As the United States is the world's largest debtor nation, with endlessly mounting trade deficits, negative savings, and inflated security markets, it is not hard to image the fear motivating recent developments by the Japanese and the Europeans. Enough is enough. Gold reserves are not the problem for central banks but rather their excessive position of dollars, which has entered a major secular downtrend. The European central banks' new gold policy must be viewed as an aggressive escalation in their policy to establish monetary independence. The world has crossed the threshold into a monetary system that will be comprised of three reserve currencies.
Gold is no longer to be held hostage to American monetary policy.
On this point it is quite interesting to see that the English Poodle, in an obvious break with its American friends, has turned its leash over to the Europeans. It will be interesting to see what response the Bank of Japan will make to the European central banks. An Asian yen-backed currency has a long way to go to equal the gold reserves backing the dollar and the euro. Until now the currency world has been engaged in a competitive race to the cellar. It could be that the race for competitive legitimacy has begun.