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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (24654)	1/14/2005 10:12:49 AM
From: mishedlo	Read Replies (3) \| Respond to of 110194

gold did well in the Depression despite the money shortage. the main reason was that nobody trusted the banks. so we might ask whether there is a possibility that people could lose their faith in banks again. that would make gold good as its eponym. Eventually something like that will probably happen but it seem too early right now. My LT scenario is that foreign debt everywhere gets wiped out. Do you believe that Japan, the US, the EU, and the UK are all more or less bankrupt? I do. What happens if foreign debt is just wiped clean? The US defaults on foreign held treasuries but not domestic. Is that possible? Every other country sort of does the same thing. Perhaps all govt debt everywhere goes kaput. There is your $4000 gold scenario. Anyway this is just rambling. I do not think we are close to that. But IF the US defaulted I am quite sure there would be a chain reaction of defaults.

To: Wyätt Gwyön who wrote (24654)	1/14/2005 10:50:00 AM
From: Tommaso	Read Replies (2) \| Respond to of 110194

>>the main reason was that nobody trusted the banks. << No, it was because Roosevelt raised the price of gold from about $20 an ounce to $35 an ounce. And when he made it illegal for private citizens to own it, the only way to invest in it was buying mining shares, at that time, mainly Homestake. The people who did not trust banks simply hoarded cash, which was still fully backed by gold even though you could not own the gold itself. Only a few rich Americans owned gold in European banks--and Kennedy even made that illegal about 1961.