Jeffrey Gundlach: Here's The Currency That's Better Than Gold In An Extreme Crisis

If things get really bad, forget gold.

In our interview with Jeffrey Gundlach, the legendary bond manager said it's good old paper cash that you want to have on hand. And not cash in the bank. More like cash under your bed, that you can pick up and carry (which you can't do with gold... do you really think that you're going to shave of flints from your goldbrick to pay for food at the store?).

And if you really can't stomach cash, even precious stones are better, since it's much easier to carry a few million in gems around then a few million in gold, which is way too heavy.

The discussion came after a broader talk about derivatives, which he sees as still posing potentially huge systemic risk to markets.

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James Turk : $8,000 GOLD and $400 SILVER between 2013 and 2015

James Turk : ...well let's step back and look at the long term point of view I am sticking to my long term forecast that sometime between 2013 and 2015 Gold will be about $8000 and ounce and Silver will be about $400 an ounce , the ratio between the two metals will be 20 ounces of silver to buy one ounce of gold , I made this forecast back in October 2003 , obviously when the price of gold and silver was much much lower , the point I am making is that we are in a financial bust and during a financial bust like the one we have been in for several years and still few more years to go people move out of financial assets and move into tangible assets because they are looking for a safe heaven , they want to avoid counter party risk and the safest of all heavens are the precious metals because they are tangible assets with no counter party risk , so for the longer point of view we are still heading into a much much higher , you mentioned the way I approach the market which is to continue accumulating , do not view gold as an investment it really is not an investment because it does not generate cash flow it's really money and when you accumulate gold you are actually saving money and saving money is a good thing , at some point in time in the future we are gonna take these savings and either invest them or we gonna spend them or just continue to hold them , at some point in time in the future gold will be at the maximum and you want to take advantage of everything that you are saving now through the these difficult economic and financial times , in regard to the short term , I am looking for a a pop up in gold price this summer and it relates back to what happen in the summer of 1982 when the Mexican government defaulted on its debt and it sent gold up 50 percent in three months and a double in six months , the circumstance today is very similar , the government ready to default though is not Mexico , it's Greece Portugal Ireland may be even Italy who knows , any number of countries that will be defaulting on their debt and when that happens I think that could really light a fire out of the Gold price so ...be prepared for an upside jump in the gold price this summer ....

TOP 5 GRAPHS OF THE WEEK

This week we look at some of the latest economic data coming out of Japan; noting a rare occurrence of positive inflation, and observing a further trade deficit in April. Then we look at some US data, first checking in on the US consumer sentiment index, and then a proxy for investor sentiment – long term mutual fund flows. Finally the latest monetary policy interest rate decisions are covered-off.

1. Japan Inflation
As noted Japan recorded a rare positive inflation figure in April as consumer prices rose 0.3% on an annual basis, having sat at 0% for most of this year, while April 2010 saw deflation of -1.2%. A certain degree of the positive inflation figure can be attributed to temporary shortages brought about by the earthquake, but inflation had been in a mild upward trajectory anyway. Like the rest of the world, Japan had seen some impact from rising commodity prices (as can be seen in the upward trend in imports on the next chart). Meanwhile aggregate demand has probably only had a marginal impact on inflation as the Japanese economy has been in its second recession after a brief period of growth.

2. Japan International Trade
Japan reported exports of JPY 5.2 trillion in the month of April, down -13% year on year and -12% month on month. Imports were JPY 5.6 trillion, up 9% from April last year and down -1% compared to March. The April figures add another month of trade deficit as rising import costs meet relatively stable exports. The April figures did see some impact from the earthquake as supply chain disruptions weighed on exports. Overall Japan is yet to see either its exports or imports reach pre-crisis levels, which shows the weakness of the Japanese economy, but also the slow rate of growth and economic recovery in its trading partners (not to mention a rising share of global exports for China and other emerging markets).

3. US Consumer Sentiment
The Reuters/University of Michigan US consumer sentiment survey showed some improvement in the final reading for May, with the index at 74.3 vs consensus 72.4, and the April reading of 69.8. Future expectations performed well, at 69.5 vs 61.6 in April, meanwhile current conditions was basically flat at 81.9 vs 82.5 in the previous month. So while the current conditions result was not inspiring, the trajectory of the future expectations part was promising, indeed if the trajectory continues it will be positive for the medium term outlook, which is consistent with other indicators and conditions.

4. US Mutual Fund Flows
US mutual fund flows remained in positive territory in total during April, with the majority of net inflows going to bond mutual funds, showing a possible pick up in momentum after flows into bond funds dried up at the start of the year. Domestic equity flows continued to languish, while foreign equity fund flows remained positive as investors looked elsewhere for better macro-economic fundamentals. It will pay to watch this chart through the year, especially as key events unfold such as the ending of quantitative easing, and a potential short-term correction in US equities. A final thought on the chart below is the large amount of funds that have flown into bond mutual funds, this aspect will be interesting for equities when/if bond returns begin to suffer as the monetary policy stance turns later this year.

5. Monetary Policy Review
The past week in monetary policy saw six emerging market central banks announce interest rate decisions. Those that altered interest rate levels included: Israel +25bps to 3.25%, and Nigeria +50bps to 8.00%, while those that held interest rates unchanged were: Pakistan 14.00%, Turkey 6.25%, Georgia 8.00%, and Mexico 4.50%. So it was very much a continuation of the theme were emerging markets begin to take more caution in balancing the growth vs inflation risks, but also as the inflation impulse begins to taper off as policy measures and stable commodity prices begin to take effect. But the rate hikes in Israel and Nigeria show that inflation pressures are not completely gone in emerging markets, indeed Vietnam is still a hotspot of inflation.

