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Gold Will Win "Euro Vs Dollar" War

April 9, 2003

The "Euro vs Dollar" war is the most recent - and most defining - chapter in gold's 5,000 year history.

As a seasoned gold investor, you may already be aware of the euro's currency attack on the US dollar. Even though the issue is ignored into oblivion, particularly by American news media, gold investors are usually Internet savvy enough to have come across the subject online - especially readers of

Nevertheless, few realize how profoundly this conflict will soon impact their lives and their future investment outcomes.

The "Euro War" Drives Future Gold Valuation

While the war in Iraq blazes across our TV screens, occupying the forefront of people's minds al over the world, the Euro vs Dollar war is the most far reaching conflict in today's world. Its origins and certain consequences go far deeper than anyone today imagines.

One could make a valid case that the Euro vs Dollar war is the real reason behind the United States' invasion of Iraq.

If that sounds like a ridiculous exaggeration, just realize that in November of 2002, Saddam Hussein has opted to settle all Iraqi oil sales under the UN's "oil for food" program in euro rather than US dollars.

Whether Saddam did this just to "get back" at President Bush for insisting that he disarm, or whether he felt that his financial goals were better served that way, is ultimately irrelevant.

The undeniable fact is that the United States, as the issuer of the world's sole reserve currency, cannot afford to have other OPEC nations follow Iraq's example. For, if that happens, the dollar's reserve currency status with all of its benefits to the United States is - well - over!

And when it's "over" too suddenly, the economic consequences to the US will be catastrophic.

Currently, over half of the world's central bank currency reserves are held in dollars. US dollars have historically been the exclusive medium of settlement for international oil transactions.

More than half of the world's remaining international trade transactions are settled in dollars as well, and even private individuals, especially in developing countries or former east bloc states, hold dollars as a hedge against collapse of their home currency's value.

Once even a small number of OPEC member countries begin to shun the dollar and transact their business in euro, the already existing process toward the "euro-isation" of the world monetary system will become an unstoppable avalanche that could bury the United States under mountains of its own currency - just like a hapless ski vacationer under a cascading wall of snow and ice.

And that means hyper-inflation of a magnitude even post WWI Germany has not seen.

No doubt, the need to stem the tide of WMD proliferation and Saddam's passion of supporting anti-US terrorism constitute an important part of George W.'s reasons for removing him. But to deny the fact that the ongoing euro vs dollar war has had an enormous bearing on his decision to invade Iraq would be foolish, to say the least.

Money rules the world. And the dollar has been the world's trade money and sole reserve currency for the past 58 years. America's superpower days would be over in a jiffy if the euro were to take the world by storm.

The euro vs dollar war also explains very eloquently the reasons why France and Germany have broken ranks with their liberator and former ally, and are trying to go it alone these days. These two countries consider themselves to be the driving force of Europe, and they understand very well the role of their new currency.

In the same vein, the euro vs dollar war also explains their obvious, some might say shameless, courting of terrorist-supporting OPEC nations. The French and Germans WANT oil producing countries to switch to euros for oil, because they know that this will immensely accelerate the advance of the new currency to world-wide reserve status, which will make Europe, and thereby them they hope, the next "superpower."

Gold is Europe's "Secret Weapon" ...

The euro's creators also know that the United States is dead-set against a rising gold price, as such would undermine Americans' and the world's confidence in the dollar. They know that the US economic and political leadership is forced to expend enormous capital to keep the price of gold under control.

So they cleverly set the euro up to not just peacefully coexist but actually benefit from a rising gold price.

During the Clinton administration the US has walked so far down the slippery slope of covert gold price suppression (with a little help from Bill's friends in the upper echelons of the US bullion bank industry) that it cannot suddenly change course and allow the price to rise.

... while being the US' Achilles' Heel

If the United States did allow the price to rise according to market forces, the bullion banks' massive gold short-sales exposure would cause them to implode, setting off a chain-reaction that could devastate US and world financial markets.

This is the US' Achilles' heel, and the euro countries are aiming at it with all barrels blazing.

None of this has been breathed to the American public, even by the non-mainstream media. Americans are frightfully unaware of this enormous threat.

Decades of official, media, and financial "expert" conditioning have made the American public immune to even the slightest suggestion that gold might be a prudent investment, but the recent run-up in gold prices has begun to open at least a few eyes.

