Steve Forbes: Return to Gold Standard

Release Date: 
Friday, June 6, 2014

Gold and Silver Prices

Gold prices traded modestly higher while silver remained flat this week on mixed financial news. “U.S. nonfarm payrolls increased by 217,000 in May… [surpassing] economists' forecasts of a 210,000 increase…Gold prices turned lower after the data was released, as some investors worried that it paved the way for the Federal Reserve to end its stimulus program by the end of this year...Some gold traders also pointed to the European Central Bank's decision Thursday to cut its main lending rate as continuing to lend support to the gold market.” (“Gold Prices Fall After Jobs Data,” Wall Street Journal, 6/6/14.)

Gold finished the week up $1.00, closing at $1,253.30.  Silver prices closed at $19.11, up $0.20.

Steve Forbes: Return to Gold Standard

The Washington Examiner writes that Steve Forbes’s latest book excoriates the Federal Reserve’s monetary policies and calls for a return to the gold standard.

“Influential financial publisher and former presidential candidate Steve Forbes is out with a new warning that the U.S. faces an economic catastrophe due to the Federal Reserve's loose dollar policy, and returning to a strict ‘gold standard’ is the only way to avoid disaster.”

“‘[The Fed's] vastly misguided monetary policies are now setting the stage for a new economic and social catastrophe — one that could rival the financial crisis and horrors of the 1930s,’ he wrote in the book co-authored by Elizabeth Ames…‘The best way to achieve monetary stability: linking the dollar to gold…The Fed should have only two tasks: keeping the dollar fixed to gold and dealing quickly and decisively with panics,’…Forbes has long been a leading conservative voice on the economy, and his latest book is likely to revive calls for a gold standard.” (“Steve Forbes: Link dollar to gold or face Great Depression II,” Washington Examiner, 6/02/14.)

China and India Continue Massive Gold Consumption

According to statistics presented at a recent metals conference, China and India continue to consume massive amounts of gold which may result in limited supplies.

“In opening last week’s precious metals forum in London, Bloomberg Industries Global Head of Metals and Mining, Ken Hoffman, kicked off with some of the latest stats which showed that China and India between them are consuming more gold than the world is actually mining. The Bloomberg figures suggested that China was consuming gold at a rate of 5.15 million ounces a month and India - even at a reduced rate through import restrictions - 2.85 million ounces a month, making a total of 8 million ounces a month. And these figures may even understate the case…Meanwhile Bloomberg calculates global new mined gold output at some 7.44 million ounces a month making for a deficit of 0.56 million ounces a month.”

“Bloomberg analysts also predict that global gold output will fall around 1% this year, and should Indian demand return in strength should the new Modi government relax the current import restrictions, as many expect, the deficit in the fundamental supply/demand position for gold could be significant.” (“China and India consuming more gold than the world mines,” Mineweb, 5/30/14.)

ECB Lowers Rates to Negative Territory

The European Central Bank announced new monetary policy aimed at reviving a sluggish economy.

“The ECB lowered the deposit rate to -0.1 percent, meaning it will effectively charge banks for holding their money overnight. It cut its main refinancing rate to 0.15 percent, and the marginal lending rate - or emergency borrowing rate - to 0.40 percent…Gold tends to benefit from low interest rates and looser monetary policy, which cuts the opportunity cost of holding non-yielding bullion.” (“Gold jumps 1 pct after ECB rate cut, easing measures,” Reuters, 6/5/14.)

Goldline’s Express IRA℠ Program

Many Goldline clients choose to include precious metals as part of their retirement planning especially during times of economic crisis and uncertainty.* Goldline’s Express IRA℠ allows clients to acquire precious metals on their schedule; they no longer have to wait for your self-directed IRA to be funded before getting started.

Goldline's Express IRA℠ not only provides clients with the ability to diversify their IRA on an expedited basis, clients can also qualify for Goldline's ground-breaking Two-Way Price Guarantee Program℠ when they acquire $10,000 or more of our exclusive bullion coins. When an Express IRA purchase qualifies for Goldline's Two-Way Price Guarantee Program℠ clients are protected on short-term upside and downside market movement: they can either call to reprice their coins if the selling price falls (up to a maximum of 28 days depending on the size of the purchase) or, if the selling price of the coins increase during the qualifying period, clients can call Goldline to acquire additional coins at the original selling price.

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.

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.

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