jakedeez

If This Comes True, You'll Be Glad You Own Gold & Silver

Kelly - A few things to point out...

1. Antique dealers and diamond traders are irrelevant to the point of reserve currency. (also they have to take dollars, "for all debts, public and private")

2. Inflation is higher in almost ever country other then the US.

3. The Euro cannot at this point replace the dollar because of the fractured nature of the EEC's economic localities.

4. Gold and silver, while they can reasonably be held in a portfolio as a hedge, are not something that should be invested in, seriously, in a portfolio that you don't personally hold. Meaning, if you want to buy gold, but it, and accept delivery. If you hold it in a portfolio it should be traded around.

5. Over the long term, gold is less an inflation hedge then it is a hedge against panic. The idea that gold is a hedge against inflation only works because people buy it as a hedge against inflation, causing demand to increase. It is very ponzi like.

There are so many "gold bugs" out there that believe they are investing in something real, and that those who invest in stock are foolish. Gold is an "end of the world" play. It can not always be the end of the world.

Can gold continue to rise, sure, if people continue to fear inflation. Will major holders of US debt dump their dollars for gold or anything else for that matter? No. In fact the IMF is selling gold.

A failure to bail out the debt portion of Fannie and/or Freddie if needed would be far worse for the dollar then would allowing the debt to fail.

The reason why I say the dollar will not be replaced is because there is no way it can be replaced. There is no currency that is able to replace it. The dollar will get stronger, and weaker over time. There is no doubt that if we do not do something to change our net exports the dollar will get weaker over time, but that is a much longer term issue then most "gold bugs" will admit.

Look at a 20 year chart of gold... those who think that gold can't break should sit down and have a conversation with tech investors from the bubble. Heck, at least they though that had a reason to invest, other then, the US dollar will go down so I better buy gold.

Kelly, you are right, gold is being held down. There is a weakness in the dollar and our fundamental financial system... Gold however is not the solution. Gold works best when inflation expectations are accelerating... inflation is high, inflation expectations are very high. Short term paper offers negative real returns... Things are bad... that is not the time to buy gold. If you really believe inflation will continue to accelerate or at least not abate, buy tips.

If you want to diversify your holdings in USD, then do so... but the idea that you want to buy gold because the dollar is about to blow up... you maybe just a little late to the party.

If This Comes True, You'll Be Glad You Own Gold & Silver

The dollar is not going to lose its place as the reserve currency. Horse sense people, not horse blinders. Even George Soros doesn't think people are going to sell their dollars... there is nothing to put the value in if not dollars.