Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Stock Review : Markets : News Wire : Quotes : Radio : Silver : Stocks - Main 
  
 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Closing Report: Gold and Silver Gain While Stocks Drop Over 1%
By: Chris Mullen, Gold-Seeker.com

US Dollar is the Last Stop Before Gold & Silver Spike
By: David Morgan

Stealth Gold Stock Rally
By: Gary Tanashian

TransTech Digest: GDF11: Good for the Head and the Heart
By: Patrick Cox

Gold Will Surprise In More Ways Than One
By: Bob Loukas

Is There A “Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings?
By: Daniel R. Amerman, CFA

It's all about the dollar!
By: Bill Holter

UK Joins U.S. Bombing, Courting Danger
By: John Browne, Senior Economic Consultant at Euro Pacific Capital

The Single Most Important Lesson from the Casey Summit
By: Louis James

How stable is the Bond Market?
By: James Hall

 
Search

GoldSeek Web

 
Latest Issue Excerpts from GF - GW How does a currency collapse? And the U.S.$?
By: Julian D. W. Phillips, Gold Forecaster - GoldForecaster.com



-- Posted Monday, 8 May 2006 | Digg This ArticleDigg It! | Source: GoldSeek.com

Excerpts From – “Gold Forecaster – Global Watch”  - week to 8th May 2006

 

HIGHLIGHTS in “Gold Forecaster - Global Watch”       

Silver – COT, Gold : Silver Ratio  EDR.to, SSRI, PAAS, SIL, SLW / Platinum.  

SHARES: HUI, NEM, FCX, NG, VGZ, GSS, GOLD, Portfolio

Index:

1-2. Market Forecasts / Short-term forecasts across the Board!

2-3. Comex Update

3-14. Central Bank gold Sales in 2006 / De-Hedging in full swing/ Investment, Speculation and the new gold market/ Indian Demand/ How does a currency collapse/Iran – Gold/ The Oil crisis / The U.S. $ prospects / Gold: Oil Ratio / Dow Jones / Technical Analysis of the Gold Price: Long / Gold price drivers 2006 / Short term in the U.S. $ / Treasury Notes / CRB Index

14 – 32.  International Gold Markets / Silver / Gold vs. Silver / Gold:Silver Ratio / Platinum / Silver & Gold Shares

 

 

Trial Sub. 3 months for $99 – go to  www.goldforecaster.com

 

Do you want to receive your own copy of  “Excerpts from “Gold Forecaster – Global Watch ?

- Send your e-mail address to:       gold-authenticmoney@iafrica.com

 

 

How does a currency collapse?   And the U.S. $?

 

When a currency loses the confidence of its people, its fall becomes exponential, as has happened to the Zimbabwe $, where in 1982 one U.S.$ equalled 1 Zimbabwe $.   Today around Z$200,000 buys one U.S. $ if you can find someone idiot enough to sell one for the Z$. 

 

In day-to-day terms, the smallest note in Zimbabwe a Z$500 is the size of a U.S.$.   The price of a single-ply sheet of toilet paper is more expensive at around Z$867

 

The U.S.$ is nowhere near there, but clearly the U.S. Administration has no plan or even desire to rectify the U.S. Trade deficit.   Consequently, we are seeing a growing number of Central Banks turning to the Euro for its reserves and away from the U.S.$.

 

Whilst most observers and particularly U.S. observers like to have tangible facts and numbers with which to mathematically gauge the present and the different possible futures, a collapsing currency situation is not as neatly gaugeable.   Indeed it is driven in stages of ‘confidence’, which are rarely measurable in advance.   

 

For instance we see today the move of the Pension and other long-term funds into the gold E.T.F.’ one finds there are no mathematically measurable factors with which to measure the pace of change to these funds.   Yes, the number of ‘Road-shows’ the World Gold Council does affects this move to some extent, but how do you measure the spread of that knowledge and resulting investment in the E.T.F.’s outside of that?   How does one measure the forces causing uncertainty and falling ‘confidence’. 

 

It is an emotional progression, one that moves in lurches as particular incidents destroy confidence limb by limb.   In such a climate a steady degeneration of confidence lead to an effect we shall call a "plateau - cliff" process.  

 

·         As confidence is whittled away the currency appears relatively stable.  

·         Then a particular event will occur that triggers a breakdown and the currency drops suddenly, like falling off a cliff, until it finds a short-term bottom and it holds that level for a period as though on a plateau.  The process then repeats itself.

