Christmas time is here
Happiness and cheer
Fun for all that children call
Their favorite time of the year
This year, I spent a lot less money on Christmas gifts and a lot more on putting myself in a better position to prosper in 2012. Lately, I watch over my money like I gave natural birth to it, now that I bought a new money pit (a house). The goal is not to obsess, but to learn it, how it does and does not work so that college financing won’t be as burdensome on my daughter as it has been on me. We want better for our children don’t we?
I don’t usually forward information that I get from certain newsletters because I pay big money for it, and I respect the business model (most of the time), however, there are some very immediate pitfalls staring us in the face at the start of 2012 due to our no-compromise – I don’t-care-if-it-leaves-them-in-the-food-line-congress. In light of this I want all my family, friends and readers to be protected.
The fact of the matter is, most people won’t listen to most advise, even if it sounds good. It’s just human nature so I know better than to take it personal. People don’t take action until they are minutes, even seconds from total destruction. It’s unfortunate that we are this way. On the other hand, with all the clues on the page I might get through to a few who are watching the global pulse and realize the significance in clamping down on their wallets and placing their paws on a bit of ore for insurance against the tanking American dollar.
My Christmas gift to you is this short message from one of the newsletters I’m a paid subscriber of called The Growth Stock Wire, written by Jeff Clark. Take it in and think about it before you buy one more toy or sweater or ipod or blinking inflatable California Beach Lawn Santa…
The Most Compelling Reason to Own Gold
By Jeff Clark
Investors woke up yesterday morning to the news that the European Central Bank (ECB) had performed a "Bernanke." The ECB announced it was giving away free money to European banks through something it called Long Term Refinancing Operations (LTRO). Everyone else should call it Let The Ripoff Occur.
The operation is based on the principle that nobody wants to hear the ear-piercing screams of heroin addicts suffering through withdrawal, drowning out the soothing sound of Christmas carolers. So the ECB is providing more drugs to the European banks just ahead of the Christmas holiday.
Here's how it works…
The ECB is lending long-term money to European banks at 1% interest. Those banks can then pay down their existing short-term debt to the ECB. Or they can invest the money in longer-term European sovereign debt and collect 5%-plus. Or they can simply hang on to the funds and make their balance sheets look more attractive.
Under these conditions, it's no surprise the banks jumped at the chance to borrow money and did so to the tune of nearly $500 billion. After all, if you were offered a chance to refinance your mortgage at 1%, wouldn't you do it?
But the real question is… Where did the ECB get the money for these cheap, long-term loans?
The answer, dear reader, is from the same place our own Federal Reserve got its money for quantitative easing parts one and two. It printed it out of thin air.
I cannot imagine a more compelling reason to own gold right now.
Yes, the shiny yellow metal got clubbed last week. And yes, there may be a bit more downside. But with the ECB now borrowing the heroin-filled syringe of the Federal Open Market Committee, any dips in the price of gold are like early Christmas presents – unexpected and tremendously appreciated.
Banks pay 0.10% interest on savings deposits. The broad stock market is marking time, and will likely do so for a few more years. Long-term U.S. Treasury bonds pay 3% interest.
I can't imagine a more opportune time to buy gold. You should look at last week's weakness as a Christmas gift. Be thankful for it.