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## # gold, silver bulls read this ###, page-2

  1. 749 Posts.
    re: gold, silver bulls: for siamese Thanks for that, SP.

    I have read a number of similar views elsewhere (although few citing long term price targets for gold and silver quite as high as these). I even broadly agree with the author's logic - except on one major front: I think all such commentators either underestimate or ignore the enormous power that vested interests have in preserving the status quo.

    Years ago when studying economics at Uni, I was somewhat perturbed, after wading through semesters of classic economic theory and modelling, to bump up against a paper on "Govt. Policy and Economic Theory." This gem of a course essentially convinced me that because of the brevity of the average political term (low accountability), governments will do whatever is necessary to remain in power, whether it is good for the economy or not. They will spend when they should save; they will cut taxes when they should increase them; they will print money to pay debts even though the reward is spiralling inflation. And they will "do down" any naysayers they encounter along the way. With their enormous leverage through the reserve/federal banking system, big corporations, favours given and repaid, those in power (not just politicians) can prop up utterly decrepit institutions long beyond their demolition date.

    What does all this mean? Simply that in my view the powers-that-be (like the US govt and those reliant upon its trade/favours) will not simply let the house of cards fall because to do so is political suicide. They will bring their enormous leverage to bear so that even if in the end the house does come down under a crippling weight of debt, it does so in a reasonably orderly fashion. And I must say - even though I think Greenspan and the US treasury have an enormous amount to answer for - I find the "orderly shoring up" prospect more appealing than the apocalyptic scenarios predicted by writers such as those you have quoted.

    In a financial meltdown of the proportions described in the article, I think it is naive to believe that gold and silver investors will somehow remain immune - and this comes from someone who has backed commodities strongly. I just hope for everyone's sake that the disaster of US debt levels generates concerned action rather than panic and that there is a drift to the surety of commodites rather than a red-eyed stampede.

    For who would want to be rich if the price to pay is complete social breakdown? That is why I cannot gleefully embrace the apocalypse described by such writers.

    I do think it is prudent though to back commodities - and gold in particular - since the seismic shift in global economic power from the US to China is unstoppable and will put increasing downward pressure on the US dollar and upward pressure on precious metals for years to come.

    Just my views

    R/Gupper
 
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