Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Dream on.

Read the announcement again!

Now that you all have managed to get over the gold price fiasco. Reality must now strike home that the US dollar is no longer the currency that it once was.

Effectively the announcement by the 15 European Banks has put an end to dollarization policies of the US.

Now central banks will be bidding for gold and this will far exceed the sale limits just established by the Europeans. The historic actions by the European central banks and Japan over this past week are extremely bearish for the US dollar and the US financial markets. So far the markets have failed to understand this threat.

Take into consideration the huge deficit that the US has and the fact that gold is now a haven for those with capital and no longer will these investors need to hold US dollars.

The effect will be timely and without precedence as it was in 1987.

Am I being apolyptic? No the effect will be a major correction which is well overdue and will allow future years of prosperity without the Fed's continual intervention. Policies may change (they have to) but these will be for the better!

My estimation is that you will see gold shorts raiding the markets to cover their position which will see a roller coaster ride until an equilibrium is set.

This is a 5 year policy - not an overnight sham! US $580 per ounce is a realistic *intrinsic* value. Others have quoted $1,000's as the traded value of derivatives exceed what actually exists by 100 times! By undoing these derivatives you create an unrealistic demand which may force a spike on the price, but only short term.

Remember that the central banks have woken up after a fright (the fact that they do not own what they have leased out on the 'gold carry trade') so hedging against gold will now die a natural death. The rate has increased from 1% - to 4% and it is now 9%. This is only after 3 months.
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.