Gold's push above $930 triggered chart signals to buy, according to Marty McNeill, of R.F. Lafferty Inc. in New York. “It's a technical move,” McNeill said. “In the short term, gold is well-bid above $930 or so.” It obviously pays to own gold and
silver right now (silver, which moved up 3% to $18.52 Friday is also showing strong technical momentum).
Speaking of The Wages of Gold
Recently Bill Bonner who writes The Daily Reckoning opined about "the miracle" that the US government created over 37 years ago when they presented the citizenry with fiat paper currency backed by nothing but the "good faith and credit of the US of A". I like the way Bill explained it:
"The miracle that fundamentally altered the world monetary system happened on August 15, 1971, when Richard Nixon “closed the gold window,” at the U.S. Treasury. Before then, every nation’s currency was anchored to gold.
"Governments settled their imbalances in yellow metal; since each unit of paper currency represented an option on the treasury’s gold, it forced officials to be wary of issuing too many. But after August, 1971, the world’s monetary system upped anchor and sailed with the tide. Now, it all floats on a sea of paper money – and no one knows what’s beneath the dark ocean surface.
"The Chinese merchant who sold widgets and geegaws to spendthrift Americans could not use dollars to pay his wages. He needed local currency. So he traded his dollars for yuan. And where did the Central Bank of China get enough yuan to buy up trillions of dollars? It had to create them. All over the planet, as the world’s stock of dollars rose...so did its inventories of local currencies. And then, what could it do with its dollars?
"Before 1971, it would have presented them to the U.S. Treasury and received one ounce of gold for every 41 paper dollars. In order to protect the nation’s gold, central bankers would have taken away the punch bowl and turned out the lights. Rates would have gone up; foreigners would have been encouraged to hold dollars (rather than exchange them for gold); Americans would have been discouraged from spending dollars – effectively stifling U.S. consumer spending and bringing the current account back into balance.
"Then, in 2001, the U.S. financial authorities, led by Alan Greenspan, thought they faced a crisis. They panicked – giving Americans even more credit rope. With nothing to stop it, the supply of cash and credit rose at an even faster rate. And thus it was that Americans wrapped their good fortune around their necks like a noose. Instead of practicing the virtues that had made them rich – saving money, building new factories and learning new skills – they borrowed even more heavily than before.
"And now their houses are being foreclosed and their bills are coming due.
