Bob:
Interesting thread. I'll try to be good!
Personally I don't subscribe to the "collapse of the USA -- bring on the chaos" theory -- and it's not a situation I'd like to be living through next door in Canada! We'd probably have to use our ill gotten gains in gold to buy a machine gun to protect our lives, never mind our property! <ng>
But I do subscribe to the "inevitable devaluation of all paper currencies" theory. As well as recognising major fluctuations amongst the major fiat currencies over periods such as 10 years. For example, the German Mark (the closest thing to a Euro surrogate for long-term analysis) went from a low of US$0.29 to a high of $0.73 between 1985 and 1995. i.e. It had a "normal trading range" that allowed it to gain 350% against the greenback in one 10 year period. Similarly, the British Pound fell from US$2.61 in 1972 to a low of $1.02 in 1984 -- and now it's back up to about $1.90. These are "normal" fluctuations amongst the major fiat currencies over 10-year time periods.
So why shouldn't the US$ index fall from its current value of 83 to 60 say? e.g. a further decline of 28% from here? This would be quite a normal fluctuation by historical standards and would *not* signal the end of the US of A as we know it!
Meanwhile, the POG has gone from $100 to $427 since 1976. This is the really telling figure. In other words, in POG terms, the US$ has lost about three quarters of its value. And if you check the inflation rate (official or unofficial), you'll see that something similar's happened. Jobs that paid $15,000 a year 30 years ago pay 4 times that now. Here in Toronto a house that cost $50,000 in 1979 now costs at least $250,000. These figures are not a coincidence. They're simply reflections of the devaluation of the paper money.
So, IMHO, gold will continue to increase in value in US$ as the currency steadily decreases in value (due to the massive US debt, trade deficit, etc.), but it will also begin to increase in value at an even greater rate against the Euro, Yen, etc., since their economies are not in great shape either and their currencies are also doomed to long-term depreciation against real assets such a gold or real estate.
To summarize, we don't need anarchy to see a major increase in the POG against all world fiat currencies -- just a gradual melt-down similar to that which has been going on for at least 3,000 years. <g>
Regards,
Howy |
