This weekend’s edition of the Markets and Money is a little unusual. Dr. Alex Cowie is on holiday in Queensland and I’ve only just returned from a publishing conference myself. And because I was travelling this week, I didn’t write a full complement of Markets and Money notes.
So instead of reviewing the week’s events, I thought I’d tell you about a noteworthy phone conversation I had on Friday morning. “Australians are staking a lot on their understanding of what’s really going on with gold. I want this conference to be Australia’s premier gold bug conference, where investors and serious thinkers can talk about gold and hear from some of the best minds in the the world about it.”
We then discussed what I think will be one of the most interesting and thought provoking conversations about gold you will hear this year. And it’s being held November 2nd-5th at the Australian National University in Canberra.
Now if you don’t think gold is money or aren’t much interested in the subject at all, then you can probably take a pass on the rest of this week’s letter. But for 160 people, I reckon the weekend could be incredibly energising. So let me tell you a bit more about it, and how you can guarantee your participation.
“Gold is not an investment category,” says Markets and Money founder Bill Bonner.
“It is more like a religion or a political position. True believers stick with it through thick and thin. When gold goes up, they are insufferable. When it goes down, they are unrepentant.”
If you’re a fan of the yellow metal, you’ll know exactly what Bill is talking about.
And, chances are, you’re preparing to once again play the insufferable ‘gold bore’ at dinner parties.
Bullion has hit $1,000 an ounce again… and even though it dipped below that level late in the week…it sure seems pretty comfortable there…
“It’s interesting that the price has hovered around this level for longer than it has in the past. It seems to suggest that people are more comfortable with this price than they have been,” says CRU analyst Prem Chaphekar. “It wouldn’t be a surprise if it went up and stayed up.”
Looking at the financial press, you’d think this recession is over and recovery is underway.
But looking at the gold price – an option on financial chaos – you’d think the world is about to end—or that the financial markets are finally giving serious thought to gold’s real role in the monetary system.
So what is really going on?
You’ll know that we at the Reckoning understand that gold persists because it is no one else’s liability. What’s more, no monetary system lasts forever. This current global fiat currency system is, historically speaking, an impromptu experiment, at best; premeditated larceny at worst. It’s already lasted longer than most marriages. The bust-up, contrary to what the newspapers say, has yet to happen. And when it comes, it threatens to be nasty and expensive.
How will the final act of this financial crisis play out?
What role will gold bullion play?
And which gold-related investments will thrive as the final curtain falls on the global monetary system as we know it?
I invite you today to participate in a unique event where you’ll discover answers to these questions and more…
Australian National University, Canberra
Some of the smartest ‘metal-heads’ on the planet will be in attendance. (And, extraordinarily, I’ve been asked to deliver a presentation as well, which I’ve agreed to.)
If you are as fascinated by gold as much as I think you are, you’ll want to secure one of just 160 available places right now.
Because – and I really mean this – there has NEVER been a more crucial time for gold.
In an effort to return to the bubble era, central banks across the planet printing mind-boggling amounts of money. They will keep doing so until inflation rates go up. They make no effort to hide it. They have as much as warned the world: prepare to be robbed.
The gold market now anticipates this inflation.
We have told this story ourselves; we still believe it. But today, I caution you: there may be a plot twist.
The problem with inflation is that, as yet, there is none.
Consumer prices are falling in China, Europe and America. But, with Feds are pumping the money supply as hard as they can, how can this be the case?
The problem is all this printed money has yet to reach the real economy.
The US money supply figures that relate to actual cash in people’s hands – M1, M2, and MZM – are shrinking, at 28%, 4.9% and 6.2% respectively. Why?
In short, the Feds’ money goes into cool bank vaults and hot speculative trades.
When it tries to find its way to the consumer, it gets lost.
This happens because the transmission mechanism has broken down. We live in a bust economy, not a boom one. In a bust, consumers can’t borrow. They have nothing to borrow against. Both their wages and their assets are going down. Who would lend to them under those conditions? Not a bank that almost went broke itself twelve months ago.
Even if consumers had access to credit, they wouldn’t take it. Consumers too almost went broke a few months ago. Instead of saving money during the boom years, they spent it – or gambled with it. When the bust came in 2008, they realised they were ten years closer to retirement with little money saved. Now they have to make up for that lost decade by cutting spending and saving as much as they can.
In the absence of consumer demand, consumer prices do not rise.
That’s why inflation has yet to rear its ruinous head.
But that’s about to change…
There are bull markets everywhere right now.
But not all of them have integrity.
The bull market everyone knows about is in stocks. Since March, aside from the odd correction along the way, stock markets around the world have kept going up.
The ASX 200 and the FTSE are up over 40%. The Dow Jones is up 45%, the main European stock markets, France and Germany, are up 48% and 52%. Emerging markets are flying even higher: Egypt +91%; Peru + 117%; Kazakhstan 129%.
But why are stocks going up?
Simple: investors think world economic growth is back on track.
