As central banks around the world continue to print excessive amounts of paper money, currency printing is starting to have a negative effect on corporate revenue. Pfizer Inc. (NYSE/PFE) reported revenues of $59.0 billion in 2012, a decrease of 10% compared with $65.3 billion in 2011. Due to an unfavorable foreign exchange rate, the company lost $1.5 billion in revenue—or two percent. (Source: Pfizer Inc., January 29, 2013.) For Johnson & Johnson (NYSE/JNJ), the effect of currency fluctuation on its corporate revenue was bigger. In its full year report, the company showed sales of $67.2 billion worldwide – down 2.3% from 2011’s sales because of currency fluctuation. (Source: Johnson & Johnson, January 22, 2013.) 3M Company (NYSE/MMM), on a 2012-to-2011 comparative basis, says exchange rates decreased its sales by 2.4% in 2012. (Source: 3M Company, January 24, 2013.) Unfortunately for many American companies that get their sales abroad, central banks around the world are in outright currency wars. The Bank of Japan, central banks in Latin America, and, most importantly, the Federal Reserve have expanded their balance sheets by record amounts. The corporate revenue of large multinational companies is affected by rigorous central bank paper money printing. And it could be a long time before central banks get out of printing mode. Just look at our own central bank; the Federal Reserve is purchasing a combined $85.0 billion a month in mortgage-backed securities and government Treasuries with no expiry date yet. Key stock indices have risen, as central banks have increased the money supply. But if companies in those indices are not able to squeeze more earnings out of declining revenue, they will need to resort to plain old-fashioned stock buy-back programs to make up the difference in per-share earnings. Companies can only pass on costs to their customers for so long, especially when consumer real income has been declining. I still see gold bullion as a hedge against central banks’ printing paper money. It has been known to store value for much longer than the paper currency. The best thing about the yellow metal is that, unlike fiat currency, central banks cannot print more gold. Michael’s Personal Notes : The U.S. Treasury Department reported that the U.S. government had a surplus of $3.0 billion in January—the first surplus since September of 2012. (Source: Market Watch , February 13, 2013.) Let’s look into the “details” of this favorable report: For the current fiscal year 2013, which began in October 2012, the U.S. government has already raked in $290 billion in deficit, ballooning the national debt to $16.5 trillion. When the U.S. government incurs a deficit, it simply means it needs to borrow to pay its expenses. ... Read More