Will volatile fiat currencies present superior profit opportunity in bullion?
*Dow Theory Letters, by Richard Russell, December 21, 2009:
''The 'cost-nothing' dollar has been the favored 'free' money
currency that traders have used for the carry trade. Tens of
millions of dollars were borrowed by carry-trade speculators.
Finally, when the short side (borrow side) of the dollar became
overloaded, something snapped, and traders have panicked recently to
cover their dollar shorts. Thus the dollar rally.
A dollar rally and rising rates for dollars obviously renders dollars
more attractive. As the dollar becomes more attractive, pressure
builds on gold (as now). Ultimately, gold is not just a safe
alternative to the dollar, it is an alternative to ALL fiat currencies.
On top of that the dollar's chief competitor, the euro, has ran into
trouble and has sank against the buck. The euro is having its
troubles, with EU members Spain, Greece, Italy, France and Ireland all
encountering economic problems. As the euro sinks, the dollar
rises against its chief competitor, the euro.
As suspicions of fiat money rises, more and more attention will focus
on real money -- gold. Slowly, like the rising lady of the lake,
consciousness regarding gold is reviving. On the front page of
Saturday's WSJ is an article entitled, 'Gold is the New Tupperware. And
you're invited to the Party.' Of course, the comparison to
Tupperware is a put-down on gold. It seems that thousands of
parties are being held and instead of something to buy, the parties are
set up to as a means of buying gold. The parties are sponsored by
large enterprises. It's all so simple, it's a way of attracting
know-nothing people who are bringing in anything they have to sell
which contains gold. These yo-yo's are stupidly dumping their
gold items at the parties. This is exactly the opposite of what's
happening in Europe where giant Harrod's department store is offering
bullion coins and bars for sale. Most Americans still think that
gold is overpriced (in a 'bubble') and that it's time to sell it.
I guess they're fated to learn the hard way.
I see that there is a total of 450,000 futures contracts on the COMEX
are sold against gold. Good luck to the gold short-sellers, 2010
is going to be an interesting year.
Remember, the central banks of the world now control the world's
money. They love the power they now hold. The banks have
just one enemy -- gold is their mortal enemy. Gold is wealth
outside the system. If central banks could create gold, they'd
love gold. But they can't do it. So gold is the wild card
of the world's monetary universe. It can't be controlled by the
'masters of the universe,' much as they'd love to. All the
central banks can do is continue their propaganda and tell us why
central banks (the Fed) are so necessary to the system. At the
same time, they can try to convince us that gold is a useless and a
'barbaric relic' of earlier ages.
There's only one fact that the central banks won't touch. That
fact is that there have been many fiat currencies in history, but no
fiat money has ever survived.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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