Seven years, 637 rate cuts, and $12.3 trillion in ‘quantitative easing’ has accomplished little more than to grow the world’s debt bubble to extraordinary proportions. And now that Japan, Switzerland, most of Europe, and even the U.S. are either into negative rates, or seriously contemplating them, the straw seems to have finally broken the camel’s back, and confidence in paper fiat currencies is coming to an end.
This is the sentiment of an analyst from JP Morgan who in a sobering moment on Feb. 11, sees trust in gold becoming more inherent by the public than their trust in central banks, or in sovereign paper currencies.
There is a serious credit contraction underway, I think [Yellen] should acknowledge that. I think she has to look at the capital base being wiped off the banks in this downdraft and equities: that’s not supposed to be happening right now. They’re supposed to be bulletproof, and oh, by the way, gold at $1,200 an ounce, what does that tell you? It tells you that in a flight to quality, in a safe haven, people have more confidence in gold than in bank deposits or paper money. I think things have gotten out of control.” – Zerohedge
Yet JP Morgan’s Global CIO & Head, Global Fixed Income, Currency & Commodities Group Bob Michele is not the only analyst from the big bank to recommend moving into gold. JPM’s head quant Marko Kolanovic also went public with his own recommendations and said investors need to sell everything and get into cash, gold, or if they play equities, buy the VIX.
Since the beginning of the week most people haven’t had to be prodded by Wall Street talking heads to see the need to protect their wealth in assets not tied to paper or sovereign currencies. In fact, an interesting tale emerged yesterday where people in London were lining up around the block at a local bullion dealer just so they could have a chance to buy some gold and get out of their declining paper currency.
London-based ATS Bullion added it had been inundated with orders for the past week. The firm has sold 4,000 gold bars and coins since February 1, a 40pc rise on the same period a year ago when it sold 1,500.
“It’s been crazy – it’s been the best week since 2012. We’ve had people queuing round the block,” said Michael Cooper of ATS Bullion, a family run firm that trades online and also from an outlet in the West End. – UK Telegraph
So as we head into another weekend following default rumors of a major global bank (Deutsche Bank), both alternative and mainstream analysts are shouting en masse that gold is no longer just a barbarous relic, or an antiquated ‘pet rock’, but something everyone needs to buy, and buy right now. And since most supplies have shifted from the West to the East over the past five years, the question that comes to mind is just how high the price will go since demand is now skyrocketing far above available supply.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.