A century of transformation that lead to Gold Bubble

1900 to 1929: US had fixed amount of Dollar held can be exchanged for Gold coins. And every country allowed its individual currencies to be exchanged for gold, where every currency was fixed in reference to the amount of gold they held.
1929-1933: Great Depression
Consequence of Great Depression: US Changes its policy towards Gold.
Effect of Gold Policy Changes: Federal Reserve system should have kicked in when the systemic failure occurred during Great Depression, which did not take place. For the Fed reserve to function as expected in future for such failures, US took two steps.
1) Gold Reserve Act of 1934 brought the power for US to accumulate over large share of gold with US Treasury. As one would expect the US pegged more $ for the gold that was held by US citizens, with a 60% increase in price for gold. ($20 gold, was valued at $35). i.e. US Devalued its currency ($) against Gold.
2) Planned on Bretton Woods, NH meet by 44 nations to reach an agreement for future of stable currency standard for the world.
1930 - 1933: Gold standard collapsed under Bretton Woods Agreement
Note: Allied nations were preparing for World War II during this time.
Total Number of Nations: 44 (Allied Nations)
Bretton Woods agreement: Under this agreement , it was a setup of system of rules, institutions and procedures to regulate IMF and International Bank for Reconstruction and Development (IBRD) (Today’s World Bank)
This system started to run effectively after 1944/45.
Each Countries had an obligation: Every country will tie its currency to the US Dollar (with 1% parity) and ability of IMF to bridge temporary imbalance of payments. Where US Dollar becomes the base currency and US will link its $35 to one troy ounce.
1944 - 1969: Stability of Gold against an unstable Currency.
The gold price continued to increase beyond $35 per troy ounce due to demand, which resulted in pressure for US to print more of US$, and was forced to devalue its own currency irrespective of domestic market. To give a sense of what it looked like at that time, the price of gold rose from $35 per troy ounce in 1935 to $41.28 in 1969.
1970's US cost over Vietnam War and Increased domestic spending by Government resulted in high inflation.
US were running balance of payments deficit and trade deficit. In other words, it had to either pay gold, or pay $ to its lenders in order to meet those payment deficits. Till 1970, foreign countries held US Dollar bills and tied their currency to the US Dollar, with confidence on US market and ability to cut its budget and trade deficit.
In 1971, US printed more US Dollars, in order to pay for nation’s military spending and private investments. This was a devaluation of US Dollar by 10%. In other words, now one troy ounce of gold was $41. As per Bretton Woods agreement, countries will have to tie their currency to US Dollar. Since now US has devalued their currency, other countries that tied up to US Dollar also had to devalue their currency. West Germany (prior to 1989/90, Germany was divided as West and East) was the first country to withdraw from Bretton Woods agreement, since it did not want to devalue its currency. The move by West Germany strengthened their economy, and was value of US Dollar dropped by 7.5% against West German Currency (Deutsche Mark). Due to excess of dollars printed by US, and negative trade balance (lenders around the world), many countries started demanding US to meet their promise to pay as per Bretton woods agreement by exchanging gold for the US Paper dollars given back by those countries, they did not want the Dollars. They wanted to dump US Dollars back to US, and exchange for gold in return. Switzerland was followed by France in demanding gold in return of US Dollar Papers. Switzerland next withdrew from Bretton Woods agreement. Soon US Dollar began losing its value against European Currencies. All these events resulted in high inflation and greater spending by the US Government in domestic market, and on Vietnam War. To stop other countries from demanding gold on basis of promise to pay, US President Nixon gave a shock to the entire world by announcing the closure for gold window, where convertibility between US Dollar and Gold came to an End.
After 1971: Bubble begins to build on GOLD
After Nixon’s Shock, US Dollar was not longer tied to gold in direct proportions of closer to 1ounce / $35, but the price was declared to fluctuate based on market demand for gold. Ever since 1900 till 1971, it was mostly the Kingdoms around the world, the Central Banks & IMF which held huge reserve of gold (IMF sells gold when needed at the market price to raise fund for operational cost and other expenditures and welfare of developing / poor nations). Among the Central Banks, US Fed Reserve still holds huge amount of gold / major share of gold in its reserve. This leads to the phenomenon of linking US Economy (major stake holder of gold reserve) to gold price. In summary, market price after 1971 could go any way by supply, demand for gold and stability of global economy, since many central banks have began stacking up more of gold. In reference to the inflation between 1971 and 2011, today’s price of gold is over inflated when in reference to US economy but with globalization and taking different world economies in picture, today's price could be closer to where it is currently in ref. to adjusted global inflation in average, but its still a GOLD BUBBLE long due for burst since 1971.

