Tag Archives: money velocity

In the most simplistic and, I might add, most humourous terms, the little story below demonstrates what economists call 'money velocity' and how a bailout package (think Greece) works. It really is that simple & nonsensical!

When there is lots of economic activity, there is lots of money changing hands. When there is not very much economic activity, the pace at which money circulates through our system slows down. That is why what is happening in the U.S. right now is so troubling. Let me explain.

Is it time to throw in the towel? Is the bull market in precious metals really over? I don't think so because my analyses suggest that nearly all of the fundamental factors that have been driving the gold price higher in the past decade have only strengthened in the past two years. Now that the correction has most likely run its course, I expect gold to bounce sharply higher. Here are 10 reasons why.

It is my contention that the move in precious metals...[from] late 2008 through 2011 was largely a result of the expansion in central bank balance sheets and the perceived threat of runaway inflation. Since 2011, [however,] we’ve seen economic growth improve and inflation rates across the globe subside. As a result, investment banks and market strategists are arguing against owning gold, and making the case that, with a lack of inflation and an improved economy, the need for owning gold as an insurance hedge against inflation and currency debasement is no longer present. I strongly disagree.

Dr. Marc Faber, the author and publisher of the "Gloom Boom And Doom" report is one of the most well-read economists out there. I am of the opinion that his suggestions and investment advice are more realistic than any other economist or analyst we hear and read regularly. The summary of Dr. Faber's latest monthly report suggests that he views 2013 as a year of capital preservation. In other words, Dr. Faber is not very bullish on risky asset classes for 2013. This article discusses Dr. Faber's views and the reasons to remain cautious in 2013. Words: 1494; Charts: 3; Tables: 1

If our assessment is correct, over the coming years, stocks, precious metals, commodities and real-estate will appreciate in value versus paper currencies. Furthermore, on a relative basis, we expect precious metals and commodities to outperform all other asset-classes. Conversely, we anticipate that cash and fixed income instruments will probably turn out to be the worst assets to own over the next decade. Words: 869