To All:
Will the Euro become as the dollar of days past?
If one hears the thoughts of present investors, they consider this new currency as "a horse to fat for the running"! I offer that life is but a series of choices that, in each case, expose the risk of saving our productive efforts for a later time. Each choice does hold the bad flavor if eaten in inappropriate combinations. Even the vintage history of wine does show the bad years of mistaken purchases.
Some make the great gamble by trading investments for profit by day. As the night of these assets approaches, they find the dull taste of gold as "a season for the food of others". It seems, only the hot spice of derivatives will fill them! Yet, suddenly, a conservative nature takes hold in discussion of currencies. These same then speak loudly of a "Euro of little future" with no backing. It is much overlooked that the dollar has held the dominate position, to this day, "with little backing! Even fifteen years have passed from a time that many said, " this dollar has the weight of debt and will fall soon". It has not, it did not! Noone did see that the weight of trillions was "of little luggage" for this dollar camel that found strength in Gold! A gold chart from 1970, turn it upside down for view, there we see the strong dollar beast. However, even gold will not support the lead pack animal that does become wild with power. It will be put down when the replacement arrives. Mr. Kosares, from my last letter you find the direction to unload this dollar, yes? It be time to remove your luggage, quickly! Events, "to defend a falling dollar", "in the form of rising interest rates", will show this as the currency soon to lose the backing of gold.
I think the mistake, for many, does come from their "eyes of youth". Even the old experienced mind does, at times, view the world with "eyes of trust". Few can, or will understand what makes a currency, a currency. Gold has not changed, nor has it lost it's place in the world as money. It is still the test of currencies, yesterday, today and tomorrow!
Thank You
Another
Michael,
Poland and China are good customers for the BIS. This is real physical gold they are taking out of circulation, not the pay me back when you have a chance lease deals. They really do have the IMF/Dollar countries over the barrel. Under these conditions it's easy for them to drain the Canadian gold reserves. Soon, these goldless countries will be left with nothing but high yield US dollar treasury notes. Later, when new issues of this paper is yielding 15%-20% these Central Banks will wish for the day when they held an assetthat offered no return! Gold!
The world currency crisis is heading for resolution. I think most of the reallocation of reserve assets is complete. Now the war can commence. The Dollar NEEDS a lower gold price to keep it up. London tried to use the Russian gold story as an excuse to send it down. My understanding is that whatever collateral was freed up from the USSR , the BIS picked up for others. It left the brokers selling leases for almost nothing or 1/2% or so. No one was buying them so the rate just fell on no volume. This was a lucky move for them as the perception was that massive sales were taking place. I don't think the BIS wants to be seen as a currency destroyer so they are doing the buying quietly. Investors know now that $280 will come back rather quickly. I thought it would take a month or so!
Michael, I'm looking for a large default in the paper gold market. With the major CB only buying now something is about to give as the most extended shorts can not cover. A default is most likely part of a game plan to get the ball rolling. This spike in gold will no doubt crush the dollar. The next few months will offer the last period of time to roll out of dollar assets at a good price. Of course, all of this is my opinion from and for the most part, Another's.
Thanks
FOA
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Replies (9/3/98):
ANOTHER: Mr. Stockdoc, I think, many looked in history of "performance" by gold stocks and reached for "events" that would happen again. However, the future of investing in "most paper gold assets" is not made with a short past that begins from only 1975! Perhaps, when persons add today's "performance" of gold stocks, they will view the future as: " truly, gold in the ground, this is a business, not the currency asset". If gold does rise slowly, these stocks will show a gain for a time.
However, never before in history has gold been cornered in currency terms. Not physical terms. Never before in history, has a world reserve currency, the dollar, been forced from a high gold valuation to a low gold valuation, along with a destruction of world gold market. Because gold is traded today, worldwide in dollar terms, the transition will destroy the capital assets of 99% of all mines. Please place yourself in " context of future events". Physical gold will not reach $30,000/oz because noone is buying it! It will come to this level because the dollar, today, is already inflated to level that will bring this price. The perception that this dollar is "no longer a good reserve", it will bring the flood of buying. This "already printed and in circulationtoday" currency will seek gold!
Governments will tax mines for the right to produce money and force them to sell production in terms of "whatever the new world reserve currency" is at that time. Euro? Because gold mines are the "unique" circumstance in world of investments, their owners will suffer a "unique" problem of definingwhat they really own!
Also, remember, gold will rise soon as world trading continues this course of change. However, at some point, when the dollar market is destroyed, noone will know the currency value of gold thru an official market. Paper gold will not do well as the currency world is at war! The true surge of gold in dollar terms will not show until perhaps a year has gone by. During this time of trouble, physical gold will prove to be "the investment and holding for a lifetime".
Thank You
ANOTHER: Mr. David, Again, please place yourself in this time of change. Perhaps many banks have failed and most governments may seem as "Russia today". In this time, the US will not sell it's official gold for such a low price.
"a young man cannot see the future thru the illusion of day, always in the night of life we find the clear path"
Thank You
ANOTHER: Gw, I would say, all forms of physical gold is good to own. Even the rare ones offer the "art form", yes? Even in war, the art work is looted first, then the jewels, and always food. I prepare for not the war of men, but the war of currencies! This conflict will bring forth a new concept for many: "western governments will encourage people to hold physical gold "! When the Euro has defeated the Dollar, citizens will be asked to use gold as a savings, for holding the Euro will be frowned on. Gold will not bring your "capital gains tax" as the mines will be taxed to compensate.
Yes, rare gold will be good, but not as liquid as "bullion type" gold.
Thank You
ANOTHER: Mr. Steve, If you read my letters for today, I think this question is answered. Also, this new gold market is "ongoing" and "changing". The potential exists for the return of gold as the "only" reserve currency. This may result from a failure of the Euro, due to a massive upheaval. Oil states, they have the ability to force this outcome. During this result, all paper will burn and the world economy will start over. However, the BIS is buying gold for customer governments as they begin to lower the dollar. This action, began some months ago will bring gold up, perhaps to the middle $360 range. If the world paper markets do not destroy themselves, gold stocks may rise for a time. But, physical gold is the good hold for this time.
Thank You
ANOTHER: Mr. Johnson, I add only this: Many savers consider "no need for the gold". As spoken to Mr. Kosares, I think these investors of "young eyes" do not know the value of this insurance. Please add the amount you pay for the "Western insurance" of all personal things. The Automobile, House, Health, Life and Other. What is the "return on this investment"? It cannot be known until time to collect, yes? Perhaps, a fortunate person will find "never a return".
The physical gold, this money insurance, it will be collected in future. In that time, the return will be easy to see.
Thank You
ANOTHER: Mr. Steel, I add this to your thoughts. A currency losses value because persons do not want to use it for commerce or savings. During the times of "distress", this "value loss" does happen because citizens are selling the paper for other currencies or they are exchanging it for "things". In times past, a currency becomes "bad" because the government is no longer trusted to maintain the value of paper money. In your process, noone would take a paper gold receipt from a government if the gold could not be removed. Treasuries are known to cheat more than the once! If the paper receipts cannot bring gold, they become as "plain paper money". The Treasury say, "I print no more than amount equal to gold", but then they print more " as a temporary, emergency, measure", but then there be no end to emergencies, Yes?
My proposition: Revalue gold to represent all currencies. Perhaps many thousands US/oz. and all governments buy and sell gold for these currencies, in the open. In this outcome, we find no more "black market physical gold" than there be "black market physical currencies"!
Thank You
ANOTHER