Posted: 30 Dec 2014 04:07 PM PST

What does a healthy geography mean? Well, previously Cramer would have recommended adding foreign exposure to a portfolio. But now that he has seen the damage left behind from Europe, China and the emerging markets, he is tweaking that definition.

"What you really need is a stock that is in a safe geography. At times, when the United States is growing more slowly than the rest of the world, you need something international—and not just something that does a lot of business overseas," he said.

Cramer means a company actually headquartered in a foreign country.

Essentially, in times of international turmoil that slot in your newly diversified portfolio should be filled with something domestic. And in times of domestic turmoil, the slot should be filled with a foreign company.

Last, but not least is good old gold.

Gold brings a special element into a portfolio, one that makes it different from all other metals. However, Cramer warned that this one should not make up even 20 percent of an investor's portfolio. That is way too much.

"I think that 10 percent is the upper limit because I consider gold as an insurance policy, and no worthwhile insurance policy should be 20 percent of the money you have invested," the "Mad Money" host said.

Cramer recommends gold because it tends to go up when everything else is going down. It is the investors' insurance against geopolitical events, uncertainty and inflation.

Granted, this may sound like a terrible idea since gold has not done anything spectacular in a few years. However just as you wouldn't own a home or car without insurance, you shouldn't have a portfolio without gold.

Owning gold is not about upside potential. It is about minimizing risk to the downside.

The easiest way to add gold to a portfolio is through an ETF called SPDR Gold shares, commonly known by its symbol GLD. This ETF owns the metal, and Cramer thinks it does a great job of tracking its price.

10 Top Reasons to Invest in Gold in 2015 - Blanchard

Posted: 29 Dec 2014 04:00 PM PST

Blanchard Economic Research Unit Tuesday, December 30, 2014

From Cold Wars and Hot Wars to Bubbles and Black Swans, Investors Need Insurance

With 2014 now at a close, opinion is divided on where exactly gold prices go next. As of this writing, the yellow metal was poised to end the year about where it started, near $1,200 but well above the $1,050 target forecast by Goldman Sachs. Gold made a strong run toward $1,400 during the Ukrainian crisis in March and was up more than 12% at one point, but momentum didn't hold. However, the metal impressed many analysts with its resilience, gaining about 6% from November's lows and outperforming every major fiat currency against the U.S. dollar.

The strong dollar and a continuously rising stock market serve as gold's greatest headwinds going into 2015. Still, physical bullion remains a necessary element in any properly diversified portfolio. Blanchard and Company believes gold will eventually surpass its all-time nominal highs above $1,900 set in 2011, but its No. 1 role remains as portfolio insurance against worst-case scenarios, some of which are outlined below. With oil's unexpected year-end collapse surprising most market observers, the new year contains numerous uncertainties, any number of which could be the spark that reawakens gold. Here are some potential catalysts for gold in 2015:

10) Voracious Demand Alive and Well in Asia: China and India, the world's top two gold consumers, together buy more gold each year than is mined annually. India's imports had lagged since 2013 after the government imposed trade restrictions to alleviate the nation's current-account deficit. One impediment to India's gold trade ended in November, when the central bank abolished the controversial "20:80 rule," which required gold importers to export at least 20% of that metal as jewelry. Gold imports surged to 151.58 metric tons in November, up 38% from October.

BERU December 2014 Gold Demand Trends

As for China, although its gold consumption hasn't matched 2013's record demand, buying has still been strong, and it continues to develop its gold-trading infrastructure with the aim to rival London as the world's price-setting epicenter. In 2014 China invited several major foreign banks, including HSBC and ANZ, to participate on the Shanghai Gold Exchange. Hong Kong's Chinese Gold & Silver Exchange Society also will be trading in Shanghai starting in March. And Shanghai and Hong Kong are no longer the only importation points in China: In April, Beijing was allowed to receive gold imports, in a move acknowledged as an attempt to obscure its true consumption. Meanwhile, although China will remain the No. 1 gold producer in the world, its mining input will start to dip as ore quality declines, leading to even more imports to satisfy demand there.

