Are there benefits from owning South African Golds?

It is becoming more evident that the shift into currencies has impacted on the commodity based nations. The thought process goes like this; I want to flee the local currency, I want to invest in a particular commodity at the same time, I will be protected from inflation if I select the right commodity and country.

Well I have some bad news if you are investing in gold in South Africa and expect to make currency gains at the same time. As I illustrated in my last essay producers in commodity nations are going backwards, their costs are increasing in relation to the commodity they are producing.  They are becoming LESS profitable. Sol at www.tacticalinvester.com has demonstrated that gold is a filthy lie in an international sense, yet many don't see it because they are too bullish on gold, and true in $US gold has been rising, but not in other currencies. If you are in the United States and want to play gold and silver then do it in American Companies with property on US soil. If you want to play currencies and get a return, then buy short term treasures in those currencies.

We are being hoodwinked. The gold bulls are basing their thesis on past performance. Only trouble is past performance is no guarantee of future earnings. The past included a "Gold Standard", now we are on fiat. This comes back to the Federal Reserve and the printing press.

Bullion banks are short gold, why, to cover the gold they have leased from Central Banks and sold into the market, a variation of the carry trade. Bullion Banks also OWN the Federal Reserve. The Federal Reserve prints money. The Bullion banks need money to cover their shorts, and as they own the Fed they have a direct line to the machine. The way I see it is that the bullion banks will have unlimited funds to continue shorting gold. As they need money they will tell the Fed to print it. This is not a free market, the money comes out of thin air. The process debases the American dollar further and adds to the pressure on producers in commodity base nations. The process also points to hyperinflation in the United States. The antidote to which is real money, gold and silver bullion.

How will gold fare in other currencies? It has no choice, it must, eventually, go up. The World Bank and IMF have guaranteed it will by demanding Keynesian theory be applied by Central Banks. Also Central Banks have a real fear of allowing the business cycle to complete, the delayed result will be economic mayhem worldwide. Money as we know it will cease to exist.

For those of you who are leveraged on gold and silver shares, get prepared, reduce your exposure to margin. When the tipping point arrives for the sell off generally ALL shares will be hit. Margin calls are not selective. They eat money fast. Also keep an eye on your brokerage, they have exposure in the money market. As interest rates rise the systemic risks from derivatives increase. Your broker may not be as financially sound as you think. Take delivery of your shares. Just as you would take delivery of your bullion.

The point is this. What is happening in the United States is not necessarily happening worldwide to the gold price, or any commodity for that matter. Prudence is a necessity. Look at all angles before jumping in. Sheep get slaughtered, get educated like foxes and plan.

Allie Oop