Friday, February 13, 2009

Gold Price and Silver Price Explosions

The possible timing for gold price and silver price explosions may be around March 19 if not some other move somewhere in the financial markets.

More here on the World Economic Confidence Model


The international monetary process
Hugo Salinas Price

"Even so, gold remained a nuisance; the special nuisance for the U.S. was its established obligation to deliver gold in return for dollars tendered for payment by Central Banks: too many countries were turning in, for gold, the dollars which the U.S. was issuing in quantities larger than the world market wished to retain. U.S. gold reserves shrank from over 20 thousand tons at the end of WWII, to some 8 thousand.

On the other hand, the U.S. wanted to continue to issue more money to pay for its expenditures on war and social programs. The international monetary system was approaching a critical parameter, but any corrective measure was discarded.

Instead of reining in the excess, the U.S. discarded gold, the control which was critical to the system and which was signaling an imperative halt to excessive expenditure.

On August 15th, 1971, the world was left without an “International Monetary System”. What remained, and remains to this day, after the U.S. refused to redeem dollars for gold, is no longer a system. It cannot be a system, because the internal control which blocked the violation of critical parameters and insured operational stability has been removed.

We present an eloquent graph. It shows quite clearly that, as of 1971 and to date, the world no longer functions under an “international monetary system”, but within an international monetary explosion."

[Good graph at the above link]


It seems that the start of the loss of plane 'ol confidence in a big part of the world's financial system is underway from published accounts of the meeting at Davos. The world's current financial/banking system needs it to survive. It looks like a lot more loss is on the horizon. Fear can build up fast. It is a stronger emotion than greed. There is not a lot to have confidence in when major banks, brokerage houses, major vaults controled by entities in the financial system that are failing, governments that are supposedly regulating the financial system are in fact not, major accounting firms are not doing honest audits and the list could go on.

At some point there will be a race to the tried and true assets that can be 100% trusted, gold and silver. Then you will see the gold price and the silver price soar.

1 comment:

Poppa Bear said...

Most of us have been waiting a long time for the price of gold to start taking off again.

Gold as well as most other commodities have been held down for quite a long time by the bankers. The world wide economic system is based on paper and the Central Bankers will lose power when commodities begin to rise. If the system is driven by paper and credit, it would not be in interest of the bankers to have the public buying up tangible assets.

Gold and the rest of the precious metals have become the only real safe investment. I believe the current gold price is not anywhere near the price it should be at based on inflation.

The following is an excellent article on how gold has decoupled from the US Dollar....