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Slow Burning Financial Crisis To Force More Central Bank Action
With continued uncertainty in global markets, today King World News interviewed 25 year veteran Caesar Bryan. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Here is what Ceasar had to say regarding the ongoing financial crisis: “This has been sort of a slow-burn crisis. There are going to be times when it flares up, and other times, strangely, it is relatively quiet. I should mention there was a major downgrade of Italy last Friday, and there are rumors in the market that Spain could be downgraded next.”
Caesar Bryan continues:
Right now, the Spanish Ten-Year bond is yielding almost 7%, it’s trading at 6.93%, and the Italian yield is at almost 6%. That’s unsustainable. That’s not going to work because they won’t be able to refinance themselves. Clearly there are these huge imbalances which remain in most of the major economies.
And the central banks are now using policy in a blatant attempt to encourage inflation....
Continue reading the Caesar Bryan interview below...
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“What is so strange is that investors seem happy to lend governments money at a negative interest rate, certainly on the 2-Year. As we speak today, Eric, five governments are borrowing at a negative interest rate on 2-Year paper. A sixth, Austria, is barely positive at a paltry .009%.
I find it astonishing that people want to invest in governments with a negative return, yet they appear to be fearful of investing in solid companies, with strong balance sheets, and dividend yields of 3%, 4% and sometimes 5%. It appears to be somewhat of a dichotomy.
Would you rather invest in the government of France, who’s Ten-Year bonds are yielding 2%, or top notch international companies such as Novartis, Roche, Diageo or Nestle?
What does this reflect? I think it reflects fear. Investors just need to focus on real assets and this reflected by solid corporations, and of course the best real asset is gold. Gold is in the summer doldrums right now, but I expect the next move in gold will be upwards.
I would recommend that investors use this quiet summer period to accumulate real assets, and as I said, the most important one is gold. I would also add gold equities to that list. They represent great value. There have recently been three takeover attempts in small gold stocks. The interesting thing is they were all-cash offers. These takeover attempts were done at large premiums, but at a big discount off of the 52 week highs.”
Caesar also added: “The big picture is there is slack in the global economy, and I would add there is substantial pressure on the monetary authorities to spur growth. So expect, in the fall, more accommodative action from the major central banks. This will, of course, by extremely bullish for gold and silver and the underlying equities.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
The interviews with MEP Nigel Farage, Peter Schiff, John Embry, Egon von Greyerz and Bill Fleckenstein are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include Jean-Marie Eveillard (oversees $50 billion), Michael Pento, Gerald Celente by CLICKING HERE.
Eric King
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
July 19, 2012
