Friday, December 23, 2005

LATEST GOLD ARTICLE FROM TREND TRADERS: Fiat Money Inflation In France. - By Chris Waltzek

Fiat Money Inflation In The U.S.


(Including Gold & Silver Outlook.)

by



© Chris G. Waltzek

October 27, 2005
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" Thus came a collapse in manufacturing and commerce, just as it had come previously in France: just as it came at various periods in Austria, Russia, America, and in all countries where men have tried to build up prosperity on irredeemable paper (worthless money.)" from: Fiat Money Inflation In France.



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In the late eighteenth century, the French Revolution lead to deteriorating socio-economic conditions throughout the nation. The money supply climbed to staggering levels, resulting in a financial crisis of epic proportions. In fact, excess fiat currency exacerbated tenuous living conditions, which in turn catapulted living costs to unimaginable heights. Similarly, rising energy, commodities and precious metals prices indicates the return of domestic inflation. This article compares excerpts from the classic financial text: Fiat Money Inflation In France, with the current domestic economy in order to demonstrate conclusively that gold and silver backed money remains the only suitable remedy for national inflation.



BACK TO THE FIAT





" To cure a disease temporary in its character, a corrosive poison was administered (Printing Fiat Money), which ate out the vitals of French prosperity." from: Fiat Money Inflation In France.

The nation of France experienced two monetary travesties in the 18th century. The first national experiment with fiat money is remembered as, John Law's, Mississippi Scheme. John Law's infamous machinations promoted the distribution of paper money in 1719, approximately 70 years before the French Revolution. Until that point, the nation relied exclusively upon gold and silver coinage. Law's experiment with paper money mirrored the result of all fiat currencies throughout history: complete economic collapse and financial ruin.



Thus, by the year 1789, the French populace was acquainted with the perils of fiat money. Fiat Money Inflation in France probes the latter experiment with unbacked paper money during the Great French Revolution. The government of the newly emancipated masses exceeded available treasury funds. As a result, politicians printed mountains of unbacked money, which flooded the nation like the spent carcasses of the 17 year cicada. The second monetary debacle was as detrimental to national welfare as the first:



" New issues of paper were then clamored for as more drams are demanded by a drunkard...The great majority of Frenchmen now became desperate optimists, declaring that inflation is prosperity. Throughout France there came temporary good feeling. The nation was becoming inebriated with paper money. The good feeling was that of a drunkard just after his draught; and it is to be noted as a simple historical fact, corresponding to a physiological fact, that, as draughts of paper money came faster the successive periods of good feeling grew shorter... " from: Fiat Money Inflation In France.

Thus, by 1790, the ensuing monetary disaster lead to morose living conditions and social upheaval. In fact, merely five years elapsed between the onset of inflation and the inevitable economic calamity. During that brief period, many essential goods increased in price by more than one hundred fold. For instance, a bushel of flour cost approximately 40 cents in 1790. By 1795, the same quantity of flour rose by ten fold to $45. Similarly, a small cartload of lumber rocketed higher from $4 to $500, an astronomical increase in excess of 1,000%.





" Prices of the necessities of life increased: merchants were obliged to increase them, not only to cover depreciation of their merchandise, but also to cover their risk of loss from fluctuation; and, while the prices of products thus rose, wages, which had at first gone up, under the general stimulus, lagged behind. Under the universal doubt and discouragement, commerce and manufactures were checked or destroyed..." from: Fiat Money Inflation In France.





Consequently, inflation statistics from the 18th century indicate difficult times ahead for the domestic economy. For instance, a typical sandwich costs $3, at present inflation levels. Yet, as inflation rates approach the hyper-inflation figure of that period, price increases by 1000%. Few domestic families could afford such prices. In fact, $20 per gallon of gasoline, $15 per loaf bread, $35 per gallon of milk and a $200 meal for a family of 5 is possible. If the previous statistics seem implausible, hyper-inflation figures from the past show that they are not only possible but relatively conservative.





IRRATIONAL EXPANSION





" Early in the year 1789 the French nation found itself in deep financial embarrassment: there was a heavy debt and a serious deficit." from: Fiat Money Inflation In France.



