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  1. Mr. Mantis is offline
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    One Ambulance, Eleven Cops...

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    Posted On:
    2/10/2005 11:18pm

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    The rise of hard currency and its effect on the economy

    I've noticed this has become something to think about. The values of hard currency went up quite a bit today. Hard currency includes platinum, gold and silver (also other metals).

    Gold broke $420 today and closed at $418.70 an ounce on the New York Mercantile Exchange.

    Platinum and silver also went up.

    I believe this could have a negative effect on the economy. The dollar is not on a gold standard anymore, and interestingly enough is sometimes considered a hard currency.

    Anyway, I can't grasp all the ramafications of this situation, so if there might be someone with a rudimentary understanding of this stuff, enlightenment would be appriciated.
    Last edited by Mr. Mantis; 2/11/2005 7:51pm at . Reason: Added a crutial 't in the last sentance.
    “We are surrounded by warships and don’t have time to talk. Please pray for us.” — One Somali Pirate.
  2. nasty_totoro is offline

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    Posted On:
    2/11/2005 2:36am


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    i own gold stocks ... have since 98 ...

    its not so much that gold is rising ... but that the USD in general has been falling ...

    the value of gold is irrelevant ... except as a barometer of the USD's health ... and of inflation ...
    totoro-san ... world sushi munching champion ...

  3. punchingdummy is offline

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    Posted On:
    2/11/2005 7:33am

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    Correct. More than anything, it is an indicator of rising interest rates (which can have a negative effect on bond and real estate prices). They are classic inflation hedges. Inflation, btw, is most frequently associated with a heating economy.
  4. nasty_totoro is offline

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    Posted On:
    2/11/2005 9:08am


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    the problem being of course ... that "official" inflation figures exclude volatiles such as energy from the core index ...

    guess which household product has risen the fastest the past year ... it sure aint sugar .. =P

    everyone knows (except for the real estate market) that rates are rising ... they are doing so regardless of the fact that the USD is falling (which is not to say that the USD's fall doesn't have an effect) ... for all purposes and intents the fed is simply taking away the rate cuts of the last few years in view of an improving economy ...

    the more intesting question is whether the fall of the USD (and thus rise of gold) ... heralds a newfound aversion to american assets by foreign investors ... since they hold a very large part of american treasuries and by doing so, finance the deficit ... this is quite relevant ...

    the days when the good ole US greenback was the sole liquid store of value has come and gone with the rise of the euro ... how do i know ??? ... because even drug dealers are now using euros instead of USDs ... =)

    The dollar's decline against the euro shows no sign of ending. Clearly, currency traders have made a long-term judgment about the relative value of the currencies of the Old and New Worlds. That sounds bad enough. But now there are signs that we're losing some of the most devoted fans of the greenback: drug dealers, Russian oligarchs, and black-market traffickers of all kinds.

    http://slate.msn.com/id/2111504/
    Last edited by nasty_totoro; 2/11/2005 9:12am at .
    totoro-san ... world sushi munching champion ...

  5. Mr. Mantis is offline
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    Posted On:
    2/11/2005 11:11am

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    Quote Originally Posted by nasty_totoro

    the more intesting question is whether the fall of the USD (and thus rise of gold) ... heralds a newfound aversion to american assets by foreign investors ... since they hold a very large part of american treasuries and by doing so, finance the deficit ... this is quite relevant ...
    In addition to that, and maybe a cause is the patriot act. The Patriot act affects the way banks do business because all funds have to be tracked and accounted for, which makes international trade with the US more difficult now.

    Just a thought.
    “We are surrounded by warships and don’t have time to talk. Please pray for us.” — One Somali Pirate.
  6. Thaiboxerken is offline
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    Posted On:
    2/11/2005 11:41am

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    Hell yeah! Hell no!
    There are plenty of gold-backed currencies on the internet. I use e-gold, intgold and e-bullion.
    "Those who can make you believe absurdities, can make you commit atrocities." – Voltaire.
  7. Mr. Mantis is offline
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    Posted On:
    2/11/2005 11:47am

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    When buying gold, I thik the Canadian bullion is the best, due to the level of purity.

    Sadly, I own no gold, just a few ounces of silver. Which is nothing.
    “We are surrounded by warships and don’t have time to talk. Please pray for us.” — One Somali Pirate.
  8. Mr. Mantis is offline
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    Posted On:
    2/11/2005 11:49am

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    Hell yeah! Hell no!
    O! An I'm not talking about mining equities. I am talking about bars of these metals.
    “We are surrounded by warships and don’t have time to talk. Please pray for us.” — One Somali Pirate.
  9. patfromlogan is offline
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    Posted On:
    2/11/2005 12:21pm

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    An economist tried to explain to me how the balance of payments, the giant national debt and the raise in interest rates to keep investors buying T-bills to pay off he national debt, the decline of value in USD will all lead to the coming US real estate crash. Any thoughts?
    "Preparing mentally, the most important thing is, if you aren't doing it for the love of it, then don't do it." - Benny Urquidez
  10. nasty_totoro is offline

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    Posted On:
    2/11/2005 5:20pm


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    Hell yeah! Hell no!
    rising interest will cool off the real estate market sooner or later ... the problem with bubbles is that you can never say when they will pop ...

    national debt is like anything else ... the more you borrow ... ie larger deficits ... the less your credit is worth ... thus neccessitating a higher interest rate to keep people buying your debt ...

    the boom and bubble in china is party because dem yellow bellies are buying yankee treasuries like crazy in order to keep the USD from falling against the yuan ...
    totoro-san ... world sushi munching champion ...

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