Rather than wait for the rating agencies to downgrade...

Why This Year Will Wake You Up Let us return to the financial crisis of 2008 in the UK. The scepter of DEflation had our central bank all concerned. So the ‘Old Lady’ slashed interest rates, and continued cutting them, until they reached their historic low levels of 0.5% in March 2009. They remain there to this day. But this wasn’t enough, In March 2009 the BoE announced that it would print up £75bn, which extended to £150bn and then to £200bn in total today. At the time the BoE said it would use the money to buy up Government Bonds and Corporate debt. As it turns out, the BoE used about 97% of that £200bn to buy up Government debt. This type of debt monetisation is what gave the Republic of Weimar such a headache in the 1920s. Again, this action and all subsequent additional money printing was deemed necessary to fight off those evil falling prices. But lets look at the evidence of their actions. The BoE has a mandate of achieving inflation as measured by the CPI of 2%. As you can see from the chart on the left inflation measured by CPI (turquoise line) dipped below 2% for about six months, and it has remained over 50% above target for more than a year. In fact CPI inflation has been above target for 40 of the past 49 months. To add to the BoE woes, we get news just before Christmas that CPI inflation is again on the rise, reaching 3.3% in the latest report, with many pundits seeing a rise to 4% in 2011. What this simple little chart above tells us is that the BoE couldn’t give a damn about its 2% mandate, the game plan is to inflate away our debts by making the pound in our pocket increasingly worth less. For an example about how clueless those at the central bank are about predicting inflation, the Central Bank in November said: “The chances of inflation being either above or below the target by the end of the forecast period are judged to be roughly equal.” What kind of an assessment is this? This isn’t a prediction, saying something has a 50:50 chance of happening is just a coin toss. It’s like me saying in a two dog race i think fido’s chances of winning are exactly the same as K9. They’re basically admitting they don’t know, and yes these people really are in charge of the value of our money. To add insult to injury in September the Deputy Governor of the BoE, Charles Bean said savers should “eat into their capital a bit” to help them get by. The country is capital starved and debt saturated, what we desperately need is MORE capital and savings NOT less. You can’t have capitalism without capital, which comes from savings (under-consumption). This sort of nonsense spouted by people who are supposed to regulate the value of our money should have you sincerely questioning their ability. For a quick recap on how an economy actually grows read “Suicide Shopping to Ben Bernake’s Last Dance”. This all stems from a mis-definition of what inflation is. Simply put, it is an increase in the supply of money, it has nothing to do with prices. A consequence of inflation are rising prices. So how can i say with certainly that we will have inflation in 2011? Because it is already here in spades, it just hasn’t fully filtered through into everyday goods, yet. The reckless policy by the BoE in ignoring its mandate is hammering savers. You know, the people that ‘do the right thing’ and don’t go out and blow their money on new fangled i-whatevers, but rather ensure there is capital to grow the economy. It’s also crippling those on fixed incomes like pensioners as the purchasing power of their Pound decreases. In short it is a wealth transfer from those savers to bail out the debtors like our banks and our government. Is that fair? To highlight just how acute the problem is this report that indicated that out of 2,203 savings accounts on the UK market just 3 offered and real rate of return. For all the people with their money in the other 2,200 savings accounts, people we’re losing money because the rise in prices is greater than the interest being paid. Lets be clear, the deflation argument and why it must be avoided (because some how, things getting cheaper is bad, right?) is a diversionary tactic. The only reason for the money printing was that our largest banks were (and still are by the way) insolvent. As well as the insolvency of our government. Deflation was put forward as cover to legitimise this transfer of wealth. To keep the current banking system in place, all those crappy loans and toxic assets which were discussed ad-nauseum in the press in 08 and 09 were dumped right on the back of the UK tax payer. They didn’t go away, they were merely transferred over to the tax payer. They are still there to this day. The politicians, of whatever political strip, it really doesn’t matter - they all bat for the banking interests when