For decades, careless Federal Reserve monetary expansion has over-stimulated the economy. As a result, mountains of unbacked paper money, excessive debt and incalculable deficits jeopardize national solvency. Protective Federal Reserve policies secured economic growth at the expense of inflation. Records indicate that economic collapse is the inevitable result of such currency manipulations.





Indeed, the Monetarists at the helm of the Federal Reserve insist that increased liquidity is required to rejuvenate national conditions. Although economic stability is the intent of such monetary policies, excessive infusions create deleterious side effects. The insurmountable surplus of fiat money has caused disequilibrium within the economy. The unending flow of dollars has forced the economy toward a precipice. The dollar is held hostage to monetary decision makers, as was the French currency of the late 1890s:





" La Rochefoucauld proposed to issue an address to the people showing the goodness of the currency and the absurdity of preferring coin. The address was unanimously voted. As well might they have attempted to show that a beverage made by mixing a quart of wine and two quarts of water would possess all the exhilarating quality of the original, undiluted liquid." from: Fiat Money Inflation In France.



Eventually the dollar bubble will burst as excessive monetary liquidity further threatens economic solvency. In order to better illustrate the danger of unregulated liquidity one can compare the economy to an expanding rubber balloon. For instance, each time the balloon (economy) sags, more air (money creation) is introduced. The balloon remaines intact until it expands beyond the bursting point. Following decades of monetary stimulus, the economy cannot sustain its present, over-inflated state.





Indeed, until 2005, monetary growth climbed sharply following the September 11th, 2001 terrorist attack, a fateful episode in American history. The Federal Reserve cushioned the economy from a stock and bond market crash and decrease the liklihood of panic by increasing liquidity. Although the short-term affect was market stabilization, the long-run result is damaging inflation and currency collapse. Thus, Irrational expansion is eroding confidence in the dollar as the global reserve currency.





Thus, declining dollar value in 2003-2004, relative to global currencies, temporarily boosted sales and enhanced the competitiveness of many U.S. manufacturers. Yet, dollar erosion leads to hyper-inflation. At first, runaway inflation appears to offer an economic advantage to manufacturers. Price hikes for manufactured goods are implemented without a proportionate increase in wages paid. However, the scenario changes abruptly as domestic consumers curtail purchases for manufactured items due to lower wages earned. For instance, during the 1970's, food, gas, clothing and energy prices advanced faster than real wages. During inflationary periods, wages tend to lag far behind price hikes. Higher prices without an incremental rise in personal income places considerable pressure upon fixed income as well as lower to middle income families:





" Strange as it might seem to those who have not watched the same causes at work at a previous period in France and at various times in other countries, while every issue of paper money really made matters worse, a superstition gained ground among the people at large that, if only paper money were issued and were more cunningly handled the poor would be made rich. Henceforth, all opposition was futile."


from: Fiat Money Inflation In France.





Consequently, scoffers insist that a domestic inflationary disaster is unrealistic. Pundits tout fiat money's important qualities: its lightweight, easily stored and transported. Yet gold and silver backed paper money has the identical qualities. The unfolding monetary dilemma stems from the intangible aspects of paper money, not the tangible. Paper bills are not problematic, when each bill is properly backed. However, the dollar has no gold or silver support and thus the entire monetary system is in jeopardy:





" Various bad signs began to appear. Immediately after each new issue (money growth) came a marked depreciation; curious it is to note the general reluctance to assign the right reason...New issues only increased the evil; capitalists were all the more reluctant to embark their money on such a sea of doubt... The decline in the purchasing power of paper money was in obedience to the simplest laws in economics...(Supply and Demand.)" from: Fiat Money Inflation In France.





Moreover, U.S. dollar gold backing was abolished in 1971. The dollars decoupling from gold and silver ushered in the Great American Bubble. Since that point, paper assets have flourished beyond the dreams of avarice. The resulting inflationary boom diverted hyper-inflated dollars into alternative routes. Firstly, funds flowed into precious metals beginning in 1971, which culminated in 1980 with an incredible peak in gold and silver prices. Next, the stock market expanded from 1980 until 1999, an astounding 20 year period of growth. The final inflation peak culminated in the U.S. real-estate and bond market bubbles and a the current bull market in gold and silver assets.








