Thursday, February 11, 2010
Dong Goes Through Further Detumescence
I am referring to the Vietnam currency, of course. Another 3% devaluation to fix the country's problems (read about it here). Of course, the devaluation was against the anchorless debt-backed U.S. Dollar, which makes it both doubly amusing and sad.
Gold imports were banned in 2008 in Vietnam. Then, it was announced a few months ago that Gold trading floors would all be shut down in Vietnam. What is the relationship between the currency issues and the Gold issues? Are these unrelated events, since Gold is just a shiny and intrinsically worthless commodity according to our fiat masters?
The Gold rush is contained until it can't be. Black market premiums for Gold in Vietnam are high, as people do what they have to when their economic viability is threatened by out of control governments. Price suppression is only the first weapon in the arsenal of heavy-handed governments.
All suppression schemes fail, but Gold investors must understand they are betting that the idiocracy fostered by paper regimes out of control will continue. Governments don't like the sheeple who are smart enough to figure out the end game. If such thoughts and Gold investments become contagious (and they will, believe me), they become much harder to control by covert means. Volker thought the lesson from the 1970s was to never let the Gold genie out of the bottle and things will be OK. But our central bankstaz and those of the Anglo world are fighting the rest of the globe (including non-Anglo central bankstaz) as well as their own citizens, a battle they cannot win at this point in the business cycle.
Gold will come out on top as it has for thousands of years. The ride will continue to be volatile, but it will also continue to be profitable as it has over the past decade. The secular bull in Gold is far from over and the biggest bull moves in the Gold price are ahead of us, not behind us.