Richard,
HNY!!!
It seems that we're both tracking along the same path, but merely have different expectations of when and how we'll reach the final destination.
I think the Fed and ECB still have the wherewithal to manipulate gold through at least the first half of 1999, taking into account even a Brazilian-Mexican debacle. They would merely sell gold into any panic buying to dampen the price rise as they did last fall (strange saying that, Last Fall... :0).
Having a gold standard ties the monetary policy hands of those factions within the CB's who wish to retain Fiat money. Those Factions (and they must reside at a high managerial level), have a host of tools with which to defend their currency, to include raising interest rates in conjunction with selling gold reserves.
However, given the current economic woes, global deflationary pressures(not inflationary yet), and the need to re-inflate commodity prices and consumer demand (driving economic growth), they will have to sell more gold into any buying, because they sure as heck can't get away with raising rates.
But by the 2nd 1/2 of 1999, the pressures will likely become overbearing, especially if Y2K proves as disruptive overseas as expected. I have opined that with countries stuck in the throes of depression, there will be considerable pressure to default on foreign debt to westerners as part of a general backlash (blame it on the bankers and gringos mentality). Should this result, then I would think we would have the event necessary for a wild surge in Gold.
So I guess the only question is, should we be buying gold now, knowing the ECB/Fed may be under increasing pressure to sell more gold to defend their currency the only way they can under current conditions, or wait until even lower prices result so we can really squeeze them by buying more... <VBG>
As a "funny" aside, isn't it amazing that the Indians may actually find themselves in a better financial position than other nations someday due to the incredible demand for gold they currently have??
Regards,
Ron
|