And at the sovereign level, China hasn't updated the tonnage of its official gold reserves since 2009. It's widely suspected of having amassed much more than its officially reported 1,054 tons. If and when China reveals its true holdings to the world, expect a potential stampede into gold. Such a revelation might only help fast-track the IMF's approval of China's yuan as an world reserve currency, expected to come later this year.

9) Gold Repatriation Movement Gaining Momentum: In a bullish about-face for gold prices, central banks have gone from sellers of bullion to buyers. That trend continues. More recently, though, awareness has grown that physical gold ownership trumps holding paper or electronic receipts for gold every time. Why? Because gold is subject to rehypothecation: That is, an entity such as a bank or broker can keep a gold bar listed in its official holdings when in fact that gold bar has been leased or pledged as collateral to another entity. Thus, a gold bar can be susceptible to multiple claims of conflicting ownership.

Venezuela first made waves in the repatriation arena in 2011, when Hugo Chavez recalled his nation's bullion from overseas. But heads really turned in 2013, when Germany announced it would recall its bullion held at the New York Federal Reserve and the Bank of France, citing concerns about a possible currency crisis in the eurozone. The Fed responded with a seven-year timeline for returning Germany's gold, thus begging the question: Where is the gold? Now, two years later, Germany has had little success, retrieving only a few tons of more than 300 tons stored abroad. Still, it hasn't given up on repatriation.

BERU December 2014 bringing home the bullion

Even more important, other nations have joined the movement. The Netherlands announced a successful secret recall of 120 tons of its gold; Belgium and Austria are inching closer to seeking their metal; France's leading opposition political party is pursuing a gold audit; and Switzerland made an attempt, albeit unsuccessful, in November to return to a de facto gold standard by rebuilding its bullion reserves.

The Fed's inability to return the gold of a key U.S. ally, Germany, upon demand has only fueled conjecture that perhaps it doesn't have the gold it claims to be storing. The Fed "acts as the custodian of gold owned by account holders such as the U.S. government, foreign governments, other central banks, and official international organizations," its Web site states. "A small portion of the gold held by the U.S. Treasury (roughly $600 million in book value) – about 5% – is held in custody for the Treasury by the Federal Reserve Banks, as fiscal agents of the United States."

If more of these "foreign governments" decide to follow Germany's lead and call in their gold and can't get it back, the Fed's credibility will be shot, faith in the foundations of the modern financial system will be shaken, and a true run on gold could ensue.

8) The Fed's Experiment May Go Horribly Wrong: The Fed has managed to swell its balance sheet to more than $4 trillion and then end its quantitative-easing bond-buying program without igniting inflation. But that doesn't mean inflation isn't coming once monetary velocity rebounds from record lows. The very real danger exists that the Fed will get this unprecedented monetary experiment dreadfully wrong. "All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse," observed ex-Fed chief Paul Volcker in 2013.

BERU December 2014 FRED chart

Meanwhile, it continues to keep interest rates at record lows, while projecting its intentions for a slow increase over time. However, it's a dangerous balancing act. "If the Fed gets spooked and moves too soon, too fast it could derail the recovery and then force the Fed to do an about-face," MarketWatch has warned. "At the other extreme, the Fed could prove too patient, potentially setting up a scenario in which policy makers have to hike rates aggressively to catch up with resurgent inflation." Observed Yale economist Stephen Roach: "Trapped in a post-crisis quagmire of zero interest rates and swollen balance sheets, the world's major central banks do not have an effective strategy for regaining control over financial markets or the real economies that they are supposed to manage."

