Is Your Portfolio Ready for 2012?

Accelerating U.S. Debt Load Could Mean A Riskier Economy

Many economists and investors have been focused on the debt crisis in Europe. But did you know that debt in the United States is now more than 90% of GDP, a sign of increasing economic risk? In fact, the gap between debt and GDP has narrowed considerably over the past two years (see Chart 1 below). This is placing increasing strain on the U.S. economy. Is your portfolio prepared to weather this uncertainty? Now is the time to review your portfolio and make sure you’re adequately diversified among stocks, bonds, cash and Gold — the fourth asset class.

In today’s video, APMEX Chief Executive Officer Michael Haynes talks about how growing debt levels in the U.S. are creating greater uncertainty in our financial markets. He also explains how a diversified asset allocation may help minimize risk in your portfolio.

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The Fed’s “Dual Mandate”

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When congress passed the Federal Reserve Act in 1913, they established our nation’s independent central bank, and outlined the purpose of the bank.  Section 2A of the act sets this purpose:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

This section outlines what economists call the “dual mandate” of the Fed: a balance between price stability (i.e., inflationary control) and full employment.  When one is out of balance, the Fed will act to adjust monetary policy in order to restore the balance.  For example, in 2009, when the U.S. was experiencing the worst economic cycle in nearly a decade, unemployment hit nearly 10%.  The Federal Reserve used the policy tool known as Quantitative Easing to increase the money supply and lower interest rates, with the goal being for businesses to invest money in production and hire more workers.

The risk to this strategy is that the Fed may actually take a step too large for the economy to handle.  The U.S. economy has been compared to a large ship, and monetary policy is the steering wheel.  The ship turns very slowly and has a lot of momentum;  by the time you know you’ve turned the wheel too far, it can be too late to do anything about it.  There are many opinions as to how well the Fed Chairman Ben Bernanke is steering the ship. I would be curious to hear yours.

By Peter LaTona, Vice President of Sales at APMEX

Balance your portfolio with the 4th asset class of Gold today.

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WHAT TYPE OF INVESTOR ARE YOU?

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What is your outlook regarding the future of oil prices, world peace, the U.S. budget deficit, the European debt crisis and unemployment? Your opinions about worldwide political and economic events should help shape your asset allocation strategy — including the percent of your portfolio you dedicate to Gold and other precious metals.

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Take our ”What Type of Investor are You?” quiz to see whether your allocation to precious metals is in proper balance given your outlook about key global issues. The quiz will help you:

  • Pinpoint your views on topics that are likely to affect the financial markets.
  • Learn how precious metals have historically reacted during times of inflation, global political disruption, and weakness in the U.S. dollar.
  • Determine whether you might make adjustments in your asset allocation into precious metals.

Whatever the future holds, a well-balanced portfolio with asset allocation that includes exposure to Gold and other precious metals can help protect your wealth. You might have questions and we would like to help. Call our non-commissioned Account Managers toll-free at 888.518.7464 Monday through Friday from 8 a.m. to 5 p.m. Central time.

Balance your portfolio with the 4th asset class of Gold today.

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Donald Trump to Accept Gold Bullion in Lieu of Dollars on APMEX Lease at 40 Wall Street

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For the first time in the history of The Trump Organization, Donald J. Trump will be accepting Gold Bullion as a security deposit. APMEX, one of the largest U.S. precious metals dealers, will give Mr. Trump Gold Bullion today as a deposit on a 10 year commercial lease for the entire 50th floor at 40 Wall Street, also known as the Trump Building. At the signing of the lease today, APMEX CEO Michael Haynes will present Donald Trump with three, one kilo, .9999 pure Gold bars, weighing in total approximately 96.45 troy ounces.

Donald Trump said, “The Trump Organization has always strived to be ‘the gold standard. We welcome APMEX as our tenant at 40 Wall, a prestigious and historical location. The legacy of Gold as a precious commodity has transcended to become a viable currency and an accepted universal monetary standard. Central Banks around the world are holding Gold as a reserve asset. It is also a terrific, potentially lucrative diversifier in a portfolio, especially with such volatility in the stock market.”

Click HERE for the entire press release.

 

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8.19.11 WEEKLY RECAP

Markets were still highly volatile this week and the lack of certainty has pushed Gold to new record highs.  Stocks are suffering from fears of a double-dip recession due to weak economic data in practically every sector. 

