The Phaserl


The “Perfect Storm” That Could Shoot Gold Prices Through the Roof

by Doug Casey, Casey Research:

A “perfect storm” has hit the gold market…

Longtime readers know Casey Research founder Doug Casey has been warning of another major financial disaster for years. According to Doug, the financial hurricane that made landfall in 2008 never left. It’s been hovering above us, gaining strength.

Doug now thinks we’re exiting the eye of the storm. When the trailing edge hits, it will trigger a crisis “much more severe, different, and longer lasting than what we saw in 2008 and 2009.”

He’s encouraged anyone listening to buy gold, the ultimate safe haven asset. If you took Doug’s advice, you’re likely sitting on big gains.

The price of gold has surged 27% this year. It’s beat global stocks 6-to-1. Gold hasn’t done this well in years.

Today, we’ll explain what’s driving gold prices. As you’ll see, folks are piling into gold at the fastest pace ever. And there’s no reason to think this buying mania will end anytime soon.

• Gold is having a historic year…

Over the first six months of this year, the price of gold surged 25%. According to the World Gold Council, gold had its best start to a new year since 1980.

Record “investment demand” caused gold to take off.

If you’ve been reading the Dispatch, you might find the phrase “investment demand” odd. After all, we don’t consider gold an investment. We think of it as real money.

For centuries, gold has preserved wealth because it’s unlike any other asset. It’s durable, easy to transport, and easily divisible. Unlike paper currencies, it’s survived every financial crisis in history. It’s the most reliable store of value on the planet.

When the World Gold Council says “investment demand,” it’s talking about gold coins, gold bars, and gold ETFs… basically anything but jewelry.

Frankly, it doesn’t matter if you call gold an investment or real money. The point is that folks are buying gold at the fastest pace ever.

• Investors bought 1,064 tons’ worth of gold during the first half of this year…

That shatters the previous all-time record.

Investors bought 16% more gold during the first six months of this year than they did in the first half of 2009…when we were still in the midst of a global financial crisis.

Investors are buying any gold they can get their hands on…

MarketWatch reported last week:

Demand comes from a “broad spectrum of investors accessing gold via a range of products with gold-backed ETFs and bars and coins performing particularly strongly.”

As you probably know, gold ETFs like the SPDR Gold Trust ETF (GLD) track the price of gold. They trade like stocks, making them a convenient way to “own” gold.

However, it’s important to keep in mind that gold ETFs are “paper gold”—they’re no substitute for a gold coin you can hold in your hand.

That said, gold ETFs are incredibly popular. They can say a lot about investor sentiment toward gold.

Right now, investors can’t get enough of these funds. According to the World Gold Council, inflows into gold-backed ETFs hit 579.2 metric tons during the first half of the year. That, too, is a new all-time high.

• “Mom-and-pop” investors aren’t the only ones buying gold…

Legendary investors George Soros, Carl Icahn, Stan Druckenmiller, Bill Gross, and David Einhorn have all recently placed huge bets on gold.

These are some of the best investors to ever walk the Earth. None of these men got to where they’re at by investing like everyone else. They made billions of dollars by being contrarians. Yet, they’re all doing the same thing right now: buying gold.

Just as important, they’re buying gold for the same reasons we own gold. It’s the ultimate safe haven asset.

This tells us something is very wrong with the global economy or financial system.

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1 comment to The “Perfect Storm” That Could Shoot Gold Prices Through the Roof

  • Geo

    “Legendary investors George Soros, Carl Icahn, Stan Druckenmiller, Bill Gross, and David Einhorn have all recently placed huge bets on gold.”

    Don’t forget GLD allows its biggest holders to redeem for the underlying physical gold but everyone else is left holding the bag. Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give your everyday investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. There are other issues as well that I’ve verified and welcome everyone else to do the same:

    “Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded to act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.

    I remember there was a well documented visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”

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