Any card-carrying gold bug worth his salt knows that gold is money. It has been since the origins of time. And has continued to be – even into the face of mass dumping and manipulation by global Central Banks.
While it’s price may fluctuate – it’s role as money – never will.
Unquestionably gold’s role as money, and as a barometer of inflation and reckless behavior among bankers has once again emerged – directly into the face of every effort to silence it.
The one place where gold’s voice is always ultimately heard – is in the global currency markets. The beauty of the currency markets is that it’s the only market too large for central banks to manipulate for any prolonged period of time.
Yes, Central Bankers can and do intervene in the currency markets from time to time. But, the bully-pulpit, not actual intervention is their main weapon, for no Central Bank has the currency reserves to manipulate any major currency for any prolonged period of time.
Over the last year and a half, both gold and gold stocks have been stuck in a trading range. But, a few months ago, this writer began to see action in the currency markets – specifically in the Euro Dollar, that signaled that gold was not just “alive and well” – but, also ready to soon launch to new highs.
Back in July this blog cited the “Euro Dollar:Gold Ratio” as the key indicator to watch, in confirming that Gold and Gold stocks were about to enter a new rally phase:
And “rally” they have!
Gold has finally entered it’s most profitable and perhaps it’s most parabolic stage as the ultimate flight to safety currency:
“Gold as the only safe, true, and honest form of money.”
Over the last few weeks we have seen more cracks develop in the global financial system. Stanley O’Neil was forced to resign as the CEO of Merrill Lynch as the firm wrote off $8 Billion Dollars in subprime credit derivative losses. Citibank’s CEO looks to be the next casualty as Citi’s stock crashed over 20% in the past week. And speculation swirls over “Level 3 Off the Books” assets that are still valued at the banks own “market to model” valuations. Goldman’s “Level 3 Assets” which are valued at their own “mark to model” valuations are said to be $72 Billion – over twice the firms capital base of $36 Billion.
Goldmans entire existance relies upon the valuation of those “off the books” Level 3 assets.
The “books” of America’s largest banks and investment houses are now being exposed as another — “Enron.”
No wonder the U.S. Dollar has collapsed to all time lows, and no wonder Gold is exploding to new highs.
If you have any questions about gold as money, or about it’s role as a safe haven in times of crisis – here’s your answer!
Just look at that chart – what a thing of beauty!
That chart holds up as a self-evident truth, even into the face of all the lies and manipulation that the Fed, the Treasury and the Investment Banks can muster.
No spin-meister can change these facts:
Just since August:
– Gold is up 33% against the U.S. Dollar
– Gold is up 23% against the Euro Dollar
– Gold is up 17% against the Swiss Franc (the “other” ultimate safe haven currency!)
– Gold is up 16% against the Japanese Yen
Make no doubt about it – Gold is the answer!
And the questions it may be answering are these:
Are Citibank, Goldman Sachs, Merrill Lynch, Bear Stearns, Countrywide Financial and Fannie Mae – all bankrupt?
Have the “books” of the entire U.S. Financial & Banking System become – one giant “Enron”?
Are we about to see the largest bailout in modern history – dwarfing the S&L crisis and the post September 11th reflations?
And the final question:
If so – how high can Gold go?