Saving in America

Last weekend, one of our staff members spoke to a family member who is over the age of 80, who is saving in Certificate of Deposits (CD’s). When asked what the going rate was, he told us that his 3 month CD pays him almost HALF of a percent. This of course is because of the Federal Reserve system. In a market driven economy, there is no way banks in their current financial condition would be allowed to borrow for basically nothing. The current system not only doesn’t reward savers, but it punishes them because the fact is a dollar saved is worth a lot less than it was even a year ago. When it comes to gas, food, clothing, even dog food, the value of the dollar has gone down, yet the safety of the nominal number has deceived people into thinking they are protecting themselves.

As you can see from the chart below, the savings rate has increased for Americans since the downturn began in 2007.

 The problem is the next two charts below. The first chart shows how your saved dollar has done against food.

 The second chart is the Food Stamp chart, but instead of just showing the increase in people, this one also shows the increase in cost.

Thus the problem with saving in the U.S. dollar. If there was one thing we wanted to help people with over the next 10 years it would be understanding this. The Federal Reserve and the Federal Government have done an excellent job in making people believe that their dollar is money, when it is not. Don’t believe us, check out the definition of money, the dollar does not meet the standard of a constant measure of value. Think about it for a second, the same amount of paper and ink goes into making a $100 bill or a $1 bill.The true value of them is the same, the nominal value is different by a lot, however, priced against things that are constant the nominal value changes everyday.

So, for people to truly understand gold, you have to understand that the gold isn’t going up and down in price, the measuring stick that you are using to price gold is going up and down.

For example, a 1 ounce gold coin from 100 years ago is equal to a 1 ounce gold coin today. No matter how you look at it, an ounce is an ounce.

CHINA Economy Grows 9.1%

Now in any other country this would be an amazing number, however, in China this is actually the slowest growth in 2 years. The slow down is mainly due to weaker demand from Europe and to a lesser extent, the U.S. Exports to Europe were down 9.8% in September. Clearly the debt crisis in Europe has spread globally.

In the big picture, this is still going to be China’s century.

The clothing chain The Gap, recently announced detailed plans to close 189 locations in the U.S. while at the same time open 30 new stores in China, tripling their current presence of just 15 stores. We should note that the Gap plans to still have 700 stores in the U.S. by the end of 2013, far more than China, yet also far less than the 1,056 stores they had open in 2007. A trend we believe that accurately reflects the massive shifts in wealth going on globally.

Major Trend Alert for China!!!

For the first time gold trading in yuan began, this is a double alert! 1. This will help internationalize the yuan 2. This will increase the demand for gold. predicts that soon you will see oil traded in yuan and eventually all other commodities. Setting up the yuan to one day be a global reserve currency, if not “the” reserve currency.

This is important for our members to know because as the yuan takes more of an international role, this will give the world a place to run to as the value of western fiat currencies remain in a debt crisis. So, the simple question is, do you want to join the crowd in 2 to 5 years? Or do you want to maybe have a little exposure to the yuan today before it becomes an international currency and way before it becomes a reserve currency. We of course are not advocating for paper government currency, however, we do believe in focusing on the trends and playing the hand we are dealt.