Soaring Gold and a Sinking Dollar Signal Trouble Ahead

October 18, 2010 03:59

The sobering truth, however, is that history provides very few examples where dramatically rising gold prices do not point to unnerving instability or disaster.

By Claude Sandroff at American Thinker


Once the housing bubble burst, even more violently than the dot-coms, there was little left to inflate. The Fed decided to think outside the box, and through quantitative easing, it became the buyer of last resort of treasury bonds and toxic mortgage debt. In so doing, The Federal Reserve has managed to achieve the perverse distinction of throwing fuel on a fire that it itself ignited.

Since Bernanke tipped his inflating hand in Jackson Hole in August, the dollar has fallen over 8% against the broad basket of currencies constituting the dollar index. Both the Canadian and Australian dollars are effectively at parity with the U.S. dollar for the first time in history, the Swiss franc is trading at an all-time high against the dollar, the Singapore dollar has reached a level versus the greenback not seen since 1982, and the Japanese yen strengthens almost every day and sits at a fifteen-year high.

So cash is rushing into gold as gold fulfills its historic role as inflation hedge and alternate currency in a world where signs are pointing to the dollar relinquishing its hundred-year reign as the global reserve currency.

We are on the precipice of a currency crisis, a completely man-made catastrophe. The men who orchestrated it first created a central bank in 1913 that eventually took us off the gold standard and devalued the purchasing power of our currency by 90%. Later, others in the 1930s and 1960s erected a viral, insatiable welfare state and attempted to feed it and keep it at bay with high taxes and waves of financial, stock, and real estate bubbles. Then we elected Obama, who decided to go down in history as the great destroyer by unleashing several trillion-dollar bubbles at once. We know the names of all of his co-conspirators and hope to punish them severely in a few weeks.


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