SGM Metals: "Gold is the Perfect Asset to Benefit from FED Money Printing" DUH!

June 25, 2012 - PRLog -- SocGen reports: [ Societe Generale is "enthusiastic on gold" -- so much so that in their latest cross-asset strategy report, they call "buy gold ahead of QE3" their number one strategy, saying it's "the perfect asset to benefit" from additional loose monetary policy.

In the report, SocGen discusses the historical relationship between the price of gold and the U.S. monetary base. The SocGen team writes that "if gold catches up with the increase in the monetary base since 1920 (as it did in the early 80s), its price would rise to USD 8500/Oz," adding that just "to close the gap with the monetary base increase since July 2007, gold would have to rise to $1,900/oz, assuming full transmission from the monetary base increase to the gold price."

SocGen also notes that gold appreciated 36 percent as a result of QE1 and 21 percent as a result of QE2. The report doesn't note the diminishing returns, however, saying the outlook for gold in the wake of a third round of quantitative easing would be "very positive."

SocGen's gold call: Buy gold, while hedging the implicit USD exposure. Gold is back to the lower band of the trading range of the past year. It is also the commodity that benefits most from the Fed’s unconventional monetary policies. As a result, we are strong overweight gold ahead of QE3 and expect its price to challenge $1,800 before the end of the year. Timeline of the call: 3-6 months.]

How much longer do we really need to play cat & mouse with the topic of what gold & silver really are as an investment? Can we finally shake off the garbage that has been programmed through the talking box? Can we finally admit to one another that gold & silver are real sound money & are the currency of choice when central banks are hopelessly locked into a fiat money printing dilemma that threatens the viability of the very paper medium of exchange? Can we stop ignoring over 6,000 years of human history that clearly illustrates that gold & silver have always been the true definition of wealth? Can we admit that ever time throughout history that one of these paper instead of gold scams has been perpetrated it has ended in the complete devaluation of the paper instrument & the return to gold & silver has brought with it higher prices to offset the wealth destruction caused by the paper devaluation?

When you remember that EVERY CENTRAL BANK ON THE PLANET holds their respective nations wealth in HUNDREDS OF METRIC TONS OF GOLD buried deep underground in state of the art depository bunkers with armed guards it tends to force you to realize there might be something important about gold? Because gold is the preferred medium of exchange throughout history!

I was caught off guard this morning when I saw an image of a ‘Guy Fox mask’ (made famous by the Occupy Wall Street Movement). It triggered a thought process that filled in the blanks regarding why a majority of the population refuses to acknowledge how dangerous our current financial dilemma actually is. The image was drawn that you have two major schools of thought in the nation today. The first is the Occupy Wall Street school of thought & the other is their parents, the baby boomer generation. This is where the deviation in thought becomes glaringly obvious. You see the Occupy folks are the offspring of the boomers who are becoming very clear on the concept that there will be NO future for them as far as Social Security, pensions, & 401Ks are concerned. The second group are the parents of these 'kids’ who have paid into this system for decades & are desperately (and hopelessly) dependent upon this system that is in great peril actually making it through this disaster regardless of how bleak the probability of that outcome actually is. Just having two different camps of thought is not the issue, rather it is the fact that the major difference between these two groups is that one controls a volume of investing dollars & the other has not yet had the opportunity to amass any retirement portfolio. Therefor the Occupy groups understanding of the bleak outlook of our current fiscal/economic crisis can’t be expressed by ‘voting with their dollars”. So what we have is a group of Americans who clearly see they have no hope of benefiting from the current system & its fate is quite possibly sealed & the other who feels that is probably true but is so invested & dependent on the flawed system that they have no choice but to ignore the probable outcome & hope for the best. It doesn’t help that the talking head experts on the boob tube are telling the group with investing dollars that if they were to transition their investing dollars out of the system & into a wealth preservation tool that offers an inflation hedge & more than likely would aid them in making through to the other side with their wealth in tact, they might bring the system down themselves. This logic that “you are either with us & want this thing to work or you are a selfish conspiratorial gold bug who doesn’t trust the govt. & only cares about yourself that would purchase a barbaric relic that pays no dividends” is foolish & destructive. Notice that the Occupy movement was lampooned by the media immediately & they ultimately avoided covering them after they realized they weren’t going away. The media controlled the message & you repeated what they told you.

Don’t get me wrong, I’m not endorsing the Occupy movement outright as they were sabotaged very early on in their protest by wealthy influential people who also had a vested interest in controlling the message as not to allow the message to grab hold of the nation that the system is flawed. What I am endorsing is that they had the nerve to stand together & point out the emperor had no clothes. There were many disgruntled young people who have already been tainted by their college education to hope for socialist solutions but they were led down the path of ‘pay for my education’ to make them seem selfish & stupid. The media labored this angle & the movement was immediately discredited as a stupid group of kids who wanted handouts. This pitted them against the parents who ‘were entitled to the the handouts’ because they had paid into the system for decades & were going to get the handouts before any kid got a free trip to college.

Enough is enough! Establish your “Plan B” in physical gold & silver bullion now & begin to participate in the sound money debate just as the nations & central banks of the world have for a thousand years. The idea of moving a portion of your assets into precious metals only makes sense in light of the destructive currency war that is being waged between the FED & the Chinese govt. This global currency war all but guarantees that the fiat paper dollar will suffer further dollar devaluation and this will translate into higher consumer good prices at a time when consumers are already stretched so thin they are being forced to decide whether or not to feed the kids or pay the light bill. Our current dilemma will bring with it more devastation for those who refuse to admit the elephant in the room. It will only bring more confusion & panic for those who have bought into the left right paradigm & believe the angle that swapping the current president for the other one will bring the solution we so desperately need. This too will bring with it a huge investment opportunity by the end of the 1st quarter when the nation realizes they simply swapped the red team for the blue team & there are no major differences between the two other than some fringe social positions on subjects like gay marriage & abortion in my opinion. There will be no major shift in course as this ship takes a lot to turn and with that realization will come a panic by the end of Q/1 2013 that will bring those who are denying the depth of our crisis rushing into precious metals. Break away form the herd now while you can or start practicing your ‘shocked face’ so you can seem genuinely caught by surprise when this all comes true. Tick, tock.