| | | Thursday, October 1, 2015 | Issue #2643 | |
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The Next "Smartphone"?
In 2007, cellphones were everywhere. In fact, more than 1 billion were sold that year alone. But then, on June 29, 2007, one company said, "We're going to make your phone smarter." And it released its first smartphone. The company's stock is up more than 542% as a result.
Well, there's a similar game changer happening right now. It involves the impending Wi-Fi shortage facing cities worldwide. And one company has the solution.
Here's how this company's breakthrough could make you very rich. | |
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The Swiss Are Investigating 7 Banks for Gold Manipulation... Here's What You Need to Know Sean Brodrick, Resource Strategist, The Oxford Club
 Are gold prices manipulated? Absolutely. But the conspiracy is a lot bigger than most people realized.
In 2014, Switzerland's financial regulator fined UBS (NYSE: UBS) $137 million for manipulating precious metals prices and foreign exchange rates. The same year, the U.K.'s financial regulator fined Barclays (NYSE: BCS) $40.2 million for its role in fixing a gold price daily benchmark.
Now, the Swiss are widening the probe to include five more big banks and trading houses...
- HSBC Holdings (NYSE: HSBC)
- Mitsui & Co. (OTC: MITSY)
- Morgan Stanley (NYSE: MS)
That's right - SEVEN total. You can take off your tin foil hat. It turns out gold has been manipulated for years. We just didn't realize how many banks | "It turns out gold has been manipulated for years. We just didn't realize how many banks had their hands in the cookie jar." | |
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had their hands in the cookie jar.
The questions every investor should ask are: "Will this investigation affect gold prices?" And "What does this mean for the gold I own?"
My answers: "Short term no, long term yes." And "The sky's the limit!" I'll explain.
The Largest Precious Metals Market
First, a little background. The Swiss investigation is looking into possible manipulation and "anti-competitive behavior" in the trading of precious metals. This includes not only gold and silver, but also platinum and palladium.
However, gold is the primary focus. The gold trade has a daily turnover of about $150 billion, making it the largest precious metals market.
The Swiss are looking specifically to see if the seven banks were manipulating the bid/ask spread on metals. A spokesman for WEKO - the Swiss investigative body - said in press reports that if the regulator uncovers misconduct, it could fine the banks the equivalent of up to 10% of proceeds in Switzerland resulting from manipulation.
And mind you, this is just the latest probe.
Suspicious Shenanigans
In February, the U.S. Department of Justice (DOJ) launched its own probe into manipulation of gold, silver and other precious metals. Regulators have asked banks for documents relating to the inquiry.
And last year, another Swiss regulatory agency, FINMA, ordered UBS to automate at least 95% of its global precious metals trading and foreign exchange by the end of 2016. That's after concluding that UBS employees "at least attempted" to manipulate precious metals prices and foreign exchange rates.
And it's not like these banks haven't been caught in similarly suspicious shenanigans in other markets. In 2012, UBS paid $1.5 billion to settle various regulators' probes into its manipulation of benchmark interest rates. And earlier this year, Deutsche Bank paid $2.5 billion to settle the same kind of allegations in Britain and the U.S.
No one admits to wrongdoing - and it should be emphasized that the banks aren't convicted of anything. Everybody pays big fines and gets back to business.
But these latest probes may be enough to convince the big banks to stop playing the game. Multiple fines are expensive. Because of this, many banks have left the commodity markets or cut their presence way back.
How This Will Affect Prices
So, will the probe and subsequent fines (that no one's going to jail for) affect gold prices?
In the short term, I think what's more important is what the U.S. Federal Reserve and other central banks do about interest rates.
Interestingly, the Fed just passed on a chance to raise interest rates. Now Fed Chair Janet Yellen and others are trying to sound hawkish, warning that they'll raise interest rates later this year.
I don't believe it. And when the Fed skips its next opportunity to raise rates in October, that could light a fire under the yellow metal. (Editor's Note: If rates do get a bump, that could also be great news for investors - as we recently explained here.)
Longer term, if the big banks actually quit manipulating the price of gold, well, that takes a lid off price movements. There won't be the invisible hand there to smack down the price of gold over and over again.
Even if gold prices do get whacked, they should rise to a more "realistic" level afterward. It's hard to figure out what's real in this crazy market, but I think a level of at least $2,000 per-ounce gold - and maybe $2,250 after that - would be reasonable. That way it's worth gold companies' time, effort and money to go prospecting again.
After all, U.S. gold production declined by 4% year over year in June. That's 21 months of consecutive year-on-year declines. That kind of trend can't go on forever... something has to give.
Blue Sky and Investment Opportunities
And let's say we have another "black swan" economic event. The kind where people lose faith in other investments. Precious metals are the only easily tradeable investment without counterparty risk.
That's where we could get to blue sky territory for gold. I don't think it's likely, but the possibility is out there.
So I'm staying tuned in and watching the Swiss bank probe, as well as the DOJ probe. Pass the popcorn, it could be a very interesting double feature.
And regardless, you can invest in this. Over and over, I've made the case that gold and especially gold miners are "stupid cheap" right now. I think we could see much higher prices over the next year.
Physical gold could be a smart investment - just as long as you stick to The Oxford Club's asset allocation guidelines. And there are plenty of cheap miners out there just waiting to be snatched up.
Good investing,
Sean
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Alex Green: "Your Money Needs Protection"
Don't let your money get sucked away this year. Today, you can quickly access this Escape Hatch Strategy to help protect and grow your wealth in the face of today's critical market threats. P.S. Folks who used this plan claimed average gains of 28% in 2008 while the market dropped 36%. | |
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If there is water on Mars, and colonists could make a home there, Sean thinks we're setting up for a good, old-fashioned Space Race. And there are companies that will profit. Read On... | |
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U.S. consumers represent 15% of global GDP - bigger than China's contribution to the world economy. And right now, we're entering the prime profit season for an overlooked corner of the market. Read On... | |
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As Sean wrote in today's column, gold and miners are "stupid cheap" right now. It goes without saying that oil and gas companies are in the same boat. That's why today Investment U Plus subscribers are discovering a refiner that's positioned to succeed no matter what happens to the volatile price of oil. To find out how you can get all the details, click here. | |
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