The stock market plunged hard after S&P downgraded Greek debt to junk status and cut its ratings on Portugal sovereign paper. What may have taken most observors by surprise is the spike up in gold that occurred, even with a move higher in the U.S. dollar. Gold has been transitioning this year into its 5000 year historical role as the ultmate currency and the ultimate wealth preservation tool.
This chart below from http://www.kitco.com/, which shows the trading action gold vs. major global currencies over the last 24 hours:
“If you have $100 today, you buy that much less in terms of a basket of goods and services then you did ten years ago – paper money has already lost a lot of value and in my view it will continue to lose value. The price of gold will adjust on the upside according to the loss of the purchasing power of money…If someone is rich they should buy a ton every month.”
Here is the link to the interview – it’s brief and well worth reading: Faber on Gold, the Fed
If I were the U.S. policy-makers sitting in Congress, the Fed and the White House, I’d be careful about asking for whom the bell is tolling – it’s not Greece, Europe or Goldman Sachs…