Gold And Silver Prices Skyrocketing While U.S. Businesses Preparing For Financial Apocalypse

Oct. 11, 2012 - PRLog -- Are Companies Quietly Preparing for a Monetary Apocalypse? U.S. companies are sitting on more money than at any point since Globe War 2. That is with out such as banks. I am only speaking about non-financial companies - the ones that sell goods and services and make the economic climate go. These companies hold $1.4 trillion. In absolute terms, that is probably the most ever. In relative terms, it is probably the most since Globe War II. Rare Coins, Silver Coins, Gold Coins, Learn more >> http://kitco-silver.jobshq.us/GOLD-COINS/

As traders, we are able to infer fairly a little from corporations' inability (or unwillingness) to deploy their money. For starters, it indicates that business have assumed a very defensive stance. Money, obviously, is really a buffer against uncertainty - the uncertainty that business slows for just about any cause. Management desires a wholesome money reserve with which to pay the bills and stay liquid ought to something unexpected occur. I believe we are able to all agree that this really is prudent, along with a great business practice.

However $1.4 trillion? That informs me that companies aren't just a bit jittery concerning the future. They are ready for an apocalypse. Consider this, it is essential! If these companies could conjure up even probably the most marginal of tasks to earn a meager 1% return, they would create $14 billion profit. Rather, they are sitting on the money and earning near zero to get an assured after-inflation loss.

It is a bad omen that corporate operations would forego a collective $14b per year. Obviously, by their judgment, the danger of investing in new tasks outweighs the reward - the precise opposite of the circumstances required to generate wholesome financial development. How high will silver go? Learn more >>  http://www.kitco-silver.jobshq.us/

That is the bad news. Yet here's the great, if paradoxical, news. Even with all of this corporate slack, earnings and profit margins are very wholesome, and stocks have performed fairly nicely. Case in point, the S&P 500 is up 15% YTD. Why the detachment? Nicely, the rising margins and earnings are easy to explain: companies have cut costs over the past few years, becoming leaner as well as more efficient. This also partly explains higher stock prices.

Yet I believe there's another instrumental factor to rising stock prices: the downright terrible outlook for bonds. Our analysis of stocks vs. bonds indicates that stocks are by far the better investment today. The overriding cause is simple: at near zero interest rates, bonds offer almost no upside and catastrophic downside. Merely by virtue of not being bonds, stocks have done nicely.

Returning to that pile of corporate money. There's no question that it is a waste today. But today's waste is tomorrow's potential. Companies aren't going to sit on that money forever. Eventually circumstances will be such that they'll either want to or have to invest in new tasks. Maybe inflation will be the catalyst - companies can tolerate losing 1.7% per year today. However if the inflation rate heats up to, say, 4%, you can bet that corps will be rushing to deploy that now idle money into whatever mediocre tasks they can rustle up.

Whenever that happens, they have $1.4 trillion in money ready to go. No requirement to negotiate a loan. No need to issue stock to raise funds. They have all the power they need. The gas tank is complete. Therefore while the economic climate has plenty of problems, and stocks are a far better bet than bonds, lack of money is not one of them. Companies are ready to invest as well as grow. They just need a financial and political environment favorable to doing so. Our suggested recommendation is to buy gold and buy silver today before the prices skyrocket even further tomorrow! Rare Coins, Silver Coins, Gold Coins, Learn more >> http://www.kitco-silver.jobshq.us/GOLD-COINS/