Everybody's always right

Every analyst that told you the gold bull was dead is now saying they told you to buy the lows now that gold has magically revived.   Next time gold corrects they'll have told you to sell the highs.  Because everybody's always right. 

And if they don't have the balls to just lie to your face then they'll tell you that things are bad, but to buy cautiously anyway but hedge your buys and be prepared to sell before things fall apart, and then buy again just before they rebound. 

Every now and then somebody just doesn't care, because they've been so right for so long and made so much money off it that they just couldn't care less what you think and they wouldn't dream of asking your for any money anyway.  They don't need your money.  They really hope you hang on to a bit of it, because if you everybody loses, then everybody loses.

Like, for example, George Soros:  "I am not here to cheer you up. The situation is about as serious and difficult as I've experienced in my career... The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system... At times like these, survival is the most important thing." 

Now, I'm no George Soros, but I'll tell you one thing for sure.  If we move into deflation, the Central banks will print money until the currencies deflate faster than the goods and services they buy.  This will benefit gold.  And if the financial system collapses, all paper money goes to zero.  This will benefit gold.

To me that's a win win (for gold - and a lose lose for everything else).  How do you see it?

It's all gambling

When the banking system itself is a giant casino - every financial move you make - or do not make - is a form of gambling.


Buying any stock is a gamble that the price earnings ratio will expand or contract.  It's a gamble that the company's stated earnings reflect the company's real earnings.  It's a gamble that the economy in which the company operates will continue to function efficiently.

Buying any bond is a gamble on the direction of interest rates and on the underlying credit-worthiness of the issuer.

Keeping you money in any given currency is a gamble that the currency will retain its value relative to other currencies and relative to its current purchasing power.

Buying real estate is a gamble on the value of a house and the continued efficiency of the economy of that neighborhood, that state, that country.

Even Gold is a gamble.  It is a gamble that other more liquid currencies will continue to be debased.

That is the only contingency affecting the future price of gold.  It has nothing to do with jewelry purchases, with Commitment of Trader data, with mine efficiency, or with moving averages, or Fibonacci retracements, or any other foolishness that you may read about in any economic publication.

You can go to the Kitco website right now and read the work of some jackass - employed by a gold-selling website - who's analyzing gold as a commodity.  This is precisely why gold has a long way to rise.  When everyone grasps the fact that gold is a currency it will have stabilized near it's new market value.

There are two currencies more liquid than gold: The Dollar and the Euro.  The Yen, Yuan, the Real, the Indian Rupee are other currencies that compete with Gold, yes, but only the Dollar and the Euro are appreciably more liquid on the global market.  And both currencies, the Dollar and the Euro, are being printed in unmeasurably large quantities (unmeasurable because the activities of these central banks are unauditable) and funneled into moribund banking systems.

This makes gold a pretty good gamble.

RIchard Russel has live through this before:

RICHARD RUSSELL: 12 TIPS FOR THE NEW NORMAL

14 September 2011 by Cullen Roche 99 Comments

Few investment legends have weathered more than Richard Russell.  Born in the Great Depression, Russell knows what it’s like to live in hard times.  And in this new normal he has some survival tips.  The following are courtesy of Russell’s Dow Theory Letters:

1 — Be a skinflint. Cut down on your spending. And be very nice to your boss, assuming you still have a job.
2 — Think in terms of NOT losing money. Forget about easy Wall Street profits. There aren’t going to be any easy profits — not without a huge new infusion of borrowed money.
3 — Be sceptical of everything you read. The media is desperate for circulation, and it will slap on the cover of its magazine or newspaper any damn fool statement that it thinks will sell.
4 — Have faith in your gold. As confidence in the whole monetary system slowly fades, the desire for gold will heighten.
5 — Remember, there’s often a large correction prior to the final speculative gold run.
6 — This time there may not be a “final gold rise,” because large interests may just decide never to sell their gold. They’ll keep their gold as a symbol of “eternal wealth” that can’t be destroyed of go bankrupt.
7– Check out carefully the Permanent Portfolio (PRPFX). So far, it has done well and held up well. It’s actually up so far this year, which is extraordinary. YTD return is 7.33%.
8 — Be very cynical about those “fabulous” money-making ads you hear on TV. Money is hard to make these days and risk in just about everything is high.
9 — Cut out expensive discretionary spending. Instead of eating at your favorite local restaurant, eat home and save many bucks. Supermarkets now stock endless “heat up” frozen dinners. Or better still, starting from scratch make your own dinners. Cooking is coming back.
10 — Take the long view. With stock dividends below 2.5%, the odds are that holding stocks “for the long run” is going to be discouraging or a loser.
11 — Money is made in the BUYING. When you buy anything at the right (low) price, the odds are that you’re going to make money through the passage of time.
12 — Wall Street is suffering. When the Street suffers, its natural tendency is to come up with new “ideas.” The ideas are usually risky (i.e., mortgage-backed packages). Be very sceptical of new Wall Street ideas and products.

