Tuesday, January 20, 2009

Inflation and gold

(1) Times of Malta (htp Jesse)

Gold is a currency and Phillip Manduca is proving this once and over again.

He seems to have gambled his entire professional reputation on gold, reaching the $2,000 threshold by the end of 2010.

He is well worth listening to. His words are illuminated by a previous outstandingly successful record.

The high gold price seems, for the time being, to have reached a plateau, but Manduca of Titan Investments sees a price of gold at $1,000 a troy ounce as a distinct possibility in the near future. He said so a few days ago.

China is now moving part of its massive dollar reserves from the dollar into the euro and gold.

Madoff can be said to have harmed Wall Street, but he has certainly helped the prospects of a booming gold price. The money the Fed is pumping into the economy is proving insufficient to reignite it.

(2) Article from the Economic Times on our options (htp: Jesse, again). It thinks there are three: writeoffs/bankruptcies, increase GDP, inflation. The first is politically unacceptable, the second cannot be achieved by monetary means alone, so it's to be the third:

The stage is set for a long period of slow growth as debts are worked down and a rise in inflation in the medium term.


Paddington said...

What makes gold any more valuable than land or eggs, apart from emotion? The largest use (see the latest National Geographic) is jewelry.

Perhaps the new standard should be plutonium and uranium - it might stop some countries from producing nuclear weapons. It has the added advantage that wealth could then be determined with a Geiger counter.

Sackerson said...

Jewelry = wealth you can wear. It's still wealth, like a Vermeer on the office wall; or the necklaces of coin round the necks of African women.