Thursday, July 08, 2010
Text Size:

From Richard Russell in Dow Theory Letters:

…As I’ve said a thousand times, Fed Chief Bernanke will absolutely not accept deflation…

Shrewd gold-accumulators are well aware of [this]. As the deflationary and deleveraging forces press on the US economy, the Bernanke Fed is ready to devalue the US dollar in its (“whatever it takes”) battle to hold back deflation.

Let’s boil the whole thing down to three sentences.

(1)The Fed will not tolerate the growing forces of deflation.

(2) To combat the deflationary forces, the Fed will devalue the dollar by printing trillions more of Federal fiat money.

(3) Once it is realized that the Fed is on the path to devalue the dollar, there will be a panic to buy and own gold.

http://www.thedailycrux.com/content/5198/Richard_Russell

July 7 (Bloomberg) — Gold demand in China, the world’s second-largest consumer, gained in the first half as government measures to cool the property market and falling equities spurred investment demand, the Shanghai Gold Exchange said.

The total volume of gold traded on the exchange jumped 59 percent in the first six months from a year earlier to the equivalent of 3,174.5 metric tons, said Song Yuqin, vice general manager at the exchange. Silver turnover soared more than fivefold, Song told a conference in Beijing today.

Gold surged to a record last month as investors sought to protect their wealth against the market turmoil caused by the European sovereign debt crisis, including declining currencies. Song’s remarks add to signs that investors worldwide are boosting holdings of the commodity.

“Gold- and silver-trading volume expanded sharply in the first half of this year because a declining stock market, the government’s efforts to cool the property market and the general volatility in the global financial market have all fueled the investors’ enthusiasm,” Song said.

Gold for immediate delivery has risen for nine years and touched an all-time high of $1,265.30 an ounce on June 21. The metal, which traded at $1,190.35 today, may surge to more than $1,300 an ounce in the second half, GFMS Ltd. Executive Chairman Philip Klapwijk said in Beijing at the same conference.

China’s Demand

“I expect China’s gold demand to rise by 11 to 12 percent this year to 440 to 450 tons because Chinese investors have shown their willingness to buy more when prices are on the rise,” Hou Huimin, deputy secretary-general at the China Gold Association, said today by phone. “I expect prices will rise over the remainder of this year and next year,” said Hou.

Chinese authorities intensified a crackdown on property speculation after announcing the economy expanded at an 11.9 percent annual pace in the first quarter, the most since 2007. Measures have included raising minimum mortgage rates and down payment ratios for some home purchases. Officials may also start a trial property tax, according to state media.

The efforts have contributed to a slump in Chinese real- estate sales and sent an index tracking 34 Shanghai-listed developers down almost 30 percent in 2010, even as prices kept rising. The Shanghai Composite Index is Asia’s worst performer this year, tumbling 26 percent.

Sales of gold products such as bars and coins by China National Gold Group Corp., owner of the country’s largest gold deposit, jumped as much as 40 percent in the past six months, Song Quanli, deputy party secretary at the company, said today in an interview. “We have witnessed some really good sales in our retail outlets,” said Song at China National.

China’s gold output may rise about 5 percent this year, solidifying the nation’s position as the world’s largest producer, China National’s Song said. China produced 313 tons of gold last year, the executive said.

–Feiwen Rong. Editors: Jake Lloyd-Smith, Richard Dobson

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

The financial freedom I am building is mainly for the time freedom that will allow me to enjoy these adventures.

I realize that the mobility of an Internet based business will provide me the convenience of being able to grow my residual income from about anywhere in the world where there is a wifi connection. I like the idea of this.

Although I love real estate, and know that it will eventually play a huge part in my growing assets, I have decided to build a residual and ongoing income through online Internet marketing first so that I can easily travel and grow my business at the same time while I am young.

Since traveling and exploring is one of my main passion, I realize I must take action now.

I went to the Real Estate Auction today which was held at the Dallas Regency Hotel, after staying up late and getting about 2 hours of sleep.

The auction was awesome and exciting. It’s really sexy.

My endorphins were flowing from all the energy buzzing in the room.

Some of the properties I had gone to see went up for bid, but the bids all passed the amount of cash I currently have to invest.

The good news is that a friend of mine from the mastermind group says he is willing to loan me some dough at hard money rates as long as there is good equity in a deal.

Next time the auction comes to town, I want to ensure that I have gone and investinated alot more of the properties and come up with a proper maximum bid for each. Also, to have all my financing ducks in a row so that when I hit the auction, I am ready to move.

My credit is still getting cleaned up, but have gotten a few things cleared off since my last attampts and my credit score went up about 27 points. Still trying to clean it up so I can qualify for some conventional loans.

It’s great that I have access to hard money to aquire the properties, but I anticipate needing to be appoved for a conventional loan when I intend to hold these properties as cash-flowing rentals.

The 11 Forgotten Laws

-Robert Kiyosaki

Since they are in the business of lending, and not home ownership, they are doing what they can to rid themselves of all these vacant houses they have had to foreclose on.

One way they have come up with is to host these massive auctions and invite members of the public through media advertising. These auctions are not just for investors anymore.

Anyhow,  one of these is being hosted here in Dallas at the end of the month.

I figure I’ll go look at some of the houses, and go check out the auction. Although my current investment capital is still under $10,000, I figure it can’t hurt to take some action anyhow.

Whatever the case, it will be good learning experience, I will probably meet a few good contacts at the auction, and who knows if it’s in the cards- I may even walk out of the auction as the owner of a new property that I own outright.

The 11 Forgotten Laws