Summary

So we saw the emergence of inflation in Japan, after a long period of deflation, however short term factors were likely the main cause of this. Meanwhile Japan’s international trade results showed stagnant growth and short term impact from the earthquake. In the US consumer sentiment improved again, heading in a promising trajectory. Also in the US long term mutual fund flows pointed to some interesting trends, and some key areas to watch in the stock and bond markets through the rest of the year. Finally, the week in monetary policy saw two emerging market economies tighten, while other emerging markets opted for caution in the growth risk vs inflation risk balancing act.

The Death of America - Doug Casey / Stefan Molyneux

Doug Casey on the Largest Criminal Entity on Earth . There are at least 7 trillion us Dollars held outside the United States , if the dollar collapses it is going to be a worldwide problem.The largest criminal entity today at large is not some Colombian cocaine gang , it's the US Government they're far more dangerous and they have a legal monopoly to do anything they want with you says Doug Casey , I rather deal with the mafia than I would with any agency in the US Government because first of all the Mafia tends to honor their word because they have no legal way of enforcing it , so it's easier to honor your word , US government never does that , and the Mafia has no legal right of enforcement , so the US government is much more dangerous and even under the worse circumstances even if the Mafia control the United States I can't believe that even Tony Soprano will try to steal forty percent people's income from them every year , he couldn't get away with it , but for some reason the US government is able to .



Doug Casey : "I'm of the opinion that most people are basically decent. The 80/20 rule. 80% of people are ok, basically. But now what about that 20%? Well, let's call them potential trouble sources, because they can go either way. But we can take 20% of that 20%, ok. And these people are the sociopaths "...Good points as usual...I like the sociopaths leading the 20% idea. Makes sense. Lack of philosophical anchors-great way to put it, reigning fear of middle class, yep, reflexive belief in gov't made up that some of those sociopaths. Got it. .  There are very few left who actually understand how, and why this country was founded, it is to escape the clutches of those who coerce and seek to control your life, starting with your mind, and right down to your very body and the space you exist in, simple as that.There is a lot more we can learn from Doug, and this is just an excerpt..

MoneySense - June 2011

MoneySense - June 2011
English | 96 pages | PDF | 30,4 Mb


download it here

US Economic Calendar For The Week

Date Time (ET) Statistic For Actual Briefing Forecast Market Expects Prior Revised From
May 31 9:00 AM Case-Shiller 20-city Index Mar - -3.7% -3.4% -3.33% -
May 31 9:45 AM Chicago PMI May - 63.0 62.5 67.6 -
May 31 10:00 AM Consumer Confidence May - 67.5 66.3 65.4 -
Jun 1 7:00 AM MBA Mortgage Index 05/27 - NA NA +1.1% -
Jun 1 7:30 AM Challenger Job Cuts May - NA NA -5.0% -
Jun 1 8:15 AM ADP Employment Change May - 190K 170K 179K -
Jun 1 10:00 AM ISM Index May - 57.0 57.6 60.4 -
Jun 1 10:00 AM Construction Spending Apr - -1.0% -0.5% 1.4% -
Jun 1 3:00 PM Auto Sales Jun - NA NA 4.73M -
Jun 1 3:00 PM Truck Sales Jun - NA NA 5.38M -
Jun 2 8:30 AM Initial Claims 05/28 - 400K 413K 424K -
Jun 2 8:30 AM Continuing Claims 05/21 - 3700K 3688K 3690K -
Jun 2 8:30 AM Productivity-Rev. Q1 - 1.6% 1.6% 1.6% -
Jun 2 8:30 AM Unit Labor Costs-Rev. Q1 - 1.0% 0.9% 1.0% -
Jun 2 10:00 AM Factory Orders Apr - -2.0% -1.0% 3.4% 3.0%
Jun 2 11:00 AM Crude Inventories 05/28 - NA NA 616K -
Jun 3 8:30 AM Nonfarm Payrolls May - 175K 185K 244K -
Jun 3 8:30 AM Nonfarm Private Payrolls May - 190K 220K 268K -
Jun 3 8:30 AM Unemployment Rate May - 9.1% 9.0% 9.0% -
Jun 3 8:30 AM Hourly Earnings May - 0.1% 0.2% 0.1% -
Jun 3 8:30 AM Average Workweek May - 34.3 34.3% 34.3 -
Jun 3 10:00 AM ISM Services May - 53.5 53.3 52.8 -

Dollar Armageddon Ahead ?

FINANCIAL ARMAGEDDON AS THE DOLLAR CRASHES ILLUMINATI TAKE CONTROL 
Beijing announced that China will start the first pilot of selling and buying products and services abroad with renminbi's instead of dollars.I think the next step is oil in euros, looks bad for your unstable dollar



The financial end of the US$ is on our doorstep..brace yourself america SEPT 2008 Was only a taste of whats to come.
As we travel down the road of control and manipulation where the world elite namely the illuminati and the new world order set into motion their final plan of world control.
They are shadow goverment within the goverment and control strategic an key positions.They control politicians and cia offilcials as well as a lrage part of the military.
This satanic plan which has been carefully planned for hundreds of years is at a climax and will result in the final armageddon.
Armageddon will manifest it's final battle in the planes of magido in Israel.
Armageedon led by the illuminati and their quest for war and ultimately world control.
The sad truth is these people are actually being manipulated the whole way and many will only learn this truth in their final destruction.
To think they are actually illuminated and then find that they are actually hood winked will be a sad day for many who know within their hearts that what they support is actually evil.
As we enter the final battle and satan manipulates them even more to fulfill his personal plan is putting pressure on them to esacalte the movement forward.
The dollar will crash and the rfid chip will be instituted.