push comes to shove - claim that with the help of the Central Bank and money printing “we’ve manage to avoid another Great Depression”. Not so fast. You see nobody, especially the majority in our increasingly irrelevant main stream media, has ever asked the simple question, “at what cost”. We had a chance in 2008 to fix the underlying problem in the UK, debt. Vast, unprecedented world beating debt levels. The cost of government isn’t what it taxes, but rather what it spends. It doesn’t have any money, it only has what it can take through taxes. And if it doesn’t have enough through taxes it borrows the rest, which it must pay for in the future via higher taxes. In 2008 we we’re bumping up against reality for New Labour’s profligate spending and promises. The UK needed to pay off its debts, and there are only 2 honest ways to do this, and one very dishonest. The UK could’ve raised taxes to meet its obligations. But with the outcry over 20% VAT this year it’s easy to see just how unpopular this is. Secondly, we could’ve defaulted, but the banks and bond holders who leant us money would’ve been severely burned - so that was never going to happen. So instead we’ve opted for the third way of liquidating debt. Inflation. This method is tried and tested by governments throughout history, and because of the peoples bad understanding of the causes of inflation, people fail to make the connection between the rising prices and money printing courtesy of the Central Bank. Essentially inflation is a tax, instead of rising your taxes the government with the Central bank just prints up the money to pay down the debt. So the value of your money goes down and the ‘stuff’ you can buy with the same amount of money goes down. It’s exactly the same as a tax in that you now have less purchasing power left over to buy things. just a very dishonest one, and the UK is about to get the mother of all tax bills courtesy of inflation in 2011. We all know the expression “there’s no such thing as a free lunch”. So when we ‘rescued’ the banks and government in 2008, the ‘at what cost&rsquo. We all know the expression “there’s no such thing as a free lunch”. So when we ‘rescued’ the banks and government in 2008, the ‘at what cost’ question was largely ignored. well the people in the UK are about to find out the hard way just what the cost actually is. As our central bank still deceptively talks about DEflation, here are some things to consider that will be happening this year. Can you see the deflation? • Petrol is the highest price ever in the UK - set to rise to £1.40lt by April • Gas and electricity prices set to soar as much as 10% • Anything that attracts VAT (for those that think this doesn’t affect your weekly sainsburys shopping bill because ‘food’ is exempt, think again) is going up 2.5%, permanently • Rail travel up around 13% • Tuition Fees (in 2012) up 300%! • BA fuel surcharge 10% Now lets take a look at the price of commodities today (you know, the stuff that makes all the things we buy), which have a lag time of about 6 months before they are felt by the consumer in the shops. These prices rises are already baked in the cake for 2011. •Do you drink coffee? Highest price in 13 years • Do you take sugar in your coffee? Sugar Price 30 year high • Do you like cheap t-shirts from Primark? Cotton at 15 year high • Do you want anything with electrical wiring in it? Copper all time high • Toast with your coffee in the morning? Wheat prices highest in 2 years. I could go on - but the trouble is, these prices are expected to rise further in the new-year not decrease. Perhaps two more, and our favorites. •Gold price - highest ever • Silver price - highest in 30 years Yeah, clearly there is a severe bout of DEflation just around the corner. Sarcasm off. These price increases are going to hammer corporate margins, especially those who’s business model already operate on razor thin margins (Primark to go out of business in 2011 anyone?). But more importantly, by the time UK citizens have paid more for petrol, more in taxes, more in food, more for just about anything people need to go about their day, disposable incomes for electrical trinkets will evaporate. And the ‘at what cost’ question will start to become clear to the UK citizen. Into these disposable income sapping price hikes, we have unemployment in the UK l evaporate. And the ‘at what cost’ question will start to become clear to the UK citizen. Into these disposable income sapping price hikes, we have unemployment in the UK going the wrong way again. It now stands at 2.5m (7.9%) according to the government numbers. This number is likely to rise as public sector jobs are culled, and private sector jobs are also cut because of the margin compression mentioned above. With already 25% of borrows struggling to pay off debts, throw in to the mix the