Early in the week, the markets were buoyed by the European Central Bank announcing that last week it began buying Italian and Spanish securities. According to Christoph Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt, “The market optimists will interpret this number as good news as it underscores the ECB’s resolve…Equally, the pessimists will point out that it is bad news as it shows how much money the ECB had to commit for the yield compression seen.” This came about primarily due to a failure of politicians to convince investors that the debt crisis could be contained.  Many experts are pushing for a new “Eurobond,” saying that such a common bond issuance would allow euro zone members to borrow at affordable rates, thereby solving the current debt crisis. However, the German government is strongly against the idea of issuing Eurobonds, fearing that such a move would increase borrowing costs for Germany while also reducing the incentive for troubled euro zone countries (such as Greece) to make necessary economic reforms.

All hopes of a common Eurobond went away on Tuesday; however, as the highly anticipated meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel yesterday did not satisfy world investors. The growing feeling is that plans for closer monitoring of fiscal policy in the euro zone are not enough to stop the debt problem from spreading to other countries.  This news, along with weak data about the overall health of the German economy caused jittery traders to lose the shred of confidence they had gained over the previous few days.

All of this culminated in a massive selloff late in the week, led by large losses in European financial sector.  World equity markets are plunging Thursday and Friday and the European banks are the cause for concern. Major Banks across the euro zone are sharply lower, as the news broke that the European Central Bank lent $500 million Euros to a euro zone bank, that had not requested a loan since last February. Although no details were offered, the market reads this as another sign of escalating difficulties in the European financial system, which could also affect U.S. banks.

Weekly Spot Prices

Gold:
Spot Gold prices opened this week at $1,744.40. The all-time record high was on Friday, Aug. 19th at $1,881.80, while the low for the week occurred on Monday, Aug. 8th at $1,730.80. Gold ended the week up $112.90 at $1,857.30. This week, the most popular Gold bullion products were 2011 Gold American Eagles, 1 oz. Pamp Suisse Gold Bars, and 2011 1 oz. Gold Maple Leafs.

Silver:
Spot Silver prices opened this week at $39.18. Silver reached a high of $43.04 on Friday, Aug. 19th, while this week’s low for Silver occurred on Monday, Aug. 15th at $38.69. Silver ended the week up $3.86 at $43.04. The most popular Silver products on APMEX.com this week were 2011 Silver American Eagles, 2011 Silver Maple Leafs, 1 oz. Silver Buffalo Rounds and 10 oz. APMEX Silver Bars.

Platinum:
Spot Platinum prices opened this week at $1,801.00 and ended the week up $79.10 at $1,880.10. Popular Platinum products this week included, 1 oz. Platinum Bars, 1/10 oz. Platinum American Eagles, and 1 oz. Platinum American Eagles.

Palladium:
Spot Palladium prices opened this week at $749.00 and ended the week up $6.10 at $755.10. Palladium investors preferred 1 oz. Pamp Suisse Palladium Bars and Palladium Canadian Maple Leafs this week.

 GOLD BUFFALO COINS 

 In 2006, the United States Mint introduced its first 24-karat pure Gold coin: the Gold Buffalo Coin. The Gold Buffalo coin is designed after the famous 1913 Type 1 Buffalo Nickel created by James Earle Fraser. The obverse shows the well-known Indian Head design, and the reverse features the classic buffalo design.

The Native American depiction on the Gold coin’s obverse is believed to be based on three different American Indians.  Before his death, Fraser named two of the American Indians- Chief Iron Tail of the Lakota Sioux and Chief Two Moons of the Cheyenne.  Although many Indians have claimed to be the third Indian, Fraser could not recall the person’s name.  It is widely believed that the bison on the coin’s reverse was modeled after Black Diamond, a popular attraction at the New York Zoological Gardens.

The 2006 and 2007 Gold Buffalo coins were a huge success; they provided pure-gold competition for the Canadian Gold Maple Leafs. The 2008-W Gold Buffalo is the prize of the Buffalo collection.  2008 is the only year fractional Gold American Buffalos were minted and they are scarce. The 2006, 2007, 2008, 2009, 2010, and 2011 Gold Buffalo coins are .9999 fine and are only available in a 1 oz coin.

To add the stunning 24-karat Gold Buffalo coins to your Gold coin collection or Gold portfolio, shop APMEX’s wide selection of Gold Buffalo coins. APMEX makes it easy to buy Gold by offering competitive Gold prices on all Gold coins.

 

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 APMEX Commentary via RSS feed and the  APMEX Blog via RSS feed.

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