pog, page-22

Hi Skol

Good video.....

I am on the other side of this debate to you, I think gold is going to rise in the near and long term.

However, that video does capture the essence of the debate. The debt is what it is all about isn't it?

Declining GDP's, debts beyond anyone's capacity to repay, the resulting deflation and the money printing offered as a cure. It is a testament to the amount of debt sloshing around the World that not even QE infinity has created runaway inflation.

What puts me on the gold-bug side of the debate is .... the major factor in all of this is the massive transference of wealth from Western economies to Asian economies. With that will follow a transfer of values as well.

The politics are interesting too.

Is China selling US paper to buy physical gold? That looks probable. Are they doing so only based on financial prudence? Possibly.

But, a switch away from the $US as a reserve currency [to anything else] is a political gain for China. That loss of US dollar prestige is looking increasingly likely.

The old joke about the Golden Rule ... 'He who has the gold makes the rules'... might actually apply here. The cultural disposition to see gold as the ultimate store of value and prestige is a universal .... but it is particularly strong in the Asian sentiment.

The centre of wealth [and with it the centre of power] is moving to China. What they do with that power is anybody's guess. To forecast that we can only analyze their present actions. Presently they are buying gold in record quantities.

The speculative question is .... to what purpose?

The money printing in the Western economies is a novelty at this scale. It is being done out of desperation ... it is not a policy setting any country would normally choose to adopt. The result is massive distortions in the values attributed to assets.

Is gold over valued and in a bubble? On balance it is hard to make that case. Much easier to point to equities as being artificially high.

The US dollar? Does it have an intrinsic value? If the $US was not the reserve currency, my guess is the money printing at this level would have already destroyed its value relative to any basket of currencies you could assemble. The PoG denominated in US dollars does not look over valued to my eyes.