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i posted this article here a few years ago,

written by alan greenspan , 41 years ago in 1967



a few sentences from that article................


The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.


But the fact is that there are now more claims outstanding than real assets.


Deficit spending is simply a scheme for the "hidden" confiscation of wealth.


Gold stands in the way of this insidious process.


It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.



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In reply to: datum on Sunday 28/09/08 01:34am

This is an amazing thing. I had read about this a while ago. That Greenspan did the exact opposite of what was in his thesis for his PHD is extraordinary especially as it was correct back in the sixties and still correct.

I hope everyone has loaded up on gold and silver as this train is starting to pull out of the station. This time I think it will be the bullet train not just an express. An amazing event occurred in Washington last night. The congress for the first time in as long as I can remember did something sensible. They blocked this bill. The US must stop spending money it does not have, and it must take its medicine for years of debt accumulation. Bugger me if it wasn't the republicans who voted it down. Who would have thought. The world should go back to a gold standard to protect the future of the ecomomies of the world. A gold rouble seems like a good start as a standard since Russia has the money or a gold (whatever the chinese currencies is called).

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In reply to: rickhb on Tuesday 30/09/08 09:10am

Contents of the Constitution re Money. very interesting !!


Article 1 Section 8 Clause 5. The Congress shall have Power to Coin Money, Regulate the Value thereof, and of Foreign Coin, and Fix the Standard of Weights and Measures.


Article 1 Section 10 Clause 1. No State shall Coin Money, Emit Bills of Credit and Make Any Thing but Gold or Silver Coin a Tender in Payment of Debt.


Senator Ron Paul has been preaching this for years on deaf ears.





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In reply to: rickhb on Tuesday 30/09/08 09:10am

the republicans are the supposed free marketeers BUT more importantly the congress is up for election too.Given the USA citizens see this as a wall st bail out those up for re-election need to be seen doing the "right thing" by the voters (its democracy) even if its not in the big picture.

So its local politics and getting elected versus the very big picture.

I do think the big picture will win later this week having seen the damage that was done overnight. I am an optimist though... http://www.sharescene.com/html/emoticons/unsure.gif

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In reply to: balance on Tuesday 30/09/08 09:52am

I believe that a third is up for election. I agree with your thoughts re " the right thing by the voters " but surely isnt the proposed "'bailout " , up to about no 5 or 6, like giving an alcoholic another bottle of scotch instead of a dryout. IMHO


BTW the only stock I hold is ASX listed...GOLD. http://www.sharescene.com/html/emoticons/biggrin.gif

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In reply to: cooma on Tuesday 30/09/08 10:04am

BTW the only stock I hold is ASX listed...GOLD.

Hi cooma,


I agree that GOLD looks good. The price of GOLD.AX depends as much on AUS$/US$ currency movements as on the US$ price of gold.


If the US$ tanks and if the markets fall by a further 25% as some people are predicting then US$2000 gold is probably not out of the question, giving a potential best case upside of over 100% gain. If everything stabilises and gold goes down then there is still little scope for the US$ to strengthen and so the potential worst case downside of being in GOLD.AX atm is maybe 20% loss.


Even though the US$ is strengthening again atm, the next few days could be quite interesting for GOLD. All investing is a gamble. The odds of 5 to 1 (or maybe 10 to 1) look good as the probability of a market collapse must now be much better than 1 in 5.




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in todays Criterion Column


Gold Stocks


AS is always the case when capitalism ponders its own mortality, gold has been touted as the one-stop insurance against both inflation and asset deflation.


Other factors - such as the level of demand from Indian brides during the upcoming wedding season - take a back seat.


As investors have been painfully aware, gold's safe-haven virtues often have been lost in translation when it comes to the listed gold sector. Production glitches, soaring costs and hedging snafus have produced a casualty list longer than that from the Somme in 1916.


With gold at around $US750 an ounce and the Australian dollar slinking below the US80c level, macro conditions shouldn't be more amenable.


The major local producers Newcrest (ASX: NMC) and Lihir Gold (ASX: LGL) have shed their unfavourable hedges, while there's a raft of potential projects (such as AngloGold Ashanti's Tropicana deposit near Kalgoorlie), which should see production.


Unlike dozens of nickel, zinc and copper projects threatened by the pullback in base-metal prices, the gold sector's aura should dazzle for some time to come.


That's the theory anyway, but it's a bit like the errant husband promising, ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“It will be different from now on, darlingÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ.


For those who subscribe to the financial Armageddon line, the obvious starting point is the extant producers, and Newcrest and Lihir are by far the biggest.


There's no gold heist on offer: Newcrest and Lihir don't exactly look cheap on forward price-earnings ratio of 19 times and 14 times, respectively.


As Deutsche's gold bugs note, these are consistent with valuations across the US gold sector. These producers are also below the median cash cost average of $US420 per ounce and look relatively cheap in terms of per-dollar of reserves.


The firm says: ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Overall, both Newcrest and Lihir offer good exposure to the gold sector at a time when our commodities team sees gold as being negatively correlated to the risk of equity contagion spreading to the commodities market.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ


On a cautionary note, Newcrest is entering a period of flat production and will rely on its Telfer mine and its annual 700,000oz output.


Lihir's fortunes depend on its mainstay PNG mine - also producing 700,000oz a year - remaining free of the earthquakes and IR problems that afflicted the site in the past.


Lihir also needs to prove it can commission its acquired Ballarat mine, an expected 33,000oz producer, by December. The same applies to Bonikro, the Ivory Coast mine that was bought through its Equigold acquisition.


In Criterion's view, Newcrest and Lihir are HOLDS. The flipside side of the gold safe-haven theory is that the sector loses favour when (if?) sanity returns to global markets


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