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Discussion Starter · #1 ·
There's been news about central banks around the world buying gold. The real question is this: what are they buying gold with? Are central banks starting to dump the dollar to buy gold?

This blog quotes a report from shadowstats.com that you have to be a paid subscriber to access:

Economist John Williams of Shadowstats.com has been warning for months about a sudden dollar sell-off. According to Williams, $12 trillion liquid dollar assets are held outside the U.S. (dollars and Treasuries). If the holders of these assets throw in the towel and cash out, there could be a severe dollar sell off. That could spike inflation, cause interest rates to surge and eventually plunge the country into a hyperinflationary depression, according to Williams. A special Shadowstats.com report put out yesterday said, "Lack of confidence in the U.S. dollar has been pushed to a new and more dangerous nadir in the last two weeks. Dollar selling has been exacerbated by the contentious and virtually meaningless debt deal negotiated by the President and Congress, by Standard & Poor's downgrading the rating on U.S. Treasuries to "AA+" from "AAA," and by mounting market recognition of the ongoing U.S. economic and systemic-solvency crises. Pending still is the Fed's move to QE3.
The dollar's back is close to being broken. Despite near-term interventions and extreme volatility, the heavy dollar selling that follows will be highly inflationary. . . "
 

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There's been news about central banks around the world buying gold. The real question is this: what are they buying gold with? Are central banks starting to dump the dollar to buy gold?
At this point it's just a smart move for them. It hurts us, but honestly, can you blame them? or are surprised by their actions?

Given the Euro situation (PIIGS and maybe F now too) I'm not so comfortable on the future of it and would be looking to liquidate if I had any.
 

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There is no doubt in my mind that golds price surge is directly related to lack of confidence in the dollar (and all other fiat currency)... did anyone think otherwise (if so what)? The whole reason to invest in gold is to salvage any wealth you currently have in dollars because wealth in dollars is plummeting.

Perhaps I misunderstood your post?
 

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Discussion Starter · #4 ·
There is no doubt in my mind that golds price surge is directly related to lack of confidence in the dollar (and all other fiat currency)... did anyone think otherwise (if so what)? The whole reason to invest in gold is to salvage any wealth you currently have in dollars because wealth in dollars is plummeting.

Perhaps I misunderstood your post?
I'm concerned specifically with a run on the dollar.
 

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Aesops Ant (not Aunt)
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I'm concerned specifically with a run on the dollar.
As well we should be! I have a feeling though that its not just dollar thats being "run down". The Euro is having its problems as well. The dollar is no better than the euro if we are going to be the the drunken sailors of the good ship "Printing Press"!

Do you think this is a conspiracy to ruin the dollar or are you just saying that other nations are finally realizing that we no longer have folks in power that know how to run an economy and apparently there is little hope for that to change?
 

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Even if the central banks dump the dollar, the United States is still the financial ruler of the world. China will struggle if the US can't afford to buy their product. Many countries will suffer without out our financial aid. Keep poking at the bear and see what happens.
 

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China does have other buyers for their junk, and could take over as the financial leader of the world. But I don't think it will last too long because their economy is in trouble too. They have been building cities that hardly anyone is living in and could be headed for a real estate collapse too.

Right now investors are losing confidence in the dollar and the euro...and buying gold because it seems to be the safe haven. And yes, I think that the bottom could fall out and the dollar could be almost worthless...not a pleasant thought.
 

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Even if the central banks dump the dollar, the United States is still the financial ruler of the world. China will struggle if the US can't afford to buy their product. Many countries will suffer without out our financial aid. Keep poking at the bear and see what happens.
While I guess theres some truth to this (my summation of your post:the dollar will be a backstop for all of the worlds currencies so there will be a floor to the value of the dollar) the assumption that China will struggle will be short lived. It is actually hurting them to be focused on production for export of their junk to us. If they dumped us and the dollar, they could instead focus on production for themselves, which would make them much stronger. We were a stronger nation when we were manufacturing domestically for American consumption.

As for gold (silver), what I am worried about is that I have to keep in mind that there might not be a collapse (I think there will be) and all of this (?!) will blow over and gold will be left holding the bag, and a bubble will burst. I think its highly unlikely, but certainly possible. I have become too embroiled in all the gloom and doom, but its not a given that everything will crumble. If the PTB invent some scheme to keep it all going, no matter how bs it may be, the bottom could drop out of the pm market. Given the fact that a collapse scenario relies on everyone losing faith in the dollar/fiat currency/debt based system, and that for the most part 'everyone' is a complete moron, its easy to pull the wool over their eyes.

Wizards first rule: People will believe any lie because they either want it to be true, or are afraid it is.
 