7) Strong Dollar Can Do More Harm Than Help: The Bank for International Settlements, otherwise known as "the central bank to central banks," issued a warning in December that a strong U.S. dollar risks inflicting turmoil through debt-ridden emerging-market economies. "Should the U.S. dollar, the dominant international currency, continue its ascent, this could expose currency and funding mismatches by raising debt burdens," a BIS official said. "The corresponding tightening of financial conditions could only worsen once interest rates in the U.S. normalize." In other words, debts incurred in borrowed U.S. dollars become more expensive to repay as the dollar appreciates, and emerging-market economies are leveraged to the hilt, with at least $3.1 trillion in dollar-based, cross-border loans now outstanding. A strong dollar helped fuel the Latin American debt crisis of the 1980s and the Asian crisis of the late '90s.

Conversely, a strong dollar "has the potential of damaging overseas demand" for U.S.-manufactured goods, noted the chief economist of the National Association of Manufacturers. With the dollar at a five-year high against a basket of major currencies, struggling economies like the eurozone are hard-pressed to import U.S. goods as well as our stocks and real estate. That's bad news for the U.S. economy.

BERU December 2014 Dollars Long Term Fall

And of course, the risk remains that the dollar actually weakens in 2015, perhaps as the national debt barrels higher past $18 trillion and shakes the face of our creditors in the "full faith and credit of the U.S. government." And as the chart above shows, the dollar strength of 2014 was a deviation from its largely downward trajectory since the 1980s. Ask yourself: Has anything substantively changed for the better in the U.S. to justify the dollar's rebound? "Everybody talks about the U.S. dollar strengthening," BlackRock chief investment strategist Ewan Cameron Watt told CNBC. "Well, maybe a side bet against that is to own physical gold as a hedge against this kind of noise not happening."

6) Global Slowdown Forcing Banks to Print Even More Money: "The world economy is far from fixed," a Bloomberg editorial declared Dec. 10. Indeed, the U.S. economy is just the prettiest horse in the glue factory. Things are so bad in Europe and Japan that even anemic U.S. growth looks good by comparison (with the third-quarter's 5% GDP estimate largely attributed to increased Obamacare spending, not to mention a new methodology in calculating growth introduced in 2013).

And China, while still a global juggernaut, is clearly slowing down, with a particularly vulnerable real-estate market. "When China sneezes the rest of the world catches a cold at this point," observed NYU economist Nouriel Roubini. The question is whether it's headed for a hard landing that could jolt the global economy to its core. If that occurs, the tenuous U.S. recovery will fall flat on its face; at worst, we could be looking at a replay of the 2008 crisis.

BERU December 2014 Europe Dives Below Zero

But with deflation the Public Enemy No. 1 to central banks, money printing is now in overdrive across the planet. Sure, the Fed has stopped actively buying bonds, but it has merely passed the baton to Japan, which just fired off another desperate shot of QE. After introducing a negative interest rate in June, the European Central Bank is poised to launch an outright program of purchasing sovereign bonds in 2015, and in the meantime, Switzerland and Sweden, not to mention the U.S. Fed, are imposing zero or even negative interest-rate policies. China also is boosting liquidity measures. All these stimulus programs are ultimately inflationary. This tug of war between the forces of deflation and inflation are ongoing worldwide, and if one gains the definitive upper hand, the consequences could be steep.

5) U.S. Stock Market Dangerously Overvalued: The past year has been great for the stock market, which turned in a gravity-defying performance except for a few speed bumps along the way. The U.S. stock market has not suffered a normal correction of 10% or more since 2011. But rest assured that this is not normal. At least some of the strength in the S&P 500 came this year from record-level stock buybacks by those S&P companies themselves, as well as rampant margin debt and mergers and acquisitions. And something's got to give: Nobel-winning economist Robert Shiller's price-to-earnings formula shows that stocks are on the expensive side. In fact, "based on reliable historical measures, stocks are now more expensive than at any time in history, with the brief (and very temporary) exceptions of 1929 and 2000," wrote Henry Blodget at Business Insider.