Problem is there is no proof. Not. A. Jot.
According to one UN trade ‘think tank’ “the current financial market rebound is not a “real recovery” and any world economic growth recorded in 2010 was unlikely to exceed 1.6 percent.”
This is not a real recovery.
As I’ve said many times, you cannot correct the global imbalances of a leveraged boom with more leverage.
There is no real integrity to the massive stock market rallies that we’re seeing.
So which of the bull markets are worth buying into? The ones that are better placed to preserve your money in an inflationary environment – think hard assets like metals, energy and agricultural commodities.
More specifically: think gold.
Gold has finally broken above the magic $1,000 an ounce level. That’s a massive psychological level and one that traders have been battling over since it was last above there in March last year.
Whenever the gold price has approached $1,000, sellers have driven the price down.
They’ve overcome the buyers. But it was only a matter of time before there were fewer bears left to sell. The fact that gold has now made it above $1,000 suggests that the bears are being gradually worn down.
There’s a lot of money that has been waiting on the sidelines to jump in if it broke the $1,000 barrier. That money could be ready to crash into the market just as soon as gold looks like it is holding the $1,000 level.
Simply put: it’s an exciting time for gold investors. And I’d like you to join me in November to get some ideas on what you should be doing about it…and to gain a better understanding of the real forces at work in market right now.
If you’re serious about gold, you’ll want to secure yours right now.
You’ll hear from a stellar line-up of speakers who are coming from all parts of the globe. You’ll get four days of brilliant gold-related investment strategies and ideas you can’t find anywhere else. Consider it a chance to listen to and rub elbows with some of the smartest gold analysts in the world.
The conference will start by tackling the obvious but critical questions:
Will gold push on from $1,000 an ounce? How high is it likely to go? And what are the smartest gold plays you can make?
But that’s just the beginning. You’ll also be provided with thought-provoking insights into how the global financial crisis will develop in 2010, including:
- What next for the global monetary system? The truth about the current stock rally… The ‘perfect storm’ in the currency markets… And the prospects for gold during a rapid and deliberate inflation of money supply…
- The Gold Standard: Out-of-date relic, or merely pushed aside for the time being?
- Hoarding in the East: Why the Chinese government is urging its people to load up on gold and silver.
- The mechanism of capital destruction: How falling interest rates over the last 20 years have siphoned away your wealth… and what to do about it now…
- Revealed: why COMEX warehouse gold holdings are expanding in the current climate. If open Comex interest were a country, it would be one of the world’s top ten holders of gold. You’ll learn why this is the case.
- Gold mining and exploration – the coming dominance of gold Failing currencies mean that gold and gold mining will be centre stage going forwards.
- The gold ‘backwardation’ phenomenon explained: what it means for the mining industry and your mining stocks
The answers to these questions, and many more, will affect your financial decisions for the next decade… not to mention your everyday life.
They are answers you simply won’t get reading the Financial Review.
Why? Well, because the mainstream still doesn’t get gold.
In fact, even with the gold price once again knocking around the $1,000 mark, the majority of mainstream fund managers aren’t much interested. They say that weak jewellery demand (a symptom of the recession) makes the “fundamentals” of supply and demand look bad; and, most frequently, they say it makes no sense for gold to have a role as a currency in the modern financial world.
They miss the point…
Gold investment demand is up 46% on this time last year.
The fact is that right now the gold price has little to do with the demand for bangles and brooches across the world’s shopping malls. Instead, it reflects gold’s monetary role: whether you think it makes sense or not, gold is seen by a large number of people as having a monetary function.
Most currencies are being debased in one way or another.
Doesn’t it make sense to hold one that can’t be?
As Bill Bonner likes to say, gold is most useful in extreme monetary conditions – when “other money goes bad”.
Bill isn’t the only one with this view. Secure your place at The World Financial Crisis and the Vanishing Gold Basis and you’ll hear from a sensational line-up of speakers and analysts who believe it’s gold’s time to shine in 2010:
- Prof Antal Fekete (Hungary), The Gold Standard Institute. Few people in the world have more knowledge of the inner workings of the gold market than Prof Fekete. He was appointed Assistant Professor at the Memorial University of Newfoundland in 1958, and since then has been a viting professor at Columbia University in the City of New York (1961), Trinity College, Dublin, Ireland (1964), Acadia University, Wolfville, Nova Scotia (1970), Princeton University, Princeton, New Jersey (1974). Since 2005 he has been Professor at Large of Intermountain Institute for Science and Applied Mathematics (IISAM), Missoula, Montana.
Prof Fekete has developed the ideas of Austrian economics, in particular with respect to interest rates. He’s an expert in the role of gold in the world monetary system and has followed the gold basis since the introduction of gold futures trading in the 1970s. Prof Fekete is a frequent contributor to the internet-based gold community and travels widely as a speaker.