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There's been news about central banks around the world buying gold. The real question is this: what are they buying gold with? Are central banks starting to dump the dollar to buy gold?
I have a question. If the central banks are buying gold with USD's, whom are they buying the gold from? Now the seller is sitting on the USD's. What does that hurt?
 

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...As for gold (silver), what I am worried about is that I have to keep in mind that there might not be a collapse (I think there will be) and all of this (?!) will blow over and gold will be left holding the bag, and a bubble will burst. I think its highly unlikely, but certainly possible. I have become too embroiled in all the gloom and doom, but its not a given that everything will crumble. If the PTB invent some scheme to keep it all going, no matter how bs it may be, the bottom could drop out of the pm market. ...
A legitmate concern if shorter term profits are your goal. Longer term holding and wealth preservation favors doing well. However, even if everything collapses and gold is in a bubble, a burst gold bubble will probably still be worth more than whatever the rest of the currencies fall to... so you'd still come out ahead.
 

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Discussion Starter · #11 ·
As well we should be! I have a feeling though that its not just dollar thats being "run down". The Euro is having its problems as well. The dollar is no better than the euro if we are going to be the the drunken sailors of the good ship "Printing Press"!

Do you think this is a conspiracy to ruin the dollar or are you just saying that other nations are finally realizing that we no longer have folks in power that know how to run an economy and apparently there is little hope for that to change?
I think there's a conspiracy to ruin the dollar by Obama and the Federal Reserve. I think other countries have now seen that the U.S. has no ability to cut spending. If they're smart they'll be the first to dump their dollars.
 

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Discussion Starter · #12 ·
I have a question. If the central banks are buying gold with USD's, whom are they buying the gold from? Now the seller is sitting on the USD's. What does that hurt?
The central banks could be buying gold from a large number of sellers almost anywhere. If it's on the New York market those dollars immediately hit the U.S. economy. That matters because large numbers of dollars that were sitting as part of global financial reserves will now be dumped in the U.S. economy. All those additional dollars would create inflation here. John Williams from Shadowstats.com thinks there's $12 trillion in dollars and Treasury notes held by central banks around the world as part of their currency reserves. Some people think that once the dollar loses its status as the world's reserve currency it would lose 90% of its value over a short time. That would mean that everything we import (and possibly everything we buy) would cost 10 times as much as it does today.
 

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I think there's a conspiracy to ruin the dollar by Obama and the Federal Reserve. I think other countries have now seen that the U.S. has no ability to cut spending. If they're smart they'll be the first to dump their dollars.
Why would you believe that Obama is the first President to attempt to the ruin the dollar.

I got into a discussion with one of my "radical right wing" co-workers a few years ago. Bush is great, Bush is all knowing, blah blah blah... So I set out to start looking at the spending, pulled the data straight from OMB. I was SHOCKED when I started to analyze spending data. It was literally the start of my epiphany wrt to politics and govt spending. Every budget, no matter what party is in office(s), goes up literally the same amount, year after year after year. Not only that, but the budget numbers that are widely reported, are ONLY ON BUDGET data. There's a whole section of off budget expenses. Please, don't take my word for it, got to the OMB web page and start looking, it's pretty scary.
 

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If you notice none of the economists like John Williams, Schiff, Faber, Rogers, Fleckenstein, Sinclair, Davies, Dines, Embry, etc., etc., blame individual politicians as THE single specific source of an evil creation set to destroy the dollar. He's (POTUS) is just the current guy in the suit doing what he's told just like his predecessors. Presidents control little about the money system. That's the Treasury Secretary and the Federal Reserve board, and ultimately the BIS (Bank of International Settlements) which is the bank's world bank in Basil Switzerland. Look it up.

Look at our debt. Bush took over with 5.5 trillion owed and left at 10.6 trillion. Spending on everything went up including more money to Planned Parenthood starting in 2002. Obama has overseen that debt number to 14.5 trillion and it will be what by his term end?
Graph the numbers by year for the last 20 yrs. You'll see the "rise" of the Dollar is closing in on being divided by zero in the "run" axis. Any number divided by zero is undefined=hyperinflation. And THAT is what these economists are telling us.
Presidents are akin to Bernie from Weekend at Bernie's. They're like dead men that the real players cart around for a pass or hide behind. All the politicians (huge majority, anyway) work for/represent 'them'. The bankers are completely useless to us, but they've inserted themselves as middlemen to our own Dollars.
 

