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Message: Gold

Gold

posted on Feb 20, 2008 01:35PM
This is a copy of a recent email I received.
Just wondering if any of you have any thoughts.
And what effect sucha situation could have
on juniors in general but especially this junior. 
 
D, I just wanted to share a couple of things with you.
I think you have vastly misjudged the extent of the
looming credit bubble that exists in this country.
True the sub-prime situation affects a relatively small
group of people directly, but indirectly, it is indicative
of a much, much larger problem. The creation of
mortgage backed securities, indeed the entire derivatives
market and the fantastic ballooning of credit that
has resulted is unlike anything in the history of world.
The expansion that has occurred as a result of these
vast amounts of credit and the misallocations of
capital that have accompanied all the cheap money
floating around will not be liquidated easily or painlessly
. We are in the midst of what will very likely
be a prolonged recession and very possibly could turn
into a major depression. How long that could last is
anybody's guess. My view is that it will depend to a
great extent on government management or
mismanagement of the situation, i.e. tariff laws,
taxes and manipulation of the money supply through
the federal reserve. The allure of gold and silver right
now are each's ability to hold its value throughout
tumultuous economic conditions as proven historically.
Keep that in mind. When a government inflates
away the value of a currency, gold and silver for
6000 years have always done well. And we are
in the midst of a world wide currency inflation process
the like of which has never occurred during that
entire 6000 year history. I just want you to think
about these things. You are a smart guy, but it is
very easy to fall into the trap of thinking things will
go on as they have for seventy years or so. They will
not, not this time. Matt

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