Clearly, the chart above illustrates the degree that Federal Reserve policies affected the 1990's stock market boom. The 1980's yielded similarly impressive stock market results. Expansionary policies distorted the equilibrium within the national supply and demand for money. Consequently, the stock and bond market, real estate and dollar bubbles resulted. A euphoric domestic economy roared forward for two decades, fueled by loose monetary restraints.





However, Issac Newton's third law of motion holds true in monetary concerns as well: for every action there is an equal and opposite reaction. The temptation to continually print dollars for 2 decades has become a self perpetuating inflationary cycle. The peak of the artificial economic boom has given way to an inflationary disaster. Clearly, unsustainable money growth is steering the nation toward, a Fiat Money Inflation in France style, economic disaster:





"...doubling the quantity of money or substitutes for money in a nation simply increases prices, disturbs values, alarms capital, diminishes legitimate enterprise, and so decreases the demand both for products and for labor." from: Fiat Money Inflation In France.





Indeed, declining dollar value in 2003-2004, relative to global currencies, temporarily boosted sales and enhanced the competitiveness of many U.S. manufacturers. Yet, dollar erosion leads to hyper-inflation. At first, runaway inflation appears to offer an economic advantage to manufacturers. Price hikes for manufactured goods are implemented without a proportionate increase in wages paid. However, the scenario changes abruptly as domestic consumers curtail purchases for manufactured items due to lower wages earned. For instance, during the 1970's food, gas, clothing and energy prices advanced faster than real wages. During inflationary periods, wages tend to lag far behind price hikes. Higher prices without an incremental rise in personal income places considerable pressure upon fixed income as well as lower to middle income families.





"PONZI" DOLLARS





" Still another troublesome fact began now to appear. Though paper money had increased in amount, prosperity had steadily diminished. In spite of all the paper issues, commercial activity grew more and more spasmodic. Enterprise was chilled and business became more and more stagnant. Whenever a great quantity of paper money is suddenly issued we invariably see a rapid increase of trade."


from: Fiat Money Inflation In France.





Unrestricted monetary expansion has resulted in the worlds greatest Ponzi scheme. Ponzi schemes guarantee exorbitant returns to each subsequent investor. However, the profits used to reward the original participants are merely the entry fees of the final group of unwitting investors. As a Ponzi scheme progresses, it becomes apparent that the last group of investors will receive zero profits as well as lose their initial investment.





Similarly, the dollar Ponzi scheme was financed by well meaning investors worldwide. Considered as safe as gold, U.S. bonds were exported to satiate global demand for secure interest payments. However, the surplus U.S. bonds has diluted investor demand. The Federal Reserve must now raise interest rates to combat inflation, which in turn decreases demand for government bonds.





Yet, bond values are inversely related with interest rates. In fact, merely the threat of higher rates worries bond investors. Climbing interest rates reduces the value of existing bonds. Thus, in order to decrease exposure to "Ponzi" dollars, investors will lower portfolio exposure to U.S. bond holdings and add a competing asset class: gold and silver related investments.





TREASURY BONDS: FIAT IOU





As the government increases debt to fund domestic projects, the national debt continues to reach lofty peaks. For decades, much of U.S. debt has been shipped abroad, away from North America. Thus inflation has remained relatively tame. Yet, as global bond holders collectively liquidate debt positions, dollars will flood back into the U.S. creating an instantaneous hyper-inflationary scenario. Several economic events could trigger investors to sell U.S. debt instruments:





1) Renewed dollar deflation.
2) Economic weakness/recession.
3) Climbing interest rates.
4) Unregulated, interest rate sensitive derivatives.



1) Renewed dollar deflation: In recent years, most dollars denominated assets have lost considerable value. Although the dollar exhibited considerable strength in 2005, the multi-year downward trend against world currencies is likely to resume. As the dollar continues to wane, U.S. bonds will become less attractive. Eventually, demand for U.S. debt will diminish and market liquidity will evaporate. The deluge of dollars returning to domestic shores will threaten economic stability.

2) Economic weakness/recession: Ironically, following decades of U.S. manufacturing dominance, the nation now consumes more than it produces. In fact, the ravenous appetite for globally manufactured goods encourages demand for U.S. bonds. Yet a significant recession or depression would drastically decrease the spending habits of the American public. The resulting loss of demand for imported goods would decrease foreign demand for new bond issues. If American demand for globally manufactured goods declines,U.S. debt will lose its luster and an economic tailspin will commence.

