Friday, May 08, 2009

US$ heads down as China picks gold - National Post

Gold gains as America loses
The only way is up for gold prices because the U.S., which backstops the IMF which is the world’s lender of last resort, has had to become its own lender of last resort.
Washington has cranked up the printing presses in an unprecedented way, replicating the behaviour of its spendthrift corporations and consumers. This year’s budget is US$3.5 trillion, bigger than any in history including Napoleon’s when he was taking on the British, Germans and Russians at the same time.


Anonymous said...

Taking note that gold is priced in US dollars, holding gold is holding a gold metal and US dollars. If the price of the US dollar drops relative to your currency the value of your gold drops too.

Therefore should the price of gold be fixed at a rate of a "basket of currencies" and be appreciated or devalued at specific time intervals?

Louis Paquette said...

A very good point nobody else is making about the loss by holding a US Dollar priced asset. Which I suppose makes it wise to own Canadian denomiated stocks of gold miners.

As for pricing against a basket of currencies, I haven't given much thought to the implications of such a move but it would make sense. Others such as the Chinese are also raising concerns about pricing everything in US Dollars...I don't know where this is heading but something is bound to give sooner or later if/when the Dollar keeps falling.

Dr. Marc Faber on BNN today said it is "doomed".

Thanks for your comment,


U.S. National Debt Clock