Ukraine Crisis Will Hurt the U.S. Dollar: Peter Schiff

Russia’s invasion of Ukraine can ultimately hurt the dollar, says Peter Schiff, CEO of Euro Pacific Capital.

Until now, the markets have been immune to the crisis in Ukraine and other current, major conflicts around the world. But these conflicts can influence the Federal Reserve, according to Schiff.

“The real deal is the Federal Reserve,” he told Yahoo Finance, “we do have a difficult international situation that may give the Fed the excuse that it needs to postpone the taper and rate increases. That’s what the market wants. That’s what’s driving this market. That’s the only thing driving this market.”

The situation in Ukraine is volatile and highly unpredictable, but historically markets didn’t care much about geopolitics. Markets do get spooked by geopolitics on occasion, but they typically recovered quickly.

Schiff is more concerned about America’s reaction to Ukrainian crisis than the crisis itself. He says that he had expected the dollar to fall for some time. “We’re flexing a lot of muscle we don’t have,” he added, “and we’re irritating people we need to be sucking up to. America depends on its ability to export dollars to import all the things we don’t produce.”

"We're creating extra incentive for people to move away from the dollar," Schiff said.  "That could ultimately be the biggest problem for the market. A big drop in the dollar and acceleration of inflation would put pressure on the Fed to raise rates."

Peter Schiff famously made predictions about the crash of 2008, 2009.

“The people that were ridiculing me back then are still ridiculing me,” he told Birch Gold Group, “because I’m still warning that the real crisis hasn’t even happened yet. Because everything that the Federal Reserve has done, everything that the government has done since the financial crisis of ’08 has just made the problems that they were trying to solve worse. Problems that they caused.”

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Sources:

Russia’s invasion of Ukraine threatens the dollar: Peter Schiff

Peter Schiff Exclusive Interview: On The Dollar Crisis, Federal Reserve And Future For Gold Prices

Image by the Prime Minister of the Russian Federation

Russia keeps buying gold and Chinese yuan, which may hurt the dollar

Russia is taking measures to protect itself against future sanctions from the European Union and the United States, says RT news.

The Russian Central Bank’s response to the rising pressure from Western economic sanctions has been to increase gold reserves and diversify away from the dollar and euro. Currently Moscow controls the world’s 5th largest foreign exchange reserves and the 6th largest gold reserves.

To protect itself from risks involving U.S. dollars and euros, in light of the ongoing crisis in Ukraine, Russia has cut its foreign currency reserves by 2.5 percent in the first half of 2014.

Rather than buying euros and dollars, the Russian central bank is now increasing bilateral currency swaps with China and other strategic trade partners. China’s central bank has agreed last week to increase currency swaps with Russia’s central bank.

Ebbing dominance of the U.S. dollar has worsened since the global financial crisis, and Russia’s measures to deal with the Western sanctions may accelerate its demise as the world’s reserve currency.

Global reserves of U.S. dollars has shrunk to under 61 percent from the 72 percent in 2001, according to Bloomberg, and since the global financial crisis Russia and other big emerging economies have promised to use their own currencies to conduct business.

Sources:

Russia seeks safe haven in gold, away from dollar and euro

Russia Sanctions Accelerate Risk to Dollar Dominance

Image by Prime Minister of Russian Federation

10 Countries with Largest Gold Reserves

See the ten countries with the biggest gold holdings according to a latest report by the World Gold Council. 

The World Gold Council, an association whose 21 members comprise the world’s leading gold mining companies has published its latest report on world gold reserves – gold held by national central banks around the world as a guarantee to redeem promises or secure a currency.

The International Monetary Fund maintains statistics of national central bank assets, and the same data is used by the World Gold Council to report official gold holdings of various countries and organizations. Gold reported by a country is not necessarily stored there.

Latest numbers on the World Gold Council’s table are from August 2014.

Below are the ten countries with the largest gold reserves in tonnes:

10. India

Official gold holdings:
557.7

Percent of foreign reserves in gold:
7.3%

9. Netherlands

Official gold holdings:
612.5

Percent of foreign reserves in gold:
54.3%

8. Japan

Official gold holdings:
765.2

Percent of foreign reserves in gold:
2.5%

7. Switzerland

Official gold holdings
1,040.0

Percent of foreign reserves in gold
8.0%

6. China

Official gold holdings:
1,054.1

Percent of foreign reserves in gold:
1.1%

5. Russia

Official gold holdings:
1,094.7

Percent of foreign reserves in gold:
9.7%

4. France

Official gold holdings:
2,435.4

Percent of foreign reserves in gold:
65.1%

3. Italy

Official gold holdings:
2,451.8

Percent of foreign reserves in gold:
67.0%

2. Germany

Official gold holdings:
3,384.2

Percent of foreign reserves in gold:
68.4%

1. United States<

Official gold holdings:
8,133.5

Percent of foreign reserves in gold:
71.9%

If the International Monetary Fund (IMF) was a country, it would be right behind Germany as the third largest holder of gold reserves – IMF holds 2,814.0 tonnes of gold.

