| The dollar is holding by a thin thread, ready to break down. I guess, that's the other side of the equation. If dollar loses its status as reserve currency, I don't know what the outcome will be, but it very likely will result in increased investment and jewelry demand for gold, presumably very dramatic increase in investment demand. US treasuries have been investment of last resort, and the yield is just not good enough, compared to the risk of holding overvalued currency with 5% trade deficit and large budget deficit. The same story in Japan - the last Japanese government bond auction failed miserably. Now, the Japanese were the main buyers of US government bonds - I guess, they assume US path of bubble collapse will be similar to Japanese, where government bonds just kept on going for a while. Yet I think we are about to witness a dramatic destruction of dollar value. A lot of people are expecting November bottom in gold, it seems few believe we have already seen one. I guess, that's the reason for me to stay invested. I don't think gold will go dramatically below 300 at this point |
