Wednesday, November 04, 2009

An uncertain future for the US dollar

You may recall the video we posted by Glenn Beck on the US economy and its out of control spending and debt levels. Seems others are equally concerned. India’s central bank just bought 200 tons of gold after the finance minister warned the economies of the US and Europe had collapsed. The Financial Times reported:


Gold prices continued to rise on Wednesday extending the all-time highs which followed India’s central bank bought 200 tonnes of the precious metal, swapping dollars for bullion as the country’s finance minister warned the economies of the US and Europe had “collapsed”.

India’s decision to exchange $6.7bn for gold equivalent to 8 per cent of world annual mine production sent the strongest signal yet that Asian countries were moving away from the US currency.

The purchase by New Delhi’s Reserve Bank from the International Monetary Fund pushed gold prices to a record $1,090.90 per troy ounce, up 2.6 per cent on the day, as traders bet that other central banks would also become buyers.

Pranab Mukherjee, India’s finance minister, said the acquisition reflected the power of an economy that laid claim to the fifth-largest global foreign reserves: “We have money to buy gold. We have enough foreign exchange reserves.”

5 Opinion(s):

Vanilla Ice said...

For a country as poor as India, they are taking a gamble. They would have spent $7 billion on bullion. If a new currency emerges to replace the $, like the Euro or some other, and gold slips to even $800 per troy ounce; India would have kissed almost $2 billion goodbye. But I guess it is a fair diversification hedge, given they have a surplus of $.

Vanilla Ice said...

Just to put things in perspective. A troy ounce is about 31 grams, or approximately 2/3 of a Bar One chocolate (in weight but obviously smaller in size due to gold's density). This small amount is currently valued at approximately R8,400.

Anonymous said...

The aftershock of good old hopenchangey trying to make the same dismal failure of spending his way out of a recession work is coming soon, and I think it may be bigger than the initial shock. Drop your jocks and grab your... socks. We're in for a BUMPY ride.

Spending your way out of a recession only works if the government actually controls the money supply. There are only seven nations on earth that do that. The rest all have a quasi-federal, semi-private, shareholder owned money supplier, who is only in it for the money (excuse the pun).

The currency of the realm is no longer backed by the government who is supposed to be issuing it. It is backed by sinister men involved in sinister schemes who do not give a rats arse about the currency they print and will debase it and devalue it according to their needs.

I hope you have your veggies planted...

Anonymous said...

The dollar will be replaced by the Amero and the USA, Canada, Alaska and Mexico will be replaced by the North American Union.

Anonymous said...

But the Bilderberg owned US Federal Reserve still has more gold than any other group worldwide! This suits them down to the ground!

Common Sense