{"id":5567,"date":"2012-01-01T14:16:54","date_gmt":"2012-01-01T18:16:54","guid":{"rendered":"http:\/\/www.pgm-blog.com\/?p=5567"},"modified":"2012-01-01T14:16:54","modified_gmt":"2012-01-01T18:16:54","slug":"was-2011-a-year-to-forget-and-will-2012-become-a-year-to-remember","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/was-2011-a-year-to-forget-and-will-2012-become-a-year-to-remember\/","title":{"rendered":"Was 2011 a Year to Forget, and will 2012 become a Year to Remember?"},"content":{"rendered":"

\"\"<\/a>\"\"<\/a>\"\"<\/a><\/p>\n

Dear PGM Capital Blog<\/strong> readers, first of all we want to wish you a Happy Holiday and a very prosperous 2012.<\/p>\n

I think that most of you are happy that the year 2011, which will go into history as one of the most volatile and non-realistic markets dominated by fear, has come to an end.<\/p>\n

Based on the one hand by unjustified fear about slowing BRIC Economies, European Debt Crisis, and on the other hand by false Euphoria on an improving USA Economy, caused by the media, investors fled into currently the most hazardous asset: USA Treasuries.<\/p>\n

News like the Brazilian Economy surpassing the one of the UK and is now the 6th<\/sup>\u00a0biggest on earth, \u00a0see link:<\/a>\u00a0\u00a0and the fact that Bernanke has admitted that he has printed an additional 7.7 Trillion USD in 2008, \u00a0see\u00a0link:<\/a> and also the fact that ECB disclosed\u00a0that they have expanded their balance sheet to a record 2.73 trillion Euros, see link:<\/a> have totally ignored by the market.<\/p>\n

The best performing assets in 2011 were Gold up 11.47% and USA Treasuries, for which the yield of the 10-year-note depreciated from\u00a0approx. 3.31% to 1.87%<\/p>\n

Making money on Gold with Central Bankers printing money at speed of light is logical, although in our opinion the appreciation of Gold in 2011 was too low and did not match the amount of printed money in 2011. But buying USA treasuries at such a low yield is totally illogical, because lending money to a country with hardly any Economic growth, a Budget deficit of approx. 50%, and a debt to GDP of over 100% against an historical low rate of 1.87 is totally irrational.<\/p>\n

The main reason for the soaring bond prices in the USA and subsequent decreasing bond yield is the fact that the EU leaders and the ECB aren\u2019t tackling the debt crisis in the\u00a0PIIGS<\/a><\/strong>\u00a0countries decisively enough.<\/p>\n

Based on fear, mainly caused by the media, for a collapsing Euro and Euro-zone, Investors dumped Euros and equities and ran into US-Treasuries.<\/p>\n

They did this without taking into consideration that the USA Economic situation has worsened in 2011, and USA Treasuries currently are a bubble which is on the brink to burst.<\/p>\n

We believe that 2012 may be the year of truth for the United States, the year that the foreigners currently lending money to the United States will no longer be willing to lend money to the USA against the currently low yields and will start demanding higher yields. In this case the USA and its FED have two options:<\/p>\n

    \n
  1. Responding to the markets by raising the (parity) yields on USA-Treasuries
    \nIf this happens it will immediately kill the already fragile housing market in the USA and send the country into a deep, hard and long depression.<\/li>\n
  2. The Fed to flood the market with money via Quantitative Easing programs and using this newly created money to buy USA Treasuries and by doing so maintain the yields on these bonds artificially low.
    \nThis will lead to a dilution of the value of the USD, thus creating hyperinflation, which may lead to investors fleeing the dollar and running to Gold, Silver and other hard assets, which cannot be created by Central Banks via thin air.<\/li>\n<\/ol>\n

    We strongly believe that option 2, is politically the sellable option.<\/p>\n

    Unfortunately, history has proven that (hyper) inflation is like Jeanie in the bottle, which is simple to get out of the bottle, but once out of the bottle, very difficult to get it back in. History has proven also that hyperinflation mostly ends with confiscation of assets by governments or a total reset of all paper assets.<\/p>\n

    Due to the above we think that volatility will continue in 2012 and may even become more extreme and that every investor must find for himself the proper equilibrium between a short- medium- and long-term investment and asset allocation plan.<\/p>\n

    In spite of all these facts it is uncertain how people will react or when the seriousness of the situation will prod them into action. It also depends on political decisions, which again is a matter of uncertainty<\/p>\n

    But the facts remain and will have serious effects on the markets, of which extreme volatility will certainly be the least of your problems.<\/p>\n

    In these times of uncertainty and extreme volatility having an Investment\/Financial Advisor, with a track record of predicting and managing financial crisis accordingly, will be a Critical Success Factor.<\/p>\n

    Before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities, Precious metals as well as the stocks of their producers can be very\u00a0volatile and that sharp corrections may happen in the short term.<\/p>\n

    Please feel free to contact us, for us to talk with you about your future and the best investment plan than meets your profile<\/p>\n

    Yours sincerely<\/p>\n

    Eric Panneflek
    \nChairman<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

    Dear PGM Capital Blog readers, first of all we want to wish you a Happy Holiday and a very prosperous 2012. I think that most of you are happy that the year 2011, which will go into history as one of the most volatile and non-realistic markets dominated by fear, has come to an end.[…]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,8,9,10,11,19,12,15,1,17,18],"tags":[],"class_list":["post-5567","post","type-post","status-publish","format-standard","hentry","category-commodities","category-debt-crisis","category-emerging-markets","category-eric-panneflek","category-euro","category-financial-news","category-inflation","category-pgm-capital","category-uncategorized","category-us-dollar","category-world-economic-outlook"],"_links":{"self":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/5567","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/comments?post=5567"}],"version-history":[{"count":0,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/5567\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media?parent=5567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/categories?post=5567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/tags?post=5567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}