The Epic American Credit and Bond Bubble Laboratory Message Board

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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Claude Cormier who wrote (30658)	4/15/2005 2:43:57 PM
From: Taikun	Read Replies (4) of 110194

Claude, With all this liquidity in the market at present, and all this erosion of value investors are experiencing as the USD falls, if gold cannot do its thing now how can you possibly expect that to happen after these overextended companies go belly-up and renege on their derivatives contracts. GM+FNM+AIG+MBIA is almost $7 trillion. That is money that could be used to buy gold, and that is only four companies. On top of that Greenspan is removing liquidity and increasing interest rates. Gold's opportunity cost rises. Instead of dumping fiat papers companies like GM/FNM etc have to raise fiat currencies to pay debts. If they have gold, it will be liquidated to pay cash debts. This goes for any counterparty default where assets are liquidated to settle positions. Sure, there will 'always be people', but there will be less of them, and they will have less money. David

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