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August 28, 2008

The Case for Gold

By Borisimo
Miami. FL

Gold has served us well for over 6000 years, during which we have been able to thoroughly assess its reaction to financial and general world events.  The lessons learned are simple and straight forward. There are two axiomatic rules that never change: in times of stability, it remains stable, in times of instability it gains in value against paper currencies, helping smart investors mantain their purchasing power. These simple and elegant equation have somewhat been distorted over the last hundred years of international central bank manipulations.  Central banks managed to depress the value of gold, first by hoarding it by confiscatory decree in the first half of the 20th century and by selling it off in the last half.

Now that it has been reported that banks are running out of the physical item, -which resonates true due to utter lack of auditing- they seem to be resorting to complicated and not so complicated contract selling, and paper receipt selling manipulations without having to avail themselves of the actual gold.  The good news for gold bugs is that the colluding central banks and the dealers seem to be running short of the physical item, with the result of 'on the street prices' divorcing themselves from 'spot' or 'market manipulated prices. Good news for gold bugs because if resourceful they can beat the manipulators by buying at their 'spot' price and waiting for physical delivery.  It seems that the manipulators are seeing the last days of the game as gold becomes scarcer and investors wiser.


Gold prices which reached as high as one thousand dollars this year, have dropped to about 800 over the last  couple weeks. It has since then been in a slight bounce looking for a bottom.  The floor appears to have held steady in the early eight hundreds and seems ready for a technical high bounce over the next weeks.

With world currencies declining in unison due to the expected recession or depression in the horizon, gold is on standby ready to serve as a steadying, real purchasing power wealth insurance. The dollar is weak and  in an economy fed by Asian dollars, any disruptions in the flow from the Asian tit would have grave consequences for the American Economy. The uncertainty in the future of the major financial institutions, make gold that much important now in any portfolio. But compound this with the risk of wars in the oil producing regions and we have quite the gold bull cocktail.


Some people might argue that those wars might be a thing of the past if the Democratic candidate is elected. But on reading the positions put forth by the candidate's main foreign policy advisers, it might just get worse during a Democratic administration. Lets remember that the current Democratic Congress has acted as the current administration's rubber stamp and given them a blank check to do war with Iraq, Iran and possibly Russia at will.  If McCain's advisers appear to be more rabid warmongers that the Neo-cons in the White House, the Democrats getting ready for presidential power appear to be even more completely divorced from reality in their desire for more imperial wars the country can't afford. Leaving us in what seems a one party system  with  incestuous factions presenting themselves as fighting for power.

Now we have the biggest international armada since the 1991 war, composed of American, French and English ships. forming in the straight of Hormuz, and threatening Iran. For good measure we have a NATO Armada within spitting distance of Russia getting bigger by the day, "delivering humanitarian supplies" to the Caucus nation of Georgia. The Russian Navy and NATO ships have been making strategical moves in concert and against each other.  It is a potentially catastrophic situation and an unwarranted game of nuclear brinkmanship, being advanced mostly by imperialist dogmatist in America who desire to strengthen Georgia -a western government puppet- to control the Caucus region and its energy products and routes.


Put all of this together, add inflation and we have the perfect cocktail for a bull market in gold for the foreseeable future.

To recap; the dollar is weak, bank crisis continues unabated, gold manipulation appears to be loosing steam, technical graphs point to a rise in gold prices, world currencies are declining in unison, of course inflation joins the party, the petro regions are a cinder box filled with well armed Armadas ready to do war or posturing for war, both Democrat and Republican candidates and their advisers openly stating that the war policy will continue the same or get worse.

 Just one word of advise; in these uncertain times make sure you have your gold where you can touch it and where you can keep it from greedy government hands.