Your Money and Risk Today
I have to mirror something one of my best sources in financial, especially gold, markets said last week: How can anyone put their money with a clearing house given todays risks. This was from the mouth of Jim Sinclair, a highly respected voice in the metals and mining markets.
After the bankruptcy of MF Global and now the near collapse of a stock brokerage firm that cleared a ton of trades for other firms, it is even riskier to place your money with ‘others’. Given the financial health, a all time lows, of so many brokerage firms in both stocks and futures an argument can be made for simply avoiding them all together.
Unfortunately there is not only the risk that your money will disappear from a bankruptcy of one of these firms but also there is the risk inherent in these type of investments. With the new lows in fixed income rates of returns many folks are looking to add more risk by investing in the stock markets to hopefully have a somewhat better return.
Personally, there is an inordinate amount of risk these days in almost everything. Fixed income markets are just not paying enough to offset any of the risks. To avoid the additional risk of the brokerage firms you have to take delivery of the physical bonds and put them in your bank safety deposit box and then keep track of the coupons etc.
I am still a buyer of gold and silver, although I feel that the risk here is in your entry point now. Seems that there is some sort of base around 1550 in gold so prices close to that level might be good.
There are so many things out there now to be worried about, at least theoretically since we can’t do a thing about them, such as the drought and a really terrible corn and wheat crop which will cause food prices to rise even higher, collapse of the Euro and the European Community (EC) which will affect our exports and jobs that would have been there had this not happened, collapse of our economy as evidenced by first the failure of municipalities (interesting to note the Warren Buffet paid to ‘cancel’ 1/2 of his exposure to municipal defaults last quarter), not to mention the rise in senseless violence across the country.
On top of it all we have a couple of guys running for President that by all appearances and history have few differences in economic terms. Sure they talk a good game but when you look at track records there is a very odd convergence in some really critical areas-at least in my opinion.
So here is to hoping and praying that we see some substantial change, of the good kind, and very soon. In the meantime we are preparing for the worst…gold, silver, stored food and herbs and of course water!