The
Golden Lie? Swaziland
Lilageni Namibian
Dollar New
Zealand Dollar Lithuanian Lita
Lesotho
Loti Fiji
Dollar Canadian
Dollar Australian
Dollar South
African Rand Look at the charts. Does it look like Gold was a good investment? If you had invested this money for the last two years in the South African Rand, Lesotho Loti, and Namibian Dollar, you would be up almost 100%. If you bought properties in these nations, you would be up even more. Investing in New Zealand and the Australian Dollar would have yielded upwards of 60% gains. My friend Alan Lunt who resides in New Zealand tells me, investing in properties would have yielded up to 300% gains (not to mention the additional currency gains against the US dollar). What is even more interesting is that almost all the other metals have done better than Gold. Gold is not even in the top 20 sectors. Gold’s poor cousin, Silver, is the number one Sector right now. Aluminum, copper, steel and iron ore and basic materials have all out-gunned Gold. So what gives? Just maybe it has to do with all this focus on the metal. Notice how the other metals are not mentioned as much and look how well they have done. Uranium, which is in a super bull market and is hardly mentioned at all, has buried Gold in terms of return. Maybe its Gold’s desire to be noticed that is resulting in it going unnoticed. That which we desperately seek is what usually eludes us the most. We will do follow up articles on the Silver, Platinum and Palladium Bull to see how they compare to Gold when priced in other currencies. Comments by Alan Lunt If you zip back up the page and look at gold priced in Kiwis the chart is almost the exact opposite of the track of the kiwi dollar priced in US dollars. This brings up some interesting observations I will get into later. "The rampant Kiwi" has had massive impacts on this country's economy. The first is the cost of labour priced in US dollars. Our dollar has advanced 64% in the last 3 years; therefore our cost of labour in the export sector has gone up 64%. That is a huge jump in cost in anyone’s book. It is impacting the profitability of the farming, fishing, forestry and tourism industries. Secondly, because the spending power of the Kiwi worker has gone up in real terms, he has had more disposable income, (which he has disposed of). He has leveraged the spending power into property, and the banks were only too willing to assist. We have had a crack up property boom, which is just starting to level off. This has altered the ratios of lending by the banks, effectively cutting off new lending to the export sector. The third effect is more insidious. Our Central Bank is placed in a situation where it must reign in the property boom without killing off the export sector, and the only tool in their arsenal is interest rates. Just this morning there was an announcement that the interest rate will remain unchanged. If it had gone up, more money would have flooded in contributing to inflation (an increase in the monetary base); if it had gone down, the property boom would have continued. There is also talk that the Reserve Bank will intervene in the foreign exchange market. What a disaster that will be. Now I come back to the original thought. Instead of pricing the Kiwi dollar in US dollars, price it in gold. What a difference that would have made in the last 3 years. It just shows in a graphic form what a disaster a fiat currency is capable of. Fiat currencies by their very existence are subject to excess, and the Kiwi dollar is living proof of those excesses. The excessive volatility that the currencies of small countries suffer is the result of paper shuffling by the moneymen. It has nothing to do with the ability to pay as our current account deficit proves--it is at record levels. That is what you get when spending power goes past productive ability.... imports, without the countervailing, exports to pay the cost. We are in a worse state than the United States of America was in the year 2000. It is only when gold breaks out in all currencies that the game will be exposed and people will question the value of paper. © 2004 Alan
Lunt © 2004
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