Hi Alex,
Thanks for the URL. The article was interesting.
Aussie dollar is weak and is likely to remain so or even get weaker, not because the Aussie Government has sold off much gold (167 tons) recently, but because its economy is weak and likely to remain so. IMHO, one of the reasons for this is that Australia has to spend lots on social services for a good number of its unproductive inhabitants. It seems to me Australia has been climbing the slippery slopes of social welfarism for a good number of years.
By contrast, the US$ is strong and is now almost considered a proxy for gold itself! Though not as pretty and not as durable as the yellow metal, it is far more portable, and if soiled it can be exchanged for new fresh and crisp currency at the bank.
Is it any wonder why lots of folks are deserting gold for US$ cash and bonds? However, this doesn't mean that US cash will be king forever. According to the law of cycles, gold will have a second coming, when sooner or later, the US Government start to screw things up, and the masses begin to clamor a return to gold-backed assets, or even a return to the gold standard. |
