Gold Peak?

by: Global Investing Editor

Investors poured more than $13 bn into U.S. ETFs last month, lifting assets to over $940 bn, up14% year to date. The three most popular funds in October were all emerging markets ETFs( data): Vanguard MSCI Emerging Markets ETF (NYSEARCA:VWO), which gathered $3.22 bn; iShares MSCI Emerging Markets Index Fund (NYSEARCA:EEM), $1.57 bn; and iShares MSCI Brazil Index Fund (NYSEARCA:EWZ), $1.18 bn.

Dilma be good!

Australia's CB raised interest rates another quarter point to 4.75%, in anticipation of which we bailed out of Westpac (NYSE:WBK), worrying about the impact on the booming housing market down under.

Looking for something to do after losing his bid for the CT Republican Senatorial nomination, stockbroker Peter Schiff writes of his launch of Euro Pacific Precious Metals, LLC. A cynic might say this may indicate a market top for gold.

This new company, of which I am [CEO], offers physical delivery of gold and silver coins and bullion at fair and competitive prices based on my reputation for integrity, straight talk, and fair dealing. It does not deal in numismatic coins, commemoratives, proof sets, etc., which I do not believe are suitable for investors.

He also launched a new monthly newsletter, Peter Schiff’s Gold Report which will feature feature articles by Schiff plus regular columns by the gold expert Aden Sisters and resource specialist Doug Casey’s firm, Casey Research. Peter adds:

I have always advocated that investors hold at least 5 to 10% of their portfolio in gold and silver bullion and coins. Tangible wealth, not subject to confiscation, registration, or unwarranted intrusion by government, should be a core component of any well-balanced portfolio.

I believe physical precious metals are the ultimate insurance policy in today's perilous world. No other investment offers the same level of financial privacy, while eliminating counterparty risk. Physical precious metals do not depend on a court, a bank, or a stock exchange — their value is intrinsic.

I expect gold and silver prices to move much higher. Pressure is building in all parts of the world for solutions to the debt crisis that many nations face. The classic way for governments to deal with excessive debt is by debasing the currency, i.e. inflation. This has already started, with the U.S. Federal Reserve printing trillions of new dollars since 2008. Many observers think the world's only superpower is heading toward bankruptcy. And there is no one big enough to bail us out. This means inflation of historic proportions. Potentially sending gold prices higher than most hard money investor would ever dream.

Over the years, many clients of my brokerage firm followed my advice and purchased coins and bullion from coin dealers. Too often, however, I heard that clients needlessly overpaid for their gold. In some instances, they were 'sold' on coins that were really not suitable for them. So I decided to go into the business directly. The goal is to provide a trustworthy source to find top-quality gold and silver products at competitive prices.

Euro Pacific Precious Metals features the most widely known and liquid gold and silver coins, such as American Eagles, Canadian Maple Leafs, Australian Kangaroos, South African Krugerrands, and Austrian Philharmonics. I strongly believe you should avoid buying 'exotic' or 'numismatic' coins for investment purposes. Commissions on such products are very high, and liquidity often is very limited.

Schiff forgets that Franklin Roosevelt's Administration confiscated American holdings of gold in the 1930s. When your editor got married, an elderly neighbor originally from Santa Barbara gave me one of her then illegal $5 gold pieces, part of a horde she kept in a safe deposit box. As ordered, I wore it in my shoe as I walked down the aisle, to ensure a prosperous marriage. Pres. Nixon ended the ban on Americans owning physical gold, but presumably a precedent for seizure by Washington exists.

Peter Schiff would never shop his clients to the Feds, but I am not sure they are safe from hackers and phishers.

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