Friday, January 25, 2008

Gold Price Drivers

The nature of otc derivatives (see are the main drivers to a much higher gold price. For the detailed nature of otc derivatives, see . The BIS (Bank for International Settlement) has the world's total over $500 trillion bucks worth of notional (contract) value.

Recent news tidbits from Davos, Switzerland

Fed Risks Fueling More Bubbles, Davos Economists Say

Jan. 23 (Bloomberg) -- The Federal Reserve, which yesterday announced
its first emergency rate cut since 2001, is ignoring history's lessons
and risks re-igniting more asset bubbles, economists at the World
Economic Forum annual meeting said.

The Fed is saying ``we are there to clean up after bubbles first rather
than to prevent the danger,' Stephen Roach, Morgan Stanley's Asia
chairman, said in a panel discussion in Davos, Switzerland. ``It's a
dangerous, reckless and irresponsible way to run the world's largest

Soros Sees End of Dollar as World's Reserve Currency

Jan. 23 (Bloomberg) -- Billionaire investor George Soros said the
fallout from the U.S. subprime crisis will bring about the end of the
dollar's status as the world's reserve currency.

``The current crisis is not only the bust that follows the housing boom,
it's basically the end of a 60-year period of continuing credit
expansion based on the dollar as the reserve currency,' Soros said in a
debate today at the World Economic Forum in Davos, Switzerland. ``Now
the rest of the world is increasingly unwilling to accumulate dollars.' ..


From The King Report
M. Ramsey King Securities, Inc.
Thursday January 24, 2008 – Issue 3796 "Independent View of the News"

Solons are so wretchedly desperate to save a terminally damaged and egregiously corrupted US financial system that they sheepishly floated a risible Daisy Chain Bailout to euchre the markets.

Because so many investors and traders are equally desperate, they swallowed the implausible scheme.

Does anyone realize that all the scheme does is shift the system-busting losses that bond insurers face to a different troubled pocket of the system’s pants?

Let us get this right. Stocks soared because entities with crappy paper, and some needed bailouts, will now bailout bond insurers that insure the crappy paper that the bailouters hold? Only in Cramerica!!!


What the heck is reality?

Oh, ya. We don't really "do" much of that anymore, at least in the financial system. No wonder gold and silver, reality, is such a small part of today's financial system.

Federal Reserve Board Chairman Ben Bernanke during testimony before the House Budget Committee on Capitol Hill in Washington in this Thursday, Jan. 17, 2008

Jim Sinclair, January 23, 2008 at :

"Today's situation is infinitely more dangerous than that of 1929. A financial Armageddon is possible due to the size (BIS Quarterly) of the OTC derivative mess. It is for just this reason that there is no limit to the monetary and fiscal stimulus that will be applied to prevent it. It is that attempt to prevent a total meltdown that will take the price of gold to and above $1650. I wish the Fed and PPT good luck because no one could possibly want to see what is coming in 2011."

True, all the dollars that have been created thus far can justify or are the drivers of a $5,000 gold price. The amount of otc derivatives out there now can be the drivers of an even higher gold price.

It is too late for that stuff, Ben.

"Weimar Bernanke", the man has no business experience, no banking experience, no financial market experience, yet is named to the most important central bank post on earth. - Jim Willie CB

"Reality must take precedence over public relations, for nature cannot be fooled." -- Richard P. Feynman,

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