Look - I'm as bullish about gold as anyone...But the analysis...

Look - I'm as bullish about gold as anyone...

But the analysis concerning India is ridiculous. Their current holding of gold is 6 percent of their total forex reserves. That they are buying gold with such a small alottment (when compared to most other countries) - doesn't indicate anything beyond a country wanting to improve their asset class diversification.

I actually think Peter Schiff is wrong about this - Central banks may well increase their gold holdings somewhat - certainly Russia, China, India and the Arabs will. But as much as iconoclastic lowlifes as ourselves want it to happen (and don't get huffy - I count myself as one too) - most of the world does not think that the USD is going to collapse. Most central banks support the USD decline because they know that the US cannot continue to support world growth - and that if the trade imbalances are not fixed we're all in deep fail.

What's more, exporter countries know that they need to stimulate domestic consumption. A steady devaluation of the USD helps this because it makes it more difficult for savings to accumulate in those exporter countries. Done gradually, these countries will have the time to adjust. But if it's a collapse then EVERYONE is in horrible trouble. Trade will absolutely stop dead to and from the US because a) the us won't be able to afford anything and b) industries in exporter nations will go bankrupt almost overnight (or close to overnight anyway).

So I think what a lot of people around here don't really understand is that the whole world has a vested interest in not letting the USD collapse - and they are all working to make sure that it's decline is orderly and smooth.

Why do you think central banks at the moment are buying US bonds? Everyone is wondering about the mystery of this given the asset inflation that is ubiquitous. Not mysterious at all... investment in US bonds is an investment in the dollar and a proxy for supporting the currency.

It's all managed... it's all agreed upon. The world will give the US a get out of jail free card because they are too scared to face a world without its sherrif on the beat.