Investments and Trends of Past, Present and Future

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand

Welcome to The Golden Sense! Can you believe it is almost 2013? This year has been filled with ups and downs. The markets have been reacting to news rather than making any significant changes. I believe that 2012 compounded the known realities of the world rather than changed any of the primary trends. 

Historians one day will look back on this time period as a time of great significance. These are interesting times and it is important to wake up and act accordingly for your own protection, or to take advantage of an opportunity. I see three major long term trends in the world today:

• The decline of Western superpowers and wealth creation in the emerging countries.

• The destruction of fiat money and the revamping of the world financial system.

• The rise of technology and enhancement of individual worldwide communication

In the near term the situation of the world looks dire, but with the enhancement of technology and the necessary destruction of fiat money, the long term outlook of the world is actually quite good. 

Two of the primary trends are directly related to one another. The decline of Western superpowers such as the United States and Europe are directly due to the fiat monetary standard. Fiat money is money created by a central bank or government that has no intrinsic value. An example of this is the U.S. dollar. The value of the money rests solely on confidence of those who use it and the ability of the government to repay its debt. The U.S. dollar, the Euro, the Yen, etc. are all manipulated currencies. The widespread currency devaluation occurring today is actually lowering the standard of living within these respective societies.

Over the last hundred years the Federal Reserve's widespread printing of money has created a debt based society. The worst abuser of debt is the U.S. Government. The U.S. Government has so much debt it simply cannot repay it. The situation in Europe is very similar. If you spend more than you produce, you will eventually go bankrupt. The same is true for Governments; it just takes longer for Governments to get there. In order to keep the status quo Governments and central banks are creating money out of thin air in a desperate attempt to keep the shenanigans going a little while longer. 

"For every one of all 25 million working people in Britain the government is printing £16 of brand new money – every day. The situation in the U.S. is almost precisely as bad – some $25 per day per head of the working population" Paul Tustain. 

This is a guaranteed path to destruction for the monetary system. It is also theft against the average person. The average person suffers with resulting higher prices in goods and services. It still amazes me - the general apathy the average person has towards the government and the Federal Reserve. The numbers in regards to debt or mass currency devaluation are not a question of politics, confidence, or feelings. Numbers don't feel. They just are what they are...and the numbers don't look good.

Despite all of the bad things happening around the world, the long term prognosis is still very good. This is due to the unbelievable inventions and enhancements made in technology. The strides being made in communication are phenomenal. The Internet, smart phones, Skype, PayPal, etc., the list goes on and on. These tools will eventually bring freedom to every individual across the globe. Worldwide communication is getting faster and easier. Due to this phenomena wealth creating opportunities will continue to flourish around the world and everyone’s standard of living will increase.

There are direct investment implications in regards to the first two primary trends. Buying hard assets such as gold and real estate is a way to protect your wealth. Many experts say that averaging into secure dividend paying stocks is the way forward. Basically, accumulating wealth and diversifying is a must as the government's debt expands and the value of currency decreases. 

The development in technology creates business opportunities. Using all of the new technology effectively is a great way to start your own business and work for yourself. 

MTV took an interesting poll recently. It found 75% of Generation Y workers (those in their 20’s and early 30’s) want to work for themselves one day. This poll is excellent news for the future. The more businesses created the better. 

We live in a time where the mistakes of the past are meeting their consequences, and the future is nothing but the result of those consequences and what we make of it.

It is up to you.

Over and Out,

T. Norman

Listed below are the gains or losses for the year up to November 30th. It appears that (of these) most of the gains will still be gains and the losses will still be losses by the end of the year. Of course the percentages will change, but I expect they will all be in the same ball park. 

	11/30/12	12/31/11	11 months 2012
	values	values	gain (loss) %
Gold	$1,715.00	$1,566.00	9.5
Silver	$33.44	$27.81	20.2
Permanent Portfolio	49.18	46.09	6.7
Dow Jones average	13,025.58	12,217.56	6.6
S&P 500	1,416.18	1,257.60	12.6
NASDAQ composite	3,010.24	2,605.15	15.5
US$ index	80.22	80.58	(0.4)
Euro currency	1.2982	1.2952	0.2
10 year T-Note yield	1.610%	1.871%	(13.9)
Commodity index	298.98	305.30	(2.1)
Crude oil (NYMEX)	$88.94	$99.06	(10.2)

The stock market will most likely end the year up along with all precious metals. How has gold been up 12 years in a row? The answer is that central banks are now net buyers of gold. Central banks are not dumb. They know the consequences of mass currency printing. With one hand they print money and with the other they buy gold. This trend is set to continue in 2013. In 2012, it was noted that central banks purchased the following: Central Banks

• The South Korean central bank added 14 tonnes (approximately 450,000 troy ounces) of gold in November, and now holds six times more than they held back in June of 2011. "Gold is a physical, safe asset, and allows us to deal with changes in the international financial environment more effectively," bank officials said.

• Brazil bought 18.9 tonnes (607,650 ounces) in September and October alone. It will likely buy more, since gold still accounts for only 0.8% of its reserves.

• Paraguay bought 7.5 tonnes (241,130 ounces) in July.

• Turkey imported 4.2 tonnes (135,000 ounces) of gold in November. It has bought 117.2 tonnes (3.7 million ounces) so far this year, almost double last year's purchases.

• Central banks around the world bought a total of 351.8 tonnes of gold (11.3 million ounces) in the first nine months of 2012, up 2% from a year ago.

• Even Argentina added 7 tonnes last year (225,000 ounces), and Colombia 2.3 tonnes (almost 74,000 ounces).

• And of course there's China. They didn't reveal the number but it is said they have been accumulating large quantities of gold.

An interesting fact for the stock market:

On Election Day November 4th 2000 when George Bush ran against Al Gore the S&P closed at 1,429. On Election Day November 4th 2012 when Barack Obama ran against Mitt Romney the S&P closed at 1,430!

This means that over 12 years the stock market has posted zero gains!!!!! It truly is a lost decade in regards to stocks. If you are invested in the stock market you have to be averaging into high grade, dividend paying U.S. or foreign stocks. Timing this market or trying to get capital gains is strictly a professional’s game and should be avoided by everyone else.