note from Swiss American, arrived via email
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A significant number of economic situations have prompted me to send an alert to all my clients and prospective clients. Over the last year the Federal Reserve has lowered interest rates about ten times to where we have the lowest nominal savings interest rates in forty years. With inflation rising (higher energy and consumer products and services) savers are faced with negative real interest rates. Hardest hit being senior citizens on fixed incomes earning considerably less today than over the last twenty years. Growth and protection are not achieved today by leaving money in the bank!
With the lowering of rates the Fed and Treasury have opened the floodgates with money supply growth. This tactic is being done to prevent a stock market crash or further credit defaults .I believe this policy will lead to increased prices for commodities as well as goods and services. Lower rates did not prevent three major bankruptcies this year, Argentina, Enron, and Kmart. The ripple effect by these defaults could be tens of billions to US banks and Treasury. The Enron situation has brought into question the credibility of established auditors as well as political ethical conflicts of interest. The Argentina situation questions the IMF and US strong dollar policy. It appears the introduction of the Euro will weaken the US dollar relative to foreign currencies and gold. I look for long term interest rates to start heading up with a weaker dollar.
I believe we can continue to experience both inflation with higher costs of living and deflation with corporate bankruptcies and lower financial asset values. Government, consumer and mortgage debt are at historic highs. A dangerous debt-credit bubble, in a slowing economy, can only magnify these economic forces already set into motion.
The acquisition of Gold can help protect an individual, trust, corporation, or pension plan against inflation (increased money supply and increased prices) and deflation.(contraction of debt and money supply with decreases in financial asset values).
The Gold-Anti-Trust Action Committee (www.gata.org) has put forth a flawless detailed case showing how governments and international banks violated laws to suppress the gold price. At present there is a major shortfall (consumption versus production) in both gold and silver. This imbalance will be corrected and force the hand of this cartel, which is artificially keeping prices low. There are a number of economic or geo-political events that could influence the price of gold, notwithstanding a weaker dollar. The overwhelming argument is for significantly higher prices. The suppression of the gold price through short selling, derivatives, and forward mine sales will come to an end as mines deliver into their hedges, with the Newmont acquisition of Normandy, and GATA’s case goes to Federal court. As all this information goes to investors and money managers (by way of the internet) market forces could create a new bull market and the price of gold will quickly rise.
One of the best ways of taking advantage of the coming bull market in gold and silver, as well as personal financial protection in uncertain economic times, is the acquisition of gold and silver numismatic coins.
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