Solid as GOLD

Back in 1997/98, that were talks about gold is no longer the reserve currency, and the value of gold is going nowhere but down. True enough. At the time it was the Asia financial crisis. Asian countries have to dump their gold reserves into the market to raise whatever amount of money that they need. I can still remember very clearly the Thais queuing up to donate gold to the government to pay back the loan from IMF.

To put salt on the wounds, some world financial institution announced they would slowly reduce their gold reserves. More gold would be dumped into the already saturated market. That went the gold. For an ounce of solid gold, you only needed to pay ~US$300.

As a Chinese saying goes "The east side of the river will prosper for 30 years, then the west side of the river will prosper for 30 years, and the cycle repeats". Down from its trough, gold has been climbing up slowly, unnoticed. Here is a photo of the Gate of Paradise at the baptistry in Florence, Italy. Whoever bought gold back in 1997/98 will be in the euphoria of paradise now.

Look at this chart of the price of a gold ETF. From a low of US$45, all the way to yesterday's US$71.43 and thanks to Ah Ben, who flooded the financial market with liquidity by lower the Fed fund rates to 4.75%, the price of this gold ETF is still going strong. For the same ounce of solid gold, now you to have to pay US$729.86. That goes the US dollar...