Former Fed Chief Greenspan: Buy Gold

Release Date: 
Friday, October 31, 2014

Gold and Silver Prices

Gold and silver prices fell sharply this week following the Federal Reserve’s decision to end quantitative easing and a strong U.S. dollar. “Gold and silver fell in New York, slumping to the lowest since 2010, as the dollar strengthened after the Bank of Japan unexpectedly boosted stimulus and the Federal Reserve ended asset purchases this week.” (“Gold Tumbles With Silver to Lowest Since 2010 on Dollar,” Bloomberg, 10/31/14.)

Gold finished the week down $57.70, closing at $1,173.50. Silver prices closed the week at $16.17, down $1.03.

Former Fed Chief Greenspan: Buy Gold

The Wall Street Journal reported that former Federal Reserve Chairman Alan Greenspan, nicknamed the “Maestro” for his positive leadership of the Fed for nearly two decades, warns the Fed's plan to end its controversial bond buying program will unleash “significant volatility in the markets...If bankers decide to put this money to work, creating inflation risks, the Fed may be forced to raise rates, even if the economy isn't ready for it, he warned.”

Mr. Greenspan also expressed concern about the European economy stating that, unless Europe can politically integrate the 18 countries which share the euro, the currency will ultimately collapse.

Due to the threats to the U.S. and global economies, Mr. Greenspan advises investors to buy gold: “Mr. Greenspan said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.” (“Former Fed Chief Greenspan Worried About Future of Monetary Policy,” WSJ, 10/29/14.)

Peter Cooper: Buy Gold and Silver Before Massive Price Spikes

Editor of ArabianMoney.net, Peter Cooper, urged investors to buy gold and silver before prices rise dramatically.

“This autumn is probably going to be the last chance to buy gold and silver at bargain prices before a massive spike in prices…Why then should a coming rise in interest rates be a big risk to precious metal prices, as some analysts argue, if they have been amongst the assets least impacted by ultra-low interest rates? Surely the risk is with those assets, not gold and silver that will be the true safe havens in a crisis.”

“Gold is often seen as an insurance policy against financial Armageddon. Yet, that is where we are most likely going as asset bubbles meet their inevitable demise and the over-borrowed go spectacularly bust. In 2008, gold and silver prices took a massive hit along with everything else in the huge sell-off of the Global Financial Crisis (GFC). That was unusual for such a crisis. But the bounce back came first for holders of gold and silver with some spectacular gains from the lows of the GFC. The lesson from that crunch in financial markets is that precious metals are the best asset class to buy for the recovery phase. I think it could be much better this time around. The central banks will have no alternative but to print money on an even bigger scale and that will raise the spectre of inflation that always drives gold and silver prices higher first.” (“Why Investments In Gold Will Pay Off,” Gulf Business, 10/26/14.)

Central Bank Gold Buying May Increase

Analysts at one major bank believe central bank gold purchases may increase at current price levels.

“Central-bank buying of gold could accelerate if the metal should drop below $1,200 an ounce again, says HSBC. Data from the International Monetary Fund this week shows that central banks collectively accumulated 45.6 metric tons of gold in September, with the bulk by Russia, as it increased holdings by 37.3 tons…‘We believe a drop in gold prices below USD1,200/oz could stimulate fresh central bank interest in gold.’” (“HSBC: Fresh Central-Bank Buying Of Gold Likely If Prices Fall Below $1,200/Oz,” Kitco News, 10/30/14.)

White House Attacked by Suspected Russian Hackers

The White House announced its computer network was attacked by “state-sponsored” hackers.

“The unclassified Executive Office of the President network was attacked, according to the Washington Post. US authorities are reported to be investigating the breach, which was reported to officials by an ally of the US, sources said. White House officials believe the attack was state-sponsored but are not saying what - if any - data was taken.”

“The source [a White House official, speaking on condition of anonymity] said the attack was consistent with a state-sponsored effort and Russia is thought by the US government to be one of the most likely threats. ‘On a regular basis, there are bad actors out there who are attempting to achieve intrusions into our system,’ a second White House official told the Washington Post. ‘This is a constant battle for the government and our sensitive government computer systems, so it's always a concern for us that individuals are trying to compromise systems and get access to our networks.’” (“White House computer network ‘hacked’,” BBC, 10/29/14.)

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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:

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†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.

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