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Is Gold Money or a Commodity?

Discussion in 'Financial Cents' started by Bear, Jun 10, 2006.

  1. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey


    Is Gold Money or a Commodity?

    By Roger Wiegand
    June 8, 2006

    “The U.S Dollar will be relegated to the status of being a tiny, weak puppy of gross insignificance.” -Trader Rog

    The value or real worth of gold can be understood when you see a diluted U.S. Dollar sliding away at a steady clip. It is not the value of gold that is increasing it is the value of the dollar declining. A similar example is our Dow Jones Industrial Average. If the Dow remained near 11,000 for years and the dollar diminished in value over those same years, the true worth of the Dow would be lessened considerably. The more we watch the Dow, the more we feel this is its destiny; to stay stuck in the mud of 10,500 to 11,500 forever as gold travels to the moon. Why can it not drop to 3,000? It will not slip because our market controllers will manipulate its infinite levitation as long as possible. One very sharp New York hedge fund manager said, “They simply cannot let the Dow slide below 10,000. It is too important and meaningful for all nations throughout the financial world.”

    The U.S. Dollar is the reserve currency for 80% of the world. Historically, dollars have been accepted anywhere. And, formerly, they were distinctly preferred over most local foreign national currencies. Now we hear stories from the primitive Chinese agrarian society “back in the hills folks” deciding our dollar is no longer a magic ticket as it was in years gone by. Astute small business people in foreign countries understand the dollar is weak and getting weaker. Many of these people live in countries having experienced paper currency implosions and are wary and frightened of a “Yankee Dollar Re-run.”

    Gold Demand and Production Carefully Counted

    We’ve seen incredibly elaborate reports detailing gold mine production from all over the world. Great effort is expended to count everything carefully; even the scrap. Demand reports list raw gold used for jewelry, ornamental fabrication, currency and collector coins, bullion bars in storage, and more recently the largest single sector buyer; exchange traded funds requiring bullion backing with guaranteed audits. By combining all these numbers a clear gold picture evolves.

    Annual gold production is a relatively tiny amount, growing the above ground supply approximately 2% per year. Meanwhile most of the mined gold is simply hoarded by the owners. Hoarding can be hidden in jewelry, coins, unregistered bars, crushed and unprocessed concentrate heavily laden with gold stored at an operating mine. Successful gold operators often mine gold and hold it back from the smelters waiting for higher prices or as a potential production filler in case of a mining strike shutdown. Old mining leach pads contain gold deliberately stored while others have been abandoned.

    Russian banks will not trade gold with each other as they distrust everyone in the business. China is rumored to hold only 500 tons of gold, but smart analysts have computed they are mining much more which moves into secured government vaulted storage. One high ranking communist let it slip the Chinese Communist Party’s Central Government has a policy of buying, mining and claiming all the foreign base and precious metals they can obtain in an effort to save the home grown domestic supplies for later production. In other words, we want yours first and we are saving ours for later.

    Dollar Inverse Head and Shoulders Forecasts Mild Recovery


    Weekly dollar chart signals (in top box) show dollar basing, moving sideways and preparing to rally. Middle of chart has weekly prices at 83.60 support in an upside down head and shoulders pattern. Lower box has ratio of dollar-SPX with 20 day average both moving downward in tandem. We are seeing signs of a bottom here and forecast the dollar to recover back to the 40 day moving average (blue line) at a summer term top of 88.00. During late August, expect the dollar to resume its selling especially near September.

    The United States Dollar has now achieved a level of “TO BIG TO FAIL.” Foreign holders of dollars are stuck with so many they must tip toe around the market edges in dumping dollars. If a global bank of any nation publicly renounced U.S. Dollars stating they were selling them out, the resulting bank runs would ruin the global financial system in a day. Consequently, dollars are off-loaded with cash dollar purchases of hard goods, companies, mines, corporations, timber, land, ships, aircraft, defense armaments, bulk food shipments, stocks, base metals and materials. They will not let the dollar fail. The dollar is relegated to being a tiny weak puppy of gross insignificance; not eliminated.