Bernanke promises free money for everyone (if you happen to be a bank)

Big Ben stepped out of his cocoon yesterday long enough to promise unlimited free money for every banker in the Club Fed - for at least the next free years.  How?  By pledging to keep rates negative through 2014, and promising more QE as needed.

How this will help the Economy - meaning you and me - is entirely unclear.  In fact it will certainly destroy the purchasing power of every paper dollar in every portfolio. 

How this will help the banks over the next three years should be pretty clear.  Free money means big bonuses.  After all they deserve them for being smart enough to have gone into the banking business.

How this will help the risk markets over the next few weeks should be pretty clear.  The banks will pour all that free money into the risk markets, in the hopes of even bigger bonuses.  If they lose, they know Big Ben will bail them out.   At last until the next crisis, anyway - which could come at any moment.  But may not come for several months as long as the European Central Bank follows Ben's lead, and bails out Greece, Italy, Portugal, and Spain - and then France and Austria and Belgium. 


How this will help Gold over the next three years should be eminently clear to anyone who finally realizes that gold is a currency not a commodity.  Though it should be said there are still many dull normals out there who just can't get this.

What should also be eminently clear is the Big Ben has looked into his crystal ball and sees nothing but pitch darkness for the world economy for at least the next three years.  Otherwise his move makes no sense. 

Why would you set your house on fire unless you saw a nuclear freeze and had no other means of keeping warm?  When the house burns down - well, you'll just have to think of something else.

That's the plan.  Hope you have some physical gold.  And a warm house.

Crisis Fatigue

CRISIS FATIGUE is the new catch phrase.  What does it mean?   It means "If you don't have something nice to say about the economy then just shut up."  We're sick of hearing about it, chicken little.  Keep all that negativity to yourself.

Things aren't so bad.  Apple made a ton of money this quarter.  A ton.  They invented a phone that can talk to you, for christ's sake.  Where's the crisis in that?  Your phone talks!  Get it?  You can ask it for directions, if you're too stupid or lazy to look at a map, and you don't even have to read the screen.  It will talk to you.   Right out loud.  How in hell can there be a crisis when your phone can talk to you?

As for Europe, well, everyone knows all about that.  Tell us something we don't already know.  And the banks, and the debt, massive unemployment, income disparity, and spending and the political gridlock.  YAWN.  Like we haven't heard all about that a billion times.  Half of all mortgages are still underwater?   Too big to fail financial institutions are getting bigger?  Negative rates are forcing old
savers to live off cat food?  BFD!  Shut up already.  We have Crisis Fatigue.  We don't want to hear about no stinking crisis no more.  Yeah, some people may have it rough.  Even most of them have phones that talk.

Our phones talk.  Don't you get it?  They talk.  When our phones stop talking, then maybe we can talk about Crisis.  Until then, just shut up already.

The War Against the Dollar Heats Up:

India to pay gold instead of dollars for Iranian oil. Oil and gold markets stunned
DEBKAfile Exclusive Report January 23, 2012, 5:57 PM (GMT+02:00)

Tags:  India   China   sanctions   Iranian oil   European Union 

Iranian oil for India

India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, debkafile's intelligence and Iranian sources report exclusively.  Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran's total exports of 2.5 million bpd. Both are superpowers in terms of gold assets.
By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central bank's assets and the oil embargo which the European Union's foreign ministers agreed to impose Monday, Jan. 23. The EU currently buys around 20 percent of Iran's oil exports.
The vast sums involved in these transactions are expected, furthermore, to boost the price of gold and depress the value of the dollar on world markets.
Iran's second largest customer after China, India purchases around $12 billion a year's worth of Iranian crude, or about 12 percent of its consumption. Delhi is to execute its transactions, according to our sources, through two state-owned banks: the Calcutta-based UCO Bank, whose board of directors is made up of Indian government and Reserve Bank of India representatives; and Halk Bankasi (Peoples Bank), Turkey's seventh largest bank which is owned by the government.

