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Is some sort of worldwide currency intervention on the way?

Section: Daily Dispatches

If everyone wants a weaker currency, gold would be glad to help. Just stop trying to push it down.

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Calls Grow for Global Effort to Address Debt Crisis

By Neil Shah
The Wall Street Journal
Thursday, August 4, 2011

Gyrations in world markets are fueling speculation among policy makers and investors that it will take bigger and possibly coordinated moves by governments to douse Europe's sovereign-debt fires and calm tensions between countries trying to keep their currencies weak and exports competitive.

Senior officials from the Group of Seven leading nations have been in communication about Europe's debt crisis, according to a senior G-7 official with first-hand knowledge of the situation, with U.S. officials pushing European leaders to expand the size of their rescue fund for cash-strapped countries.

Their fear is that the crisis of confidence roiling Europe's weaker economies could spin out of control, engulfing Italy and Spain -- the euro-zone's third- and fourth-biggest economies -- rattling financial markets, and pushing the global economy into a recession.

... Dispatch continues below ...


Lewis E. Lehrman on How to Solve the U.S. Debt Problem

Lewis E. Lehrman, chairman of the Lehrman Institute, sponsor of The Gold Standard Now project, advises that to reduce the $1 1/2 trillion U.S. deficit, the Republican Party must initiate an investment program.

Working Americans are not saving, which enables the banks to lead the country into a cycle of debt, leverage, boom, panic, and bust.

Lehrman says: Eliminating the budget deficit of a trillion and a half dollars cannot be done overnight. The proposal by U.S. Rep. Paul Ryan was very dramatic -- one Republican called it radical -- but it was not happily received. The solution, of course, is to design an American program for prosperity, because you can solve these entitlement problems with a growing economy. We need a tremendous program of investment, and investment comes from savings. When you pay savers, middle-income professionals, and working people 0 percent at the bank, you are not going to encourage them to save. Then we are left with a bank cycle of debt, leverage, boom, panic, and bust."

To read more and to sign up for The Gold Standard Now's free, noncommercial, weekly report, "Prosperity through Gold," please visit:

At the same time, amid growing concerns over a global slowdown and complaints by Japan and Switzerland that economic problems in the United States and euro zone are driving up the value of their currencies and hurting domestic exporters, some investors are speculating that an international agreement to ease tensions in the world's currency markets could be in the offing.

"You can see the locomotive coming," says Michael W. Gurka, managing director, of Spectrum Asset Management LLC, a $230 million hedge fund in Chicago. "Investors are waiting for what is going to be a big policy change. It's global. We're all in this together."

On Wednesday the U.S. Dollar Index, which tracks its value against a basket of currencies, fell 0.7%, with one greenback buying only about Y77, near the all-time low of Y76.25.

The latest movements in global exchange rate are turning into a dilemma for global policy makers. The U.S.'s dismal economic outlook and Europe's debt crisis -- along with a string of disappointing economic reports around the world -- are driving investors out of the dollar and euro and into the perceived safety of currencies like the Swiss franc and Japanese yen.

That helps the United States and 17-nation euro zone by making it easier for their exporters to sell their goods abroad. But it also makes business much tougher for Japanese and Swiss exporters.

On Wednesday the Swiss Central Bank moved unexpectedly to weaken the Swiss franc by increasing the supply of francs in the money markets. Swiss officials warned that more steps could also be taken. Meanwhile, Japanese authorities for days have warned financial investors they are carefully watching the dollar's fall against the yen.

Some observers believe that an international policy response -- something akin to the 1985 Plaza Accord -- could help engineer an orderly rise in the dollar that would benefit other countries like Brazil and Japan that have long complained that capital is rushing into their countries and hurting their economic prospects.

But Stephen Jen, managing director of London-based hedge fund SLJ Macro Partners LLP, says the U.S. is unlikely to participate in any Plaza Accord-style agreement unless the dollar and dollar-denominated assets enter a free-fall -- signaling a market panic that warrants international action.

That is because the latest U.S. reports on growth, manufacturing, and consumer confidence suggest the U.S. needs a weaker dollar, not a stronger one. Indeed, if the U.S. economy stalls, some say, the Federal Reserve could revive its bond-buying program to spur growth -- a decision that would further weaken the dollar. The euro-zone, especially export powerhouse Germany, also would benefit from a weaker rather than a stronger euro.

"It's a bit of a conundrum," says Dustin Reid, New York-based global head of foreign-exchange strategy at Spanish bank BBVA. To have a big international currency intervention, "you have to have someone on the other side of the trade."

Another problem: Even large-scale currency interventions fail. In March central banks around the globe tried to stem the yen's rise -- but this effort didn't succeed. The Swiss National Bank's recent efforts to buy euros and sell Swiss francs have left it with billions of euros of paper losses.

And a concerted effort to weaken some international currencies could also undermine the U.S.'s argument that China should allow its own currency, the yuan, to strengthen, Morgan Stanley currency analyst Ron Leven says.

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Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit,
Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit: