Yeah, I know it's a very deflationary event. Nevertheless,
gold may just soar. The reason is, this collapse will lead
to the Fall of the dollar as the World supreme currency.
Also, some CB gold has been loaned, and has to be repaid.
I don't really know what will happen, but shorting stocks,
combined with long gold and silver seems to be the right
longer term position. You could also short bonds.
In case of deflation, treasuries are supposed to soar.
Yet, if they soar, the derivative collapse simply won't
happen, since the credit derivative bubble feeds off the
low interest rates. A paradox? I don't think so.
Bonds will be dumped
big time. So, if bonds move opposite to deflationary
scenario, gold may just do so as well. SA or Argentina
are perfect examples of what may happen. The difference,
however, is that US dollar is the World reserve currency.
Nobody holds the rand, yet everyone holds USD. This means,
the fate of the buck will be pretty dire. The event would
be deflationary for the rest of the world, but
hyperinflationary for the US. So, in USD terms gold should
definitely rise. However, this does not meen automatically
good profits for Canadian, Australian, or SA gold miners.
In fact, it could mean losses. That's what would happen
if USA were just another country, like SE Asia, Argentina,
or Turkey, not the G1 country whose currency is the World
currency.
I believe, the CBs will sell USD reserves. They
would wish to hold something, as they do so.
That something will very likely be gold. In that event,
gold will soar enormously. |
