Americans express this loss as having freedoms taken away, however, the primary difference between the U.S. and the European Union is the fact that Americans elect their officials.
British politician and leader of the U.K. Independence Party, Nigel Farage, warned about the dangers of non-elected socialist Brussels bureaucrats 18 months ago. In a video that went viral, Farage berated the council, calling the euro a failure and pointing out that unelected officials without “any democratic legitimacy” had removed elected officials in Greece and Italy from office like Agatha Christie kills off characters in her murder mysteries.
I met Farage in 2011 when I was at a CLSA conference in Hong Kong. I was pleasantly surprised that we shared professional backgrounds, as he was formerly a metals trader. I liked him when I met him and respect his courage for speaking out against the injustices.
Gold investors, keep in mind that gold coins and gold jewelry are not “get-rich-quick” schemes. As I talked about in my interview with CNBC, gold is like car insurance. No one wants a car accident, but just because one hasn’t happened, doesn’t mean you drop your policy.
In a Low Yielding Environment, Seek Dividends
I often say that money goes where it is treated best, and Russell Napier’s following comment rings true today: “Perhaps nothing changes human behavior more profoundly than the arbitrary and unfair acts of authority.” The factors that will be driving markets in this low yielding environment and governments’ questionable policies is for investors to find investment that offer a return OF their money, not return ON their money.
And the tranquil oasis of choice will likely be large, dividend-paying U.S. companies, many of which pay higher yields than the 10-year Treasury.
Take a look under the hood of the S&P 500 Index to see how important dividends, along with buybacks, have become to the overall index. This chart, created by Professor Aswath Damodaran of the “Musings on Markets” blog and republished by Business Insider, graphs the powerful twin engines of dividends and buybacks as a percent the S&P 500.
During the early years of the new century, both dividends and buybacks made up less than 2% of the overall index level. During 2004 through 2007, they began making up a larger part of the index, climbing to a 12-year high in 2007. That was the same year the S&P 500 hit an intraday record high of 1,576.
Now, over the previous four years, these figures have been increasing once again. Companies have been buying back their stock at record levels. In 2009, buybacks only made up 1.39% of the index level; by 2012, buybacks grew to comprise more than 3%.