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Is $6,300 fair value for gold?
Ambrose Evans-Pritchard
London
Telegraph
Thursday, Nov 19th, 2009
The last parabolic spike in gold took off when
central banks joined the fray in the 1970s, hoarding bullion
with the same enthusiasm as gold bugs.
Dylan Grice from Société Générale
says it smells much the same today.
He sees an eery similarity between the decision of India’s
central bank to buy half the IMF’s entire sale of gold,
and the move by France’s central bank to start converting
dollars into gold in 1965 — which was, of course, the
start of the slippery slope leading to the collapse of Bretton
Woods and the closure of the US gold window under Nixon.
In the gold mania that followed, the price rose to levels that
matched the US dollar monetary base (it reached 140pc at the
peak). If that were to occur today after Ben Bernanke’s
go at the printing press, gold would have to reach $6,300 an
ounce. The US owns 263m ounces of gold while the Fed’s
monetary base is $1.7 trillion. Simple equation.
Gold has had its ups and downs, of course. It is trading today
at roughly the same real price as in the mid-13th Century —
when an ounce bought a light suit of chain mail.
Full
article here
"When the people find they can vote themselves
money, that will herald the end of the republic."
- Fall Of The Republic - Buy
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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