Gold investment should double on persisting economic woes - Coutts - GOLD ANALYSIS - Mineweb.com Mineweb

Gold investment should double on persisting economic woes - Coutts

Coutts, the private banking arm of RBS, says investors should double the amount of gold they hold as the value of paper currency diminishes along with the prospects for global economic growth.

Author: Rujun Shen
Posted: Wednesday , 10 Oct 2012 

SINGAPORE (Reuters)  - 

Investors should double the amount of gold they hold as the value of paper currency diminishes along with the prospects for global economic growth, said a senior executive at Coutts, the private banking arm of Britain's Royal Bank of Scotland.

Ideally, investors should aim to have 7 to 8 percent of their assets in gold, above the wealth management industry's average of 3 percent, Gary Dugan, Coutts' chief investment officer for Asia and Middle East, told Reuters.

"What's happening in precious metals is that they are becoming more mainstream," Dugan said, adding that ten years ago investors rarely held any gold in their portfolios.

"Some of the clients ask where gold prices are going, and I say don't even think about prices. It's a store of value."

PHYSICAL VS ETFS

Spot gold perched above $1,760 an ounce on Wednesday, down from an 11-month high of $1,795.69 struck last week on support from recent stimulus measures taken up by key central banks.

Dugan expected gold prices to rise towards $2,000 in the next several months, supported by short to medium-term factors including purchases by emerging-market central banks.

Gold's appeal is also likely to increase as the world economy has become more volatile and unstable after decades of usually steady growth, and there appears to be no swift solution to the structural problems emerging in the U.S. and European economies, Dugan said.

"We are going back to normality, and the normality is that precious metals are the core part of your portfolio," he added.

Coutts said its preferred method of gold investment is exchange-traded products, which provide low-cost and liquid ownership of physical metal secured in underground vaults.

But 15 to 20 percent of its clients prefer to hold their gold in a vault they trust, rather than putting money in gold-related financial instruments, as they have little trust in the financial system, Dugan said.

"One client literally took delivery in a van, because he did not trust any bank to store his gold for him," he said.

Holdings of gold ETPs reached a record high of 74.76 million ounces by Oct. 8, up 6 percent over the past two months.

(Additional reporting by Anshuman Daga in SINGAPORE; editing by Miral Fahmy)

read the article online here: Gold investment should double on persisting economic woes - Coutts - GOLD ANALYSIS - Mineweb.com Mineweb

Doug Casey on Profiting from Government Stupidity - Casey Research

Shortly after the conclusion of the Casey Research/Sprott, Inc. Navigating the Politicized Economy investor summit, Louis James sat down with Doug Casey to assess the conference and provide insights on how investors can win in today's distorted marketplace.

Here are some quotes from the interview.

On the USA and its military:

Americans love their military. It seems to be the only part of the government that at least has the façade of being competent and honest. Of course, it's actually not that competent – it's about as competent as a heavily armed version of the post office. And is it honest? Well, maybe the average soldier is, but once you get up to the supply-sergeant level, not very much; and once you get up to the Pentagon level, not at all.

On the current bond bubble:

They've driven interest rates to basically zero levels – actually negative levels in some European countries, which is pretty unbelievable. I learn something new every day; I thought that negative interest rates were almost cosmically impossible, but I've learned different in recent months. This is creating huge distortions in the way people react and so forth. And of course, the biggest one of all is the bond market, which is going to collapse at some point. The time to have bought bonds was in the early '80s, when they were yielding 12, even 15%. Now they are yielding 0%, and everybody's buying them. It's unbelievable.

And the future bubble in Gold and Silver: 

I'd say it's a certain gold bubble. Looking at the bright side of the government doing all these stupid things, they will create other bubbles. It seems inevitable to me that gold and silver are going to be among them, because they are the only financial assets – and that's what they are, financial assets – that are not simultaneously somebody else's liability.This is totally untrue of bonds. Bonds are a triple threat to your welfare. You've got the interest-rate threat. Interest rates could only go up at this point since they're at zero. You've got the credit-risk threat. Will they be able to pay back the dollars, or euros, or yen, or whatever that they are in? And you've got the currency threat. Will the yen or dollars or euros or whatever be worth anything, even if they pay them back to you? I don't see why, but everybody's buying bonds. Institutions are buying them, the average guy is buying them – trying to reach for 2% in yield when real inflation is probably running 5-6% per year. Who knows what it really is – the US is becoming like Argentina, where they disguise these numbers and don't admit the reality.

The whole interview can be seen here: Doug Casey on Profiting from Government Stupidity - Casey Research

Interest on the US National #Debt now takes 9% of federal revenue

Richard Russell had this to say on his Daily Letter:

"Speaking of the debt, interest on the national debt now takes 9% of every dollar of federal revenue. By 2040, interest will take up 58% of every dollar of federal revenue. By 2060, interest will take up 100% or ALL of federal revenue.

"The magic of compounding. By 2040, the government will annually devote four times as much in interest as it will to education, R&D and infrastructure combined."