MORO – Arhiv novic – MARKET ANALYSIS OF INVESTMENTS AND THE FUTURE OF GOLD; a guest comment

Wij present an interesting guest conformity (written on the 5th September 2011), spil part of a series of articles published from March 2010.

Orginal article, one of the most visited on our web pagina, you can read HERE.

Each kleuter of savings investment has risk. Consider the following dangers that could affect individual investments.

Savings deposited te banks devalue continuously overheen time, despite the promise of rente, which te real terms does not match the official rate of inflation, so that actually te only a few years the value is totally dissipated. The only real beneficiaries of your savings are the top officials of the deposit taking institutions who love an extreme increase ter individual wealth, through salaries and bonuses, augmented by access to credit at unrealistic rates, including individuals who despite incompetence or fraud ter their political background manage to reap high financial prizes from their deeds. They often obtain themselves good position te banks.

For those fresh readers who have not read my article published ter May of 2010 on this webstek, I recommend reading professional books written by dr. Darko Darovec, ‘Taxes are squeezing us to bleed’ (‘Davki nam pijejo kri’), published ter 2004, which talks about fiscal policy of the Venetian Republic and its influence on the economy ter North- Western Istria.

Part of the book refers to the operation of urban lending institutions (the city corporations of Izola, Roodkoper, Piran, Rovinj, Porec) which encouraged all citizens to invest money ter them, but this money benefited mainly the privileged noble ruling classes. Could you recall the similarities? Even there and then loan institutions had the occasional losses, but they did not “increase the capital” of the city budget by introducing fresh or higher taxes.

Words should not be wasted on this type of investment savings. It is enough that I repeat statement from an article published ter May 2010, that after the 1929 stock market crash, population of USA did not invested te Stock Market until the end of World War II 1945.

Investing ter Property

Certainly the importance of property investment goes before that of investment ter gold, but only to the degree and amount that is suitable for your individual residential use.

Investing ter real estate with the aim to rent them are very bad decision, spil the profit don’t rich official annual inflation rate. Property also has problems with judicial recovery of unpaid rent and judicial eviction of non paying tenants. Selling real estate is a similar ingewikkeld nightmare. Revenue ter this area generated by the purchase of agricultural land, and then switches ter the permitted usage of the land are more or less reserved for the feudal classes of our time.

Even with investing te gold wij face dangers that are typically much larger, spil the usually investor te gold has some formal education te economics.

The main danger is listening or paying attention to or receiving advice from the different (individual) banking and stock market consultants who have an economic education. They very professionally assure potential investors that investment te gold is not profitable, and that it is much better and safer to invest ter their institutions. There is also going around a campaign of informing the public through the media, which provides false information about the comebacks of gold. Some weeks ago wij witnessed article te ‘a professional katern from a well known newspaper’, where they wrote about investments, also about gold and stated that investment ter gold this year wasgoed lucrative by only 6%. Example: On 4th January 2011 the purchase price for 1 kg of gold wasgoed € 34 565,Nineteen and on 3th September 2011 at 15.15 pm the price of gold wasgoed € 42 786,52. According to my calculations, the difference of € 8 221,33 wasgoed at that time 23.78 %, rather than 6 % spil claimed by ‘the professional newspaper’.

It is necessary to understand that thesis consultants are paid according to the amount of money that they receive from customers, and that they have only one task, which is not to provide for your welfare, since it is contrary to the interests of the banks and its ancient system that favours the ruling elite of the time .

For your own fortune you should take individual charge, by adequate education and mostly by thinking for yourself.

The 2nd danger is subject to emotions of the investor. When a potential investor sees the price of gold, he often determine that the current price is too high, and determines not to buy now, but will wait for better times and lower prices. When the prices do not fall, but are steadily rising, because of his previous evidently wrong decisions, the investor determines ter anger not to buy again. Now, because of frustration about missing an chance to make a petite profit, each subsequent day becomes another missed chance.

At the same time investor is not aware that savings represent the results of his work te the past and with this decision he gives away the achievement of the past to those who are devaluing money and currency. Such persons usually never invest ter the gold.

The third danger I call the balance-sheet effect. Obviously, a formal economic education, especially if it is enhanced with an academic and even with an international title, presents a serious obstacle to investing te gold. The greatest danger is that the people with such education avoid falling ter the trapje of getting help from private advisers and they do make their own decision to invest their savings te gold at a time when its price is (too) high. When the gold price increases, they sell the gold only to increase nominal balance-sheet profit eyeing only the difference inbetween buying and selling price.Their deeds is obviously guided by a subconscious drive, obligation, that they should at the end demonstrate profit te concrete numbers or ter the sound of bankgebouw notes. They do not realise that they would make the best profit by not selling the gold. Most likely, because of the company’s positive balance-sheet they are expecting (Pavlovian conditioning) financial prize?

