The games of smoke & mirrors continues.

Kia Ora,


Well the games of smoke & mirrors continues.


On the surface it looks like the Euro is on the edge with Greece jsut being the leading contender to crumble. Meanwhile more money moves to the UK & US, but in reality they are in worse shape than anyone in Europe & Iceland has now said it will refuse to pay back loans to British & Dutch banks.

China has said it will not take part in the auction of gold by the IMF which people took to mean that things might be getting better. Did this contribute to the pull back of gold or is it part of a strategy?

Well seems China has being keeping a strategy of its own. Over the past year it has mined the most gold but it has also bought the most gold. Its own & more. Over 400 tonnes.

It has also being buying resources around the world including gold mines.

The big question at the moment is what is going to happen when the US officially ends its policy of Quantitive Easing (or printing money by hitting the computer button). Most likely at first is deflation, so assets will fall in value.

 But for how long? With the amount of money that has being printed it is likely to then turn to inflation & high inflation. In other words cash may buy more for a short period, but when inflation kicks in then that cash will buy less & less.

Of course the likely reaction in the US at least, by those who are in charge of the economy is to print more money which in the long run is likely to result not just in high inflation, but hyperinflation.

At present as the news in Europe & Britain gets worse, investors are turning to the old faithful of precious metals in particular gold, which is expected to do well in any likely scenario.