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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 01/09/2009 : 19:56:33
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Merrill Lynch says rich turning to gold bars for safety
Merrill Lynch has revealed that some of its richest clients are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or "paper" proxies.
By Ambrose Evans-Pritchard
Last Updated: 10:32AM GMT 09 Jan 2009
Rich investors are spurning gold exchange traded funds in favour of krugerrands.
Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. "People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs," he said, referring to exchange trade funds listed in London, New York, and other bourses.
"They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands," he said.
Merrill predicted that gold would soon blast through its all time-high of $1,030 an ounce, and would hit $1,150 by June.
The metal should do well whatever happens. If deflation sets in and rocks the economic system it will serve as a safe-haven, but if massive monetary stimulus gains traction and sets off inflation once again it will also come into its own as a store of value. "It's win-win either way," said Mr Dugan.
He added that deflation may prove the greater risk in coming months. "It's very difficult to get the deflation psychology out of the human brain once prices start falling. People stop buying things because they think it will be cheaper if they wait."
Merrill expects global inflation to hover near zero, with rates of minus 1pc in the industrial economies. This means that yields on AAA sovereign bonds now at 3pc will offer a real return of 4pc a year, which is stellar in this grim climate. "Don't start selling your government bonds," Mr Dugan said, dismissing talk of a bond bubble as misguided.
He warned that the eurozone was likely to come under strain this year as slump deepens. "There is going to be friction as governments in the south start talking politically about coming out of the euro.
I don't see the tensions in Greece as a one-off. It is a sign of social strain in countries that have lost competitiveness."
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Think positive. |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 01/09/2009 : 19:58:18
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We may feel a little smug for catching the gold and silver train early, but the train can already leave the station and the rich will arrive way ahead of us.
Perhaps we should hope the rich perfer gold over silver for at least a while longer. Because once they get around to silver ( and they will) the price of it will soon be beyond our reach.
So when you see $2,000 an ounce gold and $100.00 silver don't cheer too hard unless you already have all you will need. |
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Think positive. |
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n/a
deleted
84 Posts |
 Posted - 01/09/2009 : 20:10:09
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quote:
Originally posted by Ardent Listener
Perhaps we should hope the rich perfer gold over silver for at least a while longer.
it's a near guarantee that they will, most people (rich or not) are too ignorant to consider silver "precious"
other than that LOL @ the guy saying not to ditch those bonds! |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/09/2009 : 20:35:38
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THE SILVER MILLIONAIRE
by David Morgan
July 2, 2007
Key Excerpt-
"Obviously, one billion ounces divided by 715,000 ounces indicates that only 1400 silver millionaires could theoretically exist.
....If we have 2.6 million millionaires in terms of paper and it takes ten million in cash at today’s price ($13 per ounce) to become a silver millionaire, then all we need to do is cut our 2.6 million by a factor of 10. This would give us 260,000 with a ten million equivalent that have the paper necessary to purchase 715,000 ounces,
-yet less than 1400 will be able to find sufficient silver to qualify as “silver millionaires.” Simply stated, there is almost 200 times as much paper available to purchase silver than silver available if we limit our analysis to the millionaire category only."
.......Prices were higher when this was written but the facts speak for themselves. Silver isn't poor man's gold, its rich man's silver, but since silver is still looked upon as the poor cousin to gold it lags behind in price. Low price for silver is bad for silver producers but good for silver buyers.
Once the price of gold takes off silver gets dragged up with it.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/09/2009 : 20:40:45
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"other than that LOL @ the guy saying not to ditch those bonds!"
I inherited some EE bonds that were 20 years old (bought in 1986)and after factoring in inflation and the buying power of the dollar back then, the bonds just barely kept up with inflation, buying power wise.
I cashed in the bonds& used the proceeds to buy 1 ounce gold coins back in 2006 (at $450-$550 per oz) I didn't do too badly did I? |
Edited by - pencilvanian on 01/09/2009 20:43:24 |
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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 01/09/2009 : 20:42:08
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quote:
Originally posted by pencilvanian
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THE SILVER MILLIONAIRE
by David Morgan
July 2, 2007
Key Excerpt-
"Obviously, one billion ounces divided by 715,000 ounces indicates that only 1400 silver millionaires could theoretically exist.
....If we have 2.6 million millionaires in terms of paper and it takes ten million in cash at today’s price ($13 per ounce) to become a silver millionaire, then all we need to do is cut our 2.6 million by a factor of 10. This would give us 260,000 with a ten million equivalent that have the paper necessary to purchase 715,000 ounces,
-yet less than 1400 will be able to find sufficient silver to qualify as “silver millionaires.” Simply stated, there is almost 200 times as much paper available to purchase silver than silver available if we limit our analysis to the millionaire category only."
.......Prices were higher when this was written but the facts speak for themselves. Silver isn't poor man's gold, its rich man's silver, but since silver is still looked upon as the poor cousin to gold it lags behind in price. Low price for silver is bad for silver producers but good for silver buyers.
Once the price of gold takes off silver gets dragged up with it.
Thanks for the reply. I hope you don't mind if I repost it else where. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 01/09/2009 : 20:49:09
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Be my guest Ardent Listener.
Just note that this quote is really the most vital part of the article, the rest is just the history of silver, how many ounces might exist, etc.
The article is a bit like meatloaf, there is ground beef in it but there is non-meat (bread crumbs) in it that tends to make it more filling but the filler doesn't add to the value of the product. |
Edited by - pencilvanian on 01/09/2009 20:53:41 |
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misteroman
Administrator
USA
2565 Posts |
Posted - 01/11/2009 : 00:59:13
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| ML lost my Dad about 100K in 08.I told him to pull his money out and put in IRAs or silver last January.Wish he would've listened |
Buying CU cents!!!! Paying 1.2 unlimited amounts wanted. Can pick up if near Ohio area. |
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misteroman
Administrator
USA
2565 Posts |
Posted - 01/11/2009 : 01:02:54
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| On a side note, 2 of my friends have been buying silver like crazy in the last few weeks.Guess I finally got to them but think they are paying too much. |
Buying CU cents!!!! Paying 1.2 unlimited amounts wanted. Can pick up if near Ohio area. |
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fb101
Administrator
USA
2856 Posts |
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Merrill Lynch: Rich turning to Gold
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