After a while, when the price of gold rises above their selling price they are psychologically not able to buy more. Buying more at higher price would mean witnessing crimson numbers on the balance-sheet and would get them less gold than they had earlier.

People with an economic educational background have engraved ter the brain a rule not to buy spil the prices are on the rise. The gold price had risen for more than 110 years usually at 6 % vanaf annum. Because of the continuous price rise for gold, there wasgoed never a good time to invest, timing wasgoed always inappropriate for them.

Risk that the price of gold will fall, almost does not exist, at least not yet!

From the information available to mij, the year on year price of gold from 1901 onwards indicates an almost onveranderlijk increase, which fell only once, and that after almost tripling ter 1980, after the invasion by the USSR of Afghanistan. But even that final fall ter the price of gold stopped at a higher level than the previous highest point.

The golden rule, which wij discussed te an article ter February this year is that the investment te gold is not to be sold at the time of apparent daily high prices for fictitious profits. Strafgevangenis for the momentary fall ter prices compared to a few months ago. One does not sell gold for the purchase of unnecessary luxury goods or the establishment of a profit. Gold should be sold only when it is life essential.

One buys gold with all available means and not only with surplus wealth.

Ter gold one does not invest to make a fortune (this happens through the years by itself), but to protect the real value of one’s own savings, and the earnings from work spil I already stated ter an article ter May 2010.

Gold overheen the centuries always voices the same value compared to the same goods. This last statement is slightly untrue recently. Te the article written ter May 2010 I stated the fact that overheen millennia, it costs the same price ter gold to buy a house or clothes. Ter ancient Rome, a house cost about 12 kg of gold, a tunic and sandals cost an ounce of gold. Te 2010 this wasgoed still true. Today, no longer.

The price of goods compared with the price of gold fell significantly. Now the price of houses ter Ljubljana and the surrounding areas is approximately 6.Five kg of gold (by price gegevens Slonep). The price of an ounce of gold has already reached € 1,388.54, which exceeds the normal price comparison for the standard guys’s suits, underwear, shirts, ties, socks and footwear (not luxury products).

Here wij are very likely not talking (only) about the price effect of the current debt depressie, but more likely about economic fact, which is mentioned ter the book OSNOVE EKONOMSKE ANALIZE I POLITIKE (FUNDAMENTALS OF ECONOMIC AND POLITICS ANALYSIS), Publishing house Zagreb 1979, pagina 149, written by our dear late professor doctor Aleksander Bajt. The same topic wasgoed mentioned te newspaper Delo attachments by Bostjan M. Zupancic. Ter this chapter, Bajt writes about price indices of the time, where from long-term price fluctuations te the USA from 1790 to 1900 goes after, that prices of goods fluctuate, but the trend of prices is downward.

This kleintje of movement wasgoed already known before the beginning of capitalism and it is estimated, that exactly the amount of gold which had arrived from the colonies to Europe, can be calculated from its influence on the movement of prices of common goods. Gold based currencies were meant to avoid price oscillations but their bankruptcy after World War II is responsible for inflationary price rises of goods (but of course not of gold).

Bajt also warns that the US dollar lost Three/Four of its value inbetween 1914 and 1979.

I recently came across information that the German Mark lost 98 % of its value from its inception until its replacement by the Euro.

On the 1th September 2005 the purchase price for 1 kg of gold wasgoed € 14,984.00 (Trio,591,000.00 SIT). If you had then invested ter gold the value of a property (apartment), and you didn’t buy the property, with the sale of the gold today you could buy almost Three properties (apartments), (and with that your gains would zekering, so you should not do that, but keep your gold).

Ter the future, the real prices of goods will be falling, except food, health services and education. Gold prices will be rising:

  • Depending on the amount of the fresh money te circulation,
  • With introduction of inflation, which is now “assured” te the USA, and will also go after ter the EU,
  • With the political problems ter the EU – switch of currency, switch te organisational forms,
  • With the fresh quantities (foreign exchange) of reserves ter gold for the individual countries.

This last voorwerp wasgoed marked te an article already te 2010 spil one of the major influences on the price of gold ter the future. That’s exactly what has happened this summer.

At a time when the gold price wasgoed stagnating or slightly declining, two countries have bought gigantic quantities of gold, which shoved the price of gold sky high ter only three weeks. Thus, on the one forearm there were enormous quantities of USA dollars on the market and those countries have taken from their reserves and bought gold with them, on the other arm, there has bot a physical deficit of gold te the world market.

China, which doesn’t uitvoer the gold, but only imports, is a special fact that will ter future have a big effect on the rise of the gold price. Their politicians have made a formal request to become members of the London Stock Exchange for gold. Te this they will eventually succeed.

On the other mitt, there is another phenomenon arising. The amount of jewellery on the market is rapidly enhancing, which is certainly a sign of poverty, is creeping into our western civilisation. The amount of gold that individuals privately buy is reducing ter quantity (but voiced ter nominal currency is enhancing). What is causing this? The explanation is very plain. Our income introduced ter gold is ter decline.

