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Gold Industry Officials Warn Of Depression,
Expect Major Economies To Boost Reserves
Bailout packages will likely lead to mass inflation,
dollar crash
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Senior Officials within the Gold Industry have warned that an
economic depression followed by a dollar crash is a real possibility,
as they announced moves by major economies to raise their central
banks' gold reserve holdings.
Marcus Grubb, managing-director of investment
research and marketing at the World
Gold Council, has warned that the strength of the
U.S. dollar is likely to be short-lived and has
said that major developing economies such as India
and China are looking toward diminishing their dollar holdings.
"What we are seeing is a reassessment of
the risk associated with the high exposure to the dollar. Obviously
at the moment you see the dollar appreciating 25 to 30 percent
against most currencies around the world, but a lot of that
is obviously driven by liquidity." Grubb said.
"That is a temporary phenomenon, if you look
at the size of the bailout packages in North America the fact
that the U.S. economy may well enter a depression ... there
is a real fear of that," he said. "In that scenario
I wonder what will happen to the U.S. dollar."
Grubb also says he expects to see moves by middle
eastern countries to shore up their economies by buying gold.
"It would certainly be (a concern) to all
regions pegged on the dollar ... because they have run surpluses,
and the Western countries have been in deficits, they have huge
accumulation of dollar reserves," Grubb said.
"In that scenario you could see an increased demand for
gold then."
(Article continues below)
Grubb's analysis dovetails with that of other
prominent economists and investors such as such as Eric
Sprott, Johann
Santer, Jim
Rogers, Robin
Griffiths, Edward
Hands and Jurg
Kiener to name but a few, who are now predicting
that global central banks' insistence on printing their way
out of economic turmoil is setting the stage for a hyperinflationary
holocaust, a knock-on effect of which will be gold's acceleration
towards $2,000, as demand for precious metals outstrips supply.
This past weekend, legendary investor Warren
Buffett joined the chorus as he warned that the
multibillion-dollar bailouts handed out by the US Government
will bring on an “onslaught of inflation".
“Economic medicine that was previously meted
out by the cupful has recently been dispensed by the barrel,”
Mr Buffett said. “These once unthinkable dosages will
almost certainly bring on unwelcome after-effects. Their precise
nature is anyone's guess, though one likely consequence is an
onslaught of inflation.”
Meanwhile other prominent economists such as former
chief credit officer at Fannie Mae Edward
J. Pinto, philanthropist George Soros, the IMF’s
top economist Olivier
Blanchard, and Professor
Peter Morici, a former chief economist at the U.S.
International Trade Commission, have all concluded that the
U.S. is entering a full scale depression.
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