The sad result is that the United States now owns far less gold than official figures pretend. The official sector has covertly frittered its gold reserves away in illegal price suppression schemes, while the private sector has frittered its paper-dollars away by chasing illusory stock-market gains. And despite the recently commenced (and still unbroken) secular bull market in gold, few Americans give the shiny metal its due regard.

But without gold, the United States cannot even stand up - much less fight back - in a world where the US dollar becomes worthless while its enemies (declared and undeclared) make out like bandits. If the US must first exchange fast depreciating dollars to euros before settling oil transactions, it will soon be unable to pay its debts - and we are the world's largest debtor nation.

For this reason, it is imperative that Americans realize the importance of gold - even if their government will not.

Europeans realize it. They already value their gold reserves according to market price, which boosts the euro's value as a reserve currency.

Muslims realize it. They are about to launch their own 100% gold bullion currency called the "gold dinar."

Asians realize it. Asians and Indian private gold demand in the form of jewelry and ingots is legend.

Even Communist China has recently liberated its gold market, allowing the private trading and ownership of gold to take advantage of this crucial trend!

Only the US government ostrich has buried its head deep in a pile of paper dollars and gold derivatives.

Can America Escape the Looming Disaster?

That must change, or this country, with all its military might and its powerful economic engine, will be history.

The antidote to this may be painful, but it is not nearly as painful as the hyper-inflation that will hit this country when all those international reserve and trade dollar chickens will come home to roost.

Call me a dreamer, but the question simply boils down to this:

The US government can either

  • Continue to covertly support the bullion banks' leasing/short-selling price-rigging game under the conventional notion that they MUST be supported because they are "too big to fail" - and as a result suffer total economic breakdown from a hyper-inflation that will make that of post-WWI Germany pale in comparison, or
  • Cut its losses and abandon its failed, decades-old anti-gold policies by
  • Dumping the bullion banks, (sorry, Friends of Bill)
  • Valuing it gold reserves at market price (instead of the silly "official gold price" of $42.00 per ounce), and
  • Buying gold in the open market to replenish the official reserves frittered away in decades of surreptitious gold leasing, swapping, and shady ESF deals that were designed to prop up the failing dollar by "managing" the price of gold into oblivion.

If US leaders should find the courage to do this, the formerly feared explosion in gold prices set off by the official purchases (and by the powerful signal this policy change will send) will actually give the dollar's value an enormous boost, since the reserves will then be "marked to market." Marking to market simply means that the US has dropped its "raise the dollar at the expense of gold" idiocy and now allows the gold price to soar freely.

If this is done, it will utterly fend off any euro-attacks and put the dollar on a par with its currency foe, vastly decreasing any OPEC countries' temptations to dump the petro-dollar for "petro-euros." Never mind that the Euro Zone has more gold in its collective central bank vaults. Once the currency playing field is leveled, the US will outperform them any day.

President Bush has already proven that he has the guts and the foresight to ditch stupid policies - like propping up various repressive dictatorships such as the Saudis (and formerly even Saddam) in the hopes of hemming in other, more dangerous regimes (like Iran). He has proven beyond doubt that he has the moral courage to dare bring even a chance of freedom to a region that was previously considered lost to repression and violence.

Sure, the jury is still out as to the after-effect of the Iraq attack, but it is undeniable that his war plan was an unmitigated success. Even his expectations of popular support and uprisings against Saddam's forces are beginning to manifest themselves in a way no media critic has previously thought possible.

The very same courage and foresight is now needed to protect the United States from the otherwise inevitable result of the euro's takeover of world reserve currency status. For, if the President does not follow this new course of action, the terrorist-supporting oil countries (and their French and German buddies) will be the ones who laugh last, crushing the US in the dust of economic -and eventual even military - humiliation after all, never mind this stunning victory.

But, however this may be, whether the Euro wins or whether America wins this currency war, the gold eagle will soar to heights never before imagined, no matter what. Gold WILL be freed from its fiat dollar/paper-gold shackles, and it WILL become the number one measure of true wealth again. That monetary tsunami has already been set in motion by sea-bottom seismic events, and has begun its inevitable path to landfall. It will not be stopped before running its course.

The only question is: will America as a nation of free and prosperous people be there to ride out the coming ascent on the gold eagle's back - or die squirming in its talons?

Alex Wallenwein
Editor, Publisher
Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is your golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without

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