Sources:

The World Gold Council

Wikipedia

Image by Rob Lavinsky

Argentina and 10 More Countries Near Bankruptcy

Argentina defaults on its debt. Ten more countries are near bankruptcy.

The third-largest Latin American economy Argentina failed to make scheduled payments on its government bonds at the end of July. Credit agency Moody's Investors Service reported a spike in Argentina’s one-year Sovereign EDF (Expected Default Frequency) to 48% in one week. “Amid increasing concerns that Argentina’s default will exacerbate its ongoing recession, the country has the highest one-year probability of default of any of the 84 sovereign entities in our data set,” says the report. 

Argentina failed to come to an agreement with its creditors and reached the end of a 30-day grace period to make good on its payments. As a result, Moody affirmed Argentina’s Caa1 issuer rating and changed the country’s outlook to Negative from Stable, as its rival agency S&P downgraded the country to SD from CCC rating. A Caa1 rating is well below the first level of bad rating Ba1, which already indicates a significant credit risk. An SD, in the S&P scale, is next to worst.

Ten other countries listed by Moody have a rating of Caa1 or worse - that is, they too are at risk of default. Each of these nations has its own unique problems. Ukraine, for example, was downgraded because of political instability, while Belize had its credit rating upgraded in recent years because of improved economic conditions.

Before the default, the gold market seemed to ignore Argentina, but the future is very uncertain given the crisis in Ukraine, the Russian sanctions, and the Middle East crisis. Perhaps a safe-haven bid for the gold market is on its way.

Here’s the list of countries with a bad credit rating in the Moody scale:

Argentina
Moody's credit rating: Caa1; Moody's outlook: Negative

Belize
Moody's credit rating: Caa2

Cuba
Moody's credit rating: Caa2

Cyprus
Moody's credit rating: Caa3

Ecuador
Moody's credit rating: Caa1

Egypt
Moody's credit rating: Caa1

Greece
Moody's credit rating: Caa3

Jamaica
Moody's credit rating: Caa3

Pakistan
Moody's credit rating: Caa1

Ukraine
Moody's credit rating: Caa3

Venezuela
Moody's credit rating: Caa1


Article sources:

USA Today article

Moody report

Image by KenWalker

Gold-Mining Stock Performance Signal Gains for Gold Prices

Gold mining stocks have been outperforming the metal which is a good sign of future gains for gold. 

This year gold mining stocks have regained their value of 2013 and for the first time in years are outperforming gold, bringing nearly double the gains seen in gold prices. 

It’s good news for both bullion and equities since price increases in bullion tend to follow those of stocks. 

The Philadelphia Gold and Silver Index has gained 21% this year after a loss of 49% last year. The NYSE Arca Gold BUGS Index, which lost 56% last year, went up 22% percent year-to-date.

Bullion, on the other hand, had climbed 11% year-to-date, after last year’s loss of 28%.

Photo: NYSE (HUI) Gold Bugs – 1 Year

“The gold stocks typically begin rising or falling in advance of the metal, thereby foreshadowing the trend,” said Brien Lundin, editor of Gold Newsletter. “They move further on a percentage basis than the underlying metal, thereby offering leverage.” He also said that “the fact that the gold stocks are outperforming gold so far this year is a very bullish indicator for gold itself.”

Sources:

Gold stock rally ‘foreshadows a trend’ for the metal

Gold mining stocks are beating bullion - Holmes

The Composition of a Bullion IRA

Today many investors are investing in a bullion IRA, which is a retirement account that is backed by precious metal bullion coins and bars.

The uncertainty of the stock market and the weakening value of the dollar have led many investors to bullion IRAs. If you are worried about potentially losing your investment savings due to market volatility, a Precious Metals IRA could be a good fit for you.

One of the first things to do when opening a bullion IRA account is to consult with a precious metals IRA professional. Based on your investment goals, the specialists at Birch Gold Group will help you decide which options are best for you.

The second step for opening a bullion IRA is to select which metal you would like to use as an investment. The bars and coins you choose need to be approved by the IRS for placement in your IRA. There are a number of coins that are approved for a Precious Metals IRA. Here are a few popular options.

American Eagle - Released in 1986 as the first official gold bullion coin offered by the United States, the 22-carat American Eagle coin is 91 percent gold. This is the only bullion coin with a purity of less than 99 percent that the IRS approves for placement in an IRA. This coin is available in the following weights: 1/10 oz., 1/4 oz., 1/2 oz. and 1 oz.

The American Eagle bullion coin also comes in silver and platinum editions which can also be added to an IRA. Additionally, there is a proof version of the coin on the market which is often sought after because of the coin’s limited production each year and its high quality.

Canadian Maple Leaf — This coin became available to investors in 1979 and is composed of 99.99 percent gold. Known as the world’s first 24-carat gold bullion coin, the Canadian Maple Leaf is available in five versions: 1/20 oz., 1/10 oz., 1/4 oz., 1/2 oz. and 1 oz.

If you are interested in purchasing this coin, it is available in silver, platinum and palladium editions, all of which are certified for IRA placement.