Russian Move Against US Called “First Shot” Of World War III

  January 11, 2012 // 

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What Does It Mean

A grim Ministry of Finance report prepared for Prime Minister Putin is warning today that the decision by Iran to cease taking US Dollars for its oil could very be the “first shot” fired in World War III, and one which Russia will be blamed for by the Obama regime.

According to this report, Iran swiftly countered planed US sanctions against its Central Bank yesterday by announcing that it will no longer accept the US Dollar as payment for its oil shipments to India, Japan and China, and further announced that bilateral trade between itself and Russia will, also, break from the US Dollar for settlement in favor of the Iranian Rial and Russian Rubles.

UK retailers paying in yuan

0 Comment(s)Print E-mail China Daily, January 13, 2012

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A shop assistant accepts a China UnionPay bank card at a Selfridges' store in London. Many British retailers choose to pay their Chinese suppliers in yuan. [Xinhua]

A growing number of British retailers are paying their Chinese suppliers in yuan.

"Businesses have been talking about the possibility of paying in local currency since the yuan's peg was relaxed in June 2010," Sam Ford, head of Risk Solutions at Barclays Capital, told China Daily in an exclusive interview.

But it is only in recent weeks that the talk has turned into trades for Barclays' clients, Ford added.

According to Barclays Capital, the investment banking division of Barclays PLC, more British retailers are paying in yuan to achieve cost savings of up to 8 percent.

Sudan Sheds the Dollar

by Owen Bosco ǀ 21.01.2012

The Sudanese Pound. Photo by Osman Shinger

The Sudanese government early last month has formally requested from China that their bilateral trade be conducted in Sudanese pounds and Chinese Yuan rather than U.S. dollars.
The Sudan’s Central Bank Governor Mohamed Khair al-Zubeir said that “they have submitted an official request to China to deal with them in Sudanese pounds and Chinese Yuan, and it is possible that after a short while they could exit finally from the dollar.”
“The dollar has become weak and is deteriorating,” Al-Zubair said while speaking to the press in the country’s capital Khartoum and that its one of the policies his bank has come up with to control the flow of the currency and maintain the valve of the country currency.
The governor did not say what benefits Sudan would get out of the switch but emphasized the rising economic power of China.”We believe that very soon China will become the number one economic power in the world,” al-Zubeir said.
China is Sudan’s top trading partner and according to 2010 figures it topped $10 billion.

Mexican Government successfully sheds the US Dollar from its economy

February 3rd, 2011

Von Helman

Mexico has always considered the US dollar almost a secondary currency to their Peso as the fact that billions of US dollars spent their way through the Mexican economy in 2009 and 2010 which speaks for itself, but sometimes even the best of friendships come to an end.

The Mexican government in September 2010 enacted a new law which basically restricts the use of US Dollars for almost all purchases inside of Mexico.

China, Russia quit dollar

By Su Qiang and Li Xiaokun (China Daily)
Updated: 2010-11-24 08:02

Comments(476) PrintMail

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Premier Wen Jiabao shakes hands with his Russian counterpart Vladimir Putin on a visit to St. Petersburg on Tuesday.ALEXEY DRUZHININ / AFP

St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

There is no Democracy without Gold money

Money in the form of gold and silver coin was the foundation of Greek Democracy.  Money was invented in about 650 BCE, in the Black Sea Region of modern day Turkey.  Think classical Troy.  By 550 it had spread and was in wide use throughout ancient Greece.  Before gold and silver coinage all money was owned and controlled by the Priest/King.  This was true from Mesopotamia to Egypt to the Fertile Crescent to Ancient Greece and Crete.

