Question about future interest rates and the dollar

This question is exactly what is keeping the price of gold and silver at its current levels as opposed to higher. Fed action is already priced in. It (the price of gold) will continue to be volitile until the end of the year but the bulls will win this fight until next year. Look for $1200 dollar/ounce of gold by January 2009, with potential of plus or minus $200, so if you are looking for a short term investment this is a good choice.

If the world goes crazy and we are at war, all bets are off and gold will beat these estimates, by how much, only GOD knows. We will print money to finance these efforts.

If Ron Paul is elected president, then transparency in the gold markets will increase and again, all bets are off, the price of gold could go as high as $2000/ounce or higher.

Most likely, Obama will be elected, rates will go up slightly, and we will not be at war. Even if this happens, and the world markets stablize, we will have competitors like we never have before. This means a steady, but slow bull market in gold relative to dollars.

Unless you are investing in foreign markets, this is the lowest risk, bull potential investment that one can have.

Bring on the critical thinking. I am willing to admit when I am wrong.

WAHOR!!

Don't be surprised if rates stagnate for a while.

Dropping rates = destruction of the economy.

Raising rates = destruction of the economy.

This isn't the 30s or the late 70s/early 80s -- there is no longer room to maneuver. All hands have been played.

Add into this mix a silver shortage, gold miners suffocating under the weight of their hedge books, and international precious metal hording (Chinese, Russians, Indians, Turks, etc.).

We all have to decide for ourselves the road to take.

___________

Lisa C.

“Elections are short term efforts; revolutions are long term projects.”

--Ron Paul

Join the rEVOLution here: http://www.campaignforlib...

the Great Depression?

The Fed kept printing more and more money, easy credit, for an extended period of time... then they cut it off. When they cut it off is whent the sh*t hit the fan.

I imagine the price of gold would continue to rise in that situation.

analysis of the Great Depression:

"Conclusion
The brilliance of Friedman and Schwartz's work on the Great Depression is not simply the texture of the discussion or the coherence of the point of view. Their work was among the first to use history to address seriously the issues of cause and effect in a complex economic system, the problem of identification. Perhaps no single one of their "natural experiments" alone is convincing; but together, and enhanced by the subsequent research of dozens of scholars, they make a powerful case indeed.

For practical central bankers, among which I now count myself, Friedman and Schwartz's analysis leaves many lessons. What I take from their work is the idea that monetary forces, particularly if unleashed in a destabilizing direction, can be extremely powerful. The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation.

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again"

Bernanke agreed w/ Friedman that a deflation was the major error behind the Great Depression. This doesn't mean that his opinion is all that relevant in the big scheme as I think he is more of a puppet than anything. But for those worried whether it will be inflation or deflation, I found this interesting to hear Bernanke give his opinion of the Fed's role during the GD.

http://www.federalreserve...

--------------------------
"I killed the banks"

Because the Fed will continue to inject cash into the system and the US government will run huge deficits. The current 2008 debt will probably end up in the $600 to $800 billion range. And the fed has given nearly $500 billion to banks in exchange for worthless mortgage paper. They plan to start giving banks credit on all types of consumer loans.

Mike
"Fire Team for Freedom" and "Operation Daily Paul"
on revolutionbroadcasting.com
or visit www.mikeandjake.com

Currently the Fed is in a position where they are damned if they do and damned if they don't. Raise rates and they risk causing significant damage to our economy. Lower rates and they risk significant damage to the value of our dollar.

My guess is that deflation of the money supply will not be what we see the Fed do. The Fed has a very long track record of creating money to solve problems, I believe they will do the same again this time.

If you think you've heard about rising unemployment and a low stock market now, just keep watching over the next few weeks and months. The Fed won't be able to raise rates in September either, and lowering further is problematic as well, of course. That's why there have been economic warnings on this site since last year, and warnings from Ron Paul for many years.

Consider the fact that the current rate of interest and the current value of Gold (and commodities) are no where aligned.

Even IF they were to reign in the money supply, there is still too much money out there and inflation is in fact way beyond measure regardless what the current or future rate is going to be.

Or put another way, Gold is so undervalued, that it's deflated price is still very high.

There is $1500 TRILLION in derivatives which is going to want to find a home during inflation or deflation. Deflation will mean a lot of the derivatives become worthless even if the dollar were to strengthen.

(1930's dollar strengthened, values came down in price - opposite of inflation)

They've been at this for 40 years. All other episodes were only about 10 or less.

This is going to be the largest financial wipeout mankind has ever seen.

send the price of gold lower. All it has to do is reign in the money supply. It could even bring in deflation if it wanted. Then you'd be better off holding dollars.