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Dollar waning as worlds reserve currency

Even if the central banks dump the dollar, the United States is still the financial ruler of the world. China will struggle if the US can't afford to buy their product. Many countries will suffer without out our financial aid. Keep poking at the bear and see what happens.
Checking the USDX graph (a measure of dollar value), I see the dollar consistently losing value. I think it's because we continue to borrow too much from the Federal Reserve, and Federal Reserve notes are no longer backed by anything except our gross domestic product which continues to decline. Therefore, people try to preserve their purchasing power, by buying precious metals and stocks which are based on human needs (soap, toilet paper, shaving cream, food, deodorant, oil, gasoline refineries, etc.) The more we borrow, each dollar is worth less, which drives higher prices. Large institutional borrowers like price inflation because they get to pay back their loans with cheaper dollars. Countries who invest in the United States don't like it because their assets are worth less, so they curb their investments by reducing their purchase of United States treasury securities (not good for dollar value). It's why we need to get our financial house in order, just like any household.
 

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Hugo Chavez and a short squeeze?

This is pretty interesting.
If he demanded delivery of all their gold (how is Venezuela the 15th largest holder of gold?) it may touch off an explosion in the price...
 

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Discussion Starter · #18 ·
Why would you believe that Obama is the first President to attempt to the ruin the dollar.

I got into a discussion with one of my "radical right wing" co-workers a few years ago. Bush is great, Bush is all knowing, blah blah blah... So I set out to start looking at the spending, pulled the data straight from OMB. I was SHOCKED when I started to analyze spending data. It was literally the start of my epiphany wrt to politics and govt spending. Every budget, no matter what party is in office(s), goes up literally the same amount, year after year after year. Not only that, but the budget numbers that are widely reported, are ONLY ON BUDGET data. There's a whole section of off budget expenses. Please, don't take my word for it, got to the OMB web page and start looking, it's pretty scary.
I think Obama is destroying the US economy and destroying the dollar on purpose. I think his goal is to create a total economic collapse through hyperinflation. I think he's doing that to make the US part of a one-world government. I'm sure he doesn't think he's setting the stage for the Great Tribulation and the rise of the Anti-Christ but that's what's going to happen.

Obama is a liberal but he's no fool. I'm sure he knows that everything he's done would hurt the economy and that's why he's doing it. He can't be so stupid as to think a trillion dollar stimulus would help the economy. And it wasn't even a stimulus in the first place.
 

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Discussion Starter · #19 ·
Why would you believe that Obama is the first President to attempt to the ruin the dollar.

I got into a discussion with one of my "radical right wing" co-workers a few years ago. Bush is great, Bush is all knowing, blah blah blah... So I set out to start looking at the spending, pulled the data straight from OMB. I was SHOCKED when I started to analyze spending data. It was literally the start of my epiphany wrt to politics and govt spending. Every budget, no matter what party is in office(s), goes up literally the same amount, year after year after year. Not only that, but the budget numbers that are widely reported, are ONLY ON BUDGET data. There's a whole section of off budget expenses. Please, don't take my word for it, got to the OMB web page and start looking, it's pretty scary.
You also have to look at Bernanke's actions. He was wrong about the real estate bubble. The Federal Reserve created it by artificial low interest rates. Bernanke should've sounded the alarm about Obama's runaway spending. But he didn't. In March, 2009 the Federal Reserve started monetizing the debt. It started printing phantom money to cover what the government couldn't raise. That ALWAYS leads to hyperinflation. In time we'll have hyperinflation like Germany did in the 1920s. We have trillion dollar deficits as far ahead as the eye can see. The Democrats fight any and all spending cuts. Despite the fact that the Federal government will have about $2 trillion in taxes, it will spend $3.6 trillion and then claim the problem is that taxes are too low. The DEFICIT is more than 100% of GPD. You could confiscate the income of every single American and not have enough to cover the deficit. And that doesn't count the additional $5.3 trillion in unfunded liabilities like social security, medicare, medicaid, and federal pensions. So the gov't takes in $2 trillion but spends and owes about $9 trillion. Unless we cut spending by 80% we're doomed as a country. I think we're going to see the world abandon the dollar as the world's reserve currency. That will cause the dollar to lose about 90% of its value in a short time. We could go from everything being normal to a complete collapse in as little as a month.
 

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BillS,

IRC you're not a spring chicken. Remember back in Regan's day, the tri-lateral commission and one world order? At the time, I considered it a bunch of hooey.

I did as part of my MBA finance class a term paper on financial bubbles... holy crap, this stuff has been going on for a long time, it was blatantly obvious. Essentially started during Clinton's era.

I've mentioned it before, but chrismartenson.com is an awesome site. The crash course is well worth watching. episodes 17a,b, and c really wrap it up. We're in an interesting time as the house of cards is shaking. I do not expect the system to implode during this presidential term, but I do expect it to fall apart after the next election. It's in not only the presidents best interest to keep things going, but the govt in general. Unfortunately they are boxing themselves into what is know in aviation as a coffin corner. There is no way out, at least none that I can see.
 
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