The gold price
The global liquidity pyramid - 5th January 2007
What's stopping the US Dollar from doing what it must – and collapsing...?
"Global demand for the Dollar is now driven by the explosion in Dollar-denominated assets," writes Dan Denning from Melbourne, "almost completely out of the control of central banks."
Dan says these "assets" are the preferred retirement vehicles for millions of Western Baby Boomers...and the quickest way for money shufflers in London, Washington, Sydney and elsewhere to get rich on the flow of cash. They outweigh government-issued money – referred to as 'power money' by Independent Strategy in the chart above – by a factor of 85 times.
"Only a radical increase in official interest rates or a radical decline in Dollar confidence will change the incentives to create new assets denominated in Dollars," says Denning.
Will either event happen in 2007? Or will gold have much further to rise before the scramble for settlement hits...and $340 trillion in derivatives – plus $59 trillion in bonds – tries to turn itself into $4 trillion of government-issued money?
Adrian Ash runs the research desk at BullionVault, the world's No.1 gold ownership and trading service. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern and FT Deutschland; Italy's Il Sole 24 Ore, and many other respected finance publications.
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