#Gold: The investment for those who saw it coming - Mineweb.com

why a disbelief that it would happen was partly responsible for the financial crisis and the reason behind many a decision not to invest in gold

Gold: The investment for those who saw it coming

Adrian Ash looks at why a disbelief that it would happen was partly responsible for the financial crisis and the reason behind many a decision not to invest in gold.

Author: Adrian Ash
Posted: Thursday , 13 Sep 2012 LONDON (BullionVault.com) -
And what do you do? - I ignore the biggest bubbles in history, ma'am...
SO, LIKE the Queen asked, why didn't anyone see it coming?
"At every stage," replied Professor Luis Garicano, showing Her Majesty the LSE's new £71 million ($140m) faculty building in November 2008, "someone was relying on somebody else and everyone thought they were doing the right thing."

The British press snarled and barked at his sorry excuse for an answer. But given a few days - and then a few months, and then a few years - the economics profession finally got its explanation together...
"The simple response is that many people did see it coming."
  - Prof.Garicano, defending himself in The Guardian a week later

"Many people did foresee the crisis...but nobody wanted to believe [it]."
  - Open letter to the Queen, summarizing a Royal Academy seminar of experts, July 2009

"The answer is extremely simple: no-one believed it could happen."
  - Mervyn King, governor of the Bank of England, BBC Today lecture, July 2012 (no doubt reprising his own 2009 audience with Her Majesty)
So many people, such simplicity! But oh, so much disbelief too!

Contrary to what celebrity-economists would have you think, most people did in fact see the crash coming. Ask anyone you know. I promise they'll say they knew what was coming. It's just that, well, they didn't do anything about it. It wouldn't have been a crash if they had. Because they would have got out of the way, or - if they had any say in the matter - they would have done something (raising interest rates, trading more cautiously, reining back lending standards) to stall the bubble long in advance.

But contrary to the professionals again, a few people most definitely did believe it would happen. What else do you think drove the 150% rise in gold and silver investing prices in the half-decade before Northern Rock blew up? Reviewing global finance in the August 2007 edition of his Gloom, Boom & Doom newsletter, Marc Faber - a long-time advocate of buying gold - listed 13 clear warnings of trouble ahead, starting with the 2001-2006 period.
"Ultra-expansionary US monetary policies," wrote Faber of Alan Greenspan's response to the Tech Stock Bust, "with artificially low interest rates lead to bubbles all over the world and in every imaginable asset class.
"First Warning: The price of gold more than doubles..."


That red line marks the credit crunch of 9 August 2007, which all too rapidly for the all-knowing disbelievers became the Northern Rock bank run of 14 September. Over the preceding half-decade gold and silver had doubled in price. Over the following 5 years, they've both gone on to triple again.

So being early was smart - or lucky...or just doom-n-gloomy...depending on whether or not you got in. But buying even as the crisis broke has seen gold and silver investing deliver as expected, albeit with ugly swings in the meantime just to keep new buyers on their toes.

"I realised early in 2007 that the economy was going south," writes John, a BullionVault user since September 2007. "I had an endowment that was going sour, so I cashed it in and bought my gold."

Phillip, who also began buying gold when Northern Rock hit the headlines - 5 years ago this Thursday - says that "The high level of personal and public debt had concerned me since 2004, and I realised that there was only one solution: money printing and currency devaluation. But it was only in 2007 that I found BullionVault and saw how simple it could be to own gold."

"Given what's happened in the last 5 years," adds Armand, a British user of BullionVault since September 2007 who now lives in Spain, "I'm surprised more individual investors haven't bought bullion as a direct result of the crisis.

"I'm not a doomer, it's a question of confidence. To me, owning gold and silver is the only option in a financial environment heading for collapse in one of two ways: rapid, unexpected hyperinflation, or a long, drawn-out decline."

Now, that kind of gloom might sound all too common today. Newspapers and their comments section are after all full of savers moaning about zero interest rates, politicians panicking over money-printing, and economists and investment strategists fretting about hyperinflation. But look again at the first 5 years of this financial crisis. How many of the new know-it-alls - who now say they saw it coming - have actually done something about it, and chosen to buy gold or silver, the best-performing asset class by a country mile since 2007's credit crunch began?
Sure, precious metals might be edging into the presidential debate. But amongst investors and savers, they remain very much a minority sport. No doubt because, quite simply, no one really foresees the crisis continuing. And amongst those who do, no one believes it. Not enough to take action.

To quote The Economist magazine's Free Exchange blog, 11 September 2012:
"We have learned that in most situations central banks are more than capable of controlling inflation on their own. Markets [today] show no sign of a fear of looming high inflation.
Phew! That's alright then. Economists and the financial markets don't believe there's a problem.Adrian Ash is head of research at BullionVault - the secure, low-cost gold and silver market for private investors online, where you can buy physical gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
Gold: The investment for those who saw it coming - INDEPENDENT VIEWPOINT - Mineweb.com Mineweb

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#Zimbabwe withdraws 340 EPO's to stop "imposters" #Mining

They'll start working the concessions when Mugabe leaves....

Zimbabwe withdraws 340 EPO's to stop "imposters"

Published Date: September 06, 2012

Source: miningne.ws

The Zimbabwean Government's recent withdrawal of over 340 Exclusive Prospecting Orders (EPOs) applications for several mining and prospecting companies could not have come at a better time to stop “impostors” holding on to the orders for speculative reasons.
The move by the Mining Affairs Board, a quasi-government unit responsible for the allocation of mining rights, to withdraw the EPO applications after the realisation that no prospecting had taken place represents a bid by government to deal effectively with speculative holding of mining rights in the capital-intensive sector.
EPOs are mining rights which are issued by mining companies to explore possible mineral deposits in different parts of the country. Among major mining companies whose orders were withdrawn were RioZim, Ashanti Goldfieds, African Gold and Metallon Gold Exploration.
There is no denying the potential that the country’s mineral sector has and its impact on the turnaround of the economy. But this will only happen if those holding claims start making use of them and not keeping them for no other reason, but to gather dust in their cupboards.
For years on end the government continues to argue that it has the potential to be one of the leading economic powerhouses on the continent, but that hasn’t happened.
We believe the revocation of the licences will send a strong signal to other companies that are yet to explore their claims that it’s time they acted knowing failure to do so will result in them losing their claims.
The sector, which is in recovery mode, contributes over 50% of export earnings at $1,8 billion, and employs over 45 000 people, excluding small-scale miners.
The contribution of mining to the gross domestic product, according to official figures, increased almost three-fold to over 11% from 4% in 1999. The mining sector is expected to grow by 16,7% in 2012, driven by strong growth in gold, platinum, nickel, coal and chrome output.
Indications by Nadia Piffaretti, the World Bank senior country economist for Zimbabwe, are that the sector could create more than 30 000 jobs and attract $15 billion worth of investment by the year 2018, driven by a projected growth in gold, coal and chrome output.
Given the above scenario if all claims lying dormant could be made use of, Zimbabwe’s economy could place itself on a successful recovery path.
Zimbabwe has over 40 base minerals and the second largest platinum reserves in the world after South Africa.
According to Piffarett, the country, which recorded its first positive economic growth rate in 2009 after a decade-long economic contraction, failed to take advantage of a global boom in mining prices.
We believe it’s time the abundant resources are fully made use off for the full benefit of the nation.

miningne.ws: Zimbabwe withdraws 340 EPO's to stop "imposters"