Gold vs. Euro Trash
Gold's sudden plunge doesn't change the outlook for the Dollar, nor for the Euro...
HOW ABOUT THAT Gold Market, eh?
Nature's currency, gold fell over $27 per ounce in New York
trading on Thursday and is now back under $800 by a good margin. What
gives?
It's worth underscoring the fundamental structural change in the
currency markets. The US Dollar has fallen...and it cannot get back up.
There will be rallies. But even if the Dollar rallies against the Euro,
so what?
The Euro is also garbage. It's simply another currency not
backed by anything tangible. It's risen by virtue of the fact that it
is not the US Dollar. But it too, is simply an un-backed paper
liability.
And it's not even backed by a real country!
The Euro is backed by 12 member nations whose various economic
fortunes may one day force them to abandon the common currency in order
to set interest rates that are more appropriate than those set in
Brussels. Europe has a North-South divide.
But back to Gold Prices.
In a world of paper money relativity, gold is a physical absolute. That
is why people have been treating it as money for thousands of years.
That alone makes it compelling. But as we've said many times here at The Daily Reckoning, the bear market in the US Dollar is a terminal bear market.
The US government will either have to greatly devalue the
currency to pay off its debts, or it will default on those debts.
Neither is good for confidence in the currency. In the meantime, things
priced in Dollars (meaning commodities) will continue to go up as the
supply of Dollars increases faster than the supply of tangible goods.