Wednesday, July 26, 2006

Bet on Gold, Not on Funny Money

From Yahoo!:

In many ways, the conditions are far worse now than they were in 1996. Today, we have a slowing demand for the dollar. At the same time, it appears that the Federal Reserve is increasing the supply of dollars.

As you know, low demand and high supply means a drop in value of anything, including the dollar. And in order to save the dollar's purchasing power, Ben Bernanke, the new Federal Reserve chairman, may be forced to raise real interest rates. By "real," I mean an interest rate that's higher than the rate of inflation.
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I'm betting that gold is cheap, and that it'll correct as oil goes higher and countries such as Russia, Venezuela, the Arab states, and Africa become more reluctant to accept the U.S. dollar. For a while now, we've been allowed to pay for the goods and services from other countries with funny money, but the world appears to be less and less willing to take it as payment.

2 Comments:

Anonymous Anonymous said...

I like it! Good job. Go on.
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8/13/2006 4:25 AM  
Anonymous Anonymous said...

Interesting website with a lot of resources and detailed explanations.
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8/18/2006 7:31 AM  

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