What we’re seeing here is worldwide COMPETITIVE CURRENCY DEVALUATION. Gold isn’t rising, people are simply LOSING confidence in their currencies !!
With governments such as Japan, the US, Switzerland, the UK, Brazil, Korea, Taiwan, China and many others internationally devaluing their currencies there is a growing risk of inflation and indeed stagflation.
Free markets are becoming less free with manipulation of currencies and bond markets increasingly common and the likelihood that there may also be intervention in equity and precious metal markets.
The financial crisis is spreading from the private sector and into the public sector as massive private sector debt and liabilities is socialised and monetised.
Governments internationally facing deflationary pressures, particularly from falling property markets, appear to be embarking on competitive currency devaluation battles in order to weaken currencies to stimulate export driven economic growth. This has profound implications for the international monetary system itself which is why some investors and many central banks are diversifying into gold.
The quasi demonetisation of gold seen in recent years has ended and gold looks set to again be appreciated as an important monetary asset.
The ‘Emperor’s clothes’ of today’s international monetary system are being questioned and markets are worried by what lies underneath the international fiat monetary system. The majority of retail investors remain unaware of the growing risks posed by the monetary system but this will likely change in the coming months especially when inflation takes off, which it inevitably will.
I agree completely.
Some people have a hard time digesting all of that at once.
Yes: there are two forces pushing fiat currencies down. In a worldwide debt-saturated environment both of them are implacable.
One is competitive devaluation to preserve exports.
The other is defensive devaluation to diminish debt.
I believe the defensive devaluation will 'inflect' soon, leading to a sharp devaluation of the dollar similar in kind (but not in cause) to the Argentinian peso devaluation in 2002.
Paulson dances around it. I don't intend to:
FReepers, get out of cash and into hard assets, or you will be wiped out. You will wake up one morning to find that the dollar in your pocket is worth 1/4 of what it was a month before.
The way I see it is Liberals hate it. So it must be a good deal.
Just as a footnote...The IMF meets in Washington Oct.8-10. Three days of meetings. Trust some will be reporting on this on FR.