adwebster . . . question, page-7

I found this posted elsewhere, but it aligns quite closely to my thinking of how things pan out. Time will tell


I think the sequence of events looks something like this:

1) Big move down in equities helps move some money back into treasuries to soak up some of the massive supply coming online

2) Despite the change of capital flows Treasury prices fail to make new high and the 10 year rate does not go back down to 2% (maybe bottoms around 2.8-3%). Likewise US $ does not quite retouch the highs we saw last fall during the panic

3) Holders of US treasuries use this last opportunity to begin to dump and accumulate real assets (re: oil fields, land, businesses in developing countries with exposure to commodities, etc.)

4) US treasury rates head back up in response and the run on the dollar starts in earnest. The news is spun locally as that our economic recovery has started. The smart money realizes what has begun is the currency crisis and widespread dumping of US $ assets beginning with treasuries.

5) Gold which has been basing during this period begins to be sought out more and more for its value as money (re: store of value) - which none of the other major fiat currencies (euro, yen, or $) can claim to possess at this point in the game.

6) This changeover in perception with more and more holders of world's capital/wealth seeking out gold for its function as money is what can throttle the advance to $2,500 + and relatively quickly. I don't even consider it that important that the currency crisis hits the dollar. If it hits any of the major currencies - even sterling - we ought to see gold strengthen considerably because the confidence in fiat is further shaken.

7) The endgame is an important agreement between the G20 to return to fixed exchange rates or create new world currency, or something of this nature that will then allow the countries of the world to focus on building wealth by starting new businesses as opposed to having everyone a speculator. This may take longer than expected however due to China's increasing clout and mistrust among the countries.

8) The key is gold's perception as money. The currency crisis in a major fiat currency will help to show the world that all fiat currencies lack one of money's key functions (store of value).