price rises and more unemployment and look for that number to rise further. How can anyone look at the state of our economy and think we’ve saved ourselves from ‘Great Depression 2.0’? At best we delayed it by a couple of years. What ever you do please don’t listen to absurd argument that as long as wages are ‘sticky’ i.e. not rising you can’t have inflation. I thought that one of the big lessons from the problems in the 70s was to prove how fallacious this argument is. wages in Zimbabwe are pretty ‘sticky’ - how did that low inflation work out for them? So how will our government and central bank deal with this looming problem in 2011? Just before Christmas we had the staggering “plan b” from that unelected mandarin, Sir Gus O’donnell. The talk in Whitehall and Government is that there is a real chance the economy ‘falters’ next year - one wonders why we pay these people upwards of £285k a year to come up with genius assessments like this. What was staggering about the “plan b” memo was that the very first action the government, through the BoE, should undertake. Print more money. Yes you read that correctly, option number 1 in the ‘Plan b’ is to “extend quantitative easing”. A Quick aside, we’re constantly told that the ‘independence’ of the central bank is crucial for a smooth running economy. Question; if it is really independent, then how can an un-elected civil servant put is first action for countering a down turn be “extend quantitative easing”, is that not a decision solely for the ‘independent’ central bank to make? Truth is the idea of independence is just a fig leaf covering the private parts of corporatism in the hope the public don’t notice. Every time you hear someone in the press talk about BoE independence, just replace that word with secrecy and you’ll be a lot closer to the truth - “The independence secrecy of the BoE is vital to the smooth running of the economy”. So the UK policy, in the face of massive price hikes this year, will be to follow the US Central Bank right off the cliff, who have just announced another $600bn of money printing themselves, with the threat of more to come. It is clear now, that in the face of huge cost of living expenses in 2011, the Central Banks will pull its one and only lever, and print and print and print some-more. This completely reckless policy of ‘debauching’ the currency was warned about by the very economist they revere so much. “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distributie the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” JM Keynes. This is a very powerful quote, and one that demands be read a few times to realise just what is being said. Essentially devaluing a currency is a way to steal wealth from the citizens with not “one man in a million” noticing. Remember, we highlighted the fine work over at Hinde Captial who pointed out that on a per-capita basis, the public and private debt of citizen of the UK is the highest in the world, yes, even the US. Being number 1 in the world isn’t always great. The clear policy of the BoE, the Government and now we understand the head of our Civil Service, will be to run those printing presses until those debts are liquidated. Which means a Pound with vastly less purchasing power than it has today. Because we have a fiat (by decree) currency, it doesn’t have any intrinsic value, it’s just a piece of paper with some pretty signatures on it, it only has value so long as people believe and trust that it does. That trust is about to be stretched to the very limit in the coming year. And if we are not careful with our money printing, we run the very real risk of, according to Keynes of “over-turning the existing basis of society”. We are already starting to see those cracks with ongoing riots in Ireland, Greece and here in the UK. 2011 will be a very interesting year indeed. Tom Paterson Chief Economist Tom is the Chief Economist at Gold Made Simple, one of the worlds leading gold bullion ownership and trading services. Tom previously worked as a Broker on a Futures and Options desk at a main brokerage in Canary Wharf and was responsible for the production of “The Economissed” , a research paper tracking Macro themes and trade ideas. Tom is a keen student of the Austrian School of Economics – or as he refers to it 'real' economics – and feels very passionate about the lessons that can be gained by all that understand its guiding principals. Please Note: The articles that are published on our website are provided for background information only. GoldMadeSimple.com cannot offer you investment advice. Any investment you make is at your own risk. Information provided on our website may be out of date at the time of reading and we would recommend that you verify all details elsewhere before making your investment.

Gold Screams a Message - But Are You Listening?

