The next (it's actually already here, but people are still too hung over to quite realize it) crisis is the United States, not Russia or Mexico. 45% of US debt is held by foreigners, and I am not proud to say (I'm an American) that we are exporting even more dollars to the tune of $400 billion/year (4 1/2% of GDP: banana republic percentages). Overvalued financial assets, short positions in gold, and foreign holders of US dollar instruments occupy the same crowded, stale space. It's not just dusk, it is midnight on this immensely overexploited economic strategy.
At the other end of the spectrum is underowned and despised gold, which is not someone else's liability. What a novel concept (anti-finance) after a decade of overborrowing, overleveraging, and the use of black box finance schemes. Just give me something solid, and keep the interest payment, as they often can't pay it anyway. When the psychology shifts this time, it will be a green light (investment demand)to move out of paper, and into something that is not someone else's liability or receivable. And since gold has already been substantially sold naked into the market, the move could be on the magnitude of several hundred (or more) dollars. With loss of confidence in the old tired regime, no one will step in front of that train. |
