Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (19353)	10/17/2003 5:29:34 PM
From: sea_urchin	Read Replies (3) \| Respond to of 81917

Darleen > This is why it is so darn hard to discount gold at this particular time. OK, I accept what you say but the fundamental problem I have is that, despite all the "gold" talk, people are not buying gold. The rise in the gold price is as result of the purchase of short-term speculative instruments. One cannot make a proper, long-term investment on that basis. Furthermore, the time when gold is an good investment is when there is inflation, but there is very little at present. Further, one has to buy it when there is perceived value. If it costs +/- $200/oz to mine, $400 can hardly be called an attractive price. And to buy shares in marginal mines where the production cost is nearly $400/oz on the basis of an imagined big increase in gold price for some or other reason is crazy. > the pressure placed on each unit of currency to me is just immense right now. Yes, and the pressure is coming from the dollar weakness. As the USD gets weaker each country has to "bite the bullet" and revalue. Devaluation of the dollar, as many try to make out, is neither easy nor painless. There will be many consequences and unexpected consequences for all nations --- including the US. USD devaluation is not just about a bonanza for currency speculators. > all currency is at risk Not really. The fundamental problem is the US debt which appears to be irreducible. In the circumstances, many consider that the US has no alternative but to devalue in order to "minimize" the effect of the debt. But that's not all that will happen. As the dollar weakens, so imports become more expensive and with that inflation rises. We have discussed this before. I am sure you have noticed that US Treasuries are falling (interest rates rising). A rise in interest rates is an instrument which no-one seems to have considered because that will (a) strengthen the dollar and (b) dampen inflation. Of course, share and property prices will fall. Here's a long-term chart of the 30 Year Treasury which, as you see, is "testing" its support line. treasurestatefutures.com It is my opinion that the main reason the large US debt is being called into question is because the US economy is not doing well. I don't know what doing well means because it's clear that lost jobs will not return. But I am sure "they" will have some way of knowing that the economy is improving and, when that happens, the pressure on the USD will be much diminished. And, in turn, on the other currencies. I think a big mistake people are making is believe that the answer to world economic problems lies in currency manipulations. I'm down, you're up, I'm up, you're down. That game is OK for a place like SA but for the US, the powerhouse of the world, something far more fundamental is necessary. One wants to see an improvement in business, an increase in turnover, in world trade, a pervasive sense of optimism. Pessimism and gloom benefits no-one (except goldbugs). As far as US politics is concerned, as I mentioned previously, there has to be fundamental change if the situation which exists at present is to be rectified or improved. In my opinion, three areas need attention: (a) Management of debt and its creation (b) Globalism and the export of US jobs to areas of lower cost (c) US militarism, especially at the behest of Israel.