Thomas Paterson, Chief Economist at Gold Made Simple

Tom Paterson Chief Economist at Gold Made Simple

INVESTORS CHRONICLE 15 OCT - 21 OCT 2010

Gold Bullion as a safe haven insurance Gold bullion has always been considered a safe haven, what could be called 'crisis insurance' against unexpected economic disaster. No one likes to think about potential disasters but we still take out insurance which normally comes at a cost. Gold Bullion may drop in value but that is the price one pays for the safe haven insurance that this tangible metal provides. Since 9/11 the risk to our personal safety and financial security has increased dramatically. There is war in Iraq and Afghanistan, atrocities in our cities are bringing terror to our doorstep, tensions between north and south Korea are at an all time high, Iran is suspected of developing nuclear weapons, and peace between Israel and it's neighbours is as far away as ever. Confidence in the banking system and in governments is at an all time low with unprecedented levels of debt and deficit that will take years to rectify. Banks have gone bust and governments are on the verge of financial collapse. Currencies are volatile and the once robust dollar is no longer a sure bet. Plans by governments to reduce debts include radically reducing public spending, massive job cuts, higher taxation and the biggest ever increase in money supply, more commonly known as 'Quantitative Easing'. This 'printing money' program is designed to create more financial liquidity that will hopefully 'oil' the economy and stimulate growth. However it also brings the spectre of massive potential inflation, the erosion of the buying power of cash. There has never been so much uncertainty... Gold Bullion, bought as a crisis insurance, can be sold when you think there are only good times ahead. The insurance could also be free if you sell it for more than it cost you to buy and store. If the price of gold drops and you get less, then the loss will represent the cost of the security that came with holding it. Some people prefer to build legacy and pass it on to their heirs for their protection. Gold Bullion as an investment Gold is a tiny niche investment opportunity in the enormous $150 Trillion world of financial assets. The total value of gold in the world only represents about 1% of this pool. If you gathered all the gold ever mined in the world it is estimated that it would fit as an 18m by 18m cube on a tennis court. Industrial processes consume more gold than is mined every year and so if any anything the amount of gold we have is decreasing. This scarcity of this metal keeps it valuable. Unlike paper money, it can't be printed on a politicians whim. As Voltaire said, paper money eventually returns to its intrinsic value, nothing. The purchasing power of paper money is in constant decline as inflation constantly eats into its value. As an example, the dollar lost over 98% of its value in the twentieth century. Gold's safe haven credentials are not in question but it is not always a good investment if you are looking for growth. If you bought gold at its height in 1980 when gold prices reached over $850/ounce then, adjusted for inflation, you would need it to reach over $2400 today recover your money without any growth or covering the costs of storage. As buying gold pays no interest or dividends and costs money to store, then you either have to hope that it will increase in price or you value its indirect benefits such as its beauty, protection as crisis insurance or its ability to spread risk as part of a diversified financial portfolio. With gold bullion being both a commodity and a financial asset or even money, there are numerous factors that come together to determine its price. It is therefore very difficult to predict its future price. However at the time of writing this article, the price of gold bullion, when adjusted for inflation, is still a long way from it 1980 high. It would need to be over $2400 an ounce to beat that gold price and most would say that the world current economic circumstances are far worse than they were in 1980. Had you invested $10,000 in gold bullion in 1999, your initial investment would have grown to over $40,000 by 2010 - a staggering 300% increase. The same $10,000 investment in stocks of the S&P index would have lost over $1,400. A 14% loss. Bankers, producers and analysts at the London Bullion Market Association conference in Berlin in September 2010 predicted that the gold price will rise to $1,450 in 2011 driven by a lack of faith in central banks' ability to prop up the global economy. There was even talk of $2,000 an ounce. The price of gold bullion has also been fueled by the fact that gold bullion in the form of gold sovereign coins is classed in the UK as legal tender, it is money, and so is free from capital gains tax and therefore very tax efficient.

