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On Sun, Mar 30, 2008 at 03:34:01PM -0400, Rich wrote:
> Your expectations are realistic, Cedric.  Gold will likely continue to 
> increase.  If at some point a nation with huge stores of gold should dump a 
> large amount of gold on the market and drive down the price, that nation 
> could corner the market on gold.

That's the problem with gold. You have two choices really, you either
put government in charge of the economy (fiat currencies) or you put
gold miners in charge. Heck, Spain and it's trading partners underwent
severe inflation while they were busy getting all the gold they could in
the New World. Now days one nation dumping gold on the market would
severely distort the economy of completely unrelated nations who's
currency was based on gold.

That's the beauty of the current floating exchange rate system too.
Currency is completely and transparently related, on the international
level, to how much stuff, be it real goods or securities, a nation is
exporting. The US can print money all they want, but from the
perspective of other countries the problem fixes itself, either with a
devalued currency, or, by having China buy you... Yet, the US can't
screw up the economy of any country that isn't based on US dollars by
printing more dollars.

A decent tradeoff I think.

- -- 
peter[:-1]@petertodd.org http://petertodd.org
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