RE: John Embry's comments (fordy1)Sure, everybody knows the gold market is manipulated. Don't the gasoline companies conspire to rig prices and rip consumers off.
Also according to Embry: The end of fiat money is near and the US inflation rate is not really 2% but 20%. The key is the money supply growth.....
Wrong again. But don't let it bother you. I've made good money on stocks for the 'wrong reasons'. I'm sure you can too. Embry can be completely wrong and with a good risk diversification strategy and some smart trades, still make good money.
In the meantime, central banks are not dumping gold, jewelry demand is up, and many believe gold is attractive because the US dollar may decline some more (though not much IMO). Enough investors will hedge or speculate on gold to make a little bit of zero-sum trading work to the advantage of the nimble.
Why these investors fearful of the US dollar do not simply put their money into productive assets in stronger currencies is an interesting question.
Fortunately, FRP has added u308 to the portfolio in case gold heads south. Unless demand for gold jewelry increases radically, I would expect the price of gold to decline significantly from current levels by 2010.
Central bankers do have a better mouse-trap this time: rational-expectations augmented models. Even Friedman admitted not too long before his death that inflation-targeting policies were working surprisingly well. Friedman most deserves his reputation as one of the most brilliant monetary economists of the 20th century, but his postulated tight relationship between money supply growth and inflation never bore empirical examination.