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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: russet who wrote (2132)	9/27/2000 11:01:35 AM
From: nickel61	Read Replies (2) \| Respond to of 3558

I think you should understand that the only thing aside from gold used to back the validity of any countries currencies is debt. That is all other foreign reserves are the debt instruments of another country or their currency in the form of their treasury notes or bonds. When these are suddenly called into question AND THERE IS NO GOLD IN YOUR FOREIGN RESERVES there is no backing behind your currency at all. NOthing. So the analysis you should be looking at is why did they origionally need gold and are those conditions still possible today? The answer is that when the debt of a country is no longer good or comes into question about being able to be paid there is no backing for your currency because the foreign reserves you had are no longer any good. This can't happen you say? Well how would you have felt if the only foreign currency your country had against your paper monies value was Thai baht, Indonesian rupee, Malaysian sighn, and unconvertable Chinese ringat? And it was the fall of 1997? Think that is extreme? How about any Latin American country or the last fifty five years currency? Or the Russian currency? Too unrealistic? How about the Indian Rupee or the Israeli sheckel? How about the Canadian dollar or the Australian dollar in the last twelve months? THe Euro in the last two years maybe? What about the second largest economy in the world Japan? Whose credit rating is being downgraded and their debt is so overbearing that it is beginning to be questioned if they will ever get out of their ten year depresssion. But this is not possible in today's world? How about the US who is spending $370 Billion more on foreign imports this year slone than it is able to export and yet printing paper currency like crazy to keep interest rates low and the economy chugging along. You tell me which group of politicians and their paper currency you would like to have as your sole foreign currency resrve? Or maybe you aren't aware that in 1930-1935 every central bank in the world except England and the US went bankrupt. That is right unable to meet their debt obligations all at the same time. But no that couldn't happen today because the factors are different now. They don't allow the reckless creation of inflated asset bubbles or the massive level of indebtedness that could cause that type of situation and today our leaders are so much more schooled in these matters and so principaled that they would never let the entire savings of a generation be wiped out like the germans have had twice in the last century or the french have done four times or the Latin American countries do every few years. Or the Russians have just done or the Japanese are in the process of doing or the asians did just three years ago. NOne of that could ever happen could it? Well you take a look at the reserves of the US government my friend and ask yourself if gold is such a barbarous relic why are eigty percent of the United States Foreign Exchange Reserves in GOLD not paper bullshit? Why because in spite of all the arguements to the contrary the value of gold is independent of the financial condition of anyone else and in a period of crisis (which is the only time you need this stuff) the value is not dependent on the financial condition of the other country whose bonds or currcncy you are holding in forgein reserves. Because the financial world is incredibly interdependent and when the solvancy of one countrie's affairs are in question it is not impossible to imagine that other countries credit worthiness will also be in extremis. So if you still think GOLD has no value in the backing of a countries currency then you have qualified as a true believer in the modern Clintonian world of trust. As in don't worry Monica I won't release in your mouth. Trusting scum like that to protect your interests is foolhardy at best.