“I do not share the widespread view that the dollar will collapse. This has prompted a volley of hostile comment, as if I was somehow turning traitor to the cause of bears, or had become an optimist overnight.
The reason why it will not collapse — at least for now — is that the euro is facing an even deeper and more intractable crisis, Britain is mangled, Sweden frozen, most of Eastern Europe is facing a swing from property boom to bust, Brazil is about to slow dramatically, Japan is in full recession, and China’s banking system is buckling, as Fitch warned today.
What I envisage as this credit crisis goes turns into a full-fledged global economic slump is that half the world resorts to currency devaluation in a beggar-thy-neighbour scramble to stave off recession and cling to market share.
This will be very good for gold, though only once the EMU smash-up becomes more evident, perhaps with the onset of street protests in Spain. You won’t have to wait very long…”
Ambrose Evans-Pritchard in the Telegraph.
Comment:
Hmmm…I do agree with this fundamentally. The dollar looks weak short-term but mid to long term I don’t see how it can be that much weaker than the euro or other currencies, when currency debasement is practiced by most countries. Gold is the place to be. But when you buy is also important. A global slow down could keep the price down, aside from manipulation of the price. In the long run, though, it’s clear everything is bullish for gold.
Just read your piece on Counterpunch, and checked out your site. Thanks for your incisive intelligence and capacity to make the complex understandable – without dumbing down. Sorely needed in these crazy times!
Thanks Shailaja.
Drop by any time.
Lila
Great articles and blog! I’ve often read you on LRC. As far as the Euro goes… I think it is only a matter of time before the Euro flies apart and we’re back to trading the D-Mark, Lira, etc. I think that when the chips are down, nationalism will trump supra-nationalism.
Not that I’m in the dollar bull camp by any means. I’ve made some nice money the last few weeks being long the Greenback, particularly against the Euro and the Formerly Great British Pound… but I’m of the belief that fiat currencies are all doomed, and are to be arbitraged against each other with the profits being used to purchase real money like gold and silver.
Keep up the great work!
Hey thanks!
I’d love to be trading too..but then I can’t write…
I missed the right time to sell last year because the book was out and I had to work on the publicity…but of course eventually it corrected…
but what do you jump into now? Singapore dollars?
Gold? At what price? I worry about the ETF – can be manipulated easily.
Lila
Every investor’s needs are different. The first thing would be to have as much physical gold and silver for barter/ bribing border guards, etc as you feel you might need in a real crisis. Then physical stored in vaults in multiple jurisdictions, one to include GoldMoney.com, then a various mix of paper claims on physical gold all the way down to mining shares. You can’t plan for every eventuality, and needing to use the physical for bribes would definitely be a bad, bad scene… but under those conditions, survival is paramount (and by no means guaranteed).
As far as currencies, I don’t really see any of them as any kind of store of value. Any one of them could be printed out of existence tomorrow. For trading purposes, I’d follow a scheme like the ones expounded on infiniteyieldforex.blogspot.com. But currency trading in that way is a business… not really investing. Your co-author has some of the world’s very best managers writing for him. If I were you, I’d avail myself of those relationships in a serious way.
Well, looks like time to move my stop on this morning’s pound short. I don’t know what fool sold me the dollar… but he’s going to have to pay up to get it back! Take care…