Download History of the Gold Standard - Capital Consulting Group NC, Inc.

ADVISOR
THE
MONTHLY NEWSLETTER
Greetings:
Capital Financial Management NC, Inc.
Stocks have been crazy the first half of 2016. No one really knows
what the economy and the market have in store for the second half,
however we feel the market will not remain calm. Markets usually do
well in a presidential election cycle and may be up 6% or 7% by
years end. Remember, the strongest safeguard against the ups and
downs is diversified investing focused on the long term. In addition,
hedge against loss by allocating a portion of funds that index the
market with no risk. Please call my office and ask about our new
Wealthguard software that limits the downside to your portfolio at no
cost to you.
Don strives to be an advocate for retirees,
those still working and people just like you.
He is committed to helping them address the
issues that are important to their financial
well-being. Don has completed studies in
investment and finance at NCSU. He is a
licensed investment advisor and is held to a
fiduciary standard.
History of the Gold
Standard
In paradise, it's said the streets are paved with it
and Fort Knox is filled with it. Pioneers travels
westward to find it and Johannesburg, South
Africa owes its existence to it. The glean of gold
has long tantalized, transfixed and mesmerized
people everywhere. Gold has been the standard
for good jewelry and even the premium material
in electronics connections.
Even the term, the gold standard, has a
connotation of the very best.
Gold has also been a standard, adopted by many
countries, to affix the value of their currencies
with a value tied to a certain amount of gold. The
U.S. began using the gold standard de facto in
1834 and it became law in 1900 after the
Congress passed the Gold Standard Act. The
prices of an ounce of gold was valued at $20.67
in the United States stating in 1834 and it
remained at that price until 1933. The standard
offered long-term price stability.
That it offered price stability, past tense, is
because the gold standard ended in 1971. From
Copyright 2016 Capital Financial Management NC, Inc.
1946 to 1971, there existed a system called the
Bretton Woods system, under which most
countries used U.S. dollars to settle balances. The
U.S. government then promised to redeem those
central bank balances for $35 an ounce. The U.S.
gold reserves dropped steadily as a result,
provoking a global unease that the U.S. would be
able to continue to make redemption for dollars.
It was President Nixon, in 1971, who declared
that the U.S. would stop the practice and the gold
standard, once and for all, ended.
A Return to the Gold Standard
Some politicians have suggested that we return to
the gold standard in recent years. Congressman
Ron Paul suggested it during his 2012
presidential campaign, and more recently, Ted
Cruz suggested it, during the Republican
primaries. They point out the price stability that
was a byproduct during the years it was in force.
Also, they feel that it takes monetary policy away
from the group of decision makers at the Federal
Reserve.
Detractors point out that a discover of a new gold
supply would add to the worlds gold supply and a
concurrent expansion of the money supply. This
may not be a desirable byproduct at the time.
Also, if one country began to hoard gold, it
would require other countries to raise interest
rates to keep their money. If that country
happened to also be in recession, the end result
would not be good.
Don and Patti have been married for 34
years, with two great sons.
Past presidents, of very different ideologies,
supported the standard and even made the point
that it benefited the middle class, not just the rich.
Republican President William McKinley and
progressive Democrat President Grover Cleveland,
were both early supporters.
While famous economists, like John Maynard
Keynes, were against the gold standard, others
today believe that it might be a good thing. It
may become more than an academic argument in
the near future.
CAPITAL FINANCIAL MANAGEMENT NC, INC. - MONTHLY NEWSLETTER
The G20 Meeting of
Financial Officials
Recently, when the Greek economy suffered
economic woes, it affected the U.S. stock
exchanges more than once. Recent geopolitical
unrest in France has had a marked impact on
world stock markets. Currency speculators impact
the values of currencies around the world. A
down day overnight in the markets of China or
Japan, is often a precursor to a down day on Wall
Street. The true essence, of a global economy, is
seen every day in hundreds of ways, from Asia to
North America, Europe to South America.
On the other hand, economic growth benefits all
countries, through trade agreements, and
beneficial negotiations.
With this reality in mind, The Group of Twenty
(G20) was formed to bring together the finance
ministers and central bank governors from 19
countries and the European Union. The group has
been meeting annually since the first meeting in
1999. In 2008, there was a G20 "Leaders
Summit," which help pave the way for an
economic recovery after the recession. That
summit was held in Washington D.C.
The Way it Works
The group uses policy tools that can include
monetary, fiscal and structural; acting both
together as a body and individually.
66 public companies in the UK issued profit
warnings. These concerns can impact the world
economy and had the attention of the economic
experts at the meeting.
Membership in the G20 includes Argentina,
Australia, Brazil, Canada, China, France, Germany,
India, Indonesia, Italy, Japan, Republic of Korea,
Mexico, Russia, Saudi Arabia, South Africa,
Turkey, United Kingdom, United States, and
European Union.
Also, the group said that global growth was
"weaker than desirable." This opinion was shared
by all of the G20 participants and, the lack of
debate, made concentrating on a remedy easier.
The members focus on change that they can enact
that benefits the global economy through open
trade and job creation. Many other organizations,
such as the United Nations and the International
Monetary Fund, attend meetings and participate
in the solutions.
The dropping value of the Chinese currency was
also on the agenda. The president of Germany's
central bank, a member of the G20 group,
assured reporters that the global economy would
still improve this year and next.
With this meeting of minds, and the world's
leading experts, economic uncertainty can be
addressed in a global forum. That's the G20.
During the group's most recent meeting, in
Chengdu, China, Britain's exit from the European
Union was a major topic. A reworking of Britain's
relationship with the EU was laid out to calm
some of the anxiety. Despite this, some members
believe that there will be additional volatility in
the financial markets as these negotiations go
forward.
Regarding Brexit, the G20 ministers said that their
group "had the tools to cope with the potential
economic and financial consequences from the
referendum result." Even before the Brexit vote,
Closing:
Please enjoy this months newsletter and feel free to contact our office
with any questions or concerns.
Our workshops in September will be the 13th and 15th at McCormick
and Schmidt in Raleigh and the 20th and 22th at Peak City Grill in
Apex. We invite our current clients to come and enjoy a nice meal
with us, and we encourage you to bring a friend. Referrals are the
highest form of compliment you can give us.
Thanks
Don Delaria
Disclaimer: Donald Delaria is a Investment Advisor Representative (IAR) with Capital Financial Management NC, Inc.(CFM) Investment Advisory Services offered through Capital Financial
Thanks
Management NC, Inc. A Registered Investment Advisor (RIA). Investing involves risk including the potential loss of principle. No investment strategy can guarantee a profit or protect against loss
in periods
in periods of declining values. Past performance does not guarantee future results.
Don
Delaria
Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products They do not in any way refer to securities or investment advisory
services or products. Fixed Insurance and Annuity product guarantees are subject to the claims-paying ability of the issuing company are not offered by Capital Financial Management NC, Inc.
Copyright 2016 Capital Financial Management NC, Inc.