Wal-Mart Says “Serious” Inflation Is Coming

Thank you Ben Bernanke for all the money printing.  Thanks to a massive injection of cash into the financial system by the Federal Reserve and other central banks, the price of almost every major commodity has skyrocketed over the past six months.  Now those price increases are starting to filter down to the retail level.  During a recent meeting with USA TODAY's editorial board, Wal-Mart CEO Bill Simon said that rising inflation in the United States is "going to be serious" and that Wal-Mart is "seeing cost increases starting to come through at a pretty rapid rate."  For many years Wal-Mart has been famous for their "low prices", so for the head of Wal-Mart to publicly warn that much higher prices are coming is more than a little alarming.  There are millions of American families that are already drowning in debt, that can barely pay their mortgages and that are struggling to put food on the table for their families.  So what is going to happen to the U.S. economy when prices start rising substantially at places such as Wal-Mart?
But Wal-Mart is not the only major corporation that says that inflation is coming.  Hershey has just announced price increases of about 10 percent on their entire line of products.
So if you like chocolate you better start stocking up now.
Cocoa production is being seriously threatened by the political unrest in Africa right now.  The recent chaos in the Ivory Coast is certainly not good news for Hershey, but the truth is that all of the long-term trends indicate that prices for commodities such as cocoa, coffee and sugar are going to move up anyway.
In fact, Aaron Smith, the managing director of Superfund Financial, believes that coffee, sugar and cocoa will all be five to ten times more expensive by 2014 than they are today.
So if you are addicted to coffee or to sugar you might want to start making your plans accordingly.
But the truth is that inflation is not limited to just a few commodities.  Virtually every major agricultural commodity has soared in price over the past 6 months to a year.
So what is causing all of this?
Well, there are several factors which are major contributors.
First of all, overall global demand continues to increase.  The population of the world continues to grow, and as the economies of nations such as China and India develop, millions more people want to enjoy luxury items such as chocolate and coffee just like Americans do.
Secondly, all over the world central banks have been recklessly printing money in an attempt to stimulate their economies, but this is also going to end up causing tremendous inflation.
So how does that work?
Well, it is actually very simple.
For example, in the United States when there are more dollars chasing the same number of goods and services, what is going to happen?
Prices are going to rise of course.
And we are seeing this happen all over the world right now.
Thirdly, as the price of oil continues to rise, it is going to increase the cost of everything else.  The era of massive amounts of cheap food being transported around the world using massive quantities of cheap oil is rapidly coming to an end.
The following chart if from the Federal Reserve.  It shows that the price of oil is rapidly moving back to the level it was at prior to the financial crisis of 2008.  In fact, this chart is slightly out of date.  At last check, the price of oil was over $107 a barrel.  So what is it going to mean for our economy if we soon surpass the record that was set back in 2008?....

Fourthly, global instability is also going to cause prices to continue to rise.  Over the past year we have had really bizarre weather all over the globe, we have seen revolutions erupt all over Africa and the Middle East and the third largest economy in the world (Japan) just experienced the worst disaster that they have been through since World War 2 ended.
When things are unstable, economies don't work as efficiently.  That means that less goods and services are produced.
But when there are less goods and services being chased by an increasing amount of money that tends to push prices up.
The truth is that inflation is here, and if the CEO of Wal-Mart is right, it is not going to go away any time soon.
In fact, many believe that the world is on the verge of another major economic crisis.
If you stop and think about it, every major region of the world is dealing with very serious problems right now.
Right now, the European debt crisis is worse than it ever has been before.  Did you notice that Standard & Poor's just downgraded Portugal's debt for the second time in a week?  Now Portuguese debt is rated BBB-, which is only one level above junk status.
That is a very alarming sign.
Asia is dealing with the Japanese crisis, nearly all of the countries in the Middle East are dealing with protests or full-blown revolutions, Africa is dealing with the war in Libya and quite a few revolutions of their own, and the U.S. is still deeply struggling with a whole host of economic problems.
Most Americans don't realize just how precarious things are at the moment for the global economy.  The financial crash of 2008 did a lot of lasting damage, and the next wave of the financial crisis could potentially be even worse.  Unfortunately, the global financial system is more vulnerable than ever right now.
So what are the Federal Reserve and other central banks going to do the next time a major financial crisis happens?
They are going to print even larger quantities of money and they are going to give even larger bailouts to their friends of course.
The dollars that you have today are never going to be more valuable than they are right now.  Don't wait too long to use them.  If you have a huge pile of dollars sitting in the bank your wealth is slowly but surely rotting away.
Very hard economic times are coming.  The inflation that the CEO of Wal-Mart is warning about is only the beginning.  Eventually we are going to see inflation in this country that is going to be absolutely mind blowing.
But don't wait until the storm hits to start preparing.  We all have time now to prepare, so let us be wise and make the most of it.

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.

Possible Boom in Precious Metals due to Saudi Arabia Unrest

As any seasoned investor knows, precious metals are often used as a hedge against political unrest, and economic instability worldwide.  We've all seen how protests in Libya and Egypt have boosted the value of metals, as well as many other hard asset investments.  With signals of protest and rebellion peaking over the horizon in Saudi Arabia, we could very well see a jump in the price of metals in the near future if the situation in Saudi Arabia escalates.  An article from the Sydney Morning Herald describes the situation:

One witness said police fired stun grenades to disperse the crowd of around 200 people from the Shi'ite minority. Another witness and a Shi'ite activist said shots were fired.
"There was firing, it was sporadic," the witness said. It was not immediately clear whether rubber bullets or live ammunition were fired. Witnesses and activists said up to four people were wounded.
Activists in Saudi Arabia have made unprecedented calls for mass protests against the kingdom's absolute monarchy. Protests are forbidden as being against Islam and it was not clear whether people would take to the streets en masse on Friday.
"By showing a willingness to use force early, the Saudi authorities are likely hoping they will be able to deter people from joining the protests, but such actions could just as easily embolden the protesters," the political risk consultancy Statfor said.

