FinancialAdvisor's College Class (FACC)

[goldman1]

Thanks for bringing this to my attention...this goes back to what we talked about in November..see the following post placed then.....




Currency shifts....

In regards to the devaluation of the dollar to foriegn currencies.... well...this has so many sides to this story...

1. Emerging dynamo economies such as China will try to establish thier own currency as a dominant force...for third world economies in that region to become standardized against.... we see good examples of this with the U.S. dollar and South America... alot of the South American currencies are based on the US dollar... a good way to increase the competitiveness of US goods is thru this stratgey... however this puts every currency based on the US dollar at the mercy of U.S. fiscal policy... China is trying to establish thier currency to be indepedent of any other currency... this will help them increase thier influence in the economic rim and could displace the yen and dollar in the future in thier region...

2. Meanwhile you have the European Economic community doing the same thing....trying to displace the dollar as the main currency in third world european countries

3. Russia's economy is finally recovering to some point and they wish to establish thier own curreny in the world economic market....

The result is going to be a commercial battle for currency supremecy... which could result to the re-emergence of the gold standard....

Put that battle for currency supremecy with the following factors:

1. Increase in money supply to pay for Iraqi War
2. High Prices of crude and Gas will and is decreasing profits of industry
3. Cut back in work forces due to decreased profits
4. Increase in un employment..happening already....
5. Hyper increase in inflation and interest rates....
Inflation has been kept in check by weak asian economies and strong U.S. dollars...this enviroment is now changing as the US economy is getting weaker and the asian economies are heating up... this could cause an even further decline of the U.S. Dollar... Interest rates are going to have to increase to compete for money for investment....

We have a reversal of a prevoius irony... the prevoius irony was deflationary behavior in an inflationary enviroment....

Now we are in inflationary behavior in an delfationary enviroment...

Anyway...no matter how you look at it... gold is going up...unless the world figures another medium to use for currency valuations other than gold...

By the way a high price of gold means alot of problems for our country...we could see the inflation of the 70's be duplicated again....

I hope I am wrong....about these theories...