Austrian Philharmonic — This coin is made of 99.99 percent of pure 24-carat gold, and also comes in silver and platinum versions. An interesting thing about the Austrian Philharmonic coin is that it has the largest diameter of all pure and IRA-approved bullion coins.

American Buffalo — Released in 2006, this 24-carat and 99.99 percent pure gold bullion coin was the first of its kind offered by the United States. This coin is available in four denominations: 1/10 oz., 1/4 oz., 1/2 oz., and 1 oz.

If you are interested in investing in a bullion IRA, contact Birch Gold Group. We are here to answer your questions. It is easy to open a Precious Metals IRA, and Birch Gold Group will show you how to start. Our team of Precious Metals Specialists will help show you which bullion might be right for you. Call us today to learn more about your investment options.

Investing in a Precious Metals IRA

Like many Americans, you may be feeling leery of dabbling in the stock market. As the economy has fluctuated in the past decade, many people have lost their life’s savings, and those who lost it all were forced to start from scratch.

Due to volatility of the stock market since 2000, do you keep your money in savings accounts or CDs, even if they offer little in return? This "preservation method" may not be the best way to protect your hard-earned cash.

Based on your personal goals for retirement, it may make more sense for you to invest in a precious metals IRA. A precious metals IRA is an IRS-approved individual retirement account backed by precious metals like physical gold or silver. What attracts many investors to precious metals IRAs are their ability to safeguard savings while offering the same tax benefits that come with any other government-approved retirement account.

The First Step, Determine if a Precious Metals IRA is Right For You

The value of the dollar continues to go down, which endangers any of your savings that aren't keeping up with the pace of this decline. Some experts are concerned that as the Federal Reserve prints more money in an attempt to prop up the economy, the Fed is causing even greater damage to the value of the dollar.

Given current interest rates, holding your money in a traditional savings account probably won’t protect you from such risks like the declining value of the dollar. Investing in precious metals provides unique protection against the declining dollar and inflation for the simple reason that you can't easily print more gold and silver. In fact, when policies enacted by the Federal Reserve cause the dollar to decline, this further increases the relative value of precious metals.

An investment in a precious metals IRA can also protect from stock market fluctuations. So much instability continues to surround the world’s economy, and investors who rely heavily on paper assets may face tough times in the future. With a precious metals IRA, you can steer clear of stocks altogether, which makes many feel more secure about their financial future.

Choose when, where and how you invest. A precious metals IRA allows you to have flexibility and options. If you decide to transfer your retirement savings into a precious metals IRA, you don’t have to put all of your eggs in one basket. You can allocate your investments any way you would like, which allows you to invest in a wide variety of assets.

The rollover process is simple. If your retirement savings are invested in a 401k or IRA, your accounts may be eligible to be rolled into a precious metals IRA, which would allow you to retain the same tax benefits you currently receive. Best of all, in most cases there are no tax implications and no penalties for making the move. The process is easy, and Birch Gold Group can help you each step of the way.

Whether you are nearing retirement age, or new to investing, the financial moves you make today could be the difference to achieve a secure financial tomorrow. Protect your retirement today with a precious metals IRA.

All You Need To Know About Gold-Backed Roth IRAs

With so much instability in today’s stock market and uncertainty in the economy, many investors are choosing to protect their retirement savings with gold-backed IRAs.

Everyone’s retirement portfolio will be different, so depending on your particular circumstances and objectives it may be smart to change your eligible IRAs or 401ks to a gold-backed Roth IRA. This move allows you to benefit from the same tax advantages that are built into any government-approved retirement account, while also diversifying into a hard asset like gold.

If you have questions about gold-backed Roth IRAs, or how to add gold to an existing Roth IRA, Birch Gold Group can help teach you about it.

Seven Facts About Roth IRAs and Gold

      1. While a traditional IRA allows you to make tax deductions on contributions to your account, ultimately you will be taxed on withdrawals. A Roth IRA is great because it allows investors to make tax-free withdrawals from qualifying accounts.

      2. Each type of IRA has recognizable benefits, so it is a good idea to speak to a qualified tax professional about your choices.

      3. If you choose to change your eligible 401k or IRA into a gold-backed Roth IRA, your new account will be considered a self-directed Precious Metals Roth IRA. With a self-directed IRA, you can often choose among more asset classes.

      4. There are a few types of gold authorized to be placed in a gold-back Roth IRA, such as gold bullion and gold proof coins (like the Proof Gold American Eagle).

      5. Other precious metals (like silver, platinum and palladium) and other assets (like stocks, mutual funds and real estate) can be added to your gold-backed Roth IRA.

      6. For 2013 to 2014, after your transfer your funds into your gold-backed Roth IRA, you still may contribute up to $5,500 annually.

      7. Gold purchased for your Roth IRA stays protected in a qualified precious-metals depository or vault.

Industry experts like Birch Gold Group make opening a gold-backed Roth IRA simple. Whether you are transferring funds from other investment accounts or you are a new investor, Birch Gold Group will guide you every step of the way.

We have precious metal IRA specialists standing by to address your specific needs and investment goals. For more information about investing in gold, or to speak with a professional, contact us right away.