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

To: Francis R. Biscan Jr. who wrote (27418)	1/31/1999 4:12:00 PM
From: Hawkmoon	Read Replies (2) \| Respond to of 116762

Thanks Francis, I appreciate your kind words. This is a truly interesting group of people out here and we are discussing something that has powerful economic repercussions, positive and negative. One would have to ask, why that is the case. If there is a lack of confidence in whatever economy or currency one has stored his value in, he would look for some other store of value And that is exactly what has occurred in the Fiat financial system. If one country's currency loses favor, then investors shift assets at lightning speed to that of a more favorable currency. As countries compete for investor capital, this is supposed to create the "discipline" of not overheating ones economy to inflationary levels and looking after wealth preservation. It is obviously not perfect. But the dollar is the last remaining storehouse of Fiat value, and when it falls drastically relative to gold, it will destroy confidence in the Fiat "illusion" and replace it with confidence in another "illusion" that is gold. But we have arrived at the point where the US dollar is the only currency currently able to act as a global reserve currency. As so many currencies are being devalued based upon their economic inefficiencies, capital is flying to the US and Europe. The Euro will be the next major currency to lose value based upon their inefficient economy and burdensome taxation and strong unions that limit capital's ability to maximize efficiencies in comparison to the US. And that will happen regardless of how much gold backs it. (If folks review some of my earlier statements this month when they were all predicting the Dollar would lose out to the Euro, I pointed out Europe's likely difficulties in consolidating Euro gains over the dollar. If gold backs the Euro, this shouldn't be happening) Fundamentally, currency is a storehouse of value only if cosumer confidence remains high. Since the Dollar represents the FINAL repository of value in the global financial system, should it lose ground versus. When people financially panic, they sell their stocks and go to bonds, then they sell their bonds and go to gold. When gold fails, they had better have the ultimate storehouse of value, food and shelter. And if you want to know the true illusion of gold, ask the people starving in Armenia, Colombia how much gold they'll take in exchange for some food or a couple of gallons of gas. You would think they would have confidence they could take that gold and go buy more food somewhere else (if they can find it). In those events, money of any type is an illusion. It is back to the barter system. Francis, I don't know how to explain it any simpler. Money, in any form, is only valuable if a large percentage of the population believe in it as a means of exchange. Gold in an illusion that destroys the illusion of Fiat. Extreme and sudden damage to either illusion has to have repercussions for the rest of the global economy. Hard money types railed against Fiat creation during the Civil War, because they perceived it as a threat to their wealth. But since the vast majority of us all denominate our daily financial transactions in dollars, a move in the price of gold will have the same result. Fire and Water.... Communism and Capitalism... I don't have any other analogies in mind that could make my point any clearer. Enjoy the game, all.. Regards, Ron