Knowing a little about Russia, I'm not surprised at their
buying up gold. The question over the last few years is
who has been buying. The selling has been very public.
The buying has been a big secret. Strange system. It could
have been simply US, England, Switzerland, etc. selling
back and forth to each other to keep the price down to
protect the monetary system with its huge forward and
short sellers. OR/AND it could also be countries not
particularly friendly toward the US buying up gold. I
was around when the Hunt brothers tried to corner the
silver market. Madness ensued. I was at silver auctions.
People were crazy. The Hunts failed but then they didn't
have the resources of a govt. behind them. If Russia and
China have been buying and then one, or both, decide to
take physical delivery (this is, after all, a hardball
game), they could drive the price of gold and silver
through the roof. The old 800 ceiling could be met or
broken. The financial companies in the US, England, etc.
would fail unless rescued by their govts. The cost of such
a rescue would be enormous. The failure, though, would
carry a greater cost. The scary thing is that while
the Western govts. have been unloading gold, they've
continued with a system that depends on gold credits.
To protect themselves, they needed to stop allowing gold
loans. That, of course, would cause other problems. What
I see is a hybrid system with great risks. So far the
Western govts. have had it all their way but they may
be on the edge of losing control. My solution? I've been
buying gold stocks the last few days. Not overwhelmingly
but as insurance. Gold, after all, has only become cheap
in terms of US dollars. And, can this many Japanese be
wrong? |
