I guess I was taking it for granted that you understood that there had been a currency devaluation and that I did not need to say that.
But yes, you are correct, there has been a currency devaluation in those countries and therefore within those countries there has been a sudden bull market for gold. Other commodities within the countries will not have inflated with nearly the rapidity of gold, however. They may catch up, but in the mean time a person owning gold in one of those countries has enjoyed a sudden increase in wealth and can buy more goods than people who do not own gold--or can sell the gold for much more than he paid in the local currency.
As I said, within those countries, there has already been a bull market for gold.
If you look at the money supply figures for the United States, you will see that the monetary aggregates, especially M3, have expanded very fast in recent months. It may be that the Federal Reserve is monetizing the debt by buying bonds, thereby creating more dollars that can help prevent the collapse of various financial institutions that may be affected by the currency/banking problems in the Far East.
This, in turn, may erode the dollar's use as a fixed store of value and make gold more attractive for that purpose.
Barrick seems like a good, stable company to invest in if one thinks, as I do, that the price of gold may rise in terms of all currencies. |
