Warning: call_user_func_array() [function.call-user-func-array]: First argument is expected to be a valid callback, '' was given in /home/content/50/8762750/html/wp-includes/class-wp-hook.php on line 298

December 20, 2012

December 20, 2012

Happy Holidays from Guild Investment Management

We wanted to wish our readers Happy Holidays from all of us at Guild Investment Management.  We appreciate the support throughout the years and will continue to strive to inform, educate, and help our readers with their investment strategies.


Long-Term Strategy: Negative Real Interest Rates Will Push Many Asset Prices Higher

On December 12, U.S. Federal Reserve chairman Ben Bernanke announced that the Fed’s Open Market Committee’s interest-rate policy is now tied to economic markers.  The Fed will be maintaining a target federal funds rate at zero to ¼ percent interest-rate policy as long as the U.S. unemployment rate remains above 6.5 percent, or until a year or two down the road.  The Federal Reserve’s Board of Governors wrote in a statement last week,”…inflation between one and two years ahead is projected to be no more than a half percentage point above the committee’s 2 percent longer-run goal.”…

Real Interest
Rates.jpg

  Source: Bank of America Merrill Lynch Global Research

Real Interest Rates in Negative Territory…

               upgrade.jpg

Who benefits from negative interest rates and what does it mean for investors? 

Find out and read our full analysis today, upgrade your subscription to a Gold Subscription.  To learn more, click the link above.


Gold

U.S. Federal Reserve has decided to set a policy for continuing QE that will not be reversed until unemployment falls below 6.5 percent, consistent with a vague inflation rate that it has set.  Clearly, based upon the track record of the Fed, it will find reasons to keep printing after these hurdles are cleared.  This is ultra bullish for gold over the long term.  One need only look to at the long term chart for the U.S. dollar versus the Swiss franc to see the kind of damage that has been done to the buying power of the dollar since 1970.  During that time, the Swiss franc has moved from about 20 cents U.S. to about $1.09 USD.

Why is this?  Why has the Swiss franc risen so much versus the dollar?...

Who is Congress Kidding?


In this week’s Premium Global Market Commentary available to Gold Subscribers, we discuss:

  • Japanese Election was Won by the Liberal Democratic Party (LDP)

    The LDP captured 294 of a total of 480 seats in the lower house of the Japanese parliament (the Diet) versus only 57 seats for the previously dominant Democratic Party of Japan (DJP)…

    To quote Abe: “I think the results do not mean we have regained the public’s trust 100 percent.  Rather they reflect ‘no’ votes on the politics that stalled everything the last 3 years.”  The previous government for three years was the DJP, who said that they would tell the bureaucrats how to bring the economy out of the stagnation that has lasted for over 20 years.  The DJP and bureaucrats fought to a standoff, and no progress was made at all.  Realizing that the party’s three-year stint was a failure, the public resoundingly voted them out of office.  The Japanese public and business community is frightened that the stagnation of 22 years might continue — they want to end it now.  And all agree that the support of exports and renewal of the famed Japanese export machine is the way to do it…

    What does this mean for Japan?

  • Rolling Out New Advertising Technology: First in Japan, and Eventually Everywhere

    Geofencing and Context Awareness

    Getting Personal

    Shifting Ground for Shopping and Advertising

  • Guild’s Weekly Global Market Summary
    We discuss countries that we think are attractive for investment and discuss Gold’s attractiveness as an investment over the longer term.

To get the full content and much more, become a Gold Subscriber today to receive our weekly Premium Global Market Commentary, where we discuss our formulated plans and investing strategies.

Please click the button below to learn about the benefits of Gold Subscription, or contact our office at (310) 826-8600.

                 upgrade.jpg


Guild Basic Needs IndexTM

Official Inflation Data Says Consumer Prices Fell in November

According to the latest data from the Bureau of Labor Statistics, November saw a 0.3 percent decline in prices for all urban consumers.  The basket of goods used to calculate consumer prices was primarily driven lower by monthly drops in the prices for energy, medical, apparel, and autos.  Year over year, the Consumer Price Index (CPI) basket of goods showed a 1.76 percent increase in prices.

The basic, essential needs tracked in the Guild Basic Needs IndexTM(GBNI) also saw a decline from October as energy prices declined.  However, the last twelve months saw an approximate 8.6 percent increase in the prices of the food, clothing, shelter, and energy components tracked in the GBNI (see charts below).

CPI is Being Engineered Lower to Help Balance the Budget

At Guild Investment Management, we have written for years about how inflation data is manipulated and adjusted to show a slower-than-actual increase in the cost of living.  We believe that this process takes place in most countries that provide price data — not just in the U.S.  This week, the Washington Post discussed one way the Federal Government hopes to reduce its budget deficits and future obligations, by reducing the CPI through the use of ‘chained CPI’.  It is no secret that by reducing the admitted CPI, the Fed can slow the growth in outlays it must make for Social Security and other entitlement programs.

As we reported last year in our August 3, 2011 Global Market Commentary, chained CPI considers that when the price of a particular good rises, people ‘trade-down’ to a cheaper alternative.  For example, in his Washington Post article, author Ed O’Keefe writes that people may substitute chicken for more expensive beef, or lettuce for more expensive arugula if prices rise.  He states that “chained CPI attempts to account for how people react to inflated prices”.

How Many Times can Consumers Trade Down, Before their Standard of Living is Noticeably Lower?

So, if the government is going to artificially adjust down the published rate at which prices are rising, how long will it be before government benefit recipients will only be able to afford very low quality goods?  Further, for the rest of the population, how long can adjusting inflation rate down hide the fact that their standard of living is being squeezed?

The GBNI tracks food, clothing, shelter, and energy (used for heating, cooking, and transportation), not a general basket of consumer goods that are easily traded down.  Moreover, the components and weightings in our index will never be adjusted or changed.  This index was constructed and the data is being published to inform; we have no reason to manipulate the number higher or lower.  The charts in our GBNI write-ups clearly demonstrate that prices of basic, essential needs (food, clothing, shelter, and energy) may be more volatile, but have also risen much more over the past several years than the generally-accepted consumer goods basket represented in the manipulated-lower CPI.

Guild Basic Needs Index (November 2012)
November 2012 GBNI.jpg
  Click to Enlarge

To track your basic needs go to www.gbni.info


Guild Recommendation Tracker

Rec table image 100.jpg