3) Climbing interest rates: Following decades of decline, interest rates reached the lowest level in forty years. Low rates were fomented, in part, by the loose monetary policies of central banks. As inflation becomes apparent to the general public, the Federal Reserve will be forced to raise interest rates to far higher levels. In fact, the Federal Reserve has increased rates at several consecutive meetings. Bonds eventually lose value in an environment of escalating rates. Thus, U.S. bond sales will force a staggering supply of dollars back into the American economy - leading to hyper-inflation.

4) Rate Sensitive Derivatives: Derivatives are sophisticated financial instruments used to offset market risk, based upon one or more market conditions such as interest rates. Climbing rates negatively impact interest rate sensitive derivatives. Unregulated derivatives mask hidden and oftentimes unlimited risks.





THE DERIVATIVE DILEMMA








" But if this first expedient shows how naturally a "fiat" money system runs into despotism, the next is no less instructive in showing how easily it becomes repudiation and dishonor." from: Fiat Money Inflation In France.





Few analysts claim to grasp the full extent of the danger posed by unregulated derivatives. Yet, an estimated 200 trillion dollars in derivatives threaten the global economy. Although quantifying the precise impact of higher rates on derivatives is difficult, it is certain that the potential for financial chaos is substantial. Warren Buffett, the worlds 2nd richest man and arguably the worlds most successful investor, refers to derivatives as: "Weapons of mass financial destruction." Many of his contemporaries concur that a derivative related quagmire threatens the global financial system.





Moreover, the recent bankruptcy of Refco, the nations largest derivatives clearing firm, suggests that a derivatives default looms ahead for the global markets. Within less than 2 weeks of the announcement of Refco's woes, its share price plummeted from near $30 to less than one dollar. When compared with the Enron share price plunge of several months, the rate of Refco's demise is particularly alarming. Should rates suddenly spike higher, the resulting derivatives implosion could trigger an abrupt financial meltdown and culminate in a global financial panic.





Indeed, the Long-Term Capital Management (LTCM) debacle of the late 1990's illustrates the significance of the more recent Refco derivatives meltdown. The LTCM hedge fund was managed by the top financial minds of the decade. The staff included 2 Nobel prize winners, renowned for designing the Black-Scholes options pricing model. Although the trading systems were designed by financial wizards, the LTCM models failed miserably with one fateful derivatives trade. In order to mitigate risk to the national economy, the Federal Reserve allocated over $4 billion to relieve debt burdens. Although economic collapse was averted, LTCM never fully recovered and closed its doors within less than three years of the initial meltdown.





Furthermore, unregulated derivatives threaten many U.S. municipalities and public companies. The Enron debacle is the most glaring example. LTCM lost over $4.5 billion at the crisis peak. Enron eclipsed LTCM's losses with a staggering share price decline in excess of $70 billion as well as billions in loan defaults. Several unsound energy related derivative swaps lead Enron's share price into an unrecoverable spiral. The result was devastating to individuals, companies as well as pension fund investors.





Clearly, unregulated derivatives involve insurmountable risks, oftentimes in excess of the original purchase price. Still, neophytes and uninformed investors alike have been lured by derivatives due to enticing rates of return. Of the staggering $270 trillion global derivatives market, the majority include interest rate exposure (compare the $270 trillion derivative figure with the meager $50 trillion in fiat money in circulation world-wide). Thus an unexpected interest rate surge will create trillions of dollars in market risk. Such derivatives portend tremendous losses for firms, individuals and ultimately the nation as higher rates unfold.





GAMBLING WITH FIAT MONEY



" Out of the speculating and gambling of the inflation period grew luxury, and, out of this, corruption. It grew as naturally as a fungus on a muck heap..." from: Fiat Money Inflation In France.

