 200.3 tonnes still being sold. The I.M.F. has promised to inform us that they will tell us how much they were unable to sell and to sell that amount, if any, slowly in the 'open market' without disrupting the price. We will be surprised if there is any left. India has indicated it will buy more if given the chance. So keep your eye open for the next announcement too [Since this was published Sri Lanka has bought 10 tonnes].
Mauritius Buys 2 tonnes
Mauritius bought 2 tonnes, so the I.M.F. informed us. They will probably reap the benefits of this purchase as people rush to find out where the country is.
To help you in this, it is a sub-tropical Island to the North of Madagascar East of South Africa. Populated by fleeing French nobles during the French Revolution, who became sugar planters with a house by the sea and plantations inland, alongside African and subsequently Creole workers, the island was filled with people from the Indian sub-continent from Independence on. Originally a French colony it was handed to the British as a prize after a sea battle, leaving its neighbor Reunion still very French to this day [the writer prefers Reunion for its scenic beauty, black sand beaches and volcanoes - where he had his honeymoon]. A rich country that benefitted from the sanctions imposed on South Africa it is now a very popular holiday island for primarily South Africans who visit this hotel covered island to be pampered for a couple of weeks a year.
So their buying gold is not tainted by any political overtones or restrained by any. Perhaps the Indian influence that favors gold anyway and the Indian purchase of 200 tonnes prompted the buying. We believe it was bought for the same reasons as India bought - prudence in the face of a decaying $.
It's one of those numbers that's so unbelievable you have to actually think about it for a while... Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?
How did we end up with so much short-term debt? Like most entities that have far too much debt - whether subprime borrowers, GM, Fannie, or GE - the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss." What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt… at ever shorter durations… at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.
When governments go bankrupt it's called "a default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists - Alan Greenspan and Pablo Guidotti - published the secret formula in a 1999 academic paper. That's why the formula is called the Greenspan-Guidotti rule. The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."
The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.
So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default. The U.S. holds gold, oil, and foreign currency in reserve. The U.S. has 8,133.5 metric tonnes of gold (it is the world's largest holder). That's 16,267,000 pounds. At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger.
According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we've been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months - an amount far larger than our reserves.
Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.
So… where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual funding requirement equal to roughly 40% of GDP. Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or the Russian central bank, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.
So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.
One thing they're not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None own even 1% of their total reserves in gold.
Long-term readers know that gold moves inversely to the dollar, meaning if the dollar drops, gold tends to rise (and vice versa). This happens with about 80% regularity. But what many gold writers haven’t acknowledged is the leveraged movement our favorite metal has demonstrated this year to the world’s reserve currency.
The U.S. dollar index, a six-currency gauge of the greenback’s value, has dropped 7.1% so far this year. Meanwhile, gold is up 34% year-to-date.In other words, for every 1% drop in the dollar index, gold has risen 4.7%. If that approximate percentage holds over time, one can begin to estimate what the gold price might be if you know what the dollar might do.
While the dollar is likely to bounce at some point, making gold correct, the long-term fate of the dollar has already dried in cement. If the dollar were simply to return to its March 2008 low of 71.30 next year - a 5% drop from current levels - this would imply a rise in gold of 23.5% and a price of about $1,437 an ounce.
The long-term scenario is more dramatic. If you believe the dollar will lose half its value from current levels, this would imply a gold price around $2,735. If you believe it will lose 75% of its value, gold would reach about $4,103. Doug Casey has called for a $5,000 gold price; if he’s right, guess what that implies for the dollar?
And think about this: these calculations ignore what else might “show up,” such as when price inflation shows up in the economy, the greater public shows up to buy gold, or the Chinese don’t show up at an auction. Could $5,000 gold be too low?
Unless you think the dollar’s problems are solved, its eventual demise is gold’s eventual glory. Prepare, and invest, accordingly.