The big red-flag in this situation is the fact that Saudi authorities show "a willingness to use force early".  In the past few weeks, we've seen both Egypt and Libya under an enormous amount of scrutiny for the forceful actions they've taken against local protesters, and it's certainly plausible that Saudi Arabia might be next in line.  If so, look out for a huge boost in any hard asset investment.

The original article can be found here

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.

Want to know what a billion dollars looks like?

Here's what one billion US dollars looks like:

If you've ever wondered what a billion looks like, well here it is.  Now, take 14,000 of those, stack them in a warehouse, and you wouldn't have enough money to pay down the US National Debt.

If you were to deposit 5 of those billion-dollar stacks in the bank every single year since year 0, you still wouldn't have enough this day to pay the debt down.




This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.  - Leland National Gold Exchange

Potential for Silver to spike above $50 says Forbes

In an article on Forbes.com, author Robert Lenzner reveals the possibility that silver could "spike to $50" due to possible "violations to the Commodity Exchange Act". From the article:

As a result of Chilton’s public statement, several individual investors brought lawsuits against JP Morgan and HSBC, claiming they lost money on positions they took in silver futures on the Comex. One such suit claims that in August, 2008 JP Morgan and HSBC controlled over 85% of the commercial net short position in COMEX silver futures, and that this represented a short interest of 169 million troy ounces of silver, equal to about 25% of annual world mine production.

The author describes recent speculation that JP Morgan and HSBC have been manipulating the silver market:

“For months and in some cases years, conspiracy theorists and market pundits have been speculating about the manipulation of the silver market by large banks, including JP Morgan and HSBC,” Thangavel wrote today. “Recently, these theories have been given significant weight as CFTC Commissioner Bart Chilton stated his belief that the silver market was being manipulated.” Chilton stated that “there have been fraudulent efforts to persuade and deviously control” prices in the silver market, which “should be prosecuted.”

This manipulation of the silver market has the potential of causing phenomenal gains in silver. In the weeks before the article was written, silver had seen a price jump from $18 to $30 per ounce:

A chart of silver prices shows that silver in recent weeks has outshone the rise in gold prices by jumping 50% from around $18 to nearly $30 and then backed off to $27.16 today. This extraordinary increase in the price of silver suggests that short covering might explain part of the gain.

The original article can be found here.

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.

J.P. Morgan Chase accepts physical gold as collateral

J.P. Morgan Chase & co recently announced that it will accept physical gold bullion as collateral "for investors that want to make short-term borrowings of cash or securities"
Apparantly, they aren't the first one to jump on the bandwagon. From the article:

Presenting gold to satisfy demands for performance bond collateral has been allowed on the London CME in a limited way since October 2009. As of November 22, 2010, the Intercontinental Exchange Inc. (ICE) has accepted gold bullion as collateral on all credit default swaps and energy transactions.
I don't recall the G-20 declaring gold a new currency. Yet JPMorgan Chase and a couple of financial market exchanges have effectively declared that gold is an alternative currency.
In other words, gold is money.

The original article can be found here

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.

Standard Bank's Ikemizu predicts silver at $40

In an article on Bloomberg, Bruce Ikemizu describes how new applications for silver will fuel demand pushing silver to prices as high as $40 in 2011. Quoted from the article:

'Silver, the leading performer in metals this year, is likely to repeat its success in 2011, reaching $40 an ounce on new applications and industry demand, said the head of commodity trading in Japan at Standard Bank Plc.'

'The precious metal will likely outpace next year’s gains in gold, which should surpass $1,500 an ounce, and palladium, Bruce Ikemizu said today in an interview in Tokyo. “Unexpected” new applications for silver, such as in solar batteries, and industrial use that underpins 80 percent of demand, make the metal attractive to “a lot of famous investors, especially in the U.S.,” Ikemizu said, without giving more details.'

The original article can be found here

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.

Equity Correction Fuels Soaring Gold Prices

An article from The Street describes a correction in the equity market, and other factors, as the fuel for today's boost in gold prices. From the article:

There was a slew of factors pushing gold higher Friday. First, the metal had been under a barrage of technical selling in 2011. The word capitulation, however, was being thrown around Friday after reports circulated that SHK Asset Management sold gold future positions that came with a $850 million price tag. Open interest of 81,000 came out of gold on Monday. The Wall Street Journal first broke the news and said that Daniel Shak, who runs the fund, got spooked by a margin requirement increase and gold's recent selloff and decided to ditch his positions.

The shakeout of the "fast" money led many investors to see this week's selloff as a bottom, which was prompting a flood of money into the metal.

The article re-enforces that gold (and other precious metals - silver platinum palladium) will remain a portfolio stabilizer in the future.

This material is for informational purposes only. Although it is obtained from sources believed to be reliable, Leland National Gold does not guarantee its accuracy, or being all-inclusive. Past performance is no guarantee of future results. There are risks in buying and selling physical metals. The potential for loss as well as gain increases by leveraging physical precious metals transactions. Never trade with more money than you can afford to lose, and always be sure to read the Risk Disclosure provided in your account documents.