"The global economic recovery is not looking good. The G-8 meeting this weekend saw divisions that could lead [as the I.M.F. put it] to losses of trillions of dollars and millions of jobs. Now it is reported that Mr. Bernanke and his close allies at the board in Washington are worried by signs that the U.S. recovery is running out of steam. The E.C.R.I. leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.
Add to this the evidence that money velocity is slowing [M3 has contracted at an annual rate of 7.6% over the last three months] and we may well face a huge bout of money printing again? If that is the case, confidence in currencies [not just the $] will lurch lower again.Mr Levine of HSBC, in a recent gold conference pointed out that some top U.S. Asset Managers were fearful of the possibility of government confiscation of gold. Has the G-8 taken steps towards the day when governments would their citizen's gold in their vaults again?
Where and why do top U.S. Asset Managers want gold for?
First, why gold, you may ask? Bottom line, Gold still represents the ultimate form of payment, it is always accepted. In a world drowning in debt, gold's debt-free nature appeals even more strongly and will particularly to governments whose currencies are failing to retain confidence.
Second, Mr. Levine explained, that on being told that the bank's U.S. vaults had sufficient space available for their gold he was informed that they did not want their gold stored in the U.S.A. but preferably in Europe because they feared that at some stage the U.S. Administration might follow the path set by Franklin D. Roosevelt in 1933 and confiscate all U.S. gold holdings as part of the country's strategy in dealing with the nation's economic problems. Are their fears well grounded?
Surely this view is a bit extreme? The job of Asset Managers is to manage asset for the greatest return and with prudence. They have to see what may lie ahead and guard against dangers that may threaten the assets under their wings.
Who are these Asset Managers?
You may feel that they may be going too far? Who are these men? For a start, they are highly qualified capable men who understand the ins and outs of investment management. They were carefully chosen for their capabilities and good investment management sense. They have built up a body of knowledge that places them on top of the investment world. Such knowledge usually encompasses monetary matters of the sort that would include gold. As such we would suggest their opinions do have value. We should treat these opinions with respect?..."
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