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Even the banks head for safe havens in tough times

4:00AM Saturday Sep 27, 2008

Sean O'Grady

http://www.nzherald.co.nz/business/news/ar...4452&pnum=0

 

Even hedge funds have suspended their search for yield in favour of a quest for safety. They have reportedly moved around US$100 billions into "safe havens", simple money-market funds that are traditionally invested in the most conservative of instruments and which are now bolstered by yet another US Treasury guarantee. Gold, the ultimate safe haven, is also experiencing renewed interest.

.....

Troubles put a shine on gold

 

Traditionally the safest of safe havens, gold now also has the attraction of being a hedge against a weak dollar. Which could easily arise if the Paulson plan fails, with a renewed crisis in the financial system, or if it succeeds, as the burden of US Treasury debt takes its toll on taxpayers and the wider economy.

 

So, gold seems a one-way bet. Mark Byrne, director of Gold and Silver Investments, says: "Retail demand is extremely robust as evidenced in shortages of gold and silver in the US, India and in east Asia. The world's largest gold refinery, Rand, in South Africa, was cleared out of their entire inventory of krugerrands in one order by an anonymous Swiss institution."

 

Goldman Sachs and Citigroup are said to be especially keen goldbugs, as is the Bundesbank, the world's second-largest holder of gold after the US Federal Reserve.

 

Some say the Chinese Treasury, which has US$1.8 trillion (NZD$2.63 trillion) of US dollar assets and less than 1 per cent of its currency reserves in gold, may warm to the yellow metal.

 

-------------------

 

Reaching the public now.

 

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Even the banks head for safe havens in tough times

4:00AM Saturday Sep 27, 2008

Sean O'Grady

http://www.nzherald.co.nz/business/news/ar...4452&pnum=0

 

Even hedge funds have suspended their search for yield in favour of a quest for safety. They have reportedly moved around US$100 billions into "safe havens", simple money-market funds that are traditionally invested in the most conservative of instruments and which are now bolstered by yet another US Treasury guarantee. Gold, the ultimate safe haven, is also experiencing renewed interest.

.....

Troubles put a shine on gold

 

Traditionally the safest of safe havens, gold now also has the attraction of being a hedge against a weak dollar. Which could easily arise if the Paulson plan fails, with a renewed crisis in the financial system, or if it succeeds, as the burden of US Treasury debt takes its toll on taxpayers and the wider economy.

 

So, gold seems a one-way bet. Mark Byrne, director of Gold and Silver Investments, says: "Retail demand is extremely robust as evidenced in shortages of gold and silver in the US, India and in east Asia. The world's largest gold refinery, Rand, in South Africa, was cleared out of their entire inventory of krugerrands in one order by an anonymous Swiss institution."

 

Goldman Sachs and Citigroup are said to be especially keen goldbugs, as is the Bundesbank, the world's second-largest holder of gold after the US Federal Reserve.

 

Some say the Chinese Treasury, which has US$1.8 trillion (NZD$2.63 trillion) of US dollar assets and less than 1 per cent of its currency reserves in gold, may warm to the yellow metal.

 

-------------------

 

Reaching the public now.

 

After a 20 year bear market and then CB supression of the price most people including most experinced investors have forgotten gold.

 

They are too young to remember the last gold bull are not catching on to gold's thousand year and more function as the safe haven of last resort, this is good luck because we can still buy it at a reasonable price.

 

This situation which as far as I know has never happend in history before might not last long.

 

They are looking en mass to government bonds which are at a high - bonds issued by bankrupt governments that will likely be near worthless.

 

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What are people's thought on Swiss Francs?

 

I'm looking to diversify everything into the most liquid SHTF money available. Although gold and silver would no question become the currency of choice, I think Swiss Francs may offer some diversification during the inital transition period and be useful as smaller denominations.

 

£1 currently buys 2 Swiss Francs.

 

I do not want to hold anything in a bank, shares or anything like that so I'm thinking of this as my physical allocation:

 

50% physical Gold

40% physical Silver

8% cash Swiss Francs (?)

