------------------------------------------------------------------------
* G * O * A * N * E * T **** C * L * A * S * S * I * F * I * E * D * S *
------------------------------------------------------------------------
ANKA SERVICES
For all your Goa-based media needs - Newspapers and Electronic Media
Newspaper Adverts, Press Releases, Press Conferences
www.ankaservices.com
[email protected]
------------------------------------------------------------------------
Mervyn,
I think you misread me. There was a bit of sarcasm in my title. I think the US
is in for some hard times in the next few years. It has simply been living
beyond its means, specially so in the past decade.
I think any prudent investment portfolio would include diversification outside
of US$ investments and should include as well. However, guessing on where gold
prices will head, is well, a guessing game. WRT gold, there are many pulls and
pushes on its price. Right now, the world is suffering deflation, which is a
negative. Indian consumers are one of the largest buyers of gold. Specifically,
Indians buy it as a luxury item. The Indian consumer will soon, if it is not
already, retrenching and this too will be a drag on prices. Conversely, if and
only if, we switch to significant inflation, will we see gold prices coming up.
I dont see any major signs of that - for now.
There are many proposals on how to fix the current mess. One common thread for
the root causes for this is the flawed reliance on the use of the US$ as a
reserve currency, which has artificially increased its value and which has let
the US live above its means for a long time. If one compares the UK with the US
today, both are equally messed up, but the US has fared better because it has
the buffer of its currency being the reserve.
Based on this model, one key solution would be a significant devaluation of the
US$ relative to oher world currencies. This would force a significant drop in
US over-consumption via a decrease in imports and govt. borrowing. The question
remains whether other countries will accept this, for it would mean a
substantial decrease in their exports and may fight this by continuing to buy
dollars.
The wars are a small part of the problem facing America, but there is little
doubt that the so called economic growth in the last decade was achieved via
borrowing and spending. Unfortunately, I believe the new US administration is
repeating the same folly. How can one address the problem of excessive debt, by
going even deeper into debt? There has to be a limit to how much the rest of
the world will buy and if that happens, the US dollar will collapse. Forget the
phony war on terrorism etc. This is THE greatest threat to American power.
Marlon
--- On Sat, 1/24/09, Mervyn Lobo <[email protected]> wrote:
From: Mervyn Lobo <[email protected]>
Subject: Re: [Goanet] A GOLDen future?
To: "GOANET" <[email protected]>
Date: Saturday, January 24, 2009, 9:23 AM
"[email protected]" wrote:
My bottom line:
1) Currency trades: Some diversification to safeguard against a cataclysmic US$
collapse is a good idea, but too early to predict dollar trends. One predictor
for this is US bond yields.
2) Gold: look for inflation signals. If there is inflation, buy gold/dump
dollar.
3) New technologies: Strong on smart grid technologies in short/medium term.
Strong on solar/wind in medium/long term. Strong on clean water long term.
Nice post, Marlon.
Made interesting reading even though it is a US centric view point.
Others see things slightly differently.
1) The US is printing money as though it is running out of trees and Hussien
bin Obama promises more of the same.
There is only one consequence of printing more money, it becomes less valuable,
and that guarantees inflation.
Gold does extremely well in inflationary times and sometimes even when there is
the prospect of inflation.
2) The time to invest in gold, or any thing else for that matter, is when you
hear people say, "Prices are so low, I could puke."
Buying gold after inflation signals are confirmed, is rewarding those who
bought early for their astuteness. Thank you.
3) Throughout history, when nations go to war, the currencies of both the
victor and the vanquished get debauched. The first
Afghanistan war caused the Rubble and later the USSR to collapse. A similar
fate awaits the US if the politicians don't come
to their senses on the two bogus wars.
4) The US electric grid loses 50% of its energy while being transferred from
the producers to the consumers. If Obama tackles
this problem, it will be boom times again for the US. Secondly, Canadian and
European research institutions are bracing for what
Obama decides on research funding. If research funding is restored and
decisions for funding are made on non-religious views,
e.g. stem cell research, scientists and innovators will be lured back to US
institutions, immensely benefiting that economy.
5) Lastly, the US is currently losing 500,000 jobs PER MONTH. Nothing golden
about that. A golden future would be possible
only if the current administration does the exact opposite of the Bush (43)
administration. The exact opposite means:
a) Create new jobs
b) Cut military expenditure
c) Stop printing money
d) Increase taxes to balance the budget
This is the medicine the World Bank has been advocating to debtor nations for
the past 50 years.
If the biggest debtor nation is unable to take this medicine, it will get
sicker, much sicker before it recovers.
Mervyn1650Lobo
"When the lion is crippled, the hare goes to his house for debt recovery."
- African proverb -
__________________________________________________________________
Instant Messaging, free SMS, sharing photos and more... Try the new Yahoo!
Canada Messenger at http://ca.beta.messenger.yahoo.com/
