-- Posted Monday, 20 October 2008 | Digg This Article | Source: GoldSeek.com

In previous Dollar Death Ray articles we saw how size of the U.S. Federal Reserve balance had exploded. That financial frenzy continues. In its most recent report, the Federal Reserves balance sheet, after appropriate adjustment, was 46% larger than a year ago. Most of that growth has come recently during bank bailout scheme. Rarely, if ever, has a central bank of a major economy so lost control of its balance sheet, or monetary policy. That expansion of reserve bank credit is now feeding the growth of U.S. money supply, M-2. As shown in graph, U.S. money supply growth is now running double digits.   

This monetary expansion is highly inflationary, and should put to rest all talk of deflation. The true issue today is neither deflation nor inflation, but relative value of national currencies, and what they will buy on world markets. Deflation was a unique issue of the 1930s, as was inflation of the 1970s. Currency values are the issue of today. If your wealth is denominated in the wrong currency as time and events unfold, it may wither away. Choices are only Chinese Yuan or Gold. Only Gold is available to world investors.

The U.S. dollar is in a parabolic rise, just as the price of oil recently experienced. All parabolic rises end in near death experiences. Saudi's ratcheting up oil production just slightly crushed oil prices. The Fed's actions are similar, and will do the same to the dollar. The Dollar's recent rise was due to a shortage of dollars in financial system as lenders and investors have been unwilling to lend dollars to anyone. The Federal Reserve is remedying that shortage with massive asset purchases, and a now expanding U.S. money supply. The dollar's parabolic rise will implode, and Gold will begin Wave V. That makes the question fairly simple. Is your wealth mired in 1930, or will your Gold allow it to live in the future?

Ned W. Schmidt,CFA,CEBS is publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly. To receive these reports simply  go to:

 http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html

-- Posted Monday, 20 October 2008 | Digg This Article | Source: GoldSeek.com

Ned W. Schmidt, CFA CEBS is publisher of THE VALUE VIEW GOLD REPORT - Coverage of the emerging GOLD SUPER CYCLE. Explores the situation in Gold that may carry it to $1,225. To subscribe Click Here. A trial period is available by Clicking Here

Ned W. Schmidt, CFA CEBS is a nationally recognized authority and speaker on a variety of investment topics, including value investing and global capital flows. Currently, Ned is Resident of Schmidt Management Company in DeLand, Florida, specializing in financial engineering. The firm’s proprietary research influences about $15 billion in assets, and is investment advisor to the Argyle Global Equity Appreciation Fund.

Most recently Ned served as the Visiting George Professor of Applied at Stetson University where he taught institutional money management. Preciously he had been a Senior Vice president with a trust company where he had the responsibility for discretionary investments of $3.5 billion.

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