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Central banks are set to become net buyers of gold this year for the first time since 1998, according to GFMS, the metals consultancy.
This reverses the trend of the past decade when central banks, particularly in Europe, reduced their holdings. Central banks have been net sellers of gold in only seven years since the ending of the Bretton Woods exchange rate agreement in 1971.
Gold continued to hover around $1,000 a troy ounce on Monday, after breaching that level last week for only the third time in its history.
Worries over an imminent correction have mounted after the largest weekly increase for a decade in bets that prices would rise. The net long position held by speculators stood at a record 29.02m ounces for the week ending September 8, up 6.4m ounces, or 28.3 per cent, on the previous week, according to the Commodity Futures Trading Commission.
This reverses the trend of the past decade when central banks, particularly in Europe, reduced their holdings. Central banks have been net sellers of gold in only seven years since the ending of the Bretton Woods exchange rate agreement in 1971.
Gold continued to hover around $1,000 a troy ounce on Monday, after breaching that level last week for only the third time in its history.
Worries over an imminent correction have mounted after the largest weekly increase for a decade in bets that prices would rise. The net long position held by speculators stood at a record 29.02m ounces for the week ending September 8, up 6.4m ounces, or 28.3 per cent, on the previous week, according to the Commodity Futures Trading Commission.
- Financial Times
The interbank cost of borrowing dollar, euro and sterling funds for three months all marked new record lows on Tuesday, the latest daily fixing from the British Bankers' Association showed.
The spread of three-month dollar Libor rates over OIS rates tightened by two basis points to 13 bps – its narrowest level since at least the third quarter of 2007 when the global credit crisis began, according to Reuters charts.
The tighter spread reflected the large amount of liquidity still in the banking system.
The spread of three-month dollar Libor rates over OIS rates tightened by two basis points to 13 bps – its narrowest level since at least the third quarter of 2007 when the global credit crisis began, according to Reuters charts.
The tighter spread reflected the large amount of liquidity still in the banking system.
- Newsmax
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What I Discovered in a Newspaper from September 1930
By Tom Dyson Tuesday, September 15, 2009 What I Discovered in a Newspaper from September 1930 -
What I Learned from a Salesman at Lowe's
By Tom Dyson Monday, September 14, 2009 What I Learned from a Salesman at Lowe's -
Where All the Money You'll Ever Make in Stocks Will Come From
By Dan Ferris Saturday, September 12, 2009 Where All the Money You'll Ever Make in Stocks Will Come From -
What the "$15 Million to $460 Million Man" Is Saying Now
By Dr. Steve Sjuggerud Friday, September 11, 2009 What the "$15 Million to $460 Million Man" Is Saying Now -
The First Step You Should Take to Diversify Assets Overseas
By David Eifrig Thursday, September 10, 2009 The First Step You Should Take to Diversify Assets Overseas
An American Disaster That's Hard to Escape
By Dr. Steve SjuggerudWednesday, September 16, 2009
I can't believe I was such a fool...
In 1990, I was offered a raise if I moved from Florida to Baltimore, Maryland. So I moved. But you know what I ended up with? A smaller paycheck!
Now how is that possible? It's simple: Florida has no state income tax. The top income tax rate for residents of Baltimore is now a terrible 9.45%.
I was a fool. So what did I do? Two years later, I left Maryland and moved back to Florida. It was a small disaster... but at least I was able to escape it.
But when federal income taxes soar, what do we do then?
I'll show you in a minute. Before we get there, let's continue with the Maryland example to show what might happen nationwide...
The state of Maryland couldn't balance its budget last year. So the state decided the right way to raise tax dollars was to fleece the millionaires... Maryland state politicians created a "millionaire" tax bracket.
Maryland Governor Martin O'Malley of course expected tax receipts to go up. He said Maryland's 3,000 millionaires were "willing to pay their fair share." The Baltimore Sun said the rich would "grin and bear it."
But the opposite happened...
Instead of 3,000 Maryland millionaires filing taxes in April 2009, only 2,000 did. According to the Wall Street Journal: "Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year – even at higher rates."
A friend of mine lives here in Florida. He is not an American citizen. He pays U.S. taxes while he lives here. But under the threat of higher national income taxes, he is contemplating giving up his green card and moving elsewhere.
When Maryland's governor raises taxes, Maryland residents leave and government income goes down.
When the nation's President raises income taxes, foreigners like my friend leave and government income goes down.
Unfortunately, YOU CAN'T LEAVE.
Wait a minute. This is America, land of the free, right?
Not so fast... The U.S. government will track U.S. citizens everywhere to get tax money. If you leave to work in another country, you still pay U.S. income taxes. America and North Korea are the only countries that tax you on your worldwide income.
If it gets bad enough, you can just give up your citizenship, right? Nope, you can't do that either. At least, you can't do it without paying a potentially massive "exit tax."
The exit tax acts like an estate tax. If you want to give up your citizenship, you have to give up nearly half your wealth above a certain level. The Economist magazine calls it "America's Berlin Wall." Nice, eh?
