Deutsche have released a very lucid and frank report on the global economy, precious metals and new global phenomena of ‘consumerism”.
Their findings are unsurprising to the contributors of this website. Of more surprise is the fact that these views are becoming wide spread. Even the most optimistic of investment bank analyst teams is now beginning to understand the severity of the situation. The importance of ensuring capital holders have a decent allocation to the precious metals should not be missed. To use a metaphor, the inflationary train appears to be leaving the station driven by the world’s central bank’s actions working in concert with the world’s political leaders.
A couple of charts below to high light from the report below.
Firstly, the under allocation by global capital holders to the precious metals is surprising as well as a wonderful opportunity and a “gold bugs” dream.
There are many charts we will all have all seen before. The main stream has been totally under allocated to these assets. This is in the early stages of changing. If the 1970s are a good precedent the process will be significant and continuous over coming decade. It is likely that the precious metals and their miners will become a mania soon enough so check your allocations and weightings is a wise thing to do right now, in my humble opinion.
As second chart to consider is the real return on US$ savings.
Real interest rates remain negative just as more of the world’s central banks monetize their government’s debts and economic growth rates decline once again. Historically this is precisely the set of circumstances that is likely to drive capital to the precious metals. And on this occasion its a global event.
Here is the report:Deutsche-Gold-09-18-12
Their concluding comments should resonate loudly with anyone who is actively involved in asset markets and the real economy.
“While a gold standard could work, we remain skeptical that it will be considered (barring a serious financial crisis, perhaps associated with highly volatile inflation). In large part we blame the low probability on culture. The world economy has, over the past century, morphed into a highly integrated, government dominated system guided by conventional wisdom (group think). The self-reliant, individualism of the free market has been left behind in favor of a ‘new age’ of coddled consumerism”.
Eloquently put. A grand era of inflationary, as well as fiscal or government, expropriation of private capital awaits us all.
Rich
p.s. As if to re-affirm the above report here Wells providing a quick chart run through of the dire performance of the Q2 global economy.
(Remember, the real GDP nos are significantly over stated by the use of hedonics, substitution, etc adjusting our contemporary inflation measures downward).
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