Saturday, May 13, 2006

Gold hits $700 for first time since 1980

U.S. benchmark gold futures scaled a new 25-year high at $700 an ounce on Tuesday, boosted by relentless investor buying powered by geopolitical concerns and expectations of further price gains ahead, dealers said.

Gold as an Economic Indicator:

Fact: Unlike industrial commodities like copper, silver and oil, the yellow metal is never consumed and the vast majority of demand for gold is monetary. This year, total industrial and jewelry demand for gold is 81.3 million ounces, according to CPM Group, a New York-based metals research firm. But speculators now for the first time hold 1.1 billion ounces of gold, more than the amount held by government central banks. [Source: Barron’s, May 1, 2006, p. M20].

Contrary to what traders and Wall Street tell you, gold is not just another commodity. It was, and in some ways still is, money. Central banks still hold gold as a last resort asset. It is also an asset that is not at the same time somebody else’s liability.

What is the
price of gold telling us? If its current price is sustainable at the $650 level, it clearly indicates the stubborn return of price inflation, and maybe even a sharp fall in the U.S. dollar against foreign currencies.

An excellent analysis of the relationship between the US dollar, gold, deficits, inflation, the Fed, political manipulation, unnecessary wars, secrecy and the demise of the US economy

My favorite quote from Mr. Paul's assessment: "Counterfeiting the nation’s money is a serious offense. The founders were especially adamant about avoiding the chaos, inflation, and destruction associated with the Continental dollar. That’s why the Constitution is clear that only gold and silver should be legal tender in the United States. In 1792 the Coinage Act authorized the death penalty for any private citizen who counterfeited the currency.
Too bad they weren’t explicit that counterfeiting by government officials is just as detrimental to the economy and the value of the dollar."

The FED: The Biggest Scam in US History


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