4
“Rising interest rates have been advertised for so long and in so many places that
anyone who has not appropriately hedged this position by now obviously is desirous
of losing money.”
– Alan Greenspan
HEEDING THE CALL OF OUR PAST
History can make you a fortune if you are cognizant of
its lessons.With rock bottom interest rates, an unstable
economy, and soaring debt … a quick look into the past
exposes the lessons of time.We have been here before, and
we have seen this trend repeat itself. When interest rates rise
… gold and silver valuations boom.According to the Interest
Rate Triangle we can expect gold and silver to follow the
post 1965 trajectory to new heights just as they did from 1965
to 1980. The real question is … what will we do about it?
GOLD LASTS FOREVER
Gold has a history of stability and as more and more
currencies are de-valued and more and more countries are
propped up … the world turns to gold as the standard store of
value. In times of fluctuation and uncertainty Gold represents
security and insurance against all the outside forces beyond
our control.Above all, gold lasts as nothing else does. Here are
three more reasons to turn to gold right now.
1) Interest Rates Are Poised to Rise
At some point in the future, interest rates will move up from today’s artificially low levels.When
the economy does start to recover, the Fed has to raise rates to slow the flood of cheap
money that inflation has created. But, even without rising rates in the short term, world tensions,
corporate scandals, and a weak economy are already pushing gold higher.
2) Unprecedented Demand
Both US and worldwide demand for gold is increasing. According to Gold Field Services,
worldwide demand is outstripping supply by 10% and central banks are net buyers of gold for
the first time in over 12 years. New and existing mining production has also declined.
3) Gold’s Technical Picture
Gold is still trading substantially below its inflation adjusted high. In terms of today’s dollars, gold
reached $2375 in 1980. But right now, it’s trading at about $1710 an ounce. The Dow/Gold ratio is
also still high at a 7-to-1 (in 1980, that ratio was just 1-to-1) and both The Wall Street Journal and
Morgan Stanley agree that the dollar could slide even more. This all translates to a very positive
outlook for gold.
LEAR
CAPITAL
The Precious Metal Leaders
1-800-576-9355
How will you take advantage of Higher Interest Rates in the Future?
What are your thoughts? What is your plan for meeting the cyclical lessons of the Interest Rate Triangle
head on? Give us a call.We have some ideas!
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