Why is the price of gold so important? Well, it is rooted in both fact and fear. The fact is that the leader of the free world, the United States, has more debt owned abroad than it has liquidity, either in currency or gold here at home. Therefore if the U.S. government defaults on its debt, people will think twice before lending it any more money. This suggests that U.S. debt will be defaulted on via inflation and will subsequently destroy the value of the U.S. dollar.
Another point of interest involves the currency wars that seem to be continuing between the U.S. dollar, Japanese yen, Chinese yuan and the euro. Taking the USD-JPY, we see it has already retraced more than 50 percent of the attempts to stabilize currency rates by the Bank of Japan.
Many are now accepting gold and requesting it more so than the dollar in some places. Recently in the plush Emirates Palace Hotel in Abu Dhabi in the United Arab Emirates, what has been called “the ultimate ATM machine” was revealed in its lobby. Instead of cash, it dispenses gold in the form of 1-, 5- and 10-gram bars, as well as gold coins, at a price that the machine updates regularly.
Gold has always been an asset, but unlike days of past, one can put it in their bank account and transfer it as well as buy and sell it electronically. The fact that it can be transferred electronically today makes it easier to use as currency than ever before.
In all honesty I feel sorry for people who do not understand gold. It is more than something you wear on your wrist or teeth, but it seems a lot of black folks don’t understand this and completely miss the point. –torrance stephens, ph.d.
.