Want some more nice? Once you're gone, you're not legally allowed to come back and visit family and friends. Yes, if the government decides you have renounced citizenship for tax purposes, a federal law prohibits you from entering the country ever again. (You can look up the rule under 8 USC 1182(a)(10)(E).)
You can escape states with oppressive taxes. But "escaping" the U.S. – the land of the free – is much more difficult. And you can bet it won't get any easier as the government needs more and more of your income to pay its bills.
In DailyWealth, we try to be optimists. We recommended buying stocks in March, before most others did. We said the recession was over, before anyone else did. And we said buy homes in recent months, before anyone else did.
But we're also realistic here. And it's hard to be optimistic about America's Berlin Wall getting any better. Based on the facts, we urge you to take all the reasonable actions you can to protect yourself and your wealth.
Regards,
Steve
P.S. You can read about two of my favorite strategies for protecting your wealth from taxes here and here.
In 1990, I was offered a raise if I moved from Florida to Baltimore, Maryland. So I moved. But you know what I ended up with? A smaller paycheck!
Now how is that possible? It's simple: Florida has no state income tax. The top income tax rate for residents of Baltimore is now a terrible 9.45%.
I was a fool. So what did I do? Two years later, I left Maryland and moved back to Florida. It was a small disaster... but at least I was able to escape it.
But when federal income taxes soar, what do we do then?
I'll show you in a minute. Before we get there, let's continue with the Maryland example to show what might happen nationwide...
The state of Maryland couldn't balance its budget last year. So the state decided the right way to raise tax dollars was to fleece the millionaires... Maryland state politicians created a "millionaire" tax bracket.
Maryland Governor Martin O'Malley of course expected tax receipts to go up. He said Maryland's 3,000 millionaires were "willing to pay their fair share." The Baltimore Sun said the rich would "grin and bear it."
But the opposite happened...
Instead of 3,000 Maryland millionaires filing taxes in April 2009, only 2,000 did. According to the Wall Street Journal: "Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year – even at higher rates."
A friend of mine lives here in Florida. He is not an American citizen. He pays U.S. taxes while he lives here. But under the threat of higher national income taxes, he is contemplating giving up his green card and moving elsewhere.
When Maryland's governor raises taxes, Maryland residents leave and government income goes down.
When the nation's President raises income taxes, foreigners like my friend leave and government income goes down.
Unfortunately, YOU CAN'T LEAVE.
Wait a minute. This is America, land of the free, right?
Not so fast... The U.S. government will track U.S. citizens everywhere to get tax money. If you leave to work in another country, you still pay U.S. income taxes. America and North Korea are the only countries that tax you on your worldwide income.
If it gets bad enough, you can just give up your citizenship, right? Nope, you can't do that either. At least, you can't do it without paying a potentially massive "exit tax."
The exit tax acts like an estate tax. If you want to give up your citizenship, you have to give up nearly half your wealth above a certain level. The Economist magazine calls it "America's Berlin Wall." Nice, eh?
Want some more nice? Once you're gone, you're not legally allowed to come back and visit family and friends. Yes, if the government decides you have renounced citizenship for tax purposes, a federal law prohibits you from entering the country ever again. (You can look up the rule under 8 USC 1182(a)(10)(E).)
You can escape states with oppressive taxes. But "escaping" the U.S. – the land of the free – is much more difficult. And you can bet it won't get any easier as the government needs more and more of your income to pay its bills.
In DailyWealth, we try to be optimists. We recommended buying stocks in March, before most others did. We said the recession was over, before anyone else did. And we said buy homes in recent months, before anyone else did.
But we're also realistic here. And it's hard to be optimistic about America's Berlin Wall getting any better. Based on the facts, we urge you to take all the reasonable actions you can to protect yourself and your wealth.
Regards,
Steve
P.S. You can read about two of my favorite strategies for protecting your wealth from taxes here and here.
CHINA IS NOW SPONSORING YOUR GOLD POSITION
This week's "worth pondering" idea on gold and silver...
The Chinese government presents itself as an all-powerful, all-knowing steward of its economy... and it's obsessed with keeping a good public image. Recently, it started encouraging citizens to invest gold and silver.
So the government would look pretty foolish in the eyes of citizens if gold and silver suffered a big drop of, 10% or 15%.
Now, consider China also has the biggest pile of excess currency reserves in the world... several trillion dollars worth. If you were the Chinese government, wouldn't you squeeze a few billion dollars into the gold market if prices declined... rather than look like the worst financial advisor on Earth?
It would be a PR disaster for China if gold and silver took a big fall. If you're an owner of gold and silver, you now have a whopper of a backstop for your position.
The Chinese government presents itself as an all-powerful, all-knowing steward of its economy... and it's obsessed with keeping a good public image. Recently, it started encouraging citizens to invest gold and silver.
So the government would look pretty foolish in the eyes of citizens if gold and silver suffered a big drop of, 10% or 15%.
Now, consider China also has the biggest pile of excess currency reserves in the world... several trillion dollars worth. If you were the Chinese government, wouldn't you squeeze a few billion dollars into the gold market if prices declined... rather than look like the worst financial advisor on Earth?
It would be a PR disaster for China if gold and silver took a big fall. If you're an owner of gold and silver, you now have a whopper of a backstop for your position.