- A Lower Dollar Plus Inflation = 1979 to 1980.
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- It is time for those in our community to recognize that
not only is gold in a bull market, but the forces that created extremes
in price are gathering once again. The period 1979 to 1980 was the combination
of a weak dollar, plus an oil-supply problem, plus two outrageously courageous
and committed bulls by the names of Herbert and Bunker Hunt.
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- Right now we have:
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- 1. A weak dollar with systemic problems, incurable as
defined by what today represents politically.
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- 2. A real oil crisis greater than that of the late-70s.
The difference this time is that it is a firm price crisis not about to
collapse, but rather offering the potential of $40 this year and $60 next.
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- 3. The possibility of terrorism on US soil, therefore
the battlefield is everywhere.
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- 4. Russia moving back towards control by hard-line veterans
of the intelligence service. But this time they're businessmen with a business
agenda, not a political agenda. Russia is a major player in the long-term,
oil-price crisis.
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- 5. Monetary inflation is monetary hyperinflation as
the extremely dangerous, non-traditional methods inspired by the Fed --
namely using Japan to keep the U.S. system (therefore the world system)
liquefied -- has no effective control, and is like an injection of adrenaline
constantly and directly into the heart of the US economy, which has moved
to speculation now on commodities, and is temporarily finished with equities.
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- 6. Today Herbert and Bunker Hunt have been replaced,
not in silver but rather in gold, by Dr. No and Chung Phat, which you know
as Asian/Islamic demand.
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- > Conclusion: The force of stag-hyper-inflation is
percolating within the > economy. Should an act of terrorism occur,
I doubt the U.S. dollar could survive the experience as a reserve currency.
Good intelligence has revealed (in Pakistan, during the trial of one of
the murders of Daniel Pearl) that the primary focus of al Qaeda was economic
-- the US dollar. Should this be the unseen strategy in force, then the
dollar is flanked and the USA's guard is down. This is understood in Asia,
and is a hidden cause behind continuing dollar weakness that will soak
up even yen the Japanese can borrow, until the Japanese in a practical
sense run out of the ability to print more yen without sinking the yen
along with the dollar, but rather in the inverse.
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- There has never been a more dangerous time for US dollar
holders, US Treasury instruments and US equities. There has never been
a time when gold held more insurance value for investors. There has never
been a time when it was more inappropriate to use margin in gold, due to
potential volatility. There has never been a time when gold advisors to
a community on gold shares have ever been so totally wrong as they have
been over the last 30 days. There isn't a gold advisor out there that appears
to truly understand the economic and geopolitical stirrings driving the
price of gold against their recommendations.
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- There has been a time in gold however, when the same
international investment faces now materializing in gold appeared before.
That was when gold was at $400 and took off for $887.50, jumping $100 and
$150 per day to reach the price that then balanced the balance sheet
of the USA for one day. It could happen again, much sooner than anyone
expects. Happening again, this time, would result in a price of gold at
order of magnitude of 2, versus the 1980 high.
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