@corbero
Re: buying gold. You may find this interesting.
http://www.creditwritedowns.com/2010/11/gold-is-correcting-when-do-we-buy.html
– includes charts showing all the major surges and corrections (greater than 5%) since 2001 for some historical context.

I think they are doing the same for silver tomorrow.

China already runs two currencies. Don't you think they couldcontinue to use their domestic currency which they can devalue all they want, at the same time as they create and use a gold backed currency for international settlement and trade?

Pick and mix.

But for larger countries like the US, UK, China, Japan, it would be tantamount to suicide. It's exactly what they don't need now, taking away their ability to deficit-spend w/in their own country to employ people & boost demand. If one or more of the big countries would wake up & do so, they could help kick start a world-wide recovery, in time.

If the UK govt would "print" and use it productively (create jobs) inflation wouldn't be a problem, due to the massive amount of idle resources rotting all around us. But since the neoliberals use unemployment as a tool to "fight" inflation, the chances of this happening are less than nil.

Very glad you've found us. I look forward to readin any thoughts you care to share.

I agree a gold standard that relied on a global concesus hasn't a hope. That is why I think the small number of aspiring and emerging market countries will do it between themselves. I note that today China has said it is going to be buying more gold. Fancy that!

Corbo Norwich

the government isn't because it is afraid of what it means. They can't print. And they may have to raise rates, which alongside unemployment and general austerity measures would be a killer triple blow to incomes and spending and therefore to the stupid Tory plans.

But I think people will start to go mental as they begin to feel the pain and realize for themselves, in their slow way, what is really happening to them and more importantly, what is most asuredly going to happen to them.

One person probably is going mental right now and that is Mervyn King. He, at least willknow what this means.

All in all I think we are heading into the teeth of the storm now.

No they won't pay each other in gold. The idea would be to have a currency, a paper one, backed by gold at a set rate. This new reserve currency would be on a gold standard.

Remeber I am just speculating here.

But the idea would be that in a world where investors are worried about long term inflation of the dollar's worth due to excess printing, a gold bakcked currency might look very attractive as part of a porfolio of currency holdings.

Being gold backed at a fixed rate the currency would be able to be trusted in a way the dollar no longer is, because they would not be free to print it willy nilly. That is what a gold standard means. It also means, because it is not a floating fiat currency, that speculators cannnot so easily shove the value around as they please. This would make it a good stable hedge.

Of course the speculators can shift the value of tehe gold. But what no one can do is devalue by printing. Attractive in these times.

As I said I don't see this as a plan to dump the dollar completely. At least not in the short term. That would be too agressive and dangerous. I think they might be thinking to themselves that this can be introduced in a much softer way. Not dumping the dollar but 'helping' the world financial system 'alongside' the dollar.

If I am anywhere near the mark, and I could be a million miles off, but if I am anywhere near close, then I would expect 'them' to have approached the euro zone suggesting that the euro be part of a triumvirate. Such a plan would offer a real incentive for the euro zone as it would elevate the euro to reserve status and give it some of the status, relative to the dollar, it has always striven for.

Gradually China, Russia and Iran (I see them as the core players in this idea) would have a currency allowing them to run deficits, allowing them to stop accumulating quite so many dollars without having necessarily to sell them. As trade gradually shifted to the new currency and out of the dollar currency holdings woudl shift. From dollars to euors and the new currency.

All the countries invoved would be bettrer insulted from the flows of hot printed up dollars and would have better control over their domestic investment than they have now.

Such a move woiuld also geld the IMF and limit its international pretentions.

If Iran was inviolved it would bring her oil reserves in to play as secondary backing for the currency (unofficially) and make it more and more diffcult to cast Iran as one fo the axis of evil.

If such a plan became real and was bruted about I would expect Israel to be very deeply troubled.

I could go on as I have pndered this for a long while. But I will stop there becuase as I say it is all pure speculation.

The most significant upward contributions to the CPI 12-month rate to October 2010 came from:
• transport which contributed 0.9 percentage points. The largest effect here came from fuels and lubricants where, overall, prices rose by 11.4 per cent over the 12 months to October. There was also a large upward effect from air transport where fares rose by 18.0 per cent over the same period

• food and non-alcoholic beverages which contributed 0.5 percentage points with prices, overall, rising by 4.5 per cent over the year. The upward pressure on inflation here was widespread as all categories within this division had an upward contribution to the 12-month rate. The largest effects
came from fruit where prices rose by 11.2 per cent over the 12 months to October and vegetables where prices increased by 5.4 per cent over the same period.

And they're even thinking about printing more money and giving it to the banks to speculate with!?

At least I assume that's what they want to do. I don't understand the whole reserve currency issue very well. If they use the dollar, does that mean if the dollar depreciates then they're paid less for their exports, so they want to dump the dollar? If that's the case, the Euro hardly seems like a better bet.

I'd think they'd be better off spending that gold money on developing their internal markets, which seems to be the best hedge against global recession/depression. Everyone can't be Germany, surviving on exports.