Well, while element Au is on a tear, everybody seems to have neglected Au's brother, Ag. Yes, Silver seems to have fallen behind quite a bit in this latest precious metals bull run.
Why Silver? Well, Silver has much more industrial applications than Gold. For example, your IPhone has it. Moreover, Ag is often found and mined in gold mines or other industrial metal's mines. As we hit "Peak Gold", we might hit "Peak Silver" as well due to the collapse in Gold mining.
So, what's going to replace silver? We must be able to find some Silver substitute, right?
Sorry, silver is unique with its anti-bacterial properties and it's not easy to find another metal to serve this function.
I still remember back in Vancouver, circa 2000, sipping my hot cup of coffee, sitting at the top floor, at the corner store of Chapters on Robson street Downtown, I was opened to the "Mystery of Capital" by Hernando de Soto. That feeling was "shocking" because he makes so much sense! I instantly KNEW that it was one of those important work that I was holding in my hand and was forever grateful for the read in that comfy sofa in that laid back afternoon. I can't wait to see him sitting next to Joe Stiglitz, another of my favorite thinkers living today, who happens to be on my "fan" list on fb.
"Fundamentally, you don't know who owns what, where and in which banks and that's a property problem. " Hernando de Soto
Well, benefits with the Australian dollar can just go on and on and here is just some of they key ones:
1) Resource backed currency
2) Unlike the Loonies/Canadian Dollar, it's not "stuck" with the USD due to the vast bilateral trade between the two neighbors
3) Gold price making records day after day
4) Interest rate among the highest and rising with the AUD
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNQej16azBKQ&pos=4
5) Chinese recovery and immense need for global stimulatory infrastructure building
6) Like I said, in the "Yen Stability" piece, Yen is going be stable with USD from now on, RMB is not freely traded and they are all bound to USD due to the vast bilateral trading relationships anyways.
7) Good place to be in, all in all, to hedge against another potential leg down if you are in the U.S.:
http://www.businessinsider.com/meredith-whitney-i-havent-been-this-bearish-in-a-year-2009
What a dramatic statement. USD will probably depreciate quite significantly as per usual over the course of many years (as I explained point #3 in "why hyperinflation with USD is probably unrealistic:"http://globalmacrosport.blogspot.com/2009/10/why-hyperinflation-with-usd-is-probably.html), due to the lack of volume and competitiveness of the U.S. exports. But to say it will be "utterly destroyed" and that the world is going to adopt a global currency is completely unnecessary.
Imagine. If USD is utterly destroyed, who would be "holding the bag"? EVERYBODY (China, Japan, Middle East, Russia, Rest of Asia, Rest of the World)! No way the international society would, under any circumstances, agree to that, not in a million year's time - which is, approximately, the time guesstimated that the U.S. of A can pay off all of their debts.
There is a grain of truth to the point made by Mr. Vickers, however, concerning the "game" of overly indebted and overly indulgent American society is "unsustainable". Hence the whole rhetoric of U.S. will be printing money like Zimbabwe and that the international society will follow suit to maintain the trade competitiveness and that everybody would be hoarding Gold instead of paper currencies.
Will U.S. just default on their debts or inflate like Zimbabwe to shrink the real value of their debts? Not unless America want to be turned into a "Third World" country paying 15-20% interest rates on in Yen/Euro denominated bond from now on. Or worse yet, no credit/imports at all (as nobody would willing to trade/entrust their precious resources/credit for a worthless, Zimbabwean like currency/economy.)
That being said, Gold "rush" will probably still be played out and it's not a terrible idea to own some gold for your fund. 10% at the most?
Hey hey hey, seems like we are witnessing the most concerted "coincidence" in M3 collapse of the modern economic history thanks to our intertwined global banking system, save maybe, the mainland China region.
First hand source: as revealed by a group chairman of one of the global mega banks with asset in excess of 2 trillions dollars, the LATEST leverage ratio has dropped to a scarily low 0.8:1 for "prudent, well capitalized banks". Yes, even less than 100% reserve banking's 1:1 ratio. The source also revealed that as far as he knows,
other less conservative banks, for instance, another smaller, but still global top 20 bank, has a ratio of 1.7:1.
These ratios are a far cry from the 10:1, 30:1, or even 50:1 ratios we have seen before the global credit crunch.
Hold on to your coat for more chilly weather in the CREDIT NUCLEAR WINTER.
The Great Incoming Global M3 Contraction for the 2010s
Reality seems to match up with my "rain theory" as postulated in my previous post of "Blue Gold":
"There are signs that the human world is running out of fresh water. I say "human world" because global warming probably evaporates even more water into the air from the seas, it's just that they are not falling back as rains onto the right placesat sufficient levels to meet human needs anymore.You may ask why? Nobody really knows but my best guess is that if the air is too hot/warm, the water precipitation will not be able to "condense" itself at the usual regions, they need to be in contact with cold air to condense. " (Hahah, another proof that I am a true scientist at heart and no, I didn't peek the NCAR report before I wrote this) http://globalmacrosport.blogspot.com/2009/10/blue-gold.html
NCAR Scientist Aiguo Dai:
"The only rivers that could gain strength from climate change were those that flow north of the 50th parallel. "Global warming raises temperature and precipitation there and it may not be a bad thing," said Dai. "However, these are sparsely populated regions." http://www.guardian.co.uk/environment/2009/apr/22/drought-environment-waterways
What are the implication of this? India and China is going to be severely affected as they need water in their agriculture for their immense populations. Coastal regions will be able to leverage desalination plants to sustain water usage to a certain extent. Rich regions with long coastlines like Japan can definitely do this, but it would be difficult for the developing, low latitude nations to pull this off.
Investment implication: Water technologies, especially any low-cost desalination plants technology and water recycling technologies (toilet to tap).
Geopolitical implications: India and China's tension over the dwindling glacier H2O as they are both "lacking Blue Gold". Russia and China's cooperation as Russia suddenly have more arable farmland and underground water from increasing rains due to climate change then its population needed while China has the wherewithal of the "world's factory" which act as a major "customer" to Russia's resources and their "special relationship" with Nuclear North Korea as flaunted in their highly visible visit to North Korea last month (http://news.bbc.co.uk/2/hi/8289170.stm).
BRIC geopolitics and their implication to Investing Pt.1
