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Gold/Mining/Energy : Precious and Base Metal Investing

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To: russwinter who started this subject	6/7/2003 12:32:30 PM
From: que seria	of 39344

Here is an interesting view of the dollar's effect upon global trade--first bloating, then purging it. Nice graphs of the huge increase in scrip (electronic or otherwise) in nations' reserves, particularly relative to gold. financeasia.com I take the marked divergence between gold and currencies as central bank reserves to indicate credit creation, not gold sales, such that the former balance will return if the author's scenario unfolds. That is: furriners' assets get ill from dollar bloat and depreciation, they expel a lot of their greenbacks in favor of home cooked currencies, the US economy tumbles as prices of essentials rise while asset prices (read: collateral) fall, debt vaporizes, and before you know it those worth-much-less greenbacks don't outweigh gold by nearly so much on CB balance sheets. This scenario may not unfold for years--maybe never. And if it does, the dollar could quickly bounce back at gold's expense if the Fed doesn't respond to the purging of its money creation with . . . more money creation. However, I've always expected the Fed to respond to such debt destruction and concomitant deflation with rampant money creation, via repos and outright printing. The risk of this end to our nation's debt party, and the investments taken in fear of it, are why I hold rather than (usually) trade my well-positioned junior explorers.

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