Gold/Precious Metals - Money Morning - Only the News You Can Proft From.
Policymakers Panicked as China Rare Earth Ban Extends to the West
By Jason Simpkins, Managing Editor, Money Morning
China for months has blocked shipments of rare earth metals intended for Japan in retaliation for a regional dispute. Now, China appears to have expanded its rare earth embargo to include Western countries – a move that has U.S. and European authorities scrambling to formulate a backup plan.
Rare earth metals are essential to the production of high-tech devices like computers, display screens, smart bombs, and hybrid-car batteries. And despite their name, rare earth metals aren't particularly rare. However, they are difficult to produce and many rare earth production companies have moved their operations to China to capitalize on cheaper extraction costs and the nation's commitment to growing its alternative energy sector.
China, which has one-third of the world's rare earth deposits, accounted for 97% of global production last year. Of course, the near-total monopoly China wields over the sector wasn't a major concern until just a few months ago when the country cut its production and export quotas.
Money Morning Mailbag: When Investing in Precious Metals, 'Physical Metal' Isn't Always Better
[Editor's Note: After reading Money Morning columnist Jack Barnes' recent "Buy, Sell or Hold" feature on Silver Wheaton Corp., reader Rick Osborne responded by stating that physical silver and gold in an investor's hand will be the safest form of wealth preservation in a worldwide collapse of fiat money. As Barnes notes, "when investing in metals, 'physical metal' is not always better."]
By Jack Barnes, Global Macro Trends Specialist, Money Morning
If there's one thing that I've discovered in my careers as a hedge-fund manager, investment advisor and financial columnist, it's this: Whenever you pitch a stock that has something to do with mining or metals, you'll always hear the argument that "physical metal is better."
As my experience has demonstrated, however, that's not necessarily true.
Wealth protection in hard economic times is driven by asset diversification. In good times, an investor should concentrate their investment bets on profitable enterprises, in hard times you want to diversify your assets across different asset classes. You will lose some money, but if you choose wisely, you will have real assets and value on the other side.
That's not always the case when you concentrate your assets during a period in which there's substantial market risk.
Could the Government Seize Your Gold? Rules to Consider, Steps to Take
By Don Miller, Contributing Writer, Money Morning
Could the government seize your gold?
It's a question that's being asked with increasing frequency these days. The United States is struggling with a post-financial-crisis economy that can't seem to get healthy, which has led to a ballooning budget deficit and a staggering national debt.
And don't expect any structural improvements to the country's finances. Near-term stock-market bulls are awaiting an all-but-guaranteed round of "quantitative easing" (known as "QE2") – which will inject money into the U.S. financial system, though it will only add to shortfall even as it weakens the U.S. dollar.
Despite Record Gold Prices, Your Holdings May be Worth Less Than You Think
[Editor's Note: Gold closed at a new high of $1,370.50 an ounce in New York yesterday (Wednesday), the sixteenth record close in the last five weeks. Money Morning's Keith Fitz-Gerald says there's plenty more to come, too: In fact, he expects gold to double in five years or less. But at the end of that stretch, he warns, your profits may not be what you're expecting. Find out why.]
By Keith Fitz-Gerald, Chief Investment Strategist, Money Morning
Record gold prices are becoming an almost-daily headline, with the "yellow metal" making a run at $1,400 an ounce. And while this is great for the investors who are along for the ride, there is an important caveat – your gold may not be worth as much as you think it is.
Moreover, because of the tax consequences of ownership, chances are it'll never add up to what those guys hawking gold coins on late night TV lead you to believe.
But that doesn't mean you shouldn't invest. With an estimated $202 trillion in unfunded pension liabilities and the global public debt clock ticking higher, I believe gold and other precious metals should be a part of every investor's portfolio.
To find out why your gold may not be worth as much as you think, read on…
Question of the Week: Investors Seek Metals To Soften Blow of Global Currency War
[Editor's Note: Last week we asked readers if they were preparing for the impending global currency war and the devaluation of the U.S. dollar. Some of our readers' responses are listed below - along with next week's question, "Are You Vulnerable to the Budgetary Woes of Your State and Local Governments?"]
By Kerri Shannon, Associate Editor, Money Morning
The housing market remains in the dumper. U.S. stocks – despite a rally – are still 22% below their record highs of two years ago. And the "official" unemployment rate remains at a heart-stopping 9.6%.
With their knees almost ready to buckle under such burdens already, how will American consumers respond when clothes, computer accessories and other key consumer staples at their neighborhood Wal-Mart Stores Inc. (NYSE: WMT) undergo an overnight price hike of 30% to 60%?
As the United States aims to increase exports by debasing the dollar, a global currency war is underway that could swallow consumers and investors if they don't prepare for the likelihood of a weaker dollar.
The United States, China, Switzerland, Brazil, South Korea, Australia, Japan have all entered the war, trying to bring down their currencies to boost exports and fuel growth. Countries are vying to win the "race to the bottom," as it's been called by Money Morning Contributing Writer Peter Schiff.
With Prices Soaring Gold Bullion is Suddenly in High Demand
By Jason Simpkins, Managing Editor, Money Morning
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
[Editor's Note: Last week we asked readers if a gold price of $5,000 an ounce was as likely as experts seem to think. Some of our readers' responses are listed below - along with next week's question, "Are You Prepared for a Global Currency War?"]
By Kerri Shannon, Associate Editor, Money Morning
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.
Money Morning Mailbag: Don't Bank on a Return to the Gold Standard
[Editor's Note: We want to hear from you! Do you have a comment, suggestion, story idea or a question? Let us know at mailbag@moneymappress.com. (**) And be sure to check back for responses to reader questions and comments.]
By Kerri Shannon, Associate Editor, Money Morning
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.
How to Profit From the Metal That's More Precious Than Gold
By Martin Hutchinson, Global Investing Strategist, Money Morning
Gold set another new record yesterday (Wednesday), closing above $1,300 an ounce for the second-straight day. The London Bullion Market Association – at its annual conference this week – projected that the "yellow metal" would advance to $1,450 in the next year.
With the U.S. Federal Reserve, the Bank of England (BOE) and the Bank of Japan (BOJ) all having near-zero interest rates and moving toward more "quantitative easing" – pumping money into the global economy – the case for gold looks more convincing than ever.
Yet there are other precious metals that stand to benefit from the same inflation-hedging-related demand that's driving gold to record after record.
One particular metal right now looks to be an even better investment than gold. It is favored by Chinese investors and is benefiting from soaring industrial demand. Unlike gold or silver, this particular precious metal has risen only about 6% this year, and remains well below its 2007 peak.
The metal I'm talking about is platinum.
Japanese Economy Threatened by China Rare Earth Metals Ban
By Jason Simpkins, Managing Editor, Money Morning
Japanese authorities last Friday released from detention the captain of a Chinese fishing boat that was found in disputed waters. However, China continues to withhold exports of rare earth metals to its island neighbor.
Rare earth metals are crucial to Japan's high-tech industry, and the ban on shipments from China, which has been in place since Tuesday of last week, could cripple the country's economy.
There are 15 different types of rare earth metals, which are used in high-tech devices like computer display screens, smart bombs, and hybrid-car batteries. However, the metals are scattered across the globe and very difficult to extract. They are in increasingly short supply as world demand surges, with industry officials predicting a global shortfall of 30,000 to 50,000 metric tons by 2012.
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