Friday, July 4, 2008

Future History - an Oxymoron? Eurogold

Past/Present Events

The Euro

The Pros:-

  • The Euro is 10 years old and there are plenty of reasons to celebrate it birthday.
  • Its launch enabled the concepts of some of the originating founders of the Treaty of Rome to be realized.
  • It also brings the day of a Federal State of Europe that much closer and binds the individual member countries into a tighter Union.
  • The common currency and the economic policies which accompany it, means that the major reason for wars in Europe – economic power – becomes less likely.
  • As recent currency movements, particularly in the US dollar, show the world will seek a strong currency to be used as a Reserve Currency. It is quite
    unusual that a currency of such recent vintage could now be considered by many to be the alternative to the US$

    The Cons:-

  • A common interest rate structure for different countries and economies is not always a good thing.
  • Ireland for much of its boom years did not need a low interest rate environment.
  • It can be argued that low interest rates imposed on this country caused the absurd overvaluation of the built environment – land, houses and offices and as a result the Stock Market particularly the banks, would not have reached the extremes they did.
  • It can also be argued that if our own Central Bank had the power to influence domestic rates we would not have arrived at the situation that the country now faces and that the expenditure plans of a spendthrift government might have been better controlled.
  • Europe has had many of the detrimental traits of the USA in expanding money supply and in the process created the inflationary environment which all European countries face, along with most of the rest of the world.
  • As mentioned above the day of the Federal State of Europe is coming closer – unless derailed by those dammed low intelligence Irish voters - when all power will be subsumed into the centre and the peripheries will trail along like the tail of a dog.


    The past

    Tutankhamen – buried with his possessions and gold ornaments
    A Baby 2000 years ago – welcomed with Gold, Frankincense and Myrrh
    Any Museum - gold torcs, figurines
    Coins - Sovereigns, Kruger Rands, Gold Eagles
    Female adornment - Gold, silver and diamonds

    Gold has been around for longer than any other form of value, save perhaps for the oldest profession!

    The future

    Why is it the subject of media comment- and awakening investor interest - now, when it was forgotten as a store of value up to about the beginning of this Millennium?

    Gold is a store of value at all times but is only recognized when the fear of debased fiat currencies (paper money) enter the general physic. One of the best indicators of inflation and inflation perception is measuring other forms of investment against gold. Using this yardstick it is possible to identify investment bubbles, fear in the populace and the likelihood of war, retreat to a safe haven, and of course the desire for personal adornment. Few other value measurements have all of these qualities.

    The price of gold has, for the last 100 years or so, been measured in US dollars but it can be measured in terms of: -
  • oil and other commodities such as silver and base metals
  • the relative strength of other currencies,
  • and other markets such as stocks and shares and even property and land.

    Gold and its sister precious metal – Silver – have begun to receive the recognition of the market place as a true store of value in these very difficult times. Herein lies the message for investors, as in a storm you retreat to a solid structure, now is the time to at least leaven your wealth store, pension fund and portfolio with an adequate level of these two metals. As mentioned before, various commodities should also be represented in your portfolio

    If your motto is Safety First think precious metals

    Robert Mooney, is a contributor to the free stock alerts, market alerts, and stock charts website