BERU December 2014 CAPE Price E10 Ratio

Everyone knows what's mainly been driving stocks to record highs: the Fed. "In celebrating what has been a truly impressive year for U.S. equities, investors have much more than fundamentals to be thankful for," noted former top PIMCO executive Mohamed El-Erian. "To explain the impressive equity market performance, we also need to appeal to other factors – specifically, to central banks...They repeatedly responded to periodic market jitters through a combination of re-assuring statements and, in the case of foreign central banks, further monetary policy easing. In the process, they consistently signaled to markets that they would rather overdo monetary stimulus than tighten pre-maturely."

But central banks can't prop up the stock market forever. Ex-Fed chief Alan Greenspan himself told the Council on Foreign Relations in October that he's expecting "turmoil" at the very least as the central bank tightens its policies. "When bubbles emerge, they take on a life of their own," he said in July. "It is very difficult to stop them, short of a debilitating crunch in the marketplace." Where to turn before the bubble bursts? "If you're looking at a question of turmoil, you will find, as we always have in the past, it moves into the gold price," he told the CFR.

4) War in Ukraine (or Elsewhere): War is another factor that "moves into the gold price." The yellow metal soared to its 2014 peak when the Ukraine crisis was at its apex last March, nearly breaching $1,400. Conflict there has fallen from the front pages, but it's still simmering on the sidelines. Russian President Vladimir Putin in December signed a new military doctrine declaring NATO's expansion as the top risk to Russia's security and warning against Ukraine's potential membership in the alliance. As the Russian economy buckles under Western-imposed sanctions, the crisis in Ukraine could escalate unexpectedly.

BERU December 2014 NATO expansion

As for other potential hot spots, the list is a long one, Bloomberg noted: "As experts debate potential nasty surprises in 2015, certain scenarios keep coming up: a naval incident between China and one of its neighbors over a series of sparsely inhabited islands. A renewed push by Islamic rebels in Libya's lawless south into West Africa. An implosion in North Korea. Other possibilities include a Russian push into the Baltic countries, a third Palestinian intifada, an Israeli strike against Iran and a continued fall in oil prices that destabilizes countries from Russia to Venezuela."

3) Risky Aftershocks From Russia's Implosion: It's still too early to know how far Russia's economic crisis could ripple across the globe. From a trade standpoint alone, "exports to Russia are important to Europe," noted Hugh Johnson of Hugh Johnson Advisors. "Exports equal 27% of the European economy and exports to Russia equal 6.9% of Europe's exports. In turn, exports to Europe are important to the U.S. U.S. exports to Europe equal 17.5% of U.S. exports."

Russia is almost assuredly heading into a recession; it's already moved to bail out some of its banks, and inflation is surging higher. It's also facing a potential downgrade to its credit rating, with Standard & Poor's threatening 50-50 odds it might slash Moscow to junk within 90 days. The economic disaster is only serving to drive Russia closer to China, with Beijing calling Moscow its "irreplaceable strategic partner" and expanding on a currency-swap deal as a lifeline. This stronger bond dovetails with China's clear-cut wish to raise its yuan currency to world-reserve status alongside the dollar. "Beijing's move to bail out Russia … marks the beginning of the end for America's linchpin role in the global economy," a recent analysis argued. Russia also might consider using its massive gold reserves to back the ruble with bullion in a major salvo against the dollar.

BERU December 2014 Russian Central Bank Gold Reserves

But is a Russian default possible? "The Russian central bank has enough reserves to pay off the sovereign debt," Jim Rickards of West Shore Funds told CNBC. "They do not have enough reserves to pay off all the corporate debt. They probably do until the end of 2015, but beyond that they don't. Some of that debt is going to default unless Russia wants to borrow more dollars to convert it. So you have to look at where that debt is. A lot of it's in European banks, a lot of it's in emerging-market funds. Some of that has ended up in U.S. 401(k)s. So you really have to look around the world, and that's the problem with it – the interconnectedness of the financial system. Some of these debt bombs are going to go off and explode, but you don't quite know where they're buried, and that obviously has the risk of contagion and systemic risk, which we saw in 1998," when Russia defaulted. "We're all at risk."