The Priest/King controlled the Temple where goods were stored and all private transactions were recorded and sanctioned by the Priest/King and his Royal/Priestly family.  Inter-nation transactions settled in metals were administered and negotiated by the Priest/King and his representatives.  There was private enterprise but on a tiny scale, and settled through barter.

The invention of coinage made it possible for the first time in history for private citizens to control their own private transactions.  Land and goods could be sold and bought without the sanction of the Priest/king.  Private citizens for the first time became so empowered that they were able to depose the entire system of Priest/kings and replace it with Demos-Kratos: Power to the Private Citizen: Democracy.

This is a matter of historical fact.  It is something that was studied by those famous "Founding Fathers of American Democracy" and it is the major reason that those "Founding Fathers" decreed that money could ONLY be Gold and Silver coinage.  They understood that as soon as the Banking System controlled the issuance of Paper Money the system of Democracy was destroyed.  As soon as the Banks controlled the issuance of paper money, all wealth would become distributed and controlled by a new Priest/King class of bankers.

It is precisely for this reason the Thomas Jefferson wrote: " The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution....Bankers are more dangerous than standing armies......(and) if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and CORPORATIONS that will grow up around them will deprive the People of all their property until their children will wake up homeless on the continent their Fathers conquered." 

Yet the only candidate who understands this, Ron Paul, is routinely ridiculed by those pretending to support of the vision of the Founding Fathers.  Why? Because they, like everybody else in politics are owned by the banks.


One day, not so long from now, the vision of the founding fathers will be revealed to be accurate.  And when it is, you'd better own some gold.

Everyone is out to cheat you

In your second rate finance companies like Merril Lynch your stock broker is pushing crap that the "banking" division tells them to push so that the bankers get a cut from their corporate relationships, while your broker gets a cut from you.  You get to buy the crap.

In your top tier finance companies, your broker is pushing more sophisticated crap that the "bankers" are actually shorting and they all share the money you're suckered out of.

Your insurance agent is selling you on you giving them lots of money now, and they'll pay you back some time far in the future with dollars that are worth a tiny fraction of what they're worth now.  Meanwhile they take the money you give them now and gamble it in the risks markets, knowing that if they win they get huge bonuses, and if they lose, well, either the Fed pays them back, or they just don't pay you back in the future.  So what?  It's free money either way.

Your real estate agent swears up and down the NOW is the time to buy real estate "at the bottom."  Just like before was the time to buy when the market could never sell off.  As far as they're concerned you're a big fat dope, ready to be fleeced, any time.

Your investment letter guru is selling you on his charts and his Commitment of Traders Data, and his "Trader's intuition" and his moving averages and his stochastics and fibonacci retracements and his elliot waves.  All crap you don't understand, and is meaningless anyway, just so you'll pay him or her 200 or 500 or 1000 dollars a year to get that "trading edge."  Of course, if this crap provided a trading edge, your investment letter guru would use it to trade.

Your contractor, your doctor, your lawyer, all view you as a means of padding their wallets so they can buy that extra i-pad, trip to Aspen, boat, condo, hooker, they so badly need. Especially the ones that say "God bless" in stead of "good bye."  "Or God Willing," in stead of "I hope so."  The ones that constantly mention God are always The the biggest crooks of all.

And the politicians that are supposed to regulate this stuff are getting paid to write laws by the corporations and industries they're supposed to regulate.

And the news services that report on all this say whatever their advertisers and corporate strategists  tell them to say.

Why is everyone out to cheat you?

I don't know.  But I do know this: every economy functions fundamentally on trust.

When trust breaks down, an economy is on the way to oblivion.

Do you trust the investment professionals in your life?  Do you trust your colleagues, your competitors?  Do you trust your politicians?  Do you trust your news services?  Exactly whom do you trust and how far?  That's the measure of the strength of this economy.

Gold correction is over! The credit crisis is over! The Housing Market has bottomed. Load up on more debt! Buy lots of stuff!

Gold and the market are soaring!  Every pundit that declared that the gold bull was dead are now declaring that the gold "correction" is over.  European downgrades are "Old news" and "in the market."  The housing market is "bumping along the bottom" but "the worst is certainly behind us."

The internet news providing community is vast beyond counting.  There are dozens of cable news networks that need to fill 24 hours 7 days with some sort of blather.  There are even still print newspapers that need to say something about something every day.

