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Dollar Crisis Looms if US Doesn't Curb Debt: Experts
http://www.cnbc.com/id/34848783



Jim Sinclair’s Commentary
Sir Richard speaks on gold and the lack of a PRACTICAL method to either sustain a dollar rally or drain the trillions injected into the international economy.
Richard Russell comments on gold – again
January 12, 2010 – I’ve been a fan of Noriel Roubini’s, (my daughter’s been to his parties) one of the very few economists who foresaw and predicted the housing collapse. That great call made Roubini famous. But I was surprised and dismayed to note Roubini’s recent warning about what he termed the "gold bubble." Roubini is the son of an Iranian-Jewish family, and if that didn’t provide him with respec t for gold I don’t know what would. Actually I was shocked that the brilliant Roubini didn’t understand gold, all of which leads to today’s site.
At any rate, I feel the urge to talk about the fundamentals of gold. Eighty-five percent of all the gold ever mined in world history is here on the surface of the earth today — it’s in your tooth crown, it’s in your sweetie’s ring, it’s on the ceiling of your church, it’s in those heavy bars buried deep in the vaults of the New York Fed, it’s in the case of your Rolex watch. In general, gold is not "used up," it’s simply accumulated.
Gold is mentioned repeatedly in the Bible. Gold appears to be etched into the DNA of man. Gold has been lusted after and treasured since the dawn of civilization. The search for gold opened up America’s West. The quest for gold sent the merciless Spanish explorers into the Americas. Gold has been an item of wealth through the dark ages, through two world wars, through the Holocaust, through the Crusades, through Biblical times. As far as I can discover, there has never been a time when man has not lusted for the beautiful yellow metal that never tarnishes.
Gold is the standard around which all other prices revolve. The price of gold does not change. Gold is the eternal, immutable standard. Gold is priced by the minute worldwide in dollars. If the dollar price of gold rises (as now), the dollar is, in effect, being devalued. All other currencies are compared with the dollar. Thus, if the price of gold rises, that rise effects all other currencies, and thus all currencies move around the dollar, and the dollar in turn fluctuates around gold.
The Founding fathers had intimate experience with fiat paper currency, and the Constitution of the United States states that only gold and silver are to be considered money. Further, the Constitution warns specifically against paper money. Prior to 1931 you could take your dollars to a national bank and exchange those dollars for gold. Since the dollar was backed by gold, the discipline of gold limited the number of dollars that could be issued by the United States. Not enough gold, stop printing dollars.
More…


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