Gold Heading to $10,000 - Jim Rickards, page-164

You're welcome.

It's tough for the Average Australian to understand how the world works on a higher level when everyone is selling you something and the media is usually focussed on getting behind the bandwagon of whoever is paying them the most or whatever wins the most eyeballs irrespective of the long term consequences for the nation.

And an uneducated fosters an environment for weak willed leaders (not that many other countries are fairing any better at the moment), which makes it difficult to stamp out the usury and rent seeking nature of the many vested interests.

I feel like the Average Australian can't differentiate from those that are there to help an those that hurt. So there is no chance to right the system so that it rewards those that provide genuine value and incentivizes the sort of innovation that will lift the living standards of all over time. So very occasionally I'm willing to throw my two cents into an argument to ensure that it's balanced.

Yes it is mostly emerging market central banks that are building their gold reserves right now.

I imagine that is partly because their economies in recent years have been increasing in productivity at a faster rate than advanced economies and partly because their total reserves to gold ratio compared to advanced economies is low and they are quickly trying to make up for that discrepancy.

And I imagine partly being motivated by the monetary policies that begin pursued by western centrals banks.

That said, I don't have to do better than anything...

I'm more than happy for you to invest in whatever you feel is the best allocation of your capital.

Convincing you I'm right, doesn't make me right, it only makes me convincing.

And I only post if I feel I can add value to a conversation and potentially raise some important points yet to be considered.

Time is the only thing that will confirm if I'm correct or not.

I've placed my bets. I'm comfortable with them and I have a wonderful track record over the last 7 years (and I only bought gold miners in the last 18 months).

And of course if things change (ie governments and central banks start treating their currency like it should be long term store of value) then I'll be very happy to reverse my position and allocate my capital to other businesses and investments, I just haven't seen anything yet to suggest that is likely...

...and sadly I think we as a country may have less time than we realise before we are held to a high standard of account.

Out Net International Investment Position to GDP is one of the worst in the world (ie we are in massive debt), and deteriorating rapidly (given that the value of our exports have fallen dramatically).

If something dramatic doesn't reverse the recent trends, then it's not unthinkable that Australia itself could end up in a balance of payment crisis in the next few years (and our foreign reserve are horrifically low)...

Also I don't understand your point about Venezuela - it actually the point I'm making.

When you trash your economy, the world stops wanting your currency (Venezuelan bolivars) and then your debt and imported goods and services need to be paid for in gold form your foreign reserves...

Excerpts from CNN Money:

Venezuela sent $1.3 billion worth of gold bars to Switzerland in mid-January.

That gold was shipped out just weeks before two big debt payments due this month, totaling $2.3 billion. On Friday alone, Venezuela has to pay bondholders $1.5 billion.

Venezuela is running out of cash and many experts believe there's a high chance it will default by this fall when a string of big debt payments are due.

That's why the country is using its dwindling gold reserves to make debt payments. .

Experts believe Venezuela has less than $1 billion in cash reserves.

"There are not enough dollars to pay their external debts," says Mauro Roca, an economist at Goldman Sachs. "The economic environment is one of the worst in the world. It's clearly unsustainable."

Any way you look at it, Venezuela is in a severe economic recession. Inflation is skyrocketing -- the IMF estimates it will rise 720% this year. Its economy tanked last year, shrinking 10%. The value of its currency, the bolivar, has plummeted.

Default could soon be knocking on Venezuela's doorstep. In November and October, Venezuela must pay almost $5 billion in debt. Barring lots of help from China -- one of Venezuela's popular sources of finance -- experts believe Venezuela probably will default.

I bet the average Venezuelan wishes he had put away a couple of ounces of gold under his bed during the good times, because they'll soon be more valuable than any other financial asset in his country including its own currency.

DYOR.