Equinox vs CR-V vs RAV4 2011

1. Chevy Equinox 2011: This is a new model released by GM after restructuring in 2009-2010. It has a very good design, and looks bold from outside. Interior and performance are real big negatives for this vehicle from my tests. Plastics used on dash of Chevy Equinox has a “Tuc Tuc” sound of no padding beneath it, giving a sense of cheep plastic quality and build. Mileage is not as superior as vehicles in the same class, but the could be deviated from EPA estimates by couple of miles. Cargo space is real big positive for this vehicle.
2. Honda CR-V 2011 EX-L: The design for Honda CR-V 2011 is set to be revised in 2012. And it had a tough competition while I was selecting it in comparison with RAV4. Me and my wife did luv the style. It was not bold / expressive as Equinox, and it was not just a vehicle like RAV4 from its appearance. EX-L had the navi installed on it, with rear view camera, but it was not appealing bargain against its negative points. The navi dint have good graphics. With Honda I expect more for the price. The exterior look did suggest that there should be something inside better as well (Under the hood). That’s what one might think about this vehicle. But the truth is , I did hate its performance. Honda CRV does come with I-4 Engine in US, and only I-4 that delivers, close to 180 hp, and does not have a V6 engine for any trim level. It has a 5 speed automatic transmission that struggles to understand the torque, and switch gears smoothly. Interior is OK, but not that great until you choose EX-L. But you will need to shell more $ to get EX-L which is not worth the bucks paid for. And switching to EX will leave you with lesser options, and further trimming it down if LX was selected. Good side of Honda CRV is design, and trunk door. Negative points on Honda CRV goes around, engine performance(has a bit of drag), mileage, cargo space.

3. Toyota RAV4 2011 Limited I4: Let me get quickly to the negative points of a RAV4 2011. Tailgate trunk door with wheel mounted, is heavy. V6 has 5 speed, but overly priced when we see the performance delivered by I4 Engine. I4 Engine with 4 speed has just 1 mpg more than a V6. So if you wanted sporty ride where you can sacrifice 1 mpg, then V6 is a better option. I4 has better performance with its 4 speed auto transmission gear box. No doubt about it. All 4WD have On Demand All wheel drive (4WD). i.e the 4WD automatically engages when a slip is detected at speeds less than 25mph. So you get better fuel economy on RAV4 4WD than a CR-V 4WD. Also, while driving the 4WD is engaged but with differential torque to the 4 wheels as needed. For example, most of the torque in normal driving conditions from engine will deliver power for the Front wheels, and minimal torque distribution will be to rear wheels, and torque distribution automatically gets adjusted while you drive up a hill, slope, snow/ice etc.. Its automatically taken care, when needed without your knowledge / feel of 4WD engaging/disengaging. Also has an option for you to manually engage 4WD Lock, while you try to start in slippery conditions (<25mph). The ECU is quiet intelligent than its 2010 model. The ECU is programmed to learn from your driven method, and it will program the system to adjust the fuel injection and air intake etc.. to suite your driving habits. If you are an aggressive driver, it would program the injection system accordingly to deliver the performance you expect. But per dealers advice, it would take 1000 miles for it to fully get a useful pattern of your driving and work efficiently. There are some downsides to this system, if there are two drivers sharing the same vehicle, and where one drives different from the other. RAV4 is expected to have its 2012 model with Tesla powered EV. But due to the earthquake this release could get delayed, and its definitely going to be pricy, when compared to its 2011 models. Consumer Ratings tests have better results for RAV4 2011 model, and esply. on its mileage. It has 4 points on its Rollover, since it’s a bit taller, and its almost same as any SUV in its category. RAV4 Limited does have option for 3rd row, but it needs to come from the factory. 8 Way adjustable driver seat with Lumbar adjustments make it a good comfort for the driver. Ride on RAV4 over off-road conditions too appear soft, with all the independent suspensions working in favor of drivetrain, making it appear like a Lexus or in par with bigger SUV’s for off-road rides.

Soft but smart

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Finally

I am back from my vacation and other busy schedule… It was a great time up in India. There are great developments around the city of chennai, and huge infrastructure development that’s going on in OMR Road. Here a quick review of one big project that I had a chance to visit on OMR.

XS Real

My review on XS Real : This building is going to be 13 stories tall, and has all the facilities in it.

+ive: (1) Each apartment will have an Individual Unit style to it. (2) Facilities (3) Interior work (4) handover condition (5) location (6) View – if u book one of the top floors. (7) sqft price is same irrespective of which floor you are interested in. (8) generator for backup supply.

-ive: (1) Cost of hand over (for registration + fund etc..) (2) Though there is a reverse osmosis plant still drinking water is available only by purchase. (3) Though the lake is partially full now, the building is just 2000ft away from Muttukadu lake as per the GIS map. Better luck with Tsunami that yet to come some day like in 2004 dec 24th