Here is a list of the events which will take place between January 30 and February 7:
As has by now been exhaustively documented all over the web and even in the media itself, January has been a quiet month on global markets. Of course, the month and the year got off with a bang for Gold, with the spot future Comex price falling almost exactly $US 19.00 over the first week of the year. And over that same week, the US Dollar index rebounded from the near oblivion of an 80.60 close on December 30, 2004. After that, like most everything else, $US Gold and the US Dollar have been going sideways. Cast your eyes upward to the daily bar chart above. Nuff said.
We would think that it would be most uncomfortable to LITERALLY keep one's head buried in the sand for a whole month, but that is what an astonishing number of people have been doing. The volume of reassurances being pounded out across the world is deafening (and blinding too for those who choose to listen to them). Mr Bush's inaugaral address was an "idea thing". He didn't really say he's going to force the world to be free. Iraqi expatriates have already started to vote in the January 30 elections. The election will go fine, we won't worry about the half of the population which live in areas deemed too dangerous to conduct a vote. The Fed is on top of the situation. They'll raise rates another 0.25% on February 2 and go back to sleep. The G-7 will have their meeting and change a couple of punctuation marks from the communique they put out at their last meeting. And Mr Bush's budget will "freeze" spending on everything, except military and security measures of course, mustn't be irresponsible.
Above all, there are NO threats to the global financial system. None, NONE, N-O-N-E!! We have nothing to fear but fear itself. The Chinese will keep buying US Treasuries for as long as it takes for the US to get their trade and budget deficits under control. The fact that nothing has been done so far to get either under control is irrelevant. Lenders will keep lending. Borrowers will keep borrowing. Consumers will keep consuming. Exporters will keep exporting. Importers will keep importing.
Every now and then there are jarring interruptions to this determined myopia. It is announced that the two richest men in the world - Bill Gates and Warren Buffett - are both short the Dollar and absolutely CERTAIN that its continued slide is a matter of time, and not much time at that. Neither of these gentlemen inherited or expropriated one thin dime. They made their money by their own efforts. They did not do so by being either foolish or blind to the world around them.
Last week, we talked about "delusions". Genuinely deluded people are comparatively rare. Being deluded, they do not exhibit any great amount of stress because they have genuinely convinced themselves that their outlook is reality oriented. What so many in the world are now suffering under is not delusion, it is the flat refusal to add up the facts they can see in front of them to a logical sum. The problem for these people is that they KNOW they are doing this, and that leads to very high levels of stress indeed. Ayn Rand said it as well as anyone: "There are no evil thoughts except one: the refusal to think."
The refusal to think is everywhere, as a cursory glance at any "mainstream" economic or financial analysis will attest with tragic eloquence. The "evil" is self inflicted. It is shown in the stress, doubt, anxiety, and outright fear which is becoming ever more pervasive in financial markets. For a while people could convince themselves that they were "hoping against hope" that the financial powers that be knew what they were doing and that everything would "work out" in the end. Now, the "hope" is fading while the knowledge that things cannot be "worked out" without a fundamental change in the system is pressing ever harder against wilfully induced ignorance. A good definition of a financial panic is that it is what occurs when a large enough body of people can no longer maintain their self-inflicted ignorance against hte pressure of inescapable facts.
To hold Gold means that one has NOT succumbed to the disease of self-inflicted wishful thinking. The number of such people is steadily increasing, as witness the exploding demand for physical metal all over the world. The Gold "price", as expressed in US Dollars or any other paper currency (and that's all of them), is eloquent evidence of two facts. The first fact is the control that those in political charge still wield over the global financial system. The second is the fact that those who do not shy away from recognizing what is happening and acting accordingly have not yet reached a "critical mass".
The Privateer has been patiently describing and analysing the global financial system as it functions today for many years. We hasten to add that we are by no means alone, the amount of fine work being done on the internet is growing all the time. The fact is that ALL the facts, the logical analyses, and the conclusions are available to anyone who chooses to seek them out.
At this point, the "price" of Gold in paper money terms is almost completely irrelevant. We have had three weeks of limbo waiting for the events which will start with the Iraqi elections on January 30. The markets are holding their breath, waiting for a sign of which way to jump and hoping that no signs will be forthcoming. The problem is that even if NONE of these events (or any combination of them) forms a catalyst for the abandonment of the US Dollar that everyone fears, the fundamentally unviable nature of the present system will remain unchanged. Until something fundamental IS done to change the system - and you'll read about it here and in The Privateer if it is - there is no "solution" to the problem.
People who don't or won't see something which is coming right at them usually get flattened when it hits them. A viable system or currency cannot be based on debt for the same reason that a house cannot be built with promises. And that is true, and will remain true, no matter how many people wish to have their cake and eat it too and how hard they wish for it. The situation has become that childishly simple.