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« Trading Gold and Its Eurozone Crisis Premium | Main | The UK to be sucked into the Greek Bailout by the Germans »
Thursday
Jun232011

Death by a Thousand Cuts

The political landscape:

The Greeks need even more boat loads of cash to stay afloat and its richer European partners are scrambling to put a package together. The German government are desperately trying to enlist more contributors and the UK is an obvious target. So the question is will David Cameron rollover or stand firm. One of the reasons for keeping the pound was to avoid such nonsense. This bailout is good money after bad, all in aid of keeping the Eurocrats in highly paid jobs rather than helping the Greeks solve their debt problems. Taking on more debt is not a cure for debts, it is akin to giving smokers another cigarette as they try to kick the habit.

The Greeks would be far better off walking away from the euro and starting again with their own currency and a clean slate. The thought of living through a twenty year austerity programme and enduring a fire sale of state owned assets is too high a price to pay as the riots in Athens clearly demonstrate.

Business taxation in Greece amounts to around 52%, about four times more than it is in neighboring states such as in Romania. In Turkey there is a five year tax holiday to entice new businesses, so the outlook for inward investment looks bleak. That being the case, the possibility of Greece paying its debts via internal growth is zilch.

Yes a default would mean that the banks would be in for a haircut, but as we see it, its one they truly deserve.

However, we will still be subjected to the pain of the political system as those who attend the 'G' meetings, with the best of intentions, do not employ one brain between them and have been wrong footed a number of times by economic reality, as frequently highlighted by Nigel Farage in this clip entitled: Your euro-predictions have been 100% wrong, Mr Barroso.

Nigel Farge 23 June 2011.JPG
Nigel Farage of UKIP


Unfortunately those who run Europe are no brighter than those who have taken the United States to the very edge of the abyss, where there will be more quantitative easing albeit in a disguised form, as they to continue with their 'extend and pretend' policies.

Going back to the UK we can see that Gold has been making new highs in the GB Pound as shown on the chart below:

Gold chart  vs GBP 24 June 2011.JPG

One ounce of gold now costs in the region of nine hundred and fifty pounds, thought of as a ridiculous possibility only a few short years ago.

We could bring in other countries such as Spain, as their time in the bailout spotlight is drawing ever closer, however, we think you have got the drift.

As advocates of honest money just what does this mean to us?

We need to realize that our political masters are devoid of ideas other than the printing of even more money. The debasement of currencies will gather pace as each of the sovereign states smile sweetly, while devaluing their own currency in the now frantic race to the bottom. As an asset class the folding stuff generates very little in interest payments and buys less each year as prices for commodities, goods and services, power, etc, become more expensive.

To stick with paper currency is akin to a death by a thousand cuts.

What to do now

Start by calculating your net worth and ascertain just how much of it is in cash and how much is in hard assets. Allocate a certain amount of cash to act as a cushion and cover your living costs for a period of time that will put you at ease. The portion that is your 'investment cash' can then be allocated to an asset class that you consider has value. The agricultural sector is popular, so is the oil sector and energy in general. Time is usually a constraint to gaining an understanding of all the possible sectors that are vying for your cash, so focus on what suits your investment goals and criteria and then learn everything that you can about it, before making an actual purchase.

In our case its the precious metals sector where we have invested and traded for many years and have gained a 'feel' for how it performs. Our strategy has been to acquire both physical gold and silver along with a select few of the associated stocks and when the opportunity arises we also utilize the options facility to add some leverage to a particular trade.

Protecting your wealth and self preservation is the name of the game. Whether you like it or not you have a position and no matter how small it is you have to get your head up and think, is this the best that I can do, if not, then get your skates and put some effort into it, after all its your financial future that is on the line here.

Regarding www.skoptionstrading.com. We currently have a number of trades on the drawing board which will be executed once our selection criteria has been met. Patience is the order of the day as it is very important to trade only when the set up is in our favour.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 2011.JPG



The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

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For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

SK logo 26 May 2011.JPG




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Reader Comments (4)

"those who attend the ‘G’ meetings, with the best of intentions..."

Oh yeah??...please tell me you're not really that naive, or I'll have to put you on my "not worth reading" list. They may have the best of intentions of making their uber-wealthy bosses uber-richer, but we are simply chattal to them. They couldn't care less about the working class of the West except in terms of assets to milk dry...jt

June 24, 2011 | Unregistered Commenterjt

jt,

I agree with you completely. The same phrase caught my eye. I don't believe for a second the stooges who front for the Powerz have good intention.

AND, I'd give your authors a break. They're just far more polite and gentle than I would ever be. And that's probably not a bad thing.

Fact is, whether it's the result of stupidity, foolishness, or nefarious calculation, the result is the same. The bankers get bailed and we get screwed, unless we're prepared...and maybe even if we are.

The content of the piece is spot on and well-written.

June 24, 2011 | Unregistered Commenterfallingman

The Germans are still getting over a barrel full of money for a loaf of bread. The US better watch out too. A loaf of name brand rye bread is now $3.89.

June 24, 2011 | Unregistered CommenterJohn Ell

"the best of intentions"

When we observe the EU Parliament in discussion, there appears to be two types of MEP, the first knows the score, but continues to stick with the party line, the second is too thick to understand and believes that they are doing the right thing. So there intentions are well meaning, but...

June 25, 2011 | Unregistered CommenterGold Prices

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