Gold special: dollar VS. gold

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As gold outperforms other commodities amid the global financial crisis, supporters for the yellow metal are even beginning to advocate a return to gold to its former exalted place at the center of the global financial system. In this final segment of our special series on Gold, Song Hongbing, the author and currency expert,is interviewed for his opinions about gold and the dollar.











Asgoldoutperformsothercommoditiesamidtheglobalfinancial
crisis,supportersfortheyellowmetalareevenbeginningto
advocateareturntogoldtoitsformerexaltedplaceatthe
centeroftheglobalfinancialsystem.

Many have suffered losses due to the financial crisis. But Song Hongbing, the author of the popular "Currency Wars" book, has been faring well. His book ranked among the hottest items in 2008. Published last May, "Currency Wars" foresees a great unraveling of the credit crisis. Song Hongbing also criticizes the excessive issuance of the US dollar. And he asserts that gold should once again become the standard by which all things financial are measured.

Song Hongbing said, "In my opinion, gold is the real money."

"The only bubble is in US dollars. That's because The Fed has printed too much money, too quickly. If you have too much money in the market, you can push up everything. That's why the commodity market is so hot. It's the US dollar bubble. The US government has too much debt, close to 10 trillion. I think over the near term, middle term and long term. The Federal Reserve has no choice but to print more money to get rid of the heavy burden. That's why I think in the long term, gold prices will become higher and higher."

It is true that the flip side of a weak dollar is rising gold prices. Looking back at monetary history.

Song says the story of the dollar and gold has always been that of two old competitors -- always on opposite ends of an economic seesaw. The striking fact is that the US dollar has lost 90 percent of its purchasing power since it was de-pegged from the gold standard -- 30 years ago.