Buying Gold and JP Morgan
Posted by Adam King on May 14, 2012
Buying gold should receive a substantive boost in activity this coming week as the market and market participants cope with the recent illegitimate activity of JP Morgan. The CEO of JP Morgan, Jamie Dimon, is on damage control as the investment bank copes with extremely negative press. Regardless of how the JP Morgan scenario plays out, it is a further indication that the US banking sector is inherently unstable and American investors should be buying gold to protect and insulate themselves from the problems in the banking sector.
Essentially what JP Morgan did is grossly misestimate the amount of money it would need in order to participate responsibly in market business. Currently, there is a projection that the investment bank will lose $2 billion due to the recent activity. While this is a significant amount of money, considering the size of JP Morgan’s portfolio and investment portfolio, the news of the bad investment will probably affect business more than the actual losses due to the investment.
This is indicative of the US banking sector, its inherent instability, and the ultimate need of Americans to buy gold in order to invest successfully in the current economic environment. Just over six months ago, MF Global, an extremely large American investment bank with 200 years of history went bankrupt after it used customer funds in a bad bet on European debt. $1.2 billion of customer funds went missing. An estimated 60 percent of that money has been found and repaid to investors.
The signal at that time was US banks are irresponsible, untrustworthy, and unaccountable in the current market environment. JP Morgan, which took billions in taxpayer money in the form of a bailout, clearly did not take responsibility toward the public in its market activity, which is the best message that can be gleaned from its behavior.
Buying gold in the current market environment is simply the logical thing to be doing. If a person were taking money and using it irresponsibly, would you continue to give them money on the basis of threats? In order to take your money out of the reach of US investment banks, the working and investing American should be buying gold.
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US Gold Market
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