    What does a dollar failure mean to gold?

    It is our contention that gold is not a commodity but a currency. So when our currency, the U.S. Dollar became sick, gold assumed the currency mantle of premium choice. This is one of many reasons why gold and dollars normally head in opposite directions. When gold began to rally from its old resting place of $250 per ounce, miners, analysts, and various market pundits would equate gold with other commodity metals like zinc, lead, nickel, aluminum, or silver. Now changing colors like a chameleon, money is not green but golden.

    As gold prices rise and this precious metal assumes an aura of security, safety, and a storehouse of wealth, it’s no longer perceived as a commodity and is suddenly real money. In actuality, it has always been real money and to a lesser extent so has silver. Silver is even more confusing as it has a long laundry list of traditional commercial uses in addition to currency coins. Maybe the gold commodity perception relates to silver as a semi-precious metal primarily used for commerce. This is not true any longer as the dollar sinks to new lows draining away precious buying power in a storm of inflation.

    December Gold Weekly Futures for 2010 trading above $920 as of 6-5-06


    Do you suppose the U.S. Dollar will ever be trading at 144% of its 12-06 values?

    Our forecast says the 2010 dollar trades at -25% less than today’s84.00 value.

    Dollars can be produced at white hot speed with massive printing presses. To buy these new dollars you just need paper, ink, printing presses, guards and the will to make it all run. Gold is a different animal. Mining it requires prodigious amounts of men, machines and money, much of it invested on a wing and prayer. Gold is like drilling for oil; lots of expensive failures, dry holes and broken dreams. Real gold is heavy, attractive, lasting, rare, scarce and beloved by generations. Fiat dollars are worth only the confidence that men and women can place in them for today; all fleeting and quite temporary at best.

    If all the money invested and wasted in fruitless gold searches were tallied up, and financially reconciled with today’s above ground supply, the final price would boggle the mind. It would be worth a zillion dollars an ounce. With dollars you get cheap green ink and pictures of dead presidents all riding on paper, good faith and hope. When confidence and hope in our U.S. Dollar is diminished, so is the dollar’s value. Observers in the US and foreign lands watch closely as our Congress shows blatant disregard for the dollar; throwing them around like trash and wasting them by the billions. Many a keen eye can understand they mean nothing and consequently are worth nothing. So now, it is time for something different. We can see why gold is real money. It is a treasure unlike any other. Fiat paper or coin currencies have come and gone for centuries. They all ended the same way being dumped into the dust bin of monetary history. Treasury and Federal Reserve officials clearly understand what happens to their paper game when all confidence is lost. The once proud paper currency turns to toast and gold is the toaster.–Trader Rog


  2. TnAndy

    TnAndy Senior Member Founding Member

    The banksters would like us to believe it's a commodity.....like soy beans or pork bellies.

    A. Thousands of years of recorded history says "it's money"

    B. If you could get WAY down in the vaults of those same banksters, you won't soy beans...you'll find GOLD......because despite their public relations campaigns to convince the public the paper they print at will is "money", THEY also know Gold is Money.
  3. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    Yup.... ever get that feeling that someone doesn't want you to know something?....

    Or that someone doesn't want you to "HAVE" something?.....

    And when you get close to it... how they start fumbling around with their stories, and the reasons for you not to "go through that door" change minute by minute.....

    Aweful lot went on and is going on that makes me feel like all of a sudden there's a greater, drastic more apparent push to "poo poo" the real stuff....

    Watch for the big, desparate, unsophisticated moves and that telltale bead of sweat....

    Oh by the way.... I don't think there is any of the real yellow stuff WAY down in the vault... That's one of the things they don't want you to find out.... :0)

    Go on .... enjoy that juicy steak... and that delicious wine... its real... Trust me....
  4. melbo

    melbo Hunter Gatherer Administrator Founding Member

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