G-20 Meeting

Excerpts from G20: US$ Funeral, US Failed Debtor
by Jim Willie

"The global forces toward deep change have never been greater. Thus a turning point. Creditors have the option of simply refusing to purchase any more USTreasury Bond debt. To a great extent, that is what is occurring right now. The US responded last week, as its Federal Reserve announced $1050 billion in monetized USTreasury Bond and USAgency Mortgage Bond purchases. At least $1 trillion will be printed for monetized bond purpose each and every quarter from here onward, as is my forecast. The USGovt will destroy the credibility of the USDollar, but at least offer lifeblood to the crippled USEconomy, at the cost of upcoming price inflation. The United Kingdom has no such privilege. They suffered an important Gilt Bond failed auction last week, one which brought great embarrassment upon them."

Increasing inflation leads to decreasing value of the dollar and increasing value of gold.

"Last week, China was highlighted at turning the global USDollar tables. They have begun to displace the US$ within their domestic banking system, in favor of the Chinese yuan. Actually, they will soon be issuing Chinese Govt debt securities denominated in yuan currency. Doing so involves wave after wave of conversion of USTBond securities into cash, then conversion further in to Yuan Debt securities, which still need a new name. How about Dragon Bonds for a name??? The Chinese will then wear and presumably use the great currency boot, since all economies that wish to purchase Chinese products must purchase Chinese Govt bonds!!!

Creditor nations demand a more solid reliable global reserve currency, or currencies. They demand some hard asset component to the new reserve currency to be installed, like one backed by a basket that includes at least gold and crude oil. This would be sufficient to lift the gold price substantially, far above its current range, and far higher than a mere $1000 per ounce. The Chinese are the clear spearhead, uninhibited by US threats. The crowning blow against the USDollar supremacy will come when Persian Gulf nations install a new hard asset currency. At that time, one quarter of the world will pay for crude oil in a hard asset currency with a gold component. That is a spike in the heart for the USDollar founded in a unipolar world. The G20 Meeting intends to make the statement that the unipolar world is dead on the financial stage. That is their agenda. The US agenda is to preserve the system through reform."

Increased demand in gold leads to increased price.

"Foreign creditors harbor growing gold accounts and wish for price structures to properly reflect their value."

This is a huge statement! As Asians and Arabs continue to accumulate gold, they are growing increasingly annoyed with the US stranglehold on gold's price. At some point, the Western banking establishment will have to let the price of gold float. That is the day gold will skyrocket into the thousands of dollars per ounce.

"The gold price has been quiet for a month. An old adage of technical chart analysis claims the longer a price consolidates, the greater will be its move when it breaks out of its defined (if not managed) range. The gold price is forming the Right Side Handle to a reversal pattern shaped as a Cup & Handle. Strength is being built for the upward assault. Its top is 980-1000, and its bottom is 710-725. Its target is in the 1250-1300 range, stated before and still in effect as a target. The entire G20 Meeting is negative for the USDollar and positive for gold."

Short term, don't panic if gold drops to $700. Long term, I'd be shocked if we didn't see gold at $1300 this fall.

I also heard through the gold dealer grapevine that a former President of the World Bank is purchasing gold in his personal account.

Now that's what I call a bullish signal, so don't let this current dip in price get you down.


Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 24 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com.