This is information on the selling price of gold ter the MORO company and gegevens on average televisiekanaal earnings, from the Statistical Office of the Republic of Slovenia.

Date / purchase price of 1kg of gold / the average nipt monthly salary / ter gold

Feb 2006 37850,00 SIT 180193,00 SIT 47.60 g

Feb.2007 16840,00 € 815,68 € 48.43 g

Feb.2008 20167,00 € 864,43 € 42.86 g

Feb.2009 23413,55 € 917,15 € 39.17 g

Feb.2010 25735,29 € 936,77 € 36.40 g

Feb.2011 31936,37 € 971.83 € 30.42 g

From the foregoing statement wij could see how many grams of gold wij could buy ter individual years with the average televisiekanaal salary te Slovenia. Ter February 2011, wij have with our salaries earned only 64 % of gold value, compared to 2006.

Considering that on the 5th September 2011 the selling price of gold wasgoed € 43,844.62/ kg, and that from last known gegevens the average salary te Slovenia ( May 2011) wasgoed € 982.99, wij see that now wij could buy only 22.42 grams of gold or only 47.11 % of the assets from 2006. So wij work and earn te a day less than 1 g of gold.

Let’s look back ter time.

From the book written by dr. Darko Darovec it shows up that ter 1284 the price ratio inbetween gold and silver wasgoed 1:12, te 1252 wasgoed 1:Ten, te 1305 wasgoed 1:14 and then again ter 1326 wasgoed 1:Ten. Today it is around 1:43.

From the book written by dr. Vasko Simoniti and dr. Peter Stih it emerges that wasgoed average worker’s wage ter the years 1500 to 1700 wasgoed inbetween Legitimate to 22 grams of silver vanaf day. On average wij can say about 20 g vanaf day. Vanaf month times 25 (there were no free Saturdays), which calculates to 500 g of silver or 41.66 grams of gold at the then applicable average exchange rate of 1:12.

Therefore, a Middle Ages worker wasgoed earning Two times more te gold than a televisiekanaal average salary today te Slovenia.

Ter the same way your life savings depreciate ter value, unless invested ter gold.

The situation elsewhere ter the EU is not significantly different. Not only that the salary te gold reduces, but there is also a very high unemployment problem for youthfull people, which gravely shows that they will live with their parents for a lifetime. The parents are taking care of children which is furthermore reducing the possibility of savings

This phenomenon has historically bot known and the late professor dr. Vilfan talent a lecture at PF te a chapter on the big family. The example is where under the same roof are living three or even four generations of the same family. This wasgoed conditioned by the economic situation at that time. That phenomenon with higher living standards leisurely disappeared.

This will undoubtedly result te a decrease of the quantities of gold, which will be purchased by people te the EU. The largest percentage of such purchases should be happening ter Germany, Austria and Slovenia. The price will not be affected by decline of purchases, because the price will be influenced by big multi ton buyers. Ter the future wij could expect more regular ondergrens monthly rises te prices of gold, still te the framework or above the level of rente rates for loans, and individual explosive leaps, which will triggered by the big players te the market.

The gold price ter the amount of € 100,000 vanaf kg overheen the next four years is no science fiction but a very real possibility and it may toebijten sooner.

Because of problems with the economy and the banking system, countries will not be able to more earnestly affect the gold market, thus lowering the price of gold. If that mistake wasgoed to be made, (an artificial reduction te the price of gold), the market would be flooded with an amount of money which would buy up the undervalued gold, and then its price would rapidly rise again.

All this may seem a good sign for investors ter gold.

I estimate such movements of gold spil an ill-omened forecast for the gold price ter the future, regarding the state of society. I would choose that the gold price stay te the framework of natural comebacks, that is Three to Four % vanaf year spil te nature (forests, fields, orchards).

On the future and with this history, wij can not have influence.

Thus, this unluckily leaves us with only one option and that is to have insurance by saving te gold. Only te this way wij’ll be able to afford much needed goods spil food and health services spil wij get older. Services that wij are familiar today, will cease overheen next Ten years. All will be paid toegevoegd.

No one will care for us, so wij have to do it ourselves.

Unluckily, only an unchanging 6 % fortunate minority of the population invests te gold. A survey indicates that 8 procent believes that investing te gold is good.

By the end of the year the purchase price for 1 kg of gold could come close to € 50,000.

Ter the future people will be divided into two categories, those who have gold and will be able to take care of themselves, and those who do not have it and will live ter real life distress.

The gold price is most likely one of the most fair things ter the world market, reflecting a most realistic value of any individual goods, and there is almost no speculative influence on it. Gold itself is the highest form of materialised solar energy and it is located at the highest point of (economic) pyramid.

Te hope that you will fall into the very first category. Zuigeling regards until the article te 2012.

(Guest author, lawyer and pro te finance)

The article is copyrighted work of writer and does not reflect the opinions of Moro company.

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