Wednesday, September 15, 2010

Goldilocks; a piece from David Rosenberg of Gluskin Sheff


Well, at least we know we can use yesterday’s action as a microcosm to what is actually driving the gold price higher (up $22.55/oz, +1.8%, yesterday to $1,268 an ounce) — and it isn’t inflation. How do we know that? Because 10-year TIPS breakeven levels — the market proxy for inflation expectations — fell seven basis points. The correlation would seem to be more with the U.S. dollar as the DXY sank 1.0% to 81.080 yesterday. And, what ailed the U.S. dollar were hints out of Goldman Sachs that the Fed was indeed planning another round of Quantitative Easing. So once again, gold has asserted itself as a monetary metal — a currency that is no government’s liability and a hedge against these recurring concerns over the integrity of the global monetary system.

By: Bosko Kacarevic
Since August of 1971 the USD has been backed only by the good faith and credit of the USA, which really means CONFIDENCE. That confidence is now lost and this is the real reason for the economic crisis. Gold is no longer used as a backing to practically any currencies around the world. This allows bankers and politicians to run wild with spending, but Gold is the only honest money that reveals the truth of the system. I always tell people, "the rise in Gold is NOT about the rise in Gold, it's about the loss of CONFIDENCE in paper currencies and government." BK