Gold And Silver Takes On The Banksters

While banks had become the arteries and veins of the financial worlds with central banks being its heart, driven solely by the profit motives growing in every aspect of people’s financial lives with greed that went so far as to threaten with collapse. Worse still, the public perception of bankers eroded as far that it’s common to hear them described as ‘banksters,’ gold and silver are opening eyes…the instruments that has avoided the investment warfare common in the banking and monetary system. Not only in the US but globally, wherever there is a banking system, all failed to take on the corresponding social responsibilities as its purpose intended.When we see what income depositors receive after bank charges and deduct inflation to see ‘real’ interest rates, the saver is losing hands down. Yet the bank can use his money up to sixteen times in ventures of their choosing that will usually make hefty profits. The realization of the paucity of bank deposits as investments has not caught on and banks have ways to ensure that even passing temporary deposits are available for their use. Perhaps Abraham Lincoln was wrong in that you can ‘fool all the people, all of the time.’ If investors had, had gold , it would be somewhere north of $10,000 by now. Most importantly, gold and silver bullion, by itself, are places to escape dishonesty and all the common, unethical, core practices of the financial system. President Ron Fricke of Regal Assets stated that precious metals don’t lie, cannot be unethical, do not have conflicts of interest but are respected by all their investors, whatever the state of investor’s own morality. So long as this situation persists in the banking world, gold and silver will be bought as long-term money and honest investments.

Now, after breaking $1,500 an ounce Wednesday, and hitting a record $1,508.50 Thursday, gold was tested at $1.507.20, but, with the fall of that psychological barrier, leading Swiss bullion house MKS Finance declaring: “everything looks possible regarding gold now.” Barclays Capital says “prices are likely to be tested at the $1,500/oz (level) before continuing their march higher.” “Faced with [a] host of gold-friendly factors, along with elevated oil prices and on-going inflation concerns, gold is carving out a bigger share of investor interest this month than it has done all year,” said UBS analyst Edel Tully in a note. Such friendly factors include a weaker dollar and the U.S. Federal Reserve’s apparent lack of agreement on U.S. monetary policy, Edel said.

In the U.S., inflation as measured by the Fed – chucking out food and energy –you can hear the incoming inflation rounds getting closer as the dollar is losing its purchasing power. And as for Banks…in Europe, the European Central Bank is raising their rates again to combat higher prices. The Bank of England is to do the same. China, India and Brazil are all facing their own inflation challenges. Meantime, the dollar’s weakness is helping dollar-priced commodities edge higher. When the dollar falls, all things being equal, it takes more to buy the same amount of stuff.

This week will likely be dominated by expectations for the U.S. Federal Reserve’s monetary-policy decision and an unprecedented press conference by Chairman Ben Bernanke. He is expected to hint at what, if anything, will replace the bond-buying program known as the second round of quantitative easing, according to Market Watch. Traders will also get a look Thursday at first-quarter U.S. gross domestic product.

Meanwhile, news reports in China said Beijing is considering the setup of an investment fund targeting sectors such as energy and precious metals, as well as a special fund geared toward foreign-exchange stabilization. The report said the People’s Bank of China has raised the idea of the foreign-exchange stabilization fund and that it was now under study by relevant authorities, according to Dow Jones Newswires, which cited Chinese media group Caixin Media. The fund would be structured to intervene in the foreign-exchange market and buy foreign-currency notes without the government having to print new yuan-denominated currency notes, the report said.

The report said the central bank’s balance sheet would also be extended to support investment in precious metals and other commodities. It did not elaborate. Precious-metals prices were also reacting to heightened uncertainty in the Middle East, following reports Monday of a NATO air strike that damaged buildings in Col. Moammar Kaddafi’s compound in the Libyan capital and anti-government protests Sunday in Yemen.

All this adds to the world of gold which has been up five straight weeks and has set records each of the last five trading sessions. Silver is also up five consecutive weeks and has gained a whopping 49% this year and more than 155% in the last 52 weeks. Silver Wings indeed. And, with the dollar getting crushed more and more, precious metals are surging to levels not seen since January 1980. But how close are these metals to their highs on an inflation-adjusted basis, is a good question. According to the Dow Jones Market Data Group, gold’s record of $875/oz in 1980 translates into $2,371.11 in today’s dollars. That’s roughly 2.7 times the 1980 price. Using the same math, silver’s inflation-adjusted price would be $131.49/oz. The Minneapolis Fed inflation page calculates it at $130.48/oz. What’s intriguing about the inflation-adjusted figures is that gold – not silver – is much closer to the real dollar record level. And silver has been racing hard to catch up. Over the past year, silver has risen about 160%, gold has risen about 33%.

With miners and gold companies continuing to benefit from the jump in gold and other metals prices, with our glamorous gold always getting the headlines, poor man’s gold is soaring more than 8% this week, rising above $49/oz, (corrected to $46.28) however, $49 was besting the price record of $48.70 which it reached during a failed silver squeeze as the Hunt Brothers sought to corner the market. Their reasons will sound familiar: They believed that loose monetary policy and profligate government spending would soon lead to a return of metals-backed currencies. Since the dollar had only floated in the early 1970s, the notion hardly seemed far-fetched.

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