The Fed announced on Wednesday that it may begin to taper its bond purchasing program by the end of the year. Sometime in 2014, it may even cease Quantitative Easing altogether. In reaction, the stock market plunged, with the Dow losing 350 points. Precious metals took a beating as well, with gold and silver both down on the week.
(A topic for another day: Let’s not forget that, at least for the moment, nothing has changed. The Fed’s program of injecting $85 billion into the economy each month continues, and the announcement from Ben Bernanke on Wednesday was full of qualifications. Bernanke can always go back on this new supposed plan of his; he has done such things before.)
As if these times we live in weren’t already strange enough, recent months have seen precious metals and the stock market often move in similar fashion, especially when in reaction to the latest musings about the fate of Quantitative Easing. But the similarities between precious metals and stocks end there… and the “smart money” knows it.
What exactly does the “smart money” know? The “smart money” knows:
- Gold has a track record that stocks can’t touch
- Stocks come and go; gold has been around for thousands of years
- Any stock could go to zero; gold is forever
Simply put, the “smart money” knows that gold has always maintained value, and it will always have value. You cannot say that about stocks.
So with the stock market being decimated, and with gold and silver prices having been reset to 2010 levels, here at Birch Gold Group we’re seeing many of our clients shifting out of their overvalued paper assets and into hard commodities before the general public catches on… at which point prices could go through the roof.
Now you have a chance to join the “smart money”. Take advantage of this unique opportunity to get into gold and silver at prices not seen since 2010. Call us today.
Precious metals on the move
London Fix PM price at week’s end, and change over previous Friday:
- Gold: $1,295.25, down 6.9%
- Silver: $19.87, down 8.4%
- Platinum: $1,365.00, down 5.7%
- Palladium: $672.00, down 7.7%
In the news
Ron Paul: Gold could go “to infinity”
On gold and the dollar: “Eventually, if we’re not carefully, it will go to infinity, because the dollar will collapse totally… Six thousand years of history shows that gold always retains value and paper always self-destructs.”
On gold and stocks: “Markets do these types of things – they go up sharply, and sometimes they take a rest. I was never very good on short term, whether it’s the stock market, or whatever. But if you look at the record of the value of the dollar since the Fed’s been in existence, we have about a 2-cent dollar. And gold used to be $20 an ounce. So I’d say the record is rather clear on the side of commodity money.” – Ron Paul, on CNBC (link)
Schiff: Fed to increase QE, “vicious” gold rally to follow
“People are jumping to the wrong conclusion. They think the Fed is going to tighten—they’re not. In fact, the next move from the Fed is to expand QE. You’re going to see a vicious rally in gold as people look to rebuy the gold that they sold based on the false premise that the economy was improving and the Fed was going to tighten.” – Peter Schiff (link)
This is entirely a sell-off of paper gold; physical gold is primed to explode
“The end result of the stunning short attack in the U.S. paper gold market has been a dramatic net increase in global gold demand. At the same time, the lower gold price is putting gold miners under greater economic pressure and, to some level, is reducing mine supplies. So let the Western speculators play their games while they can. In every war, even the ultimate victors will lose a battle here and there.” – Brien Lundin, Kitco (link)
Quantitative Easing not to cease?
“I myself don’t think there is any prospect of the Fed ceasing [Quantitative Easing] because if it doesn’t print the money to support these (stock and bond) markets they are going to collapse.” – Dr. Paul Craig Roberts (link)
Chart of the week
If words weren’t enough: Gold sell-off is all in paper
The week ahead
- Reports from Far East suggest global surge in demand for physical gold to continue after latest drop in price
- In effort to calm nerves, expect torrent of data and speeches from Federal Reserve officials
- Consumer confidence, new home sales due on Wednesday
- Weekly jobless claims, personal income and spending due on Thursday