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Date: March 19, 2012
Subject: Central Banks Are Buying Gold ... Shouldn't You?



This is
G&G Associates
Tax & Financial Consulting Services
e-Newsletter

When Central Banks Are Buying, So Should You

Karibu (Welcome) G&G Readers,

Last week I sent you a preemptive analysis on why I’m buying Gold and why you should be buying it as well. If you missed it … no problem. Just click on the link below and surely read it I’m sure it’ll be worth your time.

For full article, click on link below:
http://db.tt/OBhPpvYK

But, when the charts say so…and the banks are doing what they tell you not to do … I ask you this question? What are you going to do?

Below is confirmation from another financial analyst I follow to give you some of the same herbs I tried to give you last week to help you protect your portfolio. But, the herbs only work if your exercise your mind and realize you need to protect yourself from getting sick. In this case, protecting your financial portfolio. {Did you like that analogy…lol?}

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By: Andy Hecht

The decade-long rally that took the price of gold from $255 an ounce all the way up to almost $2,000 is not even close to being finished - in spite of efforts by governments to keep precious metal prices down.

But here’s the deal - try as they might, market forces are at play and precious metal prices will rise, whether the governments likes it or not. And, governments themselves will be influential buyers once again in 2012!

Holding gold as an asset is nothing new. Over the course of history, this shiny, yellow metal has intoxicated many.
Even though gold went out of vogue in the 1980s and 1990s, it has now reasserted itself as the premier currency in a world of paper nothingness.

The value of a fiat currency - money, such as the U.S. greenback, that is without intrinsic value - depends on the full faith and credit of the country that prints it.

Today, with enormous levels of debt, the U.S. and the European Union are printing more and more paper currency. However, the process of adding liquidity to the system has created a farce.

Why Governments Interfere

By any conventional accounting standards, The U.S. and Europe are so indebted that their paper currencies are worth only the value of the paper they are printed on - which is why gold has moved higher for a decade and why it will continue to appreciate.

It is not that the intrinsic value of gold has gone up - it is the intrinsic value of currency that’s been unmasked. And that is precisely why governments interfere.

Higher precious metals prices have put the hot spotlight on governments that have been on a binge of uncontrolled money-printing.

Over the course of my 35-plus years as a trader on Wall Street, I have felt the direct hand of the U.S. government regulators on a number of occasions - and my Wall Street sources tell me it very recently happened again.

I remember the stock market crash of 1987 well. I was sitting on a trading desk in New York City when the U.S. government stepped in to support the stock market and crushed gold and silver prices.

And in 1995, I bought a huge chunk of silver, more than $1 billion worth, because I believed the price was too cheap - and it was.

When the silver price started to move higher, government regulators appeared on the scene. Those regulators told the management of the company I worked for, Salomon Brothers, to sell the silver we bought. We obeyed. We had no choice.

There are countless other examples of the long arm of the government meddling in the free market. And on the last day of February this year, it happened again.

The action in the precious metals markets again reeked of Washington and perhaps Brussels.

The day began with gold and silver moving higher.

Gold traded up to $1,792.30 an ounce and was fast approaching its key psychological barrier of $1,800. Silver had already traded through its $36 resistance level.

It just so happened that on the morning of February 29, Fed chairman Ben Bernanke was speaking before Congress. At the same time, the ECB was printing, injecting or simply giving $803 billion to more than 800 banks as part of its long-term financing operation amid the Greek debacle.

Usually, when Uncle Ben flaps his lips publically, precious-metal prices explode higher. This time, something different happened.


A Huge Sell Order in Gold

Some close friends who trade gold in the futures pits on Wall Street told me that just as Bernanke spoke, a huge order by financial giant JP Morgan came in to sell 15,000 contracts of the yellow metal - 1.5 million ounces of gold. That massive order took less than a minute to execute.

Abruptly, the price of gold began cascading lower. That giant sell order opened the floodgates.

I sat here scratching my bald head as I watched the action. To a veteran of the markets like myself, there could only be one reason. Someone wanted the price of precious metals lower.

It was strange. Central banks no longer are net sellers in the gold market. If there is any government out there that wishes to sell, there are scores of buyers that will gladly take the precious metal off their hands.

In fact, in 2011, central banks and governments around the world purchased a staggering 450 tons of the yellow metal.

That’s at least 450 reasons why the price of gold will continue to climb - in spite of that bizarre attempt at manipulation on the last of February.

All I can think of is that a controlled and slow rise in the price of gold is acceptable while sudden vicious rallies are not. Remember folks, those governments who bought gold last year include China, Russia, Korea, Columbia, Belarus and more!

Those governments bought because their gold holdings are low relative to total reserve assets. And they will continue to buy to bolster the amount of gold held as official reserves in their coffers.

Indeed, 18% of all of the gold mined last year found its way into central bank vaults. Central banks now realize that owning gold as a reserve asset beats low-yielding U.S. dollars or debt-riddled euros any day.

The demand for gold from individuals and investors is also rising.


The Bottom Line

G&G Readers … are you on that list of individuals and investors buying gold & silver or are you still dumping all your dollars into your 401K or TSP account at your J.O.B?
The demand for the shiny yellow metal continues unabated in the current global economic environment.

The bottom line is this: No government is a match for market forces. In the short term a huge sell order can stop the market on a dime. In the long term, the effect is minimal at best.

Gold & Silver are the closest asset to a sure thing that exists today, and its price is nowhere near the top.

Put this in your memory banks when I told you so… “I EXPECT GOL TO HIT NEW, ALL-TIME HIGHS THIS YEAR!!!”

The precious metal is now hovering around the $1650-an-ounce mark as I type this e-mail, but my advice is simple: Use these futile, short-term attempts to control gold prices as major opportunities to increase your holdings of real money and your wealth is sure to rise.

My goal in 2012 is to find ways to take advantage of such a plan for my GGIS Subscribers. I will share many of these ideas here in the weekly G&G e-newsletter but if you want the meat, you need to become a paid GGIS Subscriber. Sign up today!!!

As always…feel free to pass this information on to anyone you think is interested in increasing their tax & financial IQ.

If you need a one-on-one consultation to learn how to implement these investments or any other on the GGIS portfolio, feel free to contact me to setup an appointment.

If you missed any past G&G newsletters, click on link below for the archive:
http://ezinedirector.com/admin/publisher/archive/public/?fuseaction=a&e=7944575E0843077440

Meda Ase p (Thank You Very Much),

Asar Maa Ra Gray
Tax & Financial Consultant, RFC
G&G Associates
757-251-3757 office
866-361-3872 toll free fax
www.gngassociates.net

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LEGAL NOTICE: This work is based on what I’ve learned as a financial researcher and analyst based SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. It may contain errors and you should not base investment decisions solely on what you read here. It’s your money and your responsibility. Nothing herein should be considered personalized investment advice.

 

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