What is the world Rushing too?

Kia Ora,

Things are rushing along in the worlds economy yet most people are turning their heads away or sticking them in the sand.

Over the last few days there has being a US$200 billion bail out (to put it in perspective if you count a dollar per second it takes 12 days to count a million, 32 years to count a billion & 32,000 years to count a trillion). Iceland has refused to pay debt back to foreign countries, Dubai is still jittery & other sovereign debt issues surfacing are Greece (which the EU has apparently refused to bail out), Spain, Portragul, Italy & Ireland not to mention Britain & the US (which still has a tripe A rating mainly to prop up the worlds economy but should be C rated so junk bonds.

Only two days ago I received an email warning to stay away from the ETF (electronically traded funds) GLD because they don't actually have the gold or silver they say they do. Now due to research when increasing my financial IQ I was aware of this issue in all ETF trading gold & silver. There is estimated more gold & in particular silver(at least twice as much) being traded than is physically available. It has become an issue because a court case has being taken in US to expose this.

How will this effect the world. Well it has happened before. In 1994 Warren Buffet took out US$650 million(129.8 million ounces) of futures on Silver. They matured in 1998 & most people take their gains in cash. Mr Buffet though asked to be paid in the silver as he is allowed too. It caused panic & the markets were closed whilst they found the silver to pay him. Over night the price almost doubled.

It is expected the same will happen here. All trading on the ETF's will cease whilst they sort it out but the physical gold & silver will race up in price. Not to mention the current rises due to inflation.

Then people may get jittery & start asking for the gold & silver held in storage only to find they have being paying storage fees for metal that was going to be brought at some future date & is not actually held in the storage facilities. How do we know this? It came out when Lehmans were caught out. Their only comment was "Everyone is doing it". Not much attention was paid to that then.

So that is why it is important to improve your financial IQ through education & research of history & stay ahead of the game. It is also why it is important to learn from your mistakes & the mistakes of others.