Update

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Finn's picture
Finn
Status: Member (Offline)
Joined: Aug 14 2008
Posts: 2
Update

Thanks for the links. It's been a month, roughly, since my prior comment, and I haven't changed my view. I expect the deterioration of the economy to continue globally. As decoupling becomes recoupling, the relative value of dollars will rise. It's not about US economy doing great, it's just that economies are contracting around the world.

What comes to commodities, we are witnessing the bubbles popping when the economy sinks. It was a good run, but it definitely looks to be over now. The recovering of the dollar index looks very decisive.

Gold and other commodities will do very well indeed, should the major central banks choose printing money. Up until that - if that happens at all - I would not dare being long any of the commodities, anymore.

Actually, should the central banks start printing, I'm afraid there will be a mother of all economical crashes, as everyone rushes through the door to buy any and all inflation hedges. And I would not be surprised to see all the precious gold confiscated (has happened before, as I'm sure you are aware) should they really turn things Zimbabweish by printing. In that case hedging with gold might just turn out as heads they win, tails you lose.

Disclaimer: I'm not long any commodities. I'm long the dollar, as a European. I don't think Europe is better off than US at all. On the contrary. The only difference is we plunged a bit later.

TnAndy's picture
TnAndy
Status: Member (Offline)
Joined: Jun 2 2008
Posts: 4
Gold confiscation
"And I would not be surprised to see all the precious gold confiscated (has happened before, as I'm sure you are aware) should they really turn things Zimbabweish by printing" It actually WASN'T really confiscated last time, it was more of a 'voluntary' turn in.....at a time when Americans were far more trusting of their government, or at least the "little guy" was. The large holders of gold moved it offshore prior to the event, or there would be no pre-33 US gold coins for sale today. Having seen gold taken last time, with paper payment at $20/oz, then almost immediately revalued by the govt for $35/oz, I suspect the old saying of "fool me once, shame on you, fool me twice, shame on me" will come into play this time. I suspect they wouldn't get a bucket full of gold if this was passed, and might well lead to armed insurrection if tried. Also, one of the major reasons for taking gold out of the equation in the 30's was the use of "gold contracts". A Supreme Court case in the late 19th century on the legality and acceptance of fiat paper meant people HAD to accept paper as legal tender in lieu of gold/silver coin for debts.....unless a prior contract said different as to the method of payment. Thus, gold contracts were born. Two parties agreed in advance that gold was the ONLY method of settlement, and by this, gold would ALWAYS be a threat to paper fiat ( and the bankers ability to create unlimited amounts of it from thin air ) via these contracts UNLESS it became illegal fo the public to write these or trade in gold. THUS is became so.
TruthSpeak's picture
TruthSpeak
Status: Member (Offline)
Joined: Aug 26 2008
Posts: 21
"armed insurrection"
You got that right.

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