·         The degeneration then accelerates, so the fall from the cliff to the next stable plateau happens more quickly. 

·         Then the height of the cliff [the fall] extends until it grows at an exponential basis.  

·         The final collapse will occur when the currency is completely discredited and used only by those unfortunate to have no other choice.   Alternatively the currency is changed to a new one, one whose issue is backed by assets [Such as land - after the Weimar republic] and limited to a fixed relationship to those assets until confidence is restored by a healthy economy and a balanced Balance of Payments.   This provides a basis in which to be confident about currency.  

 

However, were the $ heading for a collapse, the U.S. $, a global reserve asset, nothing in the U.S. such as land or any other fixed U.S. asset would suffice.   The asset would have to be accessible by its creditors, outside the States who would have to have a willingness to accept that asset in the case of a default by the U.S.   The use of the $ domestically and internationally brings such problems that in the final extreme conditions the $ is inadequate as a global reserve currency.  

 

But for the market to whittle away confidence in the $ would take some time.   But we believe that it will happen.  

 

·         Look back a couple of years and we saw the $ reigning supreme.  

·         Then warnings were given against it as the Trade deficit began to grow.  

·         The Fed or the Administration then allied itself to the euro, giving it the respite it has enjoyed over the last year.  

·         Now there seems to be a breaking down of the $ of late and some Central Banks switching to the Euro out of the $.   These were three distinct stages.  

·         The next stage is for the $ to fall heavily against the Euro and Euro oriented currencies.  

·         Next will come the defence of the $ until the weight of selling pressure exhausts the $ against other currencies [please note the U.S. has few foreign currencies left in its hands with which to defend the $, but the Fed put in place measures to allow it intervene in the international foreign exchanges.]  

·         This could delay the fall for some time, but history has shown that when a Central Bank defends a rate in the market, it gives in periodically and devalues.  If insufficient it has to defend again and again.  

·         I have no doubt that Central Banks will use this defence to unload their dollars back to the States.  

·         At some stage the U.S. will have to impose Controls to prevent foreign capital from exiting the States and rejecting dollars coming home.   These are called Exchange Controls.

·         When this happens many currencies will begin facing the same problems as their reserves become suspect too and they cannot defend their own Balance of Payments deficits.  

·         At this point for the global economy to function adequately, a new “Global Currency” will have to be established and be supplied sufficient so as to regain global confidence.   We cannot see this happening without gold in there to a greater or lesser extent.  Of course this will have to be at prices believed by all nations, not just individuals!

 

During this process confidence in the currency will be the measuring factor, a nebulous, unstable element in itself.   The process of the decay of confidence is described above.   But confidence could well go down dramatically from the point we are at now with the $ in the monetary system.  Soon the cliffs will extend until the defence of the currency comes, then a long plateau while the dollar is defended, until the heavy falls begin.  

 

The international trading power of the States will dominate just how far the dollar will fall.   Of course if the States manages to show it is in the process of balancing the Balance of Payments beforehand [which may not mean the complete elimination of the Trade deficit] the demand for dollars will probably overcome the supply.   But inevitably that action will mean a huge recession for the States, which could prove an internal nightmare and cause a global recession of its own.  

 

It is probable that the Administration would isolate the U.S.A. from the rest of the world by severe Exchange Control measures, which will create its own internal boom, sooner or later.   We will produce an article, or series thereof, at the right time, on this subject.

To Subscribe to “Gold Forecaster – Global Watch”, please go to:

www.goldforecaster.com

 

Legal Notice / Disclaimer

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.   Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness.  Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.    Gold-Authentic Money / Julian D. W. Phillips assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report.

Disclosure: The owner, editor, writer and publisher and their associates are not responsible for errors or omissions.  The author of this report is not a registered financial advisor.  Readers should not view this material as offering investment related advice. Authors have taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate.  The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action.  Past results are not necessarily indicative of future results.  Any statements non-factual in nature constitute only current opinions, which are subject to change.  The information presented in stock reports are not a specific buy or sell recommendation and is presented solely for informational purposes only.  The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise outside of the trading timeframe listed above.  Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein.  Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.  


-- Posted Monday, 8 May 2006 | Digg This Article




Contact us: www.goldforecaster.com

Or: gold-authenticmoney@iafrica.com







 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2014


© GoldSeek.com, Gold Seek LLC


GoldSeek.com Supports Kiva.org

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.
OilSeek.com