- Philip Bruce (Australia), CEO, Hill End Gold. Managing Director of Hill End Gold Limited, Philip is a highly experienced international mining executive. Former Managing Director of Triako Resources Limited, General Manager of Plutonic Resources Limited, CEO of PT BHP Indonesia, and a Director of Buka Minerals Limited and Ausmelt Limited… Philip knows gold mining inside out and will pass on many potentially profitable secrets over the four days.
- Robert Lambourne (UK). Bob Lambourne is a veteran businessman, long-time gold investor and student of the markets and the international monetary system. His efforts to understand the structure of the bond market and long term interest rates led him to study in particular the link between gold and real interest rates.
- Darryl Robert Schoon (USA), www.drschoon.com. In the 1990s, Darryl began studying the Great Depression and realised his preconceptions about money and the economy were just that, preconceptions. After much time and research, he now has some insights to offer on what’s taking place inside the global financial system.
- Bron Suchecki (Australia), Perth Mint. Born in Sydney in 1969, Bron was blissfully unaware of gold until 1994, when he joined the Perth Mint as an Administration Officer in their Sydney retail outlet. In 1998, he moved to Perth to work in the then fledgling Depository Division. He has held a number of roles since then in the treasury, risk, and governance areas of the Mint.When not hurtling through the Perth bush on his mountain bike, Bron spends his spare time sharing personal views on precious metals in his Gold Chat blog.
- Nathan Narusis (Canada), Bullion Management Group. Nathan Narusis, CFA, has been a gold advocate since he entered the investment industry in 1996 and is a long-time student of Prof Fekete’s work. His particular interest in the Professor’s work lies in its application to investment strategy during the transition to a new gold monetary system. Currently Nathan sells gold for Bullion Management Group, a Canadian-based global mutual-fund operator and bullion storage provider.
- Barry Dawes, B Sc F Aus IMM(CP) MSDIA. Barry Dawes is the Managing Director of Martin Place Securities Pty Ltd, a boutique investment company specialising in investment opportunities in small-cap resource and energy companies. Martin Place Securities (MPS) has raised A$650m in the past six years as underwriter, lead manager or lead adviser for ASX, NSX and AIM listings for resources and energy companies. MPS is well known for its support of successful growth companies in these sectors and for its views on the outlook for the resources commodity sector. Barry has had over 30 years experience in the resources sector and prior to establishing MPS had worked in senior executive roles of investment management with BT Australia, equities research for Bain Deutsche Bank and equities research and corporate finance for Macquarie Bank. Barry Dawes is also Director of ASX listed Uranium Exploration Australia Ltd, of Superior Coal Ltd, of several investment companies and of a number of unlisted public operating companies and has arranged development finance for dozens of listed resource companies.Well known and well respected for his outstanding knowledge and understanding of the resources sector Barry has helped MPS to be the company that leads the way for investing in Australian growth companies.Barry is a fellow of the Aus IMM and a master of SDIA
- Sandeep Jaitly (UK), mathematician and gold basis specialist. Sandeep Jaitly read Mathematics at Imperial College, London. On graduation, he began working in finance at Odey Asset Management in London. He is currently an analyst concentrating on global equities, with a bias towards India and China, at Soditic CBIP. Since encountering Prof Fekete’s work, Sandeep has been concentrating on its application to practical investment.
- Philip Barton (Australia) , The Gold Standard Institute. A long-time watcher of the gold market, Philip is an Australian businessman and founder of The Gold Standard Institute.
In short, it’s some of the world’s greatest financial and gold market minds gathered in one place, both on the stage and in the crowd — sharing ideas and strategies you would have to spend thousands of dollars to learn about otherwise.
You’ll get real ideas… real predictions… with a few actual investment recommendations thrown in for good measure.
If that sounds like something of interest, here’s the deal…
As I said, the conference takes place over four days from Monday 2nd November to Thursday 5th November, 2009. You’ll need to free up those dates.
It’s in Canberra, so you’ll need to arrange travel and accommodation.
There will be four one-hour sessions each day (10am-12 noon and 2pm-4pm) with tea/coffee and a nice lunch provided.
I’ve managed to secure places for Markets and Money readers at the same price as 2008: $790. That includes the seminars, networking opportunities, take-home materials plus refreshments and full lunch each day of the conference.
But I need to hear from you now.
The folks at the Gold Standard Institute want to keep this as intimate as possible. As such, only 160 places will be made available.
The interest level in this event is just as high as the ‘Australia in the Red’ debt summit we held earlier this year. The few remaining seats will fill up quickly. So please do not delay.
As Richard Russell says, a man should count his wealth neither in dollars nor in Euros….He should count it in ounces.
If you share this view, and would like to mix with like-minded ‘gold bugs’ and precious metal experts, you can reserve your place now.
Do so by contacting conference organiser Dr. Marcus Matthews, who is coordinating the event on behalf of the Gold Standard Institute. He can be reached with your expression of interest or intent to order at firstname.lastname@example.org.
See you in Canberra!
Markets and Money