2) Ebola and Other "Black Swans": A "black swan" is an unexpected, extraordinary event that has a major effect on financial markets as well as overall society. An Ebola outbreak might be considered a black swan, and for a couple of months this year, Ebola's spread from West Africa to a handful of cases in the U.S. showed that the dangers of this virus goes well beyond human health; an outbreak has the potential to shut down air traffic, halt commerce, disrupt oil and mining operations, and even result in martial law. And billionaire fund manager Paul Singer of Elliott Management gave heavy play to another black swan in an investor letter in July: electromagnetic pulse, or EMP. Citing a solar storm in 1859 that knocked out telegraph systems worldwide, Singer called a potential electrical-grid blackout from EMP the "one risk that is head-and-shoulders above all the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence."

BERU December 2014 World Bank Group

Other black swans include cyberwarfare, terrorism, bird flu, drought, volcanic eruptions, nuclear disasters, earthquakes, and asteroids. Though gold isn't necessarily going to be a substitute for meeting basic needs and ensuring personal safety, bullion – with 5,000 years of history as a store of value – will preserve wealth amid widespread disruptions to commerce and corporate functions. The above events are long-shot occurrences at best, but gold above all is an insurance policy for the rest of your portfolio.

1) Falling Oil Prices Signal Dark Times Ahead: Stock-market guru Laszlo Birinyi is calling the massive plunge in oil prices the black-swan event of 2014. "It's the black swan, the Hurricane Sandy of the market, where you do not know where it's going, but if you want to guess, go ahead," he told CNBC. Although he thinks stocks will digest the oil slump, others aren't so sure.

Russia has been the clear-cut loser in the oil slump, but other nations are in trouble. Venezuela faces a potential debt default in 2015, and the U.S. shale-oil boom, which turned America into a net exporter of crude thanks to fracking technology, is now in jeopardy – and with it, all those jobs, infrastructure, investments, and future output, not to mention corporate debt. If some shale firms were struggling at $100-a-barrel oil, $60 oil or lower is catastrophic.

"The basic idea here is that, in a couple of years, the world will find itself with less oil coming out of the ground than it does today," wrote Chris Martenson of Peak Prosperity. "Unless … unless oil prices recover and quickly! If they don't, and deflation has indeed taken over, the global economy is surely headed for recession. And if producers cannot find it within themselves to cut production, then the world will have too much oil, keeping prices low. And this is how today's low oil prices are setting the stage for the next oil price shock."

Added Michael Snyder: "Are much lower oil prices good news for the U.S. economy? Only if you like collapsing capital expenditures, rising unemployment and a potential financial implosion on Wall Street."

According to Snyder, falling oil prices could "trigger a nightmare scenario for the commodity derivatives market." How? "The big Wall Street banks did not expect plunging home prices to cause a mortgage-backed securities implosion back in 2008, and their models did not anticipate a decline in the price of oil by more than $40 in less than six months this time either. If the price of oil stays at this level or goes down even more, someone out there is going to have to absorb some absolutely massive losses."

"There has only been one other time in history when the price of oil has crashed by more than $40 in less than 6 months," he wrote. "The last time this happened was during the second half of 2008, and the beginning of that oil price crash preceded the great financial collapse that happened later that year by several months. Well, now it is happening again, but this time the stakes are even higher. When the price of oil falls dramatically, that is a sign that economic activity is slowing down. It can also have a tremendously destabilizing effect on financial markets."

Indeed, "oil is not just something that is refined into fuel – it is capital, collateral, debt and risk. In other words, it is intrinsically financial," noted Charles Hugh-Smith of the OfTwoMinds blog. "Simply put, the sharp drop in oil revenues has knocked over a line of financial dominoes whose end is not yet in sight."

