We caught up with Austrian Economist and author, Robert Murphy, at Freedom Fest to chat about his newly released book, Choice and the current state of currency and banking.
Monthly Archives: July 2015
China finally updated their official gold holdings on Friday, revealing a 57% increase from the previously reported figure, but less than what most analysts were expecting to see. China’s gold reserves totaled 1,658 tonnes at the end of June of this year, up from 1,054 tonnes reported in April 2009. Bloomberg had previously estimated their holdings could be as high as 3,510 metric tonnes based on trade data. While disappointing to many gold investors, the spot price of gold declined only slightly on Friday.
Although the release was welcomed, as many have been eagerly awaiting an update to China’s data, it may have raised more questions than it answered. For example, China had been “releasing” data previously, but reports showed no change in the gold reserves every single month for six years. Therefore, the data was false. According to their official release, it now looks like China increased their gold reserves by 600 tonnes in one month, which cannot be true as the spot price of gold could not have declined as it did with that much buying.
President of the Foundation for Economic Education, Larry Reed, was a great friend and colleague of Jim Blanchard’s. We had the chance to meet up with Larry at Freedom Fest 2015 and talk about the impact Jim Blanchard made on the lives of many…hundreds of millions to be more exact.
Last week, the U.S. Mint sold out of its 2015 American Eagle silver bullion coins, citing a ‘significant’ increase in demand, according to Reuters. This also coincided with the drop in silver spot prices from $15.67 per ounce to a low of $14.62 per ounce last Tuesday. Silver hasn’t seen spot prices this low since 2009!
Given the decline in silver prices, it is not surprising to see the surge in demand for physical bullion. Contrary to the actions of futures traders who normally don’t take delivery of the physical metal, bullion investors tend to buy more when the price declines, viewing it as a buying opportunity. Managed futures traders and other money managers may instead be trading based on momentum or other strategies that are not related to an actual desire to own the physical metal.
The U.S. Mint has temporarily run out of silver bullion coins in the past, as they did last November through the end of the year. In this case however, the Mint said they expect sales to resume within a couple of weeks.
Looking at the American Eagle silver coin sales data on the U.S. Mint’s website, we can see demand has indeed been strong in the past two months. In June, the Mint sold 4.84 million 1 ounce silver coins; 80% more compared to June last year. In addition, July sales of 2.7 million ounces have already outpaced last July’s 1.975 million ounces, despite us being only half-way through the month. However, year-to-date silver sales are still slightly behind last year.
I have a big gripe with financial advisors, namely that they howl endlessly about saving for the future. While I don’t want to minimize the importance of this, I do believe that the word ‘savings’ has a broader meaning for those of us who ascribe to the importance of livimg For today.
Either way, the end goal is to spend less than you earn. And there are plenty of often-overlooked ways to do this, as I will now share with you:
1. Increase Your 401K & SEP IRA: OK, call me a kiss-up for wanting to make good with the financial advisory world that I just smacked down! But it does make sense to build a savings nest through a defined contribution plan such as a 401K (if you are a W-2 employee) or a Simplified Employee Pension (SEP IRA) if you are self-employed. Both offer a great way to tuck away a few dollars, combined with significant tax savings.
Last month we wrote about the Chinese stock market bubble that was being inflated, largely by delusional retail investors and easy access to margin and debt. But it wasn’t as if something was in the water – Chinese Mom-and-Pop investors were being egged on by their government to invest in the market as the central planners tried to juice economic statistics, bail-out heavily indebted state-owned firms and turn attention away from the sagging real estate market.
Unsurprisingly, the government-fueled rally is coming to an end as both the Shanghai and Shenzhen Indices have crashed over 30% in less than one month! Approximately $3.9 trillion has been wiped out, more than the total annual output of Germany and 16 times Greece’s GDP, to put it in perspective.
Over 1,400 Chinese companies have suspended trading, which is almost 50% of the market. Some of this is due to stocks hitting maximum daily decline limits imposed by the exchange, but much is due to the companies themselves halting trading. This is because these companies were using their own corporate stock to collateralize or secure loans from banks.
A correction of 30% would actually be somewhat normal and healthy in any market that has