Gold Forecast to Rally Through The $1,300 Barrier This Year As An Uncertain Economic and Financial Outlook Stokes Investor Interest GFMS released Gold Survey 2010 – Update 1 today, their latest report on the gold market, at a launch in London. The following details some of the highlights of the report from the briefing given at the launch by Philip Klapwijk, chairman of the independent metals research consultancy. The report devotes much space to the critical area of investment demand, as the consultancy sees this as the prime driver of the gold price’s rally during the first half of the year to record highs. Klapwijk noted here, “gold certainly lived up to its reputation as a safe haven in troubled times. Just look at the explosion in investor interest that followed the sovereign debt crisis unfurling in Europe. And it came as little surprise that we saw this interest strongest in arenas with a clear physical link, such as the ETFs, or in regions with memories of currency shock, such as German-speaking Europe”. Other factors cited in explaining investor interest included a shaky outlook for the industrialised world’s economies, the maintenance of low interest rates and the still feared threat of future inflation. One traditional driver of gold strength, US dollar weakness, proved conspicuously contrary as that currency also benefited from a flight to quality and so frequently strengthened in tandem with gold. Update 1 also highlights the critical importance of GFMS’ unique coverage of all aspects of the gold market; despite all this bullish talk of buoyant investment demand, it was, in totality, considerably lower than in the first half of 2009, when financial markets were still reeling in the aftermath of the Lehman collapse. The consultancy feel that the ability of the gold price to manage record highs this year was to a large extent due to the firmer footing of falling scrap and recovering jewellery demand. Klapwijk added, “It’s hard to see how price gains can be truly sustainable when major fabricators like India and Turkey are net exporters of bullion, the position we were in early last year. However, fast forward to 2010, when Indian off take jumped by around 170 tonnes, and you can immediately see how investment had a far firmer base to build on”. Another factor that GFMS see as significant to the rally was the shift in the official sector to net purchasing in the first half, a development chiefly attributable to the collapse in selling by signatories to the Central Bank Gold Agreement. Klapwijk noted, “the material contribution from central banks’ net buying of around 90 tonnes in the first half was itself useful. But arguably of more importance was the broader shift in sentiment - investors for instance could be more confident of solid price gains, knowing central banks were in a sense on their side”. A key element of the Update and the presentation is GFMS’ views on where the gold market might be heading and, on that score, the consultancy remains relatively bullish, with Klapwijk adding, “I think we could easily see gold spike comfortably above $1,300 before the year’s out. We’ll probably get a fair bit of profit taking as we head into the New Year but I wouldn’t take that as a sign that the party’s over - further gains in 2011 are far from out of the question”. GFMS feel that key to ongoing price strength are the extraordinary monetary and fiscal policies being enacted by the industrialised world’s governments in the face of sluggish economic growth, the spectre of a double-dip recession and already uncomfortably high unemployment. Such developments were seen undermining the value of equities or other conventional assets, ensuring the maintenance of low interest rates and stoking potential future inflation. Klapwijk also added, “the US has so far managed to side step the sovereign debt crisis. But that could change in the future and that would undermine the dollar and boost gold”. Gold’s fundamentals were also seen as being unlikely to hinder any rally as robust emerging market GDP growth meant jewellery demand would probably only fall appreciably and scrap rise if prices were to rally substantially. Furthermore, the interplay of these two and the price were seen providing a good floor to the market. This, plus further small scale gains in electronics demand, were seen as sufficient to broadly counter negatives such as the absence of substantial producer de-hedging, the slight rise in mine output and a return to modest net selling by the official sector. The consultancy also added that the risk to its forecast on central bank activity was firmly to the buyside as it was far easier to envisage additional purchases than sales.

