AfterThoughts 1 2.pdf
Friend of Another
(9/20/98; 19:03:15 Msg ID:43)
To All: It's an interesting corner that the Euro people (BIS) have put the US
government and the dollar into. As the only reserve currency, the dollar must fall in
value in order to reflate the world economy. But, a week dollar is exactly what the
Treasury doesn't need with the upcoming Euro. Now, all Europe has to do is wait and
watch as the markets do their dirty work! If the dollar stays strong, the countries in
crisis will sink even lower. In doing so this will create a US trade deficit never before
seen in modern times.
It is no accident that most of the economies in crisis are many of the chief trading
partners of America. It's also no accident that they all are IMF/Dollar advocates.
Meaning, they hold little Gold and much US treasury debt as local currency reserves.
The US will be forced, by deteriorating market conditions, to lower the exchange
value of the dollar. But, if Greenspan lowers local interest rates, Europe will begin to
dump the dollar. For them, they don't need the dollar as a reserve currency
anymore! They will hold a small amount of it only as an currency exchange
With this new definition for the dollar it will be required to carry a good interest rate.
They have the Dollar in a trap that will force the Fed to lower it's value through the
foreign exchange window. All the while pushing interest rates up or holding them
steady to protect this reserve currency.
This isn't a strange twist as it happened once before during the 70's. Only this time a
new world reserve currency is coming online, giving many countries a choice for the
first time. I think China can't wait to unload it's US treasury holdings for the Euro.
I agree with Another's last post (in the archives) about the vintage wine. Gold is that
reserve vintage that many people kept trying to open before it's time. By the end of
the year, the currency wars will bring this fine wine to completion.
Once it goes above $360 some major defaults will occur, changing the entire aspect
of the market. Add to this the introduction of the Euro and the old US Dollar gold
market will disappear. Some investors are buying gold for the Y2K problem. I thing
the Currency Wars will destroy the markets long before Y2K does it's deed!
Also, I am very excited to hear of this USAGOLD FORUM. I think myself and Another
will have much participation with this new discussion group! It will, no doubt, be
followed by many Gold investors. Who knows, perhaps even a Central Banker or
Government leader? Thanks FOA
Friend of Another
(9/20/98; 20:09:53 Msg ID:48)
We continue to watch the BOJ to see if they are selling US Treasury debt. I don't
think that is going to happen. They will buy gold, they will talk a great deal, but they
can't sell US debt held as reserves. Why? From the beginning Japan has tied it's
future to a US dollar world. They built their economic engine by trading with America
using a dollar surplus mode. From a USA viewpoint, that's a balance of trade deficit
in American dollar currency. It was always a week Yen (in real terms) that created
the demand for goods made in Japan. The huge balance of payments surplus, held
by Japan in world reserve currency dollars gave them the reserve assets to grow
their economy. As governments manipulated currency exchange rates (known as the