Dutch Central Bank Sale Announcement Imminent? Message Board

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Politics : Dutch Central Bank Sale Announcement Imminent?

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To: Ahda who wrote (8096)	10/7/1999 8:31:00 PM
From: Hawkmoon	Read Replies (3) of 81101

Darleen, Doesn't creating a sudden liquidity crunch in the gold market create even more weakness in the dollar as gold spiking creates the impression that inflation suddenly is beginning to run rampant? Why hasn't the Yen really increased in value against the dollar since gold spiked? Essentially the yen has been devalued in comparison to the POG, just as much as the dollar has. The only MAJOR currency that seems to have gained strength is the Euro charts.quotewatch.com Here's a chart for the Yen.. charts.quotewatch.com And one for the Australian Dollar: charts.quotewatch.com Looking at the Euro chart, it seems possible that the announcement to limit gold sales was used to prop up the Euro against the US dollar, due to the Euro threatening to retrace to its previous low of 102 or lower. As for believing that gold would not give the return they suspected as the reason to cease selling or leasing it tells us two things. They won't now see ANY return now since they can't sell it without reneging on their agreement. And secondly, if they hadn't discussed selling gold publicly in the first place, they could have prevented placing such enourmous pressure on the price in the first place, thus permitting them to sell quietly for a better price. Isn't that why this thread was started in the first place; because the theory was that European CBs were secretly selling gold? I don't buy it... The Europeans are trying to prop up the Euro by whatever means possible in order to prevent it dropping below par value with the dollar. Having a stronger Euro also might permit them to inject greater liquidity into their monetary system in order to spur growth (hence the decision today by the ECB not to raise rates). As for the Dollar and US debt... The US is supposedly able to generate a budgetary surplus (despite the politicians persistence in trying to spend it away). This is not a luxury that either Europe or Japan possess. So whose economy is truly the strongest, and thus rates the higher valued currency? Yep... its would be the good ol US. Let's not forget that Japan is running a tremendous deficit in trying to spur their economy. That deficit will only grow larger next year as they are required to suddenly come up with the money they need to pay off their public bondholders, who start taking redemptions enmasse in 2000. Whaddya think?? Regards, Ron

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