Gold and the U.S.$ Today
The first phase is the onset of the crisis, together with smoothing words to calm markets, but to no avail. The second phase is when there is public recognition that there is a crisis, followed by all involved coming together to give the impression that the crisis is being resolved. This phase precedes watching the system begin to actually break down despite the superficial efforts of global monetary authorities to the contrary. Are we there yet? The global credit crisis hit Asia like a tsunami hits the shore there for the first time this week, triggering a massive run for cover as investors fled their holdings of dubious fixed interest investments. Another big Capital Tsunami hits
Then the capital Tsunami flowed back to Europe where:
And we are told to expect problems from this crisis could last for two more years as the real tragedy for the sub-prime mortgage holders. But now it is a $ / banking credibility problem threatening to engulf the entire global economy Authorities overseeing the crisis are blithely raising their hands saying markets must find their own level. This is complete inaction, but is it a result of their powerlessness in the face of these massive waves of capital? The finger pointing at the suppressed Yuan is ducking the issue. The statement that the $ is not a problem of the U.S. is confirmation that the U.S. will not do anything about its weakness and why should the Fed? It is to their advantage to see a weaker $. We don't expect the States to do anything about the weak $ now or in the future. From the perspective of the States, the $ is bedrock, so the problem lies with those dealing with the States. Not only is it in the interests of the U.S. to see a weak $, there is little that they can could do to rectify the $'s performance, until foreigners take action against it. But they are in a strong position to do so. So the ball is in a foreign court. Until China and Asia are far less dependent on the U.S. it is not in their interest to see a $ collapse or even the buying power of the $ diminish. It is however in their interests to use the $ to buy up all the assets they can across the globe until they are spent. That would see a major rise in the power of China in the global economy. That is already well on the way and continuing at a frantic pace. There is little incentive to sell the dollars to lower their presence in national reserves, because this would lower the value of the remaining dollars in the reserves. Consequently we all have to live with a falling $, consequential rising global inflation, picking up speed as the velocity of the fall of the $ is diminished through market intervention, breeding more inflation still. The result has to be paper currencies across the world having to accept that to keep their economies healthy they must accept inflation, or see their international competitiveness reduce their own national growth. Gold
- as a result The trigger to this rise is the awful loss of confidence in the banking system and the investments they have engineered. It is called "risk aversion", but it is more serious than that. Harsh lessons are being learned from bitter experiences that have shocked even the most experienced of investors. Will the crisis go away we are told, not for some time to come? In fact, it could worsen as the structures on which confidence stands stumble under the doubts and fears. Then it becomes simply a matter of prudence and wisdom for investors of all types in all parts of the globe to protect themselves against this turmoil in something that is not an obligation, a promise, something not dependent on the performance of people or any other hope. Where can they go? They need something they can know will not evaporate as quickly as a changing exchange rate, something they can grip in their hands, something solid that has proved itself in just these sort of times - gold. With the global market so integrated, so informed, so fast and now so volatile, expect this relatively small market to get a great deal of attention to make it evolve into something totally different to what we see at the moment! Please subscribe to: www.GoldForecaster.com for the entire report or to the www.silverforecaster.com. Julian D. W. Phillips "Global Watch: The Gold Forecaster" covers the global gold market. It specializes in Central Bank Sales and details, the Indian Bullion market [supported by a leading Indian Bullion professional], the South African markets [+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $, Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the influential gold price factors across the globe, so as to truly understand the global reasons behind the gold price. FIND OUT MORE Legal Notice / Disclaimer Gold-Authentic Money / Julian D. W. Phillips assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit which you may incur as a result of the use and existence of the information provided within this Report. You should be aware that the Internet is not a completely reliable transmission medium. Neither Gold-Authentic Money / Julian D.W. Phillips nor any of our associates accept any liability for any loss or damage, including without limitation loss of profit, which may arise directly or indirectly from your inability to access the website for any reason or for any delay in or failure of the transmission or the receipt of any instructions or notification sent through this website. The content of this website is the property of Gold-Authentic Money or its licensors and is protected by copyright and other intellectual property laws. You agree not to reproduce, re-transmit or distribute the contents herein. Copyright © 2003-2007 Julian D. W. Phillips « BullionVault.com -- Buy gold online - quickly, safely and at low prices »
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This
week saw the $ cross the $1.48 line to the € heading for $1.50 after the
U.S. markets closed for Thanksgiving. It then bounced after the London market
had opened on Friday. We do expect a bounce, but not for long as a secondary
phase of the crisis comes into play. What crisis, you may well ask? It is the
sub-prime crisis/credit crunch/$ crisis as it spreads into the global economy
[as well as inside the U.S. of A.]