Jason Cozens, CEO of GoldMadeSimple has been reading an increasing amount of chatter about gold bullion entering a bubble, that has started as the gold price rises again. So he thought it would be a good idea to once again bring your attention to the fact that, adjusted for inflation, the gold price is still a long way from its all-time high above $2300 an ounce in 1980. The article below focuses on this in more detail: As the price of gold rises and the inevitable quacking begins again about the “barbaric” metal being overvalued, I thought a quick check-in with the historical perspective might prove useful, writes David Galland of Casey Research. The first of two charts that follow shows the long-term picture of gold from 1970 to the present, correctly adjusted for inflation. In the second chart, we overlay the inflation-adjusted price of gold from the last secular gold bull market in the 1970s, with the secular bull market we’re now in. As you can see, if the current bull ends with the sort of grand finale we saw at the end of the last big blow-off, then prices have a long way to go from here. That said, a credible case can be made that this time around, the price could go much higher. For starters, in the 1970s, though not good by any means, the economy was in much better shape than it is today. The chart here uses long-term unemployment as a proxy for that contention. As you can see, at the end of the 1970s, the employment picture was quite healthy. Today, in addition to wildly out-of-control debt on both the private and public levels, we have a massive problem with unemployment and the consequences of a burst housing bubble. Thus, Paul Volcker’s somewhat simplistic solution to inflation – and the trigger for the end of the last gold bull market – seriously ratcheting up interest rates, is off the table. (Since we’re trying to gain perspective, I’ll remind you that at the beginning of the 1980s, mortgage rates topped 18%.) But wait, I heard someone in the back shout, “There is no inflation today!” Wrong, there is unprecedented inflation – properly defined as an increase in the monetary base. What’s missing, so far, is the inevitable consequence of the inflation – steadily rising prices. That will come, and when it does, the government will find it is going into a gunfight with a (dull) knife – because raising interest rates in the Kingdom of Debt will lead to a predictable outcome. Unfortunately, thanks to the inflation, interest rates are going up no matter what the government would prefer to happen, a contention of ours that is now gaining traction in the mainstream. And, yes, up to a point, history shows gold and interest rates moving upwards in concert. Don’t go crazy about buying gold, but by all means, if you don’t own some, begin a monthly program of purchases. While it would be perfectly natural to see the gold stocks give back some of the big gains they have offered since last year’s correction, any further corrections should be viewed as opportunities. But again, don’t go overboard. If you have an investment portfolio with 20% to 30% in a combination of precious metals bullion, large-cap and small-cap stocks, you’ll be well positioned – and protected – for what’s coming. Buy gold bullion at the lowest prices...click here Casey Research, LLC., publishes a variety of newsletters and web sites with a combined weekly audience in excess of 200,000, largely high net worth investors with an interest in resource development and international real estate. Please Note: The articles that are published on our website are provided for background information only. GoldMadeSimple.com cannot offer you investment advice. Any investment you make is at your own risk. Information provided on our website may be out of date at the time of reading and we would recommend that you verify all details elsewhere before making your investment. For independent financial advice (click here)

California Dreaming 160 years since the first global gold bullion rush, the industry is braced for a second. As demand continues to outstrip supply, could things get just as messy for the average prospector? To a typical gold bullion investor today, the date January 24, 1848 may not mean a great deal. But this was the day on which gold was first discovered in Coloma, California, bringing an estimated 300,000 flocking from as far as China and Australia to join in the hunt for the yellow metal. Today, the global gold market is very different. Mining produces relatively little of the world's supply, and instead of risking life and limb, investors can buy at the click of a computer mouse. But despite the illusion of stability, the gold market is teetering on the brink of something very big. Supply is dwindling, and if demand increases as insiders predict, the next gold rush could dwarf those events with a global population dreaming not of fortunes, but of simply not being left behind. So how well should the average investor know their history lesson, and how much time is there left? Golden opportunities One thing is certain, gold demand is going up. Bullion traders are advertising heavily, buyers even more so. Governments all over the world - like Venezuela and Russia, to name just two - are purchasing in massive quantities, and mints are selling coins like their going out of fashion. But they're not going out of fashion, they're simply running out. Supply has been significantly constrained of late, with mine production falling across the world. Economic instability has also played its part, more directly than most realise. When the Greek economy wobbled dramatically earlier this year, mints as far away as the U.S. suffered outages, and instead of providing a steady supply, central banks have been holding on tight to what they've got. European