Every day I'll tell you the exact same thing over and over.  The Banks are Bankrupt.  Zombies.  Dead.  They are sucking capital out of the world economy in stead of allocating capital to the world economy.  The world economy is still drowning in debt primarily (though not exclusively) because of the massive greed of the Zombie banking community, which now includes most large "Investment" banks.

The world governments that are owned by the Zombie banks are drowning in sovereign debt, and their central banks are all insolvent as they've taken a tremendous amount of bad bank debt onto their own balance sheets.

All 'invesment" is now gambling.  Including 'investment" in paper currencies such as US DOLLARS.  Gamble all you like.  I hope you're lucky.  I'm putting my faith/luck into gold, rare gold coins and some silver.  I do keep dollars around to pay for stuff.  You have to.  Right now.   But I don't necessarily believe that in 1 or 2 or 5 years that will still be the case.

NY AUCTIONS AND SHOW REVIEWED

I've already written about the 5 billionaires who ransacked the Prospero Auction.  But of course there were other very high profile auctions, and at least some of those billionaires were active throughout.  Still, they didn't buy everything and as always happens some coins went for reasonable prices.

The ever popular Triton Auction began with a daring move by Nomos AG to offer a run of 19 Greek rarities and condition rarities with starting prices averaging about 200,000 dollars and running as high as 2.5 million dollars.  Though it appeared as if the auction sold out, in fact most of the coins were bought in by the company to save face.  It seems that billionaires prefer the thrill of actually bidding the coins up themselves.

The Triton BCD auction of Greek Silver went off the day before, and then oil sheik was active bidding some coins to ridiculous levels and buying as much as 40 percent of the auction himself.  What he didn't buy went at reasonable levels. The Greek section of the regular Triton was highlighted by a Croesus gold prototype stater that went for 175,000 dollars all in - not to the sheik.  There was not much Greek gold besides this piece, and the little offered was off condition and went for modest prices - as off condition pieces normally do, even in Triton.  A few Roman rarities brought excellent prices, and a plentiful run of high end Byzantine was well bid - though enthusiasm was dampened by the widespread knowledge of the recent 2000 piece Byzantine hoard.   Later in the auction some gorgeous medieval French gold pieces went for very good money, a Lion D'or of Phillippe VI going for 38,000 dollars to Ira Goldberg of Goldberg Auctions - and worth every penny.

The Sheik even showed up later in the week for Stacks/Ponterio auction which boasted a few uncharacteristically nice Greek gold pieces - which he bought for far less than Prospero prices as he was the only billionaire there.  Then he went online for the final offering of Triton and bought heavily in Roman, Byzantine and even some modern issues - so he's branching out.

Disappointments this year were found at the Manhattan Sale, and the Gemini Auction, both with some nice pieces, but very few marquee items to interest big bidders, and not enough true condition rarities to attract the interest of high end "normal" collector/investors.

The NYINC coin show that followed was truly abysmal this year, as most of the good material has gone into auctions both at the show and leading up to the show, so little of quality was left for the show.

Another problem was that the middle class investor/collector was notably absent - from the auctions and the show.  Because the middle class in being systematically crushed economically right now.  Nowhere is this so visible as in high end commodities and collectibles.  The middle class is struggling to eat and stay warm, and clothe and feed and educate their kids. They can only buy on credit.  There is no credit to be found in the land of Numismatics.  So they were not there.

There were more billionaires and millionaires than ever this year scowering the auctions and the show for investments.  But the middle class was gone.

What does this mean?  It means that to buy coins - real historical money - you have to understand the difference between a nice collectible, and a true high end investment - if you're interested in making money.  Because as more and more investors with real paper money are looking to convert it into Real Things, the "collecting middle class" are on their way to becoming the working poor, and they will soon be out of the economy altogether.

Dealers and investors who understand this can still do very well.  Those who don't will get killed along with the rest of the middle class.

A fascination for Real Money

Man is the only animal that uses money.  All animals abide by laws of some sort.  Not written laws of course.  Man is the only animal that uses writing.  But laws that govern the herd, territory, mating.  Even if you prefer to use the word instinct for some of this behavior, the result is that when animals contravene normal behavior, they are punished.

