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on January 1. China has around 140 billion dollars' worth of reserves, with about 60
percent denominated in dollars, the China Daily said. It also has around 60 billion
dollars of US treasury bonds. Wang said China would reschedule its reserves so there
was around 40 percent in dollars, 40 percent in the Euro and 20 percent in Japanese
yen. China currently also has German marks, Swiss francs and yen reserves. The
Euro is to be launched with 11 European members from January 1 next year. The
government has insisted in recent weeks that it does not intend to devalue the yuan,
inspite of the Asian crisis which has undermined its exports, and that it was ready to
use its huge reserves to maintain the official parity. "
I think the question of the Euro will be answered by the actions of the official
government Central Banks. For a citizen living in Europe and using the Euro, it will
become the best of all worlds. Not much different from the American using dollars to
buy goods (in discounted real terms) from Japan or any other third world country.
Only, now the shoe will be on the other foot with the USA trying desperately to sell
it's goods to Europe for EUROS. This will be another strange twist as many/most of
Americas foreign goods producers will, by then have stopped using dollars as reserve
The outcome of a change in reserve currency is mind numbing. For the small person
outside of Europe, they should "Follow in the Footsteps" of others. The holding of
physical gold can and will be considered holding a currency asset as will the holding
of Euros. However, the Euro will not come remotely close to the appreciation of gold
as valued against all things. The ECB and the BIS will make it that way. You sir (or
Ms.) will see this come to pass. Thanks
Friend of Another

(9/20/98; 22:02:45 Msg ID:53)

Before I continue, I want to thank Mr. Kosares for creating this Forum. This effort by
USAGOLD will reward many readers with interesting discussion and debate about the
future of gold in the world society. Michael, thank you!
BMACD: In reply to your 20:48. Hashimoto made the comment, but what position do
we find Mr.Yen in now? I think it was a comment created by political need at the
time. What would happen if Japan sold (dumped if you will) their US dollar reserves
on the world market and/or brought Gold with the proceeds? Even if the Federal
Reserve purchased some of the debt, it would no doubt drive down the value of the
dollar. But this action would not help their economy as they still operate worldwide in
a dollar reserve system. The dollar price of gold would rise, but not enough to liquefy
their financial burden. In short, they still have to sell goods and services to the
world, in order to raise their GDP. This will not happen if the Yen appreciates against
all other currencies!
As you can see, this is the box they are in. It is also the predicament many other
countries are in that operate using the dollar as a reserve currency. For many of
them, a rise in the dollar price of gold will not help them, yet. Gold has not been
brought to the forefront as a true currency reserve asset. It will when the Euro is
created. At that precise time these economies will have a new market for their goods
and they will accept payment in a new reserve currency.
Until this reality becomes apparent, the world financial system will continue to slide