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Gold/Mining/Energy : Gold & Gold Stock Analysis

GLD 380.06

0.0%

Nov 25 4:00 PM EST

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To: gregor_us who wrote (15810)	10/26/2008 2:18:27 AM
From: pogohere	1 Recommendation Read Replies (3) of 29622

I believe the issue of monetary velocity doesn't get enough attention. I'm in agreement with what you have written as far as it goes. However, my attention has been drawn to the issue of how to recognize when the tide turns from low velocity in the US$, i.e., it is desirable/advantageous to obtain it and hold it during a credit crunch (its relative value rises vis a vis other currencies), to high velocity i.e. when it is desirable/advantageous to spend it as fast as possible because it is apparent its purchasing power is falling. This is an aspect of inflation that I have previously ignored. There can be enormous currency printing, but if velocity is very low the increased liquidity can have quite a lagged effect. I think it is important to recognize this and not invest as if the effect of the currency printing will have a very near term impact. How will we know when there is a change in monetary velocity? I don't know, but there are signs that $US holders are getting restless: U.S. has plundered world wealth with dollar: China paper Fri Oct 24, 2008 6:14am EDT reuters.com What we are waiting for now is very simple. At some point, the present upside rampage of the US Dollar will come to an end as the demand for it to go on deleveraging dwindles and then dies. At that point, the present hugely artificial demand for US Dollars will literally vanish into thin air, leaving the Dollar suspended in mid air without a parachute. As "Bugs Bunny" once said, after landing like a snowflake after plummeting from miles high without a parachute - "you can do anything in a cartoon!" Message 25109438 Message 25109651

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