Maybe it's no coincidence that some of the biggest Wall Street banks were key drivers behind the passage of the $1.1 trillion appropriations bill on Congress in December. That bill, which rolled back part of the Dodd-Frank financial regulatory law, "largely repeals a rule that required banks to push some derivatives into subsidiaries that aren't eligible for government support, such as deposit insurance or access to the Federal Reserve's discount window," The Wall Street Journal reported. In other words, added Rolling Stone's Matt Taibbi, "they want to use your bank accounts as a human shield to protect their dangerous gambling activities."

BERU December 2014 Top Ten US Derivatives Banks

With oil prices tied into a least a part of $302 trillion worth of financial derivatives floating out there, the stakes are high – to your own pocketbook – if falling crude prices set off a chain-reaction house of cards that results in yet another taxpayer-funded bailout to the "too big to fail" mega-banks.

Given the risks to the global financial system with the appearance of this new black swan of falling oil prices, gold should remain a key part of every portfolio heading into 2015. During the last financial crisis, gold proved resilient. With the problems of 2008-09 merely papered over, not fixed, the stakes are even higher today. Own gold.

how to invest gold an make money | Asia Pacific Business ...

Posted: 28 Dec 2014 03:08 AM PST

In these uncertain economic times, many people are deciding to invest in precious metals such as gold. This is because they tend to hold their value. If you have been thinking about investing in gold, then this article is for you. It will give you some great tips pertaining to help you invest wisely.

If you were to want to add gold to your investment portfolio today without lugging around gold bars, would you know how to do that? Do you know all of your options for investing in gold? To learn some basics so that you can get started with gold investing, keep reading.

Before buying or selling gold, look into the market price for gold for the day. There are daily fluctuations on price for precious metals, so it's important for you to know what the current going rate is. This will help you understand whether the dealer is overpriced or fair in the offers made to you.

If you decide to go with a mail in service to sell your gold, make sure to have your items insured. If the items do not arrive at the buyer's location, you could lose out on the entire value of your gold. By insuring the items, you are protecting yourself against loss or theft.

Before finalizing your gold sale, get the entire thing down in writing. Later on, if there's any sort of problems related to the sale, you'll need this signed written document at the ready to prove your case. If you don't have it, you may find that proving any sort of fraud will be nearly impossible.

This article has described some great strategies you need to know for gold investing. Surely you now feel more comfortable about investing in gold to help diversify your financial portfolio. Use the information that has been given to you so that you can plan and strategize in the right direction.

You don't have to physically own gold to invest in gold. Check out mutual funds that invest specifically in gold. Also look at mutual funds that invest heavily in commodities in general with a concentration in gold. This makes investing in this sector a lot easier to handle for many.

If you decide to invest in gold, find out which type of gold is the best investment for you. Most investors buy gold bullion bars or gold coins. This type of gold requires a sizable investment. Gold bars are available in a wide variety of sizes from half an ounce to 400 ounces.

Always identify the karat value of your jewelry when you walk into the store to sell it. Some dealers will try to convince their customers that the karat value of a piece is lower than it actually is, and this results in less money in the consumer's pocket. Have a clear understanding of your piece's actual weight so this doesn't happen to you.

Refinery

Gold that has fewer stones are more valuable than gold containing many stones. This is because a jeweler must remove each stone before sending the item to the refinery. Additionally, jewelry that has several colors of gold is worth less than standard gold. Such jewelry is also known as Black Hills Gold.The best known and expert at gold refining is Republic Medals, I suggest checking them outhere before you invest anymore time or money

As you can see, there can be a lot of value in investing in gold, when done in the right way. Hopefully now you feel more comfortable about the subject. Apply the advice you have learned in this article from the Miami Herald to be much more gold savvy. You will be thankful that you did!

Wanna invest in 2015? You need this - CNBC.com | How to invest in gold

Wanna <b>invest</b> in 2015? You need this - CNBC.com | How to invest in gold

From Cold Wars and Hot Wars to Bubbles and Black Swans, Investors Need Insurance

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