2% cash GBP

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Is gold a barometer of inflation? Is it? Is it a barometer of peoples confidence in the banking system/currency? If a barometer of inflation then why should gold reach an inflation adjusted level?

 

I don't know. I bought it because it's shiny.... :(

 

Joking apart, gold may well tumble, it may well go up. But cash in the bank is probably just as volatile at the moment. My savings are being eroded daily because they're earning 4% in an environment with real inflation over 8%.

 

I've listened to the gold argument for a long time, and not done anything. The latest fiasco has made me decide to listen to what others are saying (as they are being proved right) and dabble a little, rather than leaving my last penny to the corrupt bankers.

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What are people's thought on Swiss Francs?

 

I'm looking to diversify everything into the most liquid SHTF money available. Although gold and silver would no question become the currency of choice, I think Swiss Francs may offer some diversification during the inital transition period and be useful as smaller denominations.

 

£1 currently buys 2 Swiss Francs.

 

I do not want to hold anything in a bank, shares or anything like that so I'm thinking of this as my physical allocation:

 

50% physical Gold

40% physical Silver

8% cash Swiss Francs (?)

2% cash GBP

 

Have you thought of Chinese Yuan? It could do very well with a sharp devaluation in the pound/dollar. Though I think Swiss Francs are good also.

 

Next time i am at the airport I am planning to buy a little of both.

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Have you thought of Chinese Yuan? It could do very well with a sharp devaluation in the pound/dollar. Though I think Swiss Francs are good also.

 

Next time i am at the airport I am planning to buy a little of both.

 

I dont think you can buy Yuan at the airport difficult to buy ?

 

 

What are people's thought on Swiss Francs?

 

 

as for the Swiss Franc why bother ! you have seen the chart compared to gold ;)

Helped persuade me there is only one currency really?.

Does anyone have a longer term chart?.Be interesting to see.

 

 

 

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Have you thought of Chinese Yuan? It could do very well with a sharp devaluation in the pound/dollar. Though I think Swiss Francs are good aslo.

 

Next time i am at the airport I am planning to buy a little of both.

I realise they are both unbacked paper but i'm thinking out a timeline for what I see coming.

 

1) Some GBP will initially be needed for the run on the banks.

2) After an emergency bank holiday period, GBP loses a significant amount of it's exchange value and then rapidly spirals downward.

 

As the pound evaporates, I can imagine people automatically moving towards stronger currencies to trade with so it makes sense to hold some.

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So what if you are wrong? Yes you? What if we are all wrong, what if the hyper-inflationists are wrong, what if the deflationists are wrong? What then?

 

Thoroughly confused whether we will have deflation or deflation?

 

 

Perhaps a simpler way of looking at it is to ask whether the currency will implode.

 

Currency survives: deflation

 

Currency implodes/devalues: inflation

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I dont think you can buy Yuan at the airport difficult to buy ?

 

as for the Swiss Franc why bother ! you have seen the chart compared to gold ;)

I'm thinking for use as small change and during the GBP devaluation period. I don't really want to be handing out gold or silver for small transactions.

 

If 1 or 2 Swiss Francs will continue to buy a loaf of bread then it definately makes sense to start accumulating them. As a fiat currency, I'm just curious whether it will.

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Now I've had a couple of beers, I looked at it again. It's say 5cm x 3cm and less than 1mm in size. Er.... it suddenly doesn't look much for nearly a thousand bucks! :blink:

 

It looks dinky! What have I done!!?? :lol:

 

Yes remind yourself that the dollar has a quadrillion in debt obligations. :lol:

 

Quadrillion = 1000 trillion.

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Yes remind yourself that the dollar has a quadrillion in debt obligations. :lol:

 

Quadrillion = 1000 trillion.

 

Is that meant to make me feel better about spending a thousand bucks on a sliver of shiny metal?

 

It could have bought nearly 30 cases of high quality beer instead!

