Gold and Silver Juniors, Mid-tiers and Producers Message Board

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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: maxncompany who wrote (61233)	9/19/2008 11:05:55 PM
From: E. Charters	Read Replies (2) of 78419

If they use gold to buy stuff, it is different than just selling gold. The US has 8,000 tons of gold, worth 203 billion. They are talking about using 57 million ounces or 2000 tons of the stuff to purchase illiquid mortgages. Gold in this sense is commanding paper, as if it were purchasing dollars. It would be better for the US if the gold price were allowed to rise, as it stretches their buying power more. If gold were allowed to drift down, the deal would not be very attractive. The act of buying all these mortgages you would think would put downward pressure on the gold, except for the fact that nobody else wants them. So they can get their price. In the 1930's when money was scarce, but prices were low, you could say the effect was that commodities chased few dollars so their price dropped. However gold could substitute for money so its value rose, as against commodities it too was scarce. In this instance there are lots of mortgages, and there is only so much gold, so the pressure should be positive on gold. EC<:-}

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