The world's wealthiest people are moving their money out of stocks and into gold bullion, sucking the yellow metal up by the ton in some instances.
Fears that the dollar will continue to lose value
in the wake of the U.S. Federal Reserve's quantitative easing have boosted the appetite for physical bullion as well as for mining company shares and exchange-traded funds (ETFs), UBS AG (NYSE: UBS
) executive Josef Stadler told the Reuters Global Private Banking Summit.
"They don't only buy ETFs or futures; they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest. "We had a clear example of a couple buying over a ton of gold ... and carrying it to another place," Stadler said.
Question of the Week: With Gold Prices Soaring Investors Are Cashing In
Gold prices have continued their record-breaking climb, and are showing no signs of stopping.
Industry analysts and bankers met at the London Bullion Market Association conference in Berlin last week - the biggest gold industry gathering - and predicted gold would hit $1,450 an ounce next year, a 12.5% climb from its current price of around $1,300. The LBMA's predictions have a strong track record, and in recent years often fall just shy of actual prices.
Gold is up almost 20% this year, and having this week topped $1,340 an ounce.
Buy, Sell or Hold: As Gold Sets New Records, Ride Along With Yamana Gold Inc. (NYSE: AUY)
As of Friday, gold was trading above $1,300 per ounce for the fourth consecutive day, which means the break out in the price of gold in U.S. dollars is still going strong. Gold prices are setting nominal new highs regularly, but are still actually below their record high if adjusted for inflation.
I love this kind of a sweet spot in a bull market move. You know that it's blue skies in nominal terms, but you also know that you are not yet being too greedy. That is, the upswing is still within the limits of the market's last bullish move.
This would be like buying a stock that is trading significantly below its all-time high price, but with better fundamentals.
Money Morning Mailbag: Don't Bank on a Return to the Gold Standard
Gold prices closed above $1,300 an ounce for the third straight day yesterday (Thursday), continuing a record run that's delighted gold bugs everywhere.
The surge shows just how much confidence investors have lost in fiat money, and greater appreciation for what former U.S. Federal Reserve Chairman Alan Greenspan last month called the "ultimate means of payment."
Gold's price surge "is a signal that there is a problem with respect to currency markets globally," Greenspan told the Council on Foreign Relations.
Indeed, Money Morning has repeatedly warned readers about the pitfalls of paper currency. However, it's unlikely that readers hoping for a return to the gold standard will get their wish.
We Want to Hear From You: Is a Gold Price of $5,000 an Ounce Attainable?
The gold price continues its record-breaking climb, and shows few signs of stopping. Industry analysts and bankers met at the London Bullion Market Association conference in Berlin this week – the biggest gold industry gathering – and predicted gold would hit $1,450 an ounce next year, a 12.5% climb from its current price of around [...]
Silver is Emerging From Under Gold's Shadow
Gold surged to an all-time record high of $1,298 an ounce yesterday (Wednesday) after a U.S. Federal Reserve plan to jump-start the American economy triggered a slump in the U.S. dollar.
The yellow metal has now rallied for five straight trading sessions and is up about 18% for the year. Investors are waking up to the fact that the central bank's plan to use U.S. Treasury purchases as a means of injecting another $2.3 trillion into the U.S. economy is only going to further debase the greenback.
There's no doubt that the ongoing slide in the dollar is going to be bullish for gold. But investors will do a lot better to focus on silver - the "other" precious metal.
"People are finally starting to understand that quantitative easing will devalue the currency," Gijsbert Groenewegen, a partner at Gold Arrow Capital Management in New York, told Bloomberg News. "That's why they're shifting into gold and silver."
For six ways to profit from silver, please read on...
Don't Get Bullied out of Bonds
Bonds have provided a welcome safe-haven for investors seeking shelter from the financial maelstrom of the past two years, offering steady returns while stocks bounce up and down.
Now some analysts are afraid that once the selling of bonds begins it will be indiscriminate, and there will be a bloodbath. But that fear totally ignores the new investment reality in which we're living.
The fact is, stocks won't be crawling out of the gutter anytime soon, and until they do, investors will continue to look elsewhere for a store of value. They have already decided they can find it in two places: U.S. bonds and gold.
Prosperity Piquing Investor Interest in India
In the investment world, there's often so much talk about China in the United States that the tremendous success in India gets short shrift. But business there is booming.
The world's third-fastest growing economy is set to expand by 8.5% this year, the most in the past half-decade. Such rapid growth has compelled the central bank to lift interest rates four times in the past six months.
Compare that with the U.S. Federal Reserve, which has made clear it intends to keep rates low through at least the middle of next year due to limp demand and negligible inflation.
While American consumers are burdened by high levels of debt and joblessness, India's urban middle class and farmers - who have enjoyed a year of ample but not over-abundant rainfall and rising prices - are eager to spend their newfound wealth.
Three Ways to Brace for a Double-Dip Recession
Economists are torn... Is the U.S. economy on the upswing? Or are we facing the dreaded "double dip recession"? Either way, there are a few things every smart investor needs to do now to protect their nest eggs. Find out what you should do in this free report.
Special Report: How to Buy Silver
As precious metals go, silver may not have quite the same mystique as gold.
But let's be honest: The "white metal" has its backers, too.
In fact, when Money Morning published its "How to Buy Gold" special report just a few weeks ago, one of the biggest questions that we received in response was: "When can you do the same for silver?"
That's just what we've done here. In this special report, we show you how to buy silver.
To find out how to buy silver, please read on...