From Mogambo: I keep looking at a chart of the growth in federal debt, and it is now increasing at the rate of almost $80 billion per month. Per month! Just how valuable IS a currency that is being inflated at that rate?… Mr. van Eeden writes, “The dollar is likely to fall approximately 50% from its current level. That would free the dollar denominated gold price to find its way back towards its true value of $699 an ounce (as of 2002). Given the mounting pressure on the dollar, there is virtually no chance that it will not collapse.” Remember those currency crises of those foreign nations, and how Clinton and Robert Rubin and Greenspan and the IMF and all those guys, which is everybody, decided to establish the principle of moral hazard, and so they bailed everybody out by sticking the American taxpayers with the bill? You do? I knew it! I could tell by the way you grind your teeth that you remember perfectly!
Anyway, I know what you are dying to ask me: “Hey! Mogambo! Yo! What did gold do during those trying times?” I am glad you asked that question, because Mr. van Eeden, in a stroke of coincidence, provides the answer to that very question, and thus saves me trouble of getting up off of my lazy butt and actually trying to find out, and maybe end up doing actual work for a change, and then I remember how tiring that is, and I lose all interest. Anyway, he writes “The gold price in Japanese yen however, increased by 34% between 1995 and 1996. The next year the gold price jumped more than 40% in both Philippine pesos and Malaysian ringgit, and 67% in Korean won. Indonesia suffered the most during the South East Asian Crisis and the gold price, accordingly, increased more than 400%.”
Remember, I was recommending buying gold at $300. Now it’s at $404. Of course, I also thought the markets would go down this summer. There’s one scenario that explains both going up – inflation. Don’t believe the CPI. Like all government stats, it’s fiction.