Chuck, any thoughts on my prediction of low POG for next 5-10 years.
A post of Dr. Dave Webb, President of Mongolia Gold Resources
(only bits and peices, link address follows:)
>>>>>>>>>>>>>>>>>>>
the last few weeks we've seen the two top predators in
the gold food chain swallow (or attempt to) multi-hundred million dollar
meals. Barrick and Placer Dome are continuing to acquire.
the price of gold is
decided by buyers and sellers of 15% of the worlds production, the
financial markets.
There is talk of the tremendous overhang in gold reserves in central
banks. On examination, one realizes three critical points.
1. The Central Banks are the predominant source for bullion sold into
the market as borrowings and hedges. This is gold that has been borrowed
2. The total quantity of gold stored in central bank vaults is open for
speculation, but estimates average around 1,000 million ounces (30,000
tonnes).
3. Central Banks must replace this reserve with something .........
One must question the wisdom of selling
an asset (gold) near its record low price (inflation adjusted) to buy an
asset (US dollar) that is selling near its record high price.
the market has created a creature called synthetic
gold. This is not some alchemist's dream, rather it is a central
banker's nightmare. It has been around for ages, but has become very
popular in the past few decades. By simultaneously selling a put (the
The creation of
synthetic gold has expanded the quantity of gold in the world. Because
it acts just like gold, it has displaced gold in many transactions,
including central banks reserves. Synthetic gold is however, transitory.
It can be rolled over, creating an illusion of permanence though. The
gold in the central banker's vaults is no longer 24 carat it has been
debased many times through paper transactions. It is in reality only 18,
or maybe 14 carat. Maybe less.
What inevitably happens is bad money replaces good. It has happened for
that the supply-demand equation is really skewed because "synthetic
gold" has been added to the supply-side. I may not know what good money
is, but I have an idea what bad money is.
Dave
Message 6794084
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My reply of King with no cloths.
Message 6799370
Doug |
