Wow, what confusion in the markets, eh? One day the Dow Industrials are up 100 points or so, the next day it’s down sharply. One day gold is down $15, the next day, it’s up $12.

One day silver is collapsing again, another trading day, it’s roaring higher. One day the bond market is soaring higher signaling deflation, the next day it’s cratering, worried about inflation.

I’ve been around these markets a long time. Thirty-three years to be precise. I’ve traded tens of billions of dollars, mostly in the wild and wooly futures markets. And quite frankly, I have never seen such volatility, in any market. Period. It’s amazing.

But it’s also not surprising. The post-Bretton Woods fiat monetary system is breaking down. A new global financial architecture and monetary system is desperately needed. Everyone knows it.

That’s never been more true than it is today. Not just because of the massive debt crisis that is affecting the developed world, but because the emerging markets — which represent fully 84% of the world’s population — are growing like never before.

The problem is, the wild swings we’re seeing in the markets will not abate. They are bound to increase in the weeks, months and years ahead. Until the authorities around the world realize themselves that the world is changing.

Until then, the fact of the matter remains that your wealth and the wealth of your children and grandchildren are totally and unabashedly at risk.

Today, though, I want to take a step back from the day-to-day swings in the markets and do another Q&A column, culling some recent questions from readers.

This way, I can help you keep the bigger picture in focus. Plus, you’ll know what others are thinking and asking, and, of course, what my answers are (or at least my visions of the futures are). So let’s get started …

Q: How would a future single world currency impact the price of gold once it’s introduced?

A: The question should not be how it will affect its price, but its value. Let me clarify: Suppose gold is trading at $7,000 per ounce just before a new world currency is introduced. And let’s suppose that one new world currency unit equals $1,000 U.S. dollars. An ounce of gold would then be valued at a price of seven new world currency units.

In other words, the value and purchasing power of gold remain the same; the only thing that changes is the denomination of the currency.

You might think, “well, then nothing has really changed.” And in the strict sense of the matter, that would be true.

But, a single world currency would not be introduced in a vacuum. It would (most likely) be introduced based upon a basket of internationally traded commodities