Economist MacLeod: Gold “Incredibly Cheap”

Release Date: 
Friday, August 22, 2014

Gold and Silver Prices

Gold prices retraced some of its earlier losses on Friday but remained in negative territory. “Gold rose for the first time in more than a week after Federal Reserve Chair Janet Yellen said slack remains in the labor market, easing concern that the central bank is ready to increase interest rates. ‘They’re trying to bluff the market,’ Tom Winmill, who helps manage about $220 million of assets…said in a telephone interview. ‘They’re trying to warn investors about the potential for rate increases, without actually implementing a rate increase. I think that will strengthen the trading range for gold.’” (“Gold Prices Rise as Yellen Sees U.S. Labor Market Slack,” Bloomberg, 8/22/14.)

Gold finished the week at $1,281.40, closing down $24.10. Silver prices closed the week down $0.21, at $19.44.

Economist MacLeod: Gold “Incredibly Cheap”

Economist Alistair MacLeod explained why the international move away from the U.S. dollar as the reserve currency has made gold “incredibly cheap.”

“Alasdair Macleod writes the blog FinanceAndEconomics.Org. His research aims to explain the relationship between the dollar and gold, and to warn investors about the biggest threats to their wealth from macro-economic events. Besides what the Fed is doing by printing money, there is another big threat to the dollar, said Alasdair. Countries in Asia are banding together in order to rid themselves of using the dollar in international trade.”

“‘There is a thing called the Shanghai Cooperation Organization, an agreement principally between China and Russia, whereby they tie up the whole of Asia as their backyard…The objective of the SCO is basically to settle international trades between these countries without using the dollar…It’s not just members of the SCO, either, that could eschew the dollar. The Middle East, for example, now principally sends exports to China and India, so there’s no pressing reason to use the dollar there. You can see that, if they succeed, the whole Asian continent, at some point in the future, will be off the dollar.’”

“‘So much gold has already gone from Western vaults to the Far East – China, India – and the Middle East going back to the 1970s’. We probably don’t understand that this is one of the greatest wealth transfers in history. Relative to the amount of fiat currency in circulation, gold is probably as cheap as it was in 2000 or 2001 – incredibly cheap.’” (“What if China, Russia Succeed in Going off the Dollar? -- Alasdair Macleod,” Sprott’s Thoughts, 8/21/14.)

Williams: Gold Price to the “Stratosphere”

The hedge fund manager with Vulpes Gold Fund, Grant Williams, discussed why gold will see “incredible movements” as prices rise.

“Asian countries and their citizens want to buy and own physical gold. When you look at these Eastern countries now, after the last 25 years their reserves have gone from $300 billion to $5 trillion. And these people want to swap that fiat currency for gold. So this time around when you get any kind of run-up in price, you will be competing to buy physical gold with a lot of entities in Asia who are holding a great deal of cash and who would much rather own physical gold than paper money. So when we get to the stage where central banks finally lose control of all these things they are trying to keep in certain ranges such as inflation, bond markets, and currencies, once they start to lose control and people begin moving aggressively into gold again, you will see that an incredible amount of firepower has built-up that will want to buy and take physical gold off the market…I think we are going to see some really incredible movements in terms of price.”

“At some point the Chinese will feel they have enough gold, and eventually the gold market will capture the public’s imagination. And when a market as small as the gold market does capture their imagination, there just isn’t enough gold around for everyone to own some of it without the price going significantly into the stratosphere.” (“Grant Williams - Why Gold Is Headed Into The Stratosphere,” King World News, 8/19/14.)

Hackers Target Health Care Provider

Chinese hackers targeted one of largest health care systems in the nation stealing confidential information from 4.5 million patients.

“Hospital giant Community Health Systems said on Monday that the personal information of nearly 4.5 million patients was stolen by hackers in an attack believed to originate from China…[T]he company, which operates 206 hospitals in 29 states, reported that the hackers used ‘sophisticated malware’ to attack the company’s security systems and copy and transfer hospital data.” (“Community Health Systems hacked, records of nearly 4.5 million patients stolen” Fox News, 8/18/14.)

Our Special Report, A Cashless Society: Will Convenience Lead to Catastrophe? is now available upon request.

Welcome to a cashless society, where money is digitized and privacy is virtually liquidated. Attacking personal and institutional financial accounts will never be easier. In fact, it’s virtually encouraged — by hostile foreign governments, state sponsored hackers and international cyber criminals. You need to learn the facts now about how the move to a cashless society will leave you vulnerable to financial ruin. And what you can do to protect yourself.

To download your free copy of A Cashless Society: Will Convenience Lead to Catastrophe? Click here.

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program. Listen to the show below:

News Footer


†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

You should review Goldine's Account Agreement along with our risk disclosure booklet, Coin Facts for Investors and Collectors to Consider ®, prior to making your purchase. Goldline has a spread or price difference between our selling price, called the "ask", and our buy-back price, called the "bid". That spread varies depending on coin or bar you acquire. Spreads on 1 oz bullion coins, 90% silver dimes and quarters, and one ounce and larger bullion bars are 13%. All other coins have a spread of 28%. There is also a 1% liquidation fee when you sell your coins back to Goldline. The market must go up enough to overcome this spread before an actual profit is achieved. Precious metals and rare coins can increase or decrease in value. Past performance does not guarantee future results. Coins are a long-term, three- to five-year, preferably five- to ten-year investment. We believe precious metals are suitable for 5% to 20% of the average investment portfolio though others may recommend a different percentage.

To receive free information package on gold and precious metals investing, call Goldline at 1-800-963-9798.