But only humans use money.  Money has allowed humans to specialize.  Without money everyone would have to spend all their time making their clothes, hunting their food and building their shelter.  Money has allowed humans to spend vast amounts of time and energy creating, inventing, evolving.

For all of human history gold and silver have constituted Money.  For brief periods throughout history Man has tried to use paper as a marker to be redeemed for gold and silver, and occasionally, to disastrous results, paper as money itself.

We happen to live in one such terribly unfortunate period.

However, as the paper edifice crumbles and ultimately burns, fascination for Real Money is on the rise.  We now have a presidential candidate who is gaining great credibility amongst the young as a proponent of Real Money.  We have Central Banks beginning to buy and hoard Real Money.  And we have a wealthy class that is beginning to convert their paper into Real Money.

Along with this fascination for Real Money, many humans also become fascinated by Historical Examples of Real Money.  That is to say gold and silver coins from the time of Croesus in 600 BCE all the way through to gold and silver coins for the modern era.

If you can't understand the fascination for Real Money, stop reading.  If you can - how might you participate?

1) Start with a period of history with which you are fascinated,

2) Study the coinage of that period.  Figure out which coins - and medals - have particular historical importance in relation to that period.

3) Talk to dealers, buy books, look at auction records.  Figure out a reasonable price range for these coins and medals.

4) Understand we are in the very early stages of a renewed fascination for Real Money - and Historical Examples of Real Money.  So even now you're getting in early enough so that errors you make should be bailed out by a rising market.   It's a huge bull market, likely to continue until paper money is shunned, hated, and derided as a barbarous relic of a fallen age.

5) And ask yourself this: Which is more likely to lose value over time: a Gold Historical Coin, or a modern unit of paper money?

Random lines, Random pronouncements

Many say the gold bull is dead.  Every single pronouncement you read to this effect is based on lines that are drawn on graphs.  I'm not kidding.  A bunch of guys and gals with high school level math - Algebra 2 will basically give you all you need to know to perform this parlor trick - plot price bars on a graph and calculate moving averages and then tell you if you're in a bull or bear market.  In a theoretically free market (a market where all participants can participate with equal efficacy) with unlimited price discovery - which means absolute transparency of purchase and sale records by all participants - this method has some validity.

If you think that gold, or stocks, or options, or futures constitute a free market with valid price discovery then I have a bridge to sell you.  It connects  Brooklyn and Manhattan.  Very useful.  You can take ownership after transferring a million dollars into my private account.

The fact is that nobody has ever made much more than a dime in the markets through this type of technical analysis.  The great experts of the art are guys and gals who make money writing newsletters and charging for the service.  If they could make money trading off this information they would.  They know they can't so they write the newsletters encouraging others to trade in this fashion.  Other morons.

If you want to make money - or at least preserve the money you still have - you'd better have a point of view that is impervious to this type of nonsense.  I'm serious.  This is crucial to your financial survival.

Here's my point of view.  Debt of the level we're experiencing is highly deflationary.  As deflation takes hold all risk assets deflate - but essentials (food, gas, heat, rent, medical care, education) continue to inflate causing everyone to become poorer and poorer.  In other words the currency is worth less and less even as risk assets deflate.  Governments fight this by furiously printing money.  This causes some risk assets to inflate again, while continually debasing the currency in terms of essentials.  Eventually, the printing is rejected by an increasingly impoverished  populace and risk assets again deflate. 

And over time everyone moves to gold as the only stable currency.  Gold may fluctuate wildly in any given short term period.  Over time it only increases in value.

This has proved a financially useful point of view for the last ten years.  It should be good for at least another ten.

That's my point of view.  What's yours?

The Rush out of Paper

 

Fearful Investors Stash Money in Luxury Goods

By Nils Klawitter

01/05/2012

DPA

The uncertain financial markets and the euro crisis have left many Germans feeling nervous. Worried about the security of their savings accounts, increasing numbers of people are deciding they would rather invest in material goods like art, vintage cars and real estate instead. But experts warn that nothing is 100 percent safe any more.

Franz Herrmann, head of the German Association of Savers (BDS), has spent half a century trying to be a good investor. As a child, he filled piggy banks and, as an adolescent, he put money away in his savings account. Later came a building loan contract, in addition to 12 life insurance policies. "Money attracts money," his father liked to tell him, quoting a German saying. "I was hardwired for saving money," Hermann explains.

