August 05, 2011 – On the London OTC, where the real suppliers and consumers meet to conduct real trade in real time, the price of gold bullion has been relentless in its recent surge. But what’s going on stateside?
Not that the futures trade is collapsing, but they instantly dropped some $30 off the London PM fix. There is but one explanation: American investors are going into full risk-off mode, cashing in everything they hold for dollars.
Stop. Take a deep breath. Count to ten. Relax.
OK, then. Why the panic? Yes, equities are looking pretty ugly right now. If you don’t have decades to hold, it might be wise to move some assets. But cash is the last thing on Earth you need. A mountain of greenbacks today will be tomorrow’s molehill. Severe risk-off says go where the purchasing power is least likely to deteriorate, and throughout history that has meant gold.
The dollar, my friends, is dying. It cannot be resurrected. And the country is progressing through the five stages of grief.
The first was denial and isolation, and we learned that pin-the-tail-on-the-Chinese was not going to get us anywhere. Next came anger, and boy did we get that one right. We blamed anyone and everyone but us for the mess we were in.
Then we entered the bargaining stage, when we tried to negotiate life back into the greenback. That reached its climax with The Deal, and we have now come to depression.
Depression is good at just one thing: blinding us to alternatives. It is the towering wall that stands between us and the final stage, acceptance. Funny thing is, once we Americans reach that stage we become a force to be reckoned with.
Faith in the dollar is misplaced, sustained only by euphoric recall. Let it go peacefully, it’s only dragging us down. Pay your last respects, roll up your sleeves, and get to work building new tomorrow.
If you have anchored our wealth to gold bullion, you have all you need to rise to the challenge.
