By Michael Kosares www.USAGold.com July 29, 2001 "NEW YORK, July 27 (Reuters) -- COMEX gold finished New York higher after a day in negative territory, driven up by late news that gold miners will strike in South Africa after all, and a late mustering of strength by the euro currency, gold traders said Friday..... "Most gold speculators figured all bets were off for a strike and liquidated long positions placed in anticipation of one. When news crossed the wires, gold headed to its highs." * * * The word I'm getting is that, strike or no strike, the market wants to work its way higher. I think it all gets down to the euro. That will be the primary motivator for higher prices, though I won't dispute that a strike in South Africa would be a good kick- start. The European Union folks don't want to introduce the euro in an ugly atmostphere. They do not want to sell conversion from national notes in an atmospere where the euro is tanking. That could lead to social and economic discord, perhaps chaos and bank runs. That's probably what Europe told Bush & Co.in Genoa, and my hunch is that the United States will step aside and let the dollar go, if it's possible. Pressure from all directions is pointing to that "paradigm." Central banks are capable at least in the short term of creating an atmosphere conducive to pushing a currency in one direction or the other as long as their counterparts in other countries are of similar mind -- the opposite of beggar thy neighbor, if you will. Forget the past. It is now in Europe's best interest to drive the euro higher and in America's best interest to push the dollar lower. The New York Times warned today that if corporate earnings don't begin to shape up, staff is going to be cut. More and more, corporate America is blaming the strong dollar. That's the motivation on this side of the pond. I've already outlined the motivation on the right side of the water. I expect U.S. interest rates to go lower (possibly much lower) and an effort made to provide a real rate of return on the euro -- at least temporarily. Europe would be well-served to push its rates higher. As it stands, we have a ways to go, but if its not achieved, we've got a problem on both sides of the Atlantic -- and thenit's 1930, here we come. But it's all cosmetic until the day Europe pays for its oil out of its own checkbook directly, not after a dollar conversion at the bank. That will prove to be the route to true freedom. Gold is the place to be no matter what happens -- especially for Europeans for one set of reasons (followed closely by Americans for another set of reasons). Why the typical European investor hasn't gone head over heels for the yellow remains one of the great mysteries to me -- especially given the euro's sorry performance. Afer all, Europeans are going to have to give up their national currencies one day soon. It's a done deal. Policy will be made in Brussels, not Paris or Berlin, or Rome. Sooner or later, the European saver will have to face that reality and make a decision what to do with his assets: accede or diversify. I would say the Swissie and gold are in for better days, and that Europe may lead the move to gold the way it did in the 1960s and 1970s -- the last time Europe made a quantum leap in the direction of economic freedom. Speaking of economic freedom, I've been working on "News & Views" for nearly a week now (off and on). The most interesting aspect has been a careful and rewarding read of Greenspan's essay, "Gold and Economic Freedom." Did you know he talked about the dangers of currency inflation migrating to the stock market in the 1920s, and that he believed it caused the Great Depression? I read what he wrote in 1967 and said to myself "My God, the man was foreshadowing his own Fed chairmanship." Spooky. Maybe Tolstoy was right -- We are all carried by an inexorable Fate, even Alan Greenspan. It is ultimate irony that he became the perpetrator of the maladies and weaknesses he so eloquently revealed, predicted, and warned against in 1967. I would recommend that all take the time not only to read but study the Greenspan essay. It's at the Gilded Opinion page at www.USAGold.com. Incredible how it stands up even today. No wonder Greenspan said he wouldn't take back a word of it. -END- ------------------------ Yahoo! Groups Sponsor ---------------------~--> <FONT COLOR="#000099">Small business owners... Tell us what you think! </FONT><A HREF="http://us.click.yahoo.com/vO1FAB/txzCAA/ySSFAA/WfTolB/TM";><B>Click Here!</B></A> ---------------------------------------------------------------------~-> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
