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Originally Posted by macmanmike6100
In the scenario described above, hoarding gold securities are not going to help, right?
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Not guaranteed, no. But if the dollar is devalued and there is a flight into other stores of value by investment funds -- not necessarily the euro, but commodities and assets like gold, silver, oil, and other things, even farmland and agricultural commodities -- gold might hold its "real" value relative to the shrinking dollar, or even spike far over its sustainable value for a while in panic buying.
That said, I hold mainly gold as an insurance policy against a radically lower dollar. If the dollar sinks, and I sell at the right time, I maintain some of the value that I would have lost otherwise.
A "bubble" in gold prices would be very nice indeed for me, but is not my primary wish. As soon as the financial situation stabilizes on some level and new rules of economic play come to the fore, gold's value will sink again. I will sell before then, or try to.
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And I agree, a 'correction' could indeed be major, but I think the ripples would be so far and wide (i.e. world economy scale) that global interventions would come into play. World depression all over again? Perhaps, but I doubt that the true financial string-pullers of the world would let that happen, as even the rich weren't unscathed in the 30's.
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The keepers of world finances -- the G8 people, the World Bank, and so on -- just officially admitted that there were problems with this state of affairs (global imbalance between Asian lenders and US borrowing) in the last week or two. They've moved very slowly as things have progressed. I wouldn't say that they won't try to do something, but will they be successful? Will they be fast enough and effective enough? Will their remedies be politically saleable?
These are open questions. There has been so much malfeasance and foolishness at the lower and middle levels of world finance these days, is it wise to trust that things are different at the top?