"These blogposts are a reflection of my personal journey to understanding how developing this financial education can improve the lives of my family and those whom I work with".
Raymond E. Lee
Raymond E. Lee
A 1 gram Karatbars Gold Bar Exchanged or purchased on 1st October 2014 was €48.37 , today it is €55.58– a more than 11.5% increase!
Full pricing history pdf HERE
Did your bank give you 11.5% interest in the past year? Probably not….
Think that’s a good return?……
The price for one ounce today is $1135 … I think it could go to$5000 per ounce soon….Here’s why…. *Please read this in full as it is important for you and your family whether you are involved with Karatbars or not. .
One of the conundrums of monetary policy over the past eight years is the central banks’ failure to cause inflation. This sounds strange to most. People associate inflation with misguided monetary policy by central banks.
So-called “money printing” is seen as a certain path to inflation. (QEorQuantitive easing) The Federal Reserve alone has printed almost $4 trillion since 2008. Yet inflation (at least as measured by official statistics) is barely noticeable. With so much money around, where’s the inflation?
Reuters news today announced that gold falls to three-week low on rate hike talk.
NEW YORK/LONDON, Oct 29 (Reuters -truncated) - Gold fell for a second day on Thursday, reaching its lowest level in three weeks, after the Federal Reserve hinted at a possible U.S. interest rate rise in December.
Spot gold, stronger initially due to a retreat in the dollar, fell as much as 0.9 percent to its lowest since Oct. 9 at $1,145.43 an ounce. It was down 0.8 percent at $1,146.10 at 2:58 p.m. EDT (1858 GMT).
U.S. gold futures for December delivery settled down 2.4 percent at $1,147.30 an ounce. The fall was more exaggerated than the spot market because the U.S. market settled firm on Wednesday, before the release of the Fed statement that pressured prices.
The Fed kept interest rates unchanged on Wednesday, as expected, but in a direct reference to its next policy meeting, the central bank put a December rate increase firmly in play.
The U.S. central bank said that raising rates at its next meeting would depend on progress on employment and inflation, omitting any reference to global developments affecting economic activity.
"The consensus was for the first rate hike to occur in early 2016, so certainly yesterday's statement was read as hawkish compared to expectations," Capital Economics analyst Simona Gambarini said.
In recent weeks, investors had bet that the Fed would delay its first rate hike in nearly a decade until next year because of weakness in the global economy and its impact on the United States.
Rate-futures traders boosted bets that the Fed would raise rates at its next meeting on Dec 15-16.
The surprisingly hawkish tone of Fed chair Janet Yellen sent the dollar soaring to a two-month high. Though it turned down around 0.5 percent Thursday, gold prices continued to fall.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.17 percent to 694.34 tonnes on Wednesday.
Industrial metals also fell on Thursday, with platinum down 0.9 percent at $989 an ounce and palladium falling 1.5 percent to $667.50. Silver dropped 2.1 percent to $15.58.
Sounds bad doesn't it? Yet these are investment markets, and the gold prices are the spot prices used in trading not the RETAIL prices which we buy at.
Why central banks didn’t get the inflation they wanted?
This conundrum has several answers. The first is that central banks have been printing money, but few are lending it or spending it. The banks don’t want to make loans, and consumers don’t want to borrow.
In fact, the private sector on the whole has been deleveraging – selling off assets and paying off debt – even as public debt expands.
Increased money supply alone does not cause inflation. The money must be borrowed and spent. The absence of lending and spending (as shown in declining velocity) is one reason disinflation and deflation have been more prevalent than inflation.
The second reason for the absence of inflation is that the world is confronting powerful deflationary head winds, principally demographics and technology. The rate of increase of global population peaked in 1995. Today, populations are in decline in Japan, Russia and Europe. They are also stagnant elsewhere outside of Africa and the Middle East.
Fewer people means less aggregate demand for goods and services. Improved technology and efficiencies from predictive analytics have lowered the cost of everything from inventories to transportation. This combination of less demand and greater efficiency results in lower prices.
The final reason is globalization. The ability of global corporations to locate factories and obtain resources anywhere in the world has expanded the pool of available labour.
Global supply chains and advanced logistics mean that products like smartphones are created with US technology, German screens, Korean semiconductors and Chinese assembly. The phones are then sold from India to Iceland and beyond. Yet many of the workers are paid little for their value-added in these global supply chains.
Why central banks fear lack of inflationThese deflationary tendencies create a major policy problem for central banks. Governments need to cause inflation in order to reduce the real value of government debt. Inflation also increases nominal (if not real) incomes. These nominal increases can be taxed.Persistent deflation will increase the value of debt and decrease tax revenues in ways that can cause governments to go bankrupt. Governments are therefore champions of inflation and rely on central banks to cause it.