At 52, he says he figured out "what's going on." He'd earned money through his business selling beer steins and jewelry in Munich's city center. But he became convinced that he'd actually lost money through his savings efforts and cancelled his insurance policies, while the small interest earnings from his remaining savings accounts were "eaten up by inflation," he says. To fight back, Herrmann formed the BDS. Now he makes appearances around the country, warning of "money-destroying instruments." He's certain that saving is "state-sanctioned robbery."

Fusion Alternatives

News and updates on the global diamond industry.

Who Is Pushing Up Diamond Prices?

  November 22, 2011 – 10:46 am
 
Yet another world record diamond price was achieved last week at Sotheby’s Geneva Sale of Magnificent Jewels continuing the spate of world record prices for diamonds achieved over the last two years. The surge in diamond prices in the face of the overall turbulent economic environment has grabbed the headlines and has left many analysts left to grapple with why diamond prices continue to rise during such uncertain economic conditions. 

The Wall Street Journal

The Wealth Report

Robert Frank looks at the culture and economy of the wealthy.

• November 2, 2011, 12:47 PM

Are the Art and Wine Bubbles About to Pop?

By Robert Frank

One of the paradoxes of the wealth recovery is the collectibles market. While yachts, planes and mansions are stuck in a slump, collectibles are raging. Prices for the best-known fine art, wine, vintage cars, stamps  and antique jewelry have all surged after a taking a brief pause in 2008 and 2009.

Christie’s: Edgar Degas’s ‘La Petite Danseuse de Quatorze Ans’

The auctioneers and dealers tout collectibles as a better and more secure investment than stocks or bonds.
“Collectibles have become a viable and serious tool for investment diversification,” Jim Halperin, of Heritage Auction Galleries told Bloomberg. “I’m investing my own money in art and collectibles, right alongside public stocks, private equity, business loans and real estate.”

The Amazing Prospero Auction of Greek Coins

Last night, at the New York International Numismatic Convention (NYINC) The New York Sale auctioned off the Prospero collection of Important Greek Coins.  The Highlight was a Pantikapaion Stater from about 350 BCE (see image above) that hammered down at 3.25 Million dollars.  It was sold to an oil sheik from Bahrain.  Bidding against him was a Lebanese billionaire, a wealthy private British collector represented by Morton and Eden, a private US billionaire collector, and a mystery bidder represented by the New York Sale.  Also bidding were a half dozen wealthy private collectors who, in the past, used to be able to dominate these auctions, but now they could hardly participate, along with the five most powerful dealers who were able to acquire almost nothing.  All night long, 500 lots went for fantastic sums to the five dominant bidders.

Is this a bubble?  In some ways, yes.  Some atrocious material sold for hundreds of thousands of dollars.  But many unique important coins also sold for record sums.  The atrocious material will never be worth much on the open market (if it ever gets back there).  But the important and beautiful pieces are still far cheaper than buying a Jeff Koons mass produced porcelain figurine of Michael Jackson looking like a monkey.

So the verdict is mixed.  The oil sheik seemed to be buying at random.  He acquired some great pieces, and some junk - often at around the same price (100 to 200,000 dollars).  The British client of Morton and Eden was much more discriminating.

Conclusions?  Every day more wealthy people are actively seeking to diversify out of paper.  Sometimes they trade their paper for junk, some times they trade their paper for amazing historical artworks.  But every day more and more of them are trading junk paper for tangible things.  The trend is only accelerating.

Maybe they know something.

Hmmm.... What can they do?

2:23

World’s Biggest Economies Face $7.6 Trillion Debt

 

  Jan. 3 (Bloomberg) -- Governments of the world's leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs. The amount needing to be refinanced increases to more than $8 trillion when interest payments are included. Linda Yueh reports on Bloomberg Television's "First Look" with Caroline Hyde. (Source: Bloomberg) 

How will they fund this debt when tax receipts will account for less than 40 percent of the current budgets - to say nothing of this gigantic accrued debt? 

Gee, if they can't tax the money, what else could they do?  Hmm.  Can you think of anything?

G