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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: PaulM who wrote (6960)	1/30/1998 9:16:00 AM
From: tekgk	Read Replies (2) \| Respond to of 116762

Weakness of the Euro at birth is not a foregone conclusion. Coming out with a strong currency that subsequently weakens would be very short sighted and psychologically devastating. Anyone with any sense would sandbag by buying dollars now, making the dollar look better than it is. That way when you sell the dollars later because you establish the euro as a reserve currency and don't need the same level of reserves, the euro will strengthen. Add to this the problem of the real strength of the dollar manifesting itself and you have a compounding effect. The US runs a trade and current account deficit that was supported by Asia and is now supported by Europe - when the support ends, the dollar will return to it natural lower level. The long term value of the Euro will depend on what mechanisms are established to prevent the erosion of the currency by the bureaucrats. None of this is a forecast - just some common sense that I am sure has gone through at least a few bureaucrats minds in Europe. European actions to date seem to support this theory. I would also make high gold reserves part of the plan. First talk it down and quietly buy it at lower levels, next, make the gold reserves higher than expected and bang - another psychological boost and some nice profits. After all paper money is all about psychology since there are no tangible assets associated with it. The decline in gold and silver stocks in the comex while volumes are growing in the LBMA is the main reason I have formulated this theory. Another reason for Europe to dump dollars and buy gold is that if they don't, they will always remain under the American thumb. Can Europe pull it off - depends on how good their timing is. They can't wait until May to start the plan - they needed to start about a year ago and they need to execute precisely for the desired result to manifest itself when the Euro participants are announced. The worlds leading power always assumes that the rest of the world is stupid which eventually leads to it's demise. My view is that secondary powers are smart and are always trying to figure out how to displace the leading power.