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Is that meant to make me feel better about spending a thousand bucks on a sliver of shiny metal?

 

It could have bought nearly 30 cases of high quality beer instead!

 

In the Russian collapse Vodka became money exchangeable for anything.

 

I have accumulated a few dozen half bottles of vodka, shame we have such high tax on it here otherwise i would have bought a whole lot more.

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Still can....and will be able to. :)

Which may not be true of $1000 in paper.

 

Edited.

 

 

In the Russian collapse Vodka became money exchangeable for anything.

 

I have accumulated a few dozen half bottles of vodka, shame we have such high tax on it here otherwise i would have bought a whole lot more.

 

 

Now take your 30 cases of beer to any country in the world and sell them to the highest bidder.

 

Points taken. As implied, at least it's portable!

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GREAT interview on FSN today looking at the Credit Crisis which has been understated by the FS radio team so far IMO. This interview is spot on by outlining the flight to treasuries with a future problem with treasuries and the dollar itself in the near future. This is what I have meant when saying we should focus on the devaluation of the dollar and a currency crisis.

 

http://financialsense.com/fsn/main.html

2nd Hour Guest Experts

Select an Audio Format

RealPlayer | WinAmp | Windows Media | Mp3

 

Doug Noland

Market Strategist, David Tice & Associates

 

Topic:

Update on the

current credit crisis ~

worse than expected

post-1944-1222486755_thumb.jpg

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I just lost my Gold Virginity!!! Cgnao frightened me enough to head to fortress Kitco, where I bought a 1oz .999 gold bar! The coins were about 30 dollars more expensive, but it was explained to me that they have a minimum value of 50 dollars..... ..

 

May I ask what 'fortress Kitco' is?

 

When I first read your post, I assumed you just meant Kitco (as in the Kitco website), and your gold would just be in the mail. But then it transpired that you actually had the gold.

 

Did you buy the gold over the counter, or did you just buy online a while ago and only post when you'd taken delivery?

 

I've never bought any actual in-my-hand gold (all mine is BullionVault stuff -- for good or ill), so I'm just curious about how you got yours.

 

I think if there was a bullion shop in my piddly little town (i.e. picking up physical PMs was trivially easy), I'd probably have acquired... well, probably some silver I would think, in case things really go down the tubes, so that I have some smallish denomination silver coins to use as money in a pinch.

 

As it stands, though, as I say, I don't have any actual physical hold-in-my-hand metal. Can't really decide whether this is such a big deal or not... :unsure:

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WaMu gone.

Another casuality- just heard about it.

This would have been big headline news only a few weeks ago

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GREAT interview on FSN today looking at the Credit Crisis which has been understated by the FS radio team so far IMO. This interview is spot on by outlining the flight to treasuries with a future problem with treasuries and the dollar itself in the near future. This is what I have meant when saying we should focus on the devaluation of the dollar and a currency crisis.

 

http://financialsense.com/fsn/main.html

2nd Hour Guest Experts

Select an Audio Format

RealPlayer | WinAmp | Windows Media | Mp3

 

Doug Noland

Market Strategist, David Tice & Associates

 

Topic:

Update on the

current credit crisis ~

worse than expected

 

I've just finished listening. Yes, excellent.

 

Here is his website: http://www.prudentbear.com/

 

Doug Noland

 

Doug Noland, portfolio manager and financial markets strategist at David Tice & Associates, has eighteen years short-side investment experience as a trader, analyst and portfolio manager. His analytical focus has been on contemporary finance and the crucial role of credit. Prior to his work in investments, Mr. Noland worked in the treasury department at Toyota and was a Price Waterhouse CPA. Mr. Noland graduated summa cum laude from the University of Oregon and received his MBA from Indiana University.

 

http://www.prudentbear.com/index.php/dougnoland

 

Changed Financial Landscape

 

* by Doug Noland

* September 25, 2008

 

http://www.prudentbear.com/index.php/comme...in?art_id=10122

 

Scroll to near the end for the article.

 

 

 

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