In the past eight years, the Fed has tried every trick in the book to cause inflation. They have lowered rates, printed money, engaged in currency wars, used “forward guidance” (promises not to raise rates in the future), implemented “Operation Twist” and used nominal GDP targets. All of these methods have failed.
The Fed then shot itself in the foot by tapering asset purchases, removing forward guidance and threatening to raise rates from 2013-15. These tightening moves made the dollar stronger and increased deflationary forces even as the Fed claimed it wanted more inflation.
This two-year tightening episode is proof (not that any was needed) that the Fed does not understand the dynamic deflationary forces it is now confronting.
My expectation is that the Fed will soon reverse course and return to some form of easing – probably more forward guidance and a cheaper dollar. If I’m wrong and the Fed actually does raise rates, deflation will get worse and a global recession will emerge.
A central bank’s worst nightmare is when they want inflation and can’t get it.
The Fed’s tricks have all failed. Is there another rabbit in the hat?
Buy Karatbars Gold Exchange Your Cash Now – Gold Could Go To $5000 Per Ounce Soon
How to spark inflation in 15 minutes
The Fed can cause massive inflation in 15 minutes. They can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce. The Fed can make that new price stick by using the Treasury’s gold in Fort Knox and the major US bank gold dealers to conduct “open market operations” in gold.
They will be a buyer if the price hits $4,950 per ounce or less and a seller if the price hits $5,050 per ounce or higher.
They will print money when they buy and reduce the money supply when they sell via the banks. This is exactly what the Fed does today in the bond market when they pursue quantitative easing.The Fed would simply substitute gold for bonds in their dealings. The Fed would target the gold price rather than interest rates.
Of course, the point of $5,000 gold is not to reward gold investors. The point is to cause a generalized increase in the price level. A rise in the price of gold from $1,000 per ounce to $5,000 per ounce is really an 80% devaluation of the dollar when measured in the quantity of gold that one dollar can buy.
This 80% devaluation of the dollar against gold will cause all other dollar prices to rise also. Oil would be $400 per barrel, gas would be $10.00 per gallon at the pump and so on. There it is – massive inflation in 15 minutes: the time it takes to vote on the new policy.
This has happened before!Don’t think this is possible? It has happened in the US twice in the past 80 years. You may even know some people who lived through both episodes.
The first time was in 1933 when President Franklin Roosevelt ordered an increase in the gold price from $20.67 per ounce to $35.00 per ounce, nearly a 75% rise in the dollar price of gold. He did this to break the deflation of the Great Depression, and it worked. The economy grew strongly from 1934-36.
The second time was in the 1970s when President Richard Nixon ended the conversion of dollars into gold by US trading partners. Nixon did not want inflation, but he got it.
Gold went from $35 per ounce to $800 per ounce in less than nine years, a 2,200% increase. US dollar inflation was over 50% from 1977-1981. The value of the dollar was cut in half in those five years.
History shows that raising the dollar price of gold is the quickest way to cause general inflation. If the markets don’t do it, the government can. It works every time.
History also shows that gold not only goes up in inflation (the 1970s), but it also goes up in deflation (the 1930s). When deflation runs out of control, as it did in the 1930s and may again, the government will raise the price of gold to break the back of deflation. They have to – otherwise, deflation will bankrupt the country.
Do I expect deflation to run out of control soon? Actually, no. Deflation is a strong force now, but I expect that eventually the Fed will get the inflation they want – probably through forward guidance, currency wars and negative interest rates.
When that happens, gold will go up.
Still, if deflation does get the upper hand, gold will also go up if the Fed raises the price of gold to devalue the dollar when all else fails. This makes gold the ultimate “all weather” asset class. Gold goes up in extreme inflation and extreme deflation. Very few asset classes work well in both states of the world. Since both inflation and deflation are possibilities today, gold belongs in every portfolio as protection against these extremes.
How to build your own gold stock.
Can the message be any clearer? You now know why you should buy gold… and you also know where to buy!
Karatbars sell the best quality 1g, 2.5g and 5g at the best prices in an easy affordable format.
Purchasing takes just a few minutes..
1. Login at www.karatbars.com
2. Go to “Product Purchase”
3. Click “Classic Karatbar”
4. Choose amount of 1/2.5 or 5g cards (prices below)
5. Choose free storage or delivery by Fedex
6. Pay by credit/debit card or bank transfer.
There have been over €30,000 in sales in Brian McGinty's team in the past few weeks alone!
“The postings on this site are my personal opinions and do not represent the positions, strategies and opinions of Karatbars International GmbH.”