The Biggest Loser Wins - By Peter Schiff (27/5/13) PDF Print E-mail
Peter Schiff   
Monday, 27 May 2013 08:38

Euro Pacific Capital, Inc.

While the world's economies jockey one another for the lead in the currency devaluation derby, it's worth considering the value of the prize they are seeking. They believe a weak currency opens the door to trade dominance, by allowing manufacturers to undercut foreign rivals, and to economic growth, by fighting deflation. On the other side of the coin, they believe a strong currency is an economic albatross that leads to stagnation. But the demonstrable effects of currency strength and weakness reveal the emptiness of their theory.

A country that attracts investment from abroad (through stable and fair governance, low taxes, a growing economy, and a productive labor force) and produces goods that are in demand on the global stage will generally see a rising currency. In essence, this is the reward for a job well done. Strong currencies then help nations stay strong by conferring greater purchasing power to its citizens and businesses, which keeps input costs low, thereby enhancing international competitiveness. Strong currencies also encourage savings, keep real interest rates low, lower capital costs, and allow for greater productivity and higher real wages.

It is often argued that a weak currency confers advantages in foreign trade. But the edge only results from putting exports on sale. Any merchant will tell you that it's easy to sell more if you cut prices, but most would prefer charging full retail. However, exports are not an end in themselves, they are a means to pay for imports. The goal of an economy is not to work, but to consume. If citizens in one nation buy goods produced in another, they must pay with exports. When a nation's currency appreciates imports cost less and fewer exports are needed to pay. This means goods and services at home will be cheaper and more plentiful, and citizens won't need to work as hard to buy them. This is the definition of rising living standards.



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Clients Denied Gold At Major Banks As Shortage Intensifies - By Egon von Greyerz (24/5/13) PDF Print E-mail
Egon von Greyerz   
Thursday, 23 May 2013 20:42

King World News

Greyerz:  “This week I want to talk about what we are seeing in the physical gold market, and why there is a disconnect in that market.  We transfer a lot of gold from Swiss banks and other banks into private vaults for investors.

More often now, than ever, we are encountering incidents when the banks are putting up all kinds of obstacles for these transfers.  The first sign of the potential shortage of physical gold started with ABN AMRO a few weeks (when they) declared that they would renege on their commitment to redeem gold accounts in physical gold....

“Instead they would redeem in cash.  The custodian for ABN AMRO, for the gold, is UBS, and UBS decides to what extent they hedge the ABN paper gold position. 

So as there is no more physical redemption of the ABN AMRO gold accounts, it seems these contracts are no longer backed by physical gold.  It’s just backed by paper, and this is of course typical for the paper market, Eric.  This paper market, which is 100 times bigger than the physical market, probably has zero percent backing of physical.  This is why ABN stopped redeeming in gold.

Then, last week we had an investor being refused to take his physical gold out of a major Swiss bank.  They told him that the regulatory authority prevented the bank from giving the client his physical gold.  That is of course total nonsense, and eventually we helped the client to get his gold out of the bank.

Another of our clients was told by a major Swiss bank that he can only take out 100,000 Swiss francs of physical gold every six months.  They blamed money laundering and terrorist activity for this decision.  Yet another client was again told by a major Swiss bank that his storage fees would be going up substantially.  When he complained he was told that he should convert to paper gold.

And finally, Eric, another big bank, which has an ETF, told a client who wanted to transfer gold out it that he would have to wait at least two weeks for the transfer.  You just wonder why a major bank that is supposed to hold substantial amounts of physical gold needs two weeks of more to transfer gold to a client.

So all of this, Eric, points to the fact that there is a major shortage of physical gold in the banks.  These banks obviously don’t want to lose customers, but their behavior and the reluctance to deliver also points to a real shortage in the physical market. 

So the disconnect between the paper and the physical market (for gold) is continuing.  Refiners still have major production delays and demand continues to be very high, ‘No matter how much they produce,’ as one refiner told me today.  And premiums are still high also.”




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Last Updated on Thursday, 23 May 2013 20:44
 
Japan Stock Market Crash Leads To Global Sell Off - By Tyler Durden (24/5/13) PDF Print E-mail
Tyler Durden   
Thursday, 23 May 2013 20:40

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We Have Blown The Largest Bubble In The History Of Mankind - By Mac Slavo (22/5/13) PDF Print E-mail
Mac Slavo   
Wednesday, 22 May 2013 07:15

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The Coming Collapse Of The Petrodollar System - By Andrew McKillop (22/5/13) PDF Print E-mail
Andrew McKillop   
Wednesday, 22 May 2013 07:13

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