Saturday, 5 October 2013

The US going down. Gold remains a bargain?

Jim Rogers: US govt shutdown is sham and charade to jerk us all around:

If the government did shut down for a while we'd save a lot of money and get rid of a lot of bureaucrats.

They're gonna play a game for a while, jerk us all around... I don't even pay attention. I guess you have to because you're a journalist. This is a charade, a sham.

No they are not on the brink of default because they can print as much money as they want. Yes, America is the largest debtor nation in the history of the world and it's going higher and higher, but America will not default, not for a few years, because they print as much money as they want.

The Russians and the Chinese are saying this is crazy and eventually they are going to be forced to default, but not anytime soon.

Yes, it is media news all over the world, but the people buying and selling dollars are not paying too much attention.

This has happened many times before, they always play this game. The only meaningful thing would be if some one cut spending and started paying down the debt.... it's apart of the on-going decline of the US.

There's some people who want to cut spending and some people don't want to cut spending. As long as some people want to continue to spend we're going to have this game.

Some one somewhere is going to go into a back room, decide on what we're going to say, come out with a nice announcement, start the government up again, start spending and a year or two or three we'll have the same little game again.

I know you have to report it, but it's not very serious. I wish it were serious, I wish something would come of it."

Quoting Simon Black, Senior Editor, writing from Santiago, Chile 04 October 2013 ...

"After more than a decade of positive returns, many investors have abandoned their precious metals positions. The conventional wisdom says that gold is 'finished'. After all, the dollar price is falling... so it must be a bad 'investment'.

Others, however, are looking at where gold is right now, where it probably will be a few years from now, and thinking that it's a hell of a bargain.

Azerbaijan's State Oil Fund (SOFAZ) is in this group. The fund recently announced that they were increasing their gold holdings by 33% over the next year... they join other sovereign wealth funds from Qatar to China, plus central banks in places like Turkey, Russia, Mongolia, and Kazakhstan, who are increasing their gold holdings.

Right now, the United States is in a privileged position because of the dollar's status as the primary reserve currency. Mr. Bernanke can print trillions of dollars, then export much of that new money overseas.

In Argentina, for example, the government has engaged in similar wanton monetary inflation.

But Argentine pesos are not accepted anywhere else in the world. All of those pesos remain at home... and this has created debilitating inflation bordering on a currency crisis.

The US gets to spread its dollars all over the world, thus pushing the negative inflationary effects onto foreign nations. From Sri Lanka to Botswana to Ukraine to Cambodia, I've seen it first hand with my own eyes.

Foreign nations have long trusted the United States to maintain a sound dollar. But for decades, and especially over the last several years, America has abused this privileged trust.

That's why it's coming to an end. It's absurd to think that the rest of the world will just lay down and suffer, indefinitely, so that Americans can keep buying McMansions, flat screen TVs, and cruise missiles.

Everywhere you look there are signs of this happening.

Russia has recently agreed to sell oil to the Chinese, accepting renminbi as payment. Fortune 500 companies from McDonalds to Morgan Stanley have issued bonds denominated in Chinese renminbi. Even the London Stock Exchange now has a thriving renminbi bond business.

The gold story in Azerbaijan is just one more brick in the wall. But it underscores this growing theme of the end of the US dollar's dominance-- one of the most critical trends in the world today."