gold is up hit $1350 overnight, page-53

chuk

Thanks for letting me know Faber's view.

I think he is right in the short term, but mid-longer term the financial stress could become extreme. I think these newly minted billionaires etc would have made their fortunes on the basis of recent Chinese credit expansion and will have a lot of debt in their companies etc. Without the support of the central govnuts/central bank they could be in big strife (banks may need to call in many of the bad loans and even good loans to maintain their liquidity and this has a downward spiraling effect (think Japan post 1990 when asset prices fell).

For me the saving factor is that many of the newly minted rich are "communist" govnut functionaries or related to them and they will work over time to save their wealth. That could mean they print even harder and wipe away their debt by inflation. Now that would give gold a massive boost and we could see it at USD2500 within a year (and SLR shares would be back at $2-3 - golly am I really saying this?).

loki