how would the gold cover clause affect gold?" - si

  1. dub
    33,892 Posts.
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    Monday, 01/13
    "How would the Gold Cover Clause Affect Gold?"
    A: Greenspan has noted that the best year for the equities markets in the 30's was the year after gold was revalued. There is a real potential of a modified, modernized Federal Reserve Gold Certificate Ratio for Monetary Aggregates (AKA the Gold Cover Clause) may well occur. If this approach was adopted, I believe it would be a powerful US dollar-positive act. It would affect gold in the following ways:

    A depreciation of the gold price from that point forward would not be in the best interest of an expanding economy. It is reasonable to assume that the Central Bank interest in leasing gold and/or selling gold would logically be reduced if not eliminated.

    Gold would still be influenced by the 5 Elements (The Golden Keys), but would be apt to find a floor level in bear phases higher than before.

    Should the 5 Elements go positive for a bull phase in gold, then it is reasonable to assume the circumstances would not be too much different from the present.

    However it is my opinion that the probabilities support gold in a range of $50 above and $50 below the point at which Gold Cover Clause occurred for most of the time. It is unlikely that the mechanism would occur before June of 2004 when it might be seen as a tool with which to influence the economy, assuming the tax cuts fail then to significantly influence investment decision by businesses.



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