central banks released just 1.8 tonnes at the beginning of 2010, defying a trend that has lasted almost a quarter of a century. It's a trickle that could in the blink of an eye become a torrent. More and more commentators are asking the question 'what happens if demand goes up?' And the response more often than not is 'It's not if, but when'. So what will happen? Only 5% of the world's population are invested in gold at present. All it takes is a nudge for the demand to rocket, and as increasing numbers of investors see the importance of gold in the long term, that nudge seems to be creeping ever closer. But surely high demand is a good thing, for current investors at least? Going, going, gone While mine supply is falling, scrap supply is filling the gap. In fact the total volume of gold available to trade changes very little, the problem is that - as history has shown us rather more recently, 1980 to be precise - under high inflation, hoarding and bulk buying are inevitable, and those without it seek to own it. This kind of mania buying can be worsened by short-term influxes of supply as all kinds of people flog every last ounce of coinage or jewellery they can find. But scrap simply can't keep up with the demand we're already seeing. Central banks aren't selling, they supplied only 7 million ounces last year, a drop of over half. In fact the era of the central bank as a reliable source is more than likely over for good. This kind of shock to the system can create desperate acts, this in turn having repercussions down the line. Many investors will be delighted with these conditions, but a bullish gold price is all very well if you can acquire enough gold to make a profit. Gold has for centuries been a highly desirable long term investment, resisting all manner of depreciative forces that can affect other investments. The phrase Golden Egg is no accident. It's the perfect investment to sit on, possibly for generations. And in a pessimistic global environment, with 95% of the world's population capable at any moment to decide to make gold their long-term financial future, supply is looking fragile to say the least. Recent years have seen some truly extraordinary behaviour in the gold market. The U.S. Mint has been unreliable to the point of running out. The Royal Canadian Mint was almost cleaned out in 24 hours when the market took a turn for the worst, by two German banks. In Australia, and South Africa, similar mass buying has occurred with mints and single shops alike forced to virtually hang a 'sold out' sign on the front door. There is simply no reselling at present, and without a secondary market availability can simply cease to exist. So much so that anyone serious about making a gold investment in the near future needs to start to outweigh the price against the number of ounces they can lay their hands on at all. So what's the rush? Ultimately, the climate of the next 6 months in the gold markets is not clear. But its hyper-sensitivity to seemingly unrelated economic factors anywhere in the world makes it liable to a shift at any moment. Another gold rush is almost guaranteed, though the scale, duration and tone are for now obscure. Being able to make the most if your current investment means reading the signals, and when you get mints making radical decisions, as they have been recently, you can be certain something is definitely up. A century and a half ago, nobody knew just how much gold California had to offer. It turned out to be enormous - worth billions in today’s money - but as the mining became more sophisticated, and technology and corporate financing took over from individual miners, only a few enjoyed the wealth all the 49ers must have dreamed of. Many began the long journey home with little more than they had to begin with, a lesson that is well worth considering by new and small-scale investors today. Get in while the going's good, because eventually the big boys will take over. And when they do, there might not be anything left for a very long time. Buy gold bullion at the lowest prices Please Note: The articles that are published on our website are provided for background information only. GoldMadeSimple.com cannot offer you investment advice. Any investment you make is at your own risk. Information provided on our website may be out of date at the time of reading and we would recommend that you verify all details elsewhere before making your investment. For independent financial advice (click here)

An alternative to buying physical gold bullion is to invest in the shares of companies that are involved in the exploration and mining of gold. Analysts consider this to be a more risky investment, as the chances of making a large return on your investment will depend both on the price of gold price and the success of that company. However, in theory as the price of gold bullion goes up, so too does the value of gold mining shares. As this is a highly technical area, f you are considering this kind of investment we recommend doing plenty of research on the industry and speaking to an experienced financial advisor. As with all investments, financial advisors would encourage a diverse portfolio, so it is prudent to consider a complimentary investment of gold bullion too. Overall, though an investment in mining shares can be quite risky, it can provide a very good return on investment. Please Note: The articles that are published on our website are provided for background information only. GoldMadeSimple.com cannot offer you investment advice. Any investment you make is at your own risk. Information provided on our website may be out of date at the time of reading and we would recommend that you verify all details elsewhere before making your investment. For independent financial advice (click here)