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Gold Soars by 8% as Fed Shocks Market Announcement of U.S. Dollar Debasement

Commodities / Gold & Silver 2009 Mar 20, 2009 - 05:41 AM GMT

By: Mark_Obyrne

Commodities Gold surged 8% yesterday (as is the norm the far smaller market that is silver surged by even more and was up by 13.3%) as the shock Federal Reserve announcement led to concerns regarding the dollar and of the inflationary implications of massive money printing and debasement of the currency.


The dollar has fallen sharply against all currencies and particularly against the finite commodity and currency of gold which cannot be debased. In just two days the dollar has fallen from below 1.30 (EUR/USD) to over 1.37 (EUR/USD) despite concerns regarding the European economy.

Concerns about the dollar are justified and real. This is likely no short term weakness in the dollar indeed the dollar’s status as the reserve currency of the world is increasingly coming into question in an increasingly multi polar world.

Next week’s G20 Summit will hear calls for a new global reserve currency. China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions ( see News section today).

And this idea is not just coming from US competitors or potential adversaries.

A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies adding to pressure on the dollar ( see News section today).

Former Head of Currency Research at JP Morgan Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

This is of great importance and has profound implications for the current international monetary system and for the dollar. With central banks and sovereign wealth funds likely to be diversifying out of dollars and into other currencies, into a possible new global currency and into gold, gold is likely to remain in a bull market for the foreseeable future.

By Mark O'Byrne, Executive Director

Gold Investments
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Ireland
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Gold and Silver Investments Limited
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EC3V 3ND
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Ph +44 (0) 207 0604653
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Email info@www.goldassets.co.uk
Web www.goldassets.co.uk

Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

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Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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