Greenspan: “Gold is a Currency”

Release Date: 
Wednesday, November 26, 2014

Gold and Silver Prices

Gold prices traded slightly lower during the abbreviated trading week amid a mixed bag of U.S. economic data. “Gold steadied below $1,200 an ounce on Wednesday, recouping early losses on the back of a retreat in the dollar after data suggested U.S. economic growth might be slowing in the final quarter of 2014. Recent strong U.S. data has fuelled talk that the Federal Reserve could soon raise interest rates, depressing gold. Reports released on Wednesday, however, showed domestic personal spending grew slightly less than forecast in October, while U.S. jobless claims rose to their highest since September and new orders for U.S.-made capital goods fell for a second month in October.” (“Gold steadies near $1,200/oz as U.S. data hurts dollar,” Reuters, 11/26/14.)

At Wednesday’s close on the New York Spot Market, gold was down $3.00, closing at $1,198.50, with silver prices finishing the day at $16.55, up $0.12.

Greenspan: “Gold is a Currency”

Former Federal Reserve Chairman Alan Greenspan elaborated on his concerns about the West’s economic policies and why he advises investors to own gold during an interview with the Financial Times.

“These days the retired Greenspan speaks so clearly that some of his words are still ricocheting around the blogosphere. For what he revealed on the CFR (Council on Foreign Relations) platform was that he harbours considerable doubts about whether recent western monetary policy experiments have actually helped economic growth. He also fears that such experiments have been so wild that it will be very hard to exit from these policies in the future – in the US or anywhere else – without sparking huge market volatility. Indeed, Greenspan is so worried about future turbulence that he apparently sympathizes with investors (and central banks) who are currently stocking up on gold. ‘Why do central banks put money into an asset which has no rate of return, but [has] cost of storage and insurance and everything else like that? Why are they doing that?’ he asked rhetorically – before offering his own explanation. ‘Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.’” (“Gold: worth its weight?” Financial Times, 11/21/14.)

Richard Russell: Gold “Safe Haven Asset”

Veteran newsletter writer and publisher of the Dow Theory Letters, Richard Russell, told subscribers why he considers gold a “safe haven” asset amid continued loose monetary policy from central banks across the globe.

“[L]iterally every nation in the world is attempting to deflate its currency in order to aid its exports. Japan has just announced a monster infusion of yen into its system, thereby sending the yen south. The head of the central bank in Europe threatens to follow the Fed's example and move to QE. So we have all the central banks simultaneously degrading their currencies. Thus by default, the US dollar reigns supreme. Money around the world is pouring into the dollar.

“Wait, there is one superior safe haven. And that safe haven is gold. My thinking is that one way or another, a new monetary system will develop and will be a mixture of a number of major currencies, plus high-priced gold. Thus gold, by necessity, will sneak into the new monetary system.” (“Richard’s Remarks,” Dow Theory Letters, 11/24/14.)

Currency Wars Could Lead to Financial Crisis

As the U.S. dollar has strengthened, the Wall Street Journal reports other central banks across the globe are aggressively debasing their currencies.

“Central bankers struggling against weak growth and falling inflation have come up with a cunning plan: shift the problems onto someone else. Finding it hard to stimulate domestic demand through cheap credit in a world of rock bottom interest rates, the next best solution central bankers have settled on is to generate growth by boosting net exports. And the way to do that is to devalue their currencies. The Bank of Japan has been the most aggressive at pursuing this policy, driving the yen down 15% against the dollar over the past year…Other central banks have noticed. The European Central Bank has announced a number of policies over the past six months designed to boost its balance sheet…Then, on Friday morning, the People’s Bank of China launched its own measures, cutting its one year lending rate by 0.4 percentage points to 5.6% and its deposit rate by 0.25 percentage points to 2.75%.”

“As one economy devalues, the impact is to force deflation onto its neighbors. With Japan putting downward pressure on the yen, the question now is how long can other Asian economies hold out from their own devaluations…But in the short term, currency devaluation is a zero sum game. For every winner, there’s a loser…What it is likely to do, though, is to reproduce the global imbalances that triggered the financial crisis.” (“Bring On the Currency Wars,” Wall Street Journal, 11/21/14.)

Approach Year-End Planning with Confidence

As you prepare for end of year tax and retirement planning, consider whether your portfolio includes a recognized safe haven asset such as physical gold or silver. If not, learn how easy it is to add physical gold or silver to a self-directed IRA from Goldline, your trusted precious metals dealer for more than half a century.

Goldline has made it even easier to add gold and silver with its exclusive Express IRA® program. Goldline's Express IRA® program allows you to order your precious metals as soon as the self-directed IRA is opened. Further, your qualifying purchase of Goldline's limited production bullion coins comes with unprecedented price protection with Goldline's Price Shield℠. If the selling price of your coins decreases on the selected anniversary of your qualifying purchase, Goldline will automatically re-price the coins and make up the difference in additional exclusive bullion coins.

Plus, if you make a qualifying purchase in November, Goldline will offset your IRA fees for two full years with FREE, limited production bullion coins delivered directly to you.*

*Value of bullion coins based upon the current ask value

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:

*Federal IRA tax laws are complex and may change from year to year. Goldline believes it is appropriate to have 5%-20% of retirement portfolio allocated to precious metals. Other individuals and institutions may recommend different percentages. As with any investment, you should consult your tax advisor before making a decision regarding precious metals IRA investments.

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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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