Speculative financial episodes periodically emerge. In fact, the desire for quick profits where fiat money abounds has created market bubbles without exception, including: The Tulip-Mania, South Sea Bubble, Mississippi Scheme, French Revolution, 1970's gold and silver bull market and the 1990's Technology Stock Boom. The French economy during the Great Revolution is particularly relevant to the current domestic economy. In fact, as socio-economic conditions deteriorated during the French Revolution, a widely diverse section of the populace adopted gambling as a favorite past time. Once the consensus converges into a unanimous belief, a greed induced mania erupts:





" Even worse than this was the breaking down of the morals of the country at large... from the gambling, speculative spirit... From this was developed an even more disgraceful result,--the decay of a true sense of national good faith..." from: Fiat Money Inflation In France.





Similarly, each year millions of Americans enjoy recreational gambling. More than two hundred years have elapsed since the French gambling episode. Yet domestic speculative fever is emerging in a new continent. Scratch and win tickets, lotto, as well as various games of chance are available in most communities. As mountains of inflated currency course through the nations commercial arteries, Internet gambling provides anyone with access to the World Wide Web and a credit card the ability to risk paper capital at a moments notice:





" Says the most brilliant of apologists for French revolutionary statesmanship, "Commerce was dead; betting took its place." from: Fiat Money Inflation In France.





Moreover, prosperous economic and political conditions mask the underlying costs associated with speculation and gaming. For instance, the stock market boom from 1980-2000 created incredible economic growth. The ensuing prosperity marginalized the damaging affects of gambling. In fact, one may argue that the satisfaction gained from occasional gambling is worth the invariable losses incurred.





" The French are naturally thrifty; but, with such masses of money and with such uncertainty as to its future value, the ordinary motives for saving and care diminished, And a loose luxury spread throughout the country. A still worse outgrowth was the increase of speculation and gambling..." from: Fiat Money Inflation In France.





Yet this article demonstrates conclusively that economic conditions have deteriorated sharply in the past few years. As inflation rolls forward, the cost of living will increase much faster than real wages. Deteriorating prospects will leads many job seekers to gaming in an attempt to escape their financial plight. Unfortunately, economic conditions will not solidify as they had following previous economic downturns, so gambling will merely increase suffering, for the most part. Clearly, the losses associated with gambling and speculation will become increasingly debilitating to the public and thus only prudent investments are advised:



" Out of the inflation of prices grew a speculating class; and, in the complete uncertainty as to the future, all business became a game of chance, and all business men, gamblers. In city centers came a quick growth of stock-jobbers and speculators; and these set a debasing fashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, came a passion for inordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive for immediate expenditure and present enjoyment. So came upon the nation the obliteration of thrift. In this mania for yielding to present enjoyment rather than providing for future comfort were the seeds of new growths of wretchedness: luxury, senseless and extravagant, set in: this, too, spread as a fashion.
from: Fiat Money Inflation In France.



SHEILDING WEALTH FROM INFLATION

Throughout the ages, numerous investors and financial professionals alike, have fallen prey to currency machinations. No society is fully insulated from widely held investment misconceptions. As long as fiat currencies remain in circulation, the fallacy of unbacked paper money will continue to haunt even the most sophisticated of global economies. More than 150 years have elapsed since the last national hyper-inflation dilemma. Thus, the domestic populace has little to no first hand experience to form an educated opinion concerning the unfolding quandary.





Consequently, decades of covertly inflated stock and paper assets have marginalized demand for precious metals. In fact, during the last 25 years, many investors experienced severe declines in gold related investments. Conversely, stocks and bonds were generally ideal investments. Following the quarter century bear market in precious metals, professionals and investors are slow to accept that precious metals are once again the investment du jour.





Moreover, as the roaring economic banshee threatens the populace with runaway living costs, the need for a precious metals standard will become painfully apparent. As climbing prices increase at a parabolic rate, most investors will distrust any form of unbacked fiat money. Individual states, counties and cities will approve legislation for silver and gold backed currencies. Indeed, New Hampshire has current legislation pending for $50 million in silver coinage, click here for the web site:





http://www.gencourt.state.nh.us/legislation/2003/HB1342.html





Unfortunately, demographic groups with special needs suffer most from rapidly increasing prices. For instance, many senior citizens rely upon dividends, coupons and social security benefits. Yet all of the previous retirement income sources are jeopardized by hyper-inflation. Not only does inflation marginalize investment returns but the underlying principal as well. While food, housing, health care, insurance and medical prices climb, income will be declining rapidly. This will lead to deteriorating financial positions, particularly for those who need stability most:



"As a consequence the demand for labor was diminished; laboring men were thrown out of employment, and, under the operation of the simplest law of supply and demand, the price of labor--the daily wages of the laboring class--went down until, at a time when prices of food, clothing and various articles of consumption were enormous, wages were nearly as low as at the time preceding the first issue of irredeemable currency..." from: Fiat Money Inflation In France.






Consequently, shifting economic conditions create a precarious situation for investor portfolios. Wealth is a storage medium of financial potential energy. When properly maintained, wealth retains its inherent potency and increases in strength. When ignored and left to the whims of howling market forces, wealth loses potential energy and may be destroyed completely. Retaining capital in difficult periods requires diligent attention to primary financial trends.





" This disappearance of specie (gold and silver coins) was the result of a natural law as simple and as sure in its action as gravitation; the superior currency (gold and silver) had been withdrawn because an inferior currency (paper bills) could be used." from: Fiat Money Inflation In France.





Clearly, the decades long trend of monetary expansion has inflated paper assets to lofty heights and artificially depressed precious metals related assets. Complacency regarding paper assets has increased, as well. Few investors comprehend the intrinsically worthless nature of fiat money. Confidence in unbacked paper money is destined to wane as its ability to retain value is further diminished. Thus, the nation is recklessly careening down an inflationary path, similar to 18th century France:





" In speeches, newspapers and pamphlets about this time, we begin to find it declared that, after all, a depreciated currency is a blessing; that gold and silver form an unsatisfactory standard for measuring values." from: Fiat Money Inflation In France.



CURRENT GOLD, SILVER & GOLD STOCKS OUTLOOK

In 2002-2003, gold and silver completed a 22 year bear market and have followed a steady path higher for 3 consecutive years. The fundamentals are firmly in place to sustain the new bull market for several years into the future. Not since 1980 has the technical outlook for gold, silver and gold stocks been more favorable. In fact, all precious metals related charts support the view that a new bull market in gold and silver is underway.





Furthermore, the gold market has recently broken free from the U.S. dollar, following years of inverse correlation. In fact, gold has been moving higher in tandem with the dollar. As a result, gold is finally accelerating in terms of several major global currencies. Such developments confirm the notion that gold has entered a period of much higher prices. The gold market recently moved above the previous years high point and consolidated at support. Markets often pause on the trek of higher highs and higher lows. Wise investors use such retracements to accumulate positions while lower prices prevail. The following chart was originally published with this article in October 2005, just before the parabolic rise in gold:














Clearly, the break-out in the gold chart above lead to a meteoric rise in prices as seen in the chart below this text. The current question facing gold investors is whether the short-term and medium-term impulse higher is complete. The chart below indicates that a correction will likely follow the near vertical assent. After the gold market consolidation, prices will likely advance to the $600+ in 2006.











Conversely, in October, silver had not yet breached its previous high point, as illustrated in the weekly silver chart below this paragraph. The silver market was firmly entrenched within a broad consolidation or symmetrical triangle pattern. The sideways, choppy market behavior concluded as prices penetrated the upper boundary:











Indeed, as prices moved above the $8-$8.5 resistance level, a furious run to $9.20+ commenced, as forecasted in October. Silver is now testing support as viewed in the graph below. Prices are expected to climb above the weekly high point of 2005 next year. A vigorous move to the 10-$11.5 level is the most likely outcome of the recent upthrust:











During the same period, gold stocks were locked within a similar trading range for more than a year. In fact, the $XAU was still gyrating near the top of a bullish rectangular pattern. By late October, gold stocks completed the final assault upon the upper resistance level:











Gold stocks recoiled from the upper resistance level then rocketed to a new high point above the upper boundary. The old resistance line has now become a potential support level. The $XAU is poised for much higher levels, following a retest of the break-out point.












CONCLUSION



" Henceforward, until the end of this history, capital was quietly taken from labor and locked up in all the ways that financial ingenuity could devise. All that saved thousands of laborers in France from starvation was that they were drafted off into the army and sent to be killed on foreign battlefields."
from: Fiat Money Inflation In France.





All fiat money systems lead to lengthy periods of, social instability, economic distress, and warfare. The resulting inflation reduces living standards to such degree that socio-economic upheaval becomes inevitable. Sadly, the Federal Reserve has chosen to ignore such warnings, that are written upon the tablets of financial history. 18th century France required 40 grueling years of rehabilitation before full economic recovery. Will the U.S. needlessly suffer a similar fate?



Although the world is beginning to reject the U.S. dollar, the nation is not doomed to a hyper-inflationary spiral. In fact, a few central banks are halting gold sales and making precious metal purchases. Since this article was first published, the Russian central bank has announced a brilliant and bold purchase of 50 tons of gold. Many Asian central banks will likely follow its lead.





Thus, fundamental analysis dictates that silver and gold will no longer remain inexpensive compared with the over-inflated dollar. Technical analysis is forecasting precious metals to exceed current prices within the next 12 months. Gold stocks are near the beginning phase of a new bull market. It is not too late for the Federal Reserve as well as American individuals to protect against the coming inflationary maelstrom and insure financial freedom by converting a portion worthless paper money into gold and silver related investments. Rejection of fiat money is destined to return gold and silver to their rightful position as king and queen among currencies.





"At last came the collapse and then a return, by a fearful shock, to a state of things which presented something like certainty of remuneration to capital and labor. Then...(after 40 years!) came the beginning of a new era of prosperity... " from: Fiat Money Inflation In France.





Free Weekly Gold Market Analysis: Click Here.





Free Copy Of Fiat Money Inflation In France: Click Here.








Endnotes:





1. White, Andrew Dickson, LL.D., Ph.D., D.C.L.


"Fiat Money Inflation in France (How It Came, What It Brought, and How It Ended)"


Late President and Professor of History at Cornell University; Sometime United States Minister to Russia and Ambassador to Germany; Author of "A History of the Warfare of Science with Theology. ISBN: 1410205835


http://www.gutenberg.org/dirs/etext04/fiatm10.txt








© Chris G. Waltzek, October 27, 2005


Disclaimer:

This web site and its articles are a non-profit service intended to share diverse concepts and opinions concerning investments. Trading involves a high degree of risk including the possibility of a loss of principal as well as additional costs.This web site should not be viewed as an offer to buy or sell securities of any kind. Additionally, this site and its owners do not recommend any investment system or the purchase or sale of any investment securities. This site is not an investment advisory service, nor is it a registered investment advisor, broker or dealer. The past success of investment concepts is not a guarentee of future performance.analysis is forecasting precious metals to exceed current prices within the next 12 months. Gold stocks are near the beginning phase of a new bull market. It is not too late for the Federal Reserve as well as American individuals to protect against the coming inflationary maelstrom and insure financial freedom by converting a portion worthless paper money into gold and silver related investments. Rejection of fiat money is destined to return gold and silver to their rightful position as king and queen among currencies.





"At last came the collapse and then a return, by a fearful shock, to a state of things which presented something like certainty of remuneration to capital and labor. Then...(after 40 years!) came the beginning of a new era of prosperity... " from: Fiat Money Inflation In France.





Free Weekly Gold Market Analysis: Click Here.





Free Copy Of Fiat Money Inflation In France: Click Here.








Endnotes:





1. White, Andrew Dickson, LL.D., Ph.D., D.C.L.


"Fiat Money Inflation in France (How It Came, What It Brought, and How It Ended)"


Late President and Professor of History at Cornell University; Sometime United States Minister to Russia and Ambassador to Germany; Author of "A History of the Warfare of Science with Theology. ISBN: 1410205835


http://www.gutenberg.org/dirs/etext04/fiatm10.txt








© Chris G. Waltzek, October 27, 2005


Disclaimer:

This web site and its articles are a non-profit service intended to share diverse concepts and opinions concerning investments. Trading involves a high degree of risk including the possibility of a loss of principal as well as additional costs.This web site should not be viewed as an offer to buy or sell securities of any kind. Additionally, this site and its owners do not recommend any investment system or the purchase or sale of any investment securities. This site is not an investment advisory service, nor is it a registered investment advisor, broker or dealer. The past success of investment concepts is not a guarentee of future performance.
http://silverinvestor.blogspot.com/