A man speaks his mind!
CIGA Wolfgang R
“I Own Krugerrands” Says Legendary Jim Grant
Submitted by GoldCore on 07/28/2015 07:06 -0400
“I Own Krugerrands” Says Legendary Jim Grant
- He is “very bullish indeed” on gold
- Gold is “investment in financial and monetary disorder” – says Grant
- It thrives in current environment – “uncertainty, turbulence and disorder”
- “One of the most radical periods of monetary experimentation in the annals of money”
- “Gold…is now the conjunction of price, value and sentiment”
- Reminds owners of gold that the original reasons for buying gold have not gone away
- Believes Fed will raise rates despite deflationary environment
- Explains detrimental effect of excessive debt on an economy
- Grant light-heartedly destroys Jason Zweig’s “pet rock” gold jibe
Jim Grant, publisher of Grant’s Interest Rate Observer says that gold is “an investment in financial and monetary disorder.” He believes that today we are experiencing “uncertainty, turbulence and disorder”.
When asked how he liked to own gold he said he owned physical, generic, non-numismatic coins – specifically mentioning South African Gold Krugerrands and also mining shares.
Krugerrands are one of the cheapest and most cost effective ways to buy gold with very low premiums. Clients in Ireland, the UK, the U.S. and internationally are currently buying Krugerrands at extremely low premiums of just 2.5%. They remain some of the most popular bullion coins in the market due to their durability (harder 22-carat gold coin), recognisability, portability and liquidity throughout the world.
“You look around the world and you see exchange rates are properly disorderly, when you look around the world of lending and borrowing — we are in a regime of price control by another name, so-called zero percent rates and quantitative easing by the world central banks”.
He adds, “We are in one of the most radical periods of monetary experimentation in the annals of money”, with a “low probability” of a favourable outcome.
Given the disorder he sees in the world due to monetary experimentation and the very low gold price Grant says,
“You want to have exposure to the reciprocal asset of the paper assets that are the most popular – so gold, to me, is now the conjunction of price, value and sentiment, and I am very bullish indeed.”
He describes the recent fall in prices as “terrifically vexing but a wonderful opportunity” and reminds owners of gold that the reasons for owning gold have not gone away. He emphasises that gold thrives in periods of turbulence and disorder and uncertainty adding “I think we have all three of these things.”
Yet, within all this flux, I’m constantly seeking a snippet of wisdom in any article I read. Today, it appears I’ve found one.
From the article below, Simona Gambarini, commodities economist for Capital Economics, makes an astute observation: the reduction of exposure to dollars, which brings up the question…WHY? A very important question that is never addressed!
"She added that emerging market central banks looking to reduce exposure to U.S. dollars also have “few credible alternatives to gold” right now."
If that is the case, then all this talk of the U.S. Dollar being the ultimate safe haven, is nothing more than wishful thinking. Hogwash, I believe they called it in my day.
CIGA Wolfgang Rech
Central Bankers To Save The Day For Gold – Commodities Economist
By Kitco News
Monday July 27, 2015 15:40
(Kitco News) – One research firm says central bankers may help gold find a floor after prices dropped below $1,100 an ounce last week.
“[W]e argue that the official sector will remain a net buyer of gold for the foreseeable future and that the additional demand will help to set a floor under the gold price,” said Simona Gambarini, commodities economist for Capital Economics, in a note Monday.
According to the UK-based firm, central banks have become major gold buyers, with the official sector accounting for roughly 10% of total gold demand over the past five years, after having been net sellers of the metal from 1989 to 2002.
She said the tide had turned by 2010 as the official sector became net buyers of gold again.
“Since then, 1,537 tonnes of gold have been added to global reserves, with China and Russia accounting for about 80% of this amount,” she explained, adding that the International Monetary Fund (IMF) remains one of the largest official holders of gold with 9% of global reserves under its belt.
She added that there is good reason to expect the pace of gold purchases to pick up this year, especially from emerging market economies.
“[T]he World Gold Council (WGC) reported that 120 tonnes of gold were added to global central banks reserves in Q1 in 2015 and a further 11.4 tonnes were accumulated in April and May. However, these figures do not take into account the 604 tonnes addition to China’s official reserves, announced last week, as the time of the buying has not been confirmed and it likely happened over several years,” she said.
“While the increase was (arguably) less than might have been expected given the surge in total reserves over this period, this does suggest that there is more buying to come [from China].”