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Investors Shun Hard Assets Amid Fed’s Paper Rally

December 31, 2013

2013: WORST YEAR FOR GOLD SINCE 1981

Investors Shun Hard Assets Amid Fed’s Paper Rally

  • The Gold-For-Paper Exchange Heats Up. With inflation fears subdued, many investors are trading in assets that have traditionally provided wealth protection in exchange for sexier paper assets that are being driven up by the noxious policies emitting from the Federal Reserve. (This will not end well.)
  • Gold Falls 28% in 2013. After climbing 700% over the last decade, gold prices stumbled 28% this year. This is the yellow metal’s worst annual performance since 1981. The popular gold mining ETF (Ticker: GDX) has suffered even more, falling 55% in 2013… Gold ETF holdings dropped 33% this year, to the least since 2009.
  • Other Commodities Also Get Hammered in 2013. Additionally, silver turned in its worst annual performance since 1981, falling 35% in 2013. Abundant harvests sent corn prices plunging 39% in 2013, its biggest drop since 1960. Wheat fell 23%, its worst year since 2008.
  • Chinese Demand Remains Strong. Gold consumption in China increased 29% to 1,000 tons in 2013, the World Gold Council estimates (albeit, the rate of demand growth has decreased the past few months). Investors in China, India, and even Saudi Arabia are increasing their purchases when the price dips below $1,200.
  • Hold, But Prepare to Back up the Truck. Follow the Money suggests a maximum of 25%-30% of any portfolio in precious metals. Removing the protection provided by gold from any portfolio in these unchartered economic waters would be extremely foolish, in our opinion.

    That said, we maintain a “HOLD” rating on both silver and gold. (To see our real-time ratings, subscribe here.)

    New investors are wise to proceed with caution around commodities and precious metals in this current market environment. The herd mentality is currently driving stock prices back into the stratosphere but will eventually unwind.

    Wealth protection, which has been the major investment theme in the wake of the 2008 market crash, is slowly losing its value to investors who are increasingly mesmerized by soaring equity prices. FTM, and its subscribers, have benefited from this dramatic rise in the stock market this year, as we have long expected markets to trend higher on quantitative easing (for example, we are forecasting the Dow to reach 18,000 before major turmoil begins). However, the fundamentals underpinning the current rise in Western equities are little changed. While stocks and housing prices are rising, personal income levels and the labor market remain in a funk. And overall debt levels remain completely unsustainable. Meanwhile, emerging nations and central banks continue to hoard gold.

    Those who disregard the need for wealth protection assets in this tumultuous economy will be surprised when the next collapse comes. It seems the only thing we learn from history is that we don’t learn from history.

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    Inside this Issue



    “Profiting From the Coming Paper Money Collapse”

    U.S. Stocks Poised for their Biggest Annual Gains Since 1997

    The benchmark S&P 500 index has soared 29% YTD while the the Dow Jones has risen 26% YTD.

    U.S. Home Prices Rise 13.6% Over Last 12 Months

    U.S. home prices are rising at the fastest rate since February 2006…

    Europe Stocks Post Best Year Since 2009

    The Stoxx 600 has risen 17% this year as the European Central Bank pledges to keep interest rates low for an extended period.


    Chinese Firms Start Giving Gold Bars for a New Year Bonus

    Chinese media is reporting that Chinese firms, especially tech firms are giving gold bars this Chinese New Year for annual bonuses as opposed to cash.

    Pope’s Sharp Words on Money Make a Wealthy Donor Hesitate

    Donors increasingly asking: “Is this about building another building or is it about spreading the gospel and saving souls?”

    Consumer Confidence in U.S. Increases More Than Forecast

    Americans are growing upbeat about the economy as household finances improve on the heels of more hiring, rising property values and stock-market gains. (Translation: The Fed’s wealth effect is working.)

    View the Investor Wire Archive >>

    U.S. Financial Markets

    Real-time Gold and Silver Prices

    The Best Way to Buy Gold Coins, Gold Bars, Silver Coins, Silver Bars Online The Best Way to Buy Gold Coins, Gold Bars, Silver Coins, Silver Bars Online

    View Our Precious Metals Investing Resources Here >>



    “World News Headlines That We Are Tracking”

    And The Country Posing The Greatest Threat to Peace as 2013 Ends is…

    The U.S. tops the list… followed by Pakistan.

    The Japanese Mob Is Hiring Homeless People to Clean Up Fukushima

    Workers earn $60 per day to help clean up the greatest nuclear disaster in decades.

    As Tensions Rise, Saudi Arabia to Give Lebanese Army $3 Billion

    Lebanon plans on using the money to buy weapons from France.


    Israel to Publicly Fund All Abortions for Women 20-33 Starting Next Year

    Israeli health officials indicate they eventually intend to expand it to offer abortion funding to women of all ages.

    Iranian Billionaire Promoting “PetroGold” With Turkey Arrested

    “In reality his chief transgression was allowing the Petrogold system to show that the Petrodollar is no longer irreplaceable.”



    Broadcast Every Saturday Morning – Hosted by Jerry Robinson

    Topic: On this week’s show, economist and investor Jerry Robinson explains how stock traders can profit from current financial trends.

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    Liberty Wire
    “Archiving the Rise of Big Brother and the Fall of the Republic”

    Can Robots Better Spot Terrorists at Airports?

    Some countries are testing new fingerprint readers and eye scanners at airports.

    How The NSA Hacks Your iPhone

    They also have the ability to hack your WiFi devices from eight miles away…

    High Prices for Getting High Expected as Colorado Opens Legal Pot Shops

    Demand likely to outstrip supply at first as Colorado opens legal marijuana boutiques.

    View the Liberty Wire Archive >>



    “Daily Investment Trends for the Savvy Investor”

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    View the Daily Chart Archive >>



    “A Daily Stock Trading Idea for Short-Term Traders”

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    “A Daily Dose of Financial Wisdom from God’s Word”

    “Be anxious for nothing, but in everything by prayer and supplication with thanksgiving let your requests be made known to God.”
    Philippians 4:6


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