57 Metric Tons of Gold Exiting the U.S.
Big gold bricks are leaving the United States bound for Switzerland.
Once in Switzerland, they’re being melted down.
What’s presently happening represents a “tectonic shift” in power, according to Frank Holmes.
Frank is the CEO of U.S. Global Investors, Inc., an investment management firm with a longstanding history of expertise in gold, natural resources and emerging markets.
I had the luxury of discussing this evolving situation with Frank on Thursday.
Frank, who lives directly on the frontline of the gold market, says it’s important for investors to realize that gold is exiting the United States.
America has never witnessed a mass exodus of gold like this before.
In January alone, 57 metric tons of gold bullion fled the country.
Scarier still, China recently opened a brand-new vault. It’s a beast, with the capacity to store 2,000 metric tons, or roughly $82.5 billion at today’s prices.
(Is this Chinese super-vault the gold’s final destination?)
I asked Frank to connect all the dots, which he was happy to do for our readers.
Why is Switzerland melting down gold?
Where is the gold headed next?
Is this a potentially lucrative situation for investors?
As it turns out, the answers are rooted in two very powerful emotions, fear and love.
Onward and Upward,
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The news is reminiscent of the devastation wrought by the same fungus six decades ago against the Gros Michel banana – previously the world’s bestselling banana.
The Cavendish replaced the Gros Michel due to their similar tastes, and because of greater disease resistance. Currently, there are no replacement bananas available to fill in for the Cavendish, thus if the Cavendish goes the way of the Gros Michel, bananas could be nothing more than a sweet memory.
Banana prices continue to inch nearer to their record highs from March 2012.
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To add credibility to the report, Seyhun’s data contained information by actual insiders, thus eliminating any impact on the numbers by quasi-insiders, such as institutional investors. This report stands in stark contrast to the 2013 report, which was solidly bullish, and portends a more aggressive bearish period ahead for stocks.
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It has happened when each of Yellen’s predecessors took their place at the head of the Fed table since the time of Volcker, and it’s important to note that only Volcker escaped a stock market crash when the spigots were turned off. With Yellen’s arrival, the stock market is significantly overvalued – due almost entirely to Fed policy. And Yellen will be unlikely to dodge the bullet of a future market crash. It’s really a matter of time, now.
China to Allow Bank Defaults
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This decision will make it harder for smaller banks to compete, further complicating Beijing’s attempts to meet its 7.5% growth target – thus affecting global stock and commodity markets.
Beef… It May NOT Be What’s for Dinner Anymore
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The number of cattle in the United States currently stands at less than 88 million. That’s the lowest level since 1951 – when the population of the United States was 154 million (about half the size of today).
As the record drought continues, beef prices could rise 7% to 8% in 2014, and roughly the same amount in 2015. Ground beef may see especially steep price hikes, upwards 10% to 15% this year alone. All of this means consumers will experience food inflation not seen in decades, and will force consumers to be more careful about spending – at a time the economy can least afford a pullback in demand.