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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (5525)	3/26/2008 11:56:17 AM
From: Paul Kern	Read Replies (2) \| Respond to of 71455

The only thing that makes no sense is most of the junior miners. FWIW: A gold mine president, a wise investor once told me. is just a guy in a suit standing next to a hole in the ground.

To: John Vosilla who wrote (5525)	3/26/2008 12:36:36 PM
From: Real Man	Read Replies (1) \| Respond to of 71455

Gold/oil ratio has been extremely low due to investing public shunning the early gold bull market, CB gold price suppression, etc. This explains underperformance of gold miners - they can't make a profit as their costs rise quicker than gold. The ratio went up quite a bit from 2005 nadir, but that was essentially what caused the underperformance of miners relative to gold (and the gold rally, as some miners had to shut down production). It is still very low historically, as you can see on this chart below. Gold will need to go to 4K to match 1974 Gold/oil ratio peak (if oil price does not decline)

To: John Vosilla who wrote (5525)	3/26/2008 12:50:17 PM
From: Real Man	Respond to of 71455

FWIW, CB of China holds 600 tonnes of Gold or so, valued less than $20 billion. GLD holds around 650 tonnes valued at around $20 billion. Gold IS the most stable currency very long term and the best hedge against any large-scale currency devaluation. This is quite low. The global stock market cap is what, 80,000 Billion? Daily FX volume is trillions. Gold is slowly becoming a currency again. CBs will suppress it, cause if it does become the currency of choice, the global financial system will disintegrate, gold will tend to show all fiat currencies for what they really are. I believe there is a shift - everyone wants a competing reserve currency, because they realize the benefits of shipping pieces of paper for goods. Oil exporters want theirs, Europe wanted the Euro, etc. The Bretton Woods II is slowly disintegrating. I believe it will all come back to the gold standard, most likely, but who knows.