Gold has a fixed supply unlike paper money which is what the Fed is 'printing' by the ton with its emergency bailout measures for the banks and capital markets. There seems no sign of an end to this process. Standard Chartered Bank yesterday forecast a fall in the dollar to $1.75 to the euro by the end of 2009. Reflation is the only answer the Fed has to keeping the US economy afloat - the opposite policy of raising interest rates and tightening money supply would produce a depression in current circumstances. Therefore you buy gold which will rise in price as the dollar devalues and other assets - houses, bonds, most equities - fall in price. There is no reason to think the dollar will suddenly stop falling and rally - European policy makers are going in the opposite direction, and US interest rates may go to zero. Eventually the dollar will bottom around $2 but that could take a couple of years while the US economy rebalances and consumers get out of debt. Don't believe the Washington spin on dollar strength - based on what?
Truemors
Sign in to NowPublic
at 22:28 on May 13th, 2008
Gold has a fixed supply unlike paper money which is what the Fed is 'printing' by the ton with its emergency bailout measures for the banks and capital markets. There seems no sign of an end to this process. Standard Chartered Bank yesterday forecast a fall in the dollar to $1.75 to the euro by the end of 2009. Reflation is the only answer the Fed has to keeping the US economy afloat - the opposite policy of raising interest rates and tightening money supply would produce a depression in current circumstances. Therefore you buy gold which will rise in price as the dollar devalues and other assets - houses, bonds, most equities - fall in price. There is no reason to think the dollar will suddenly stop falling and rally - European policy makers are going in the opposite direction, and US interest rates may go to zero. Eventually the dollar will bottom around $2 but that could take a couple of years while the US economy rebalances and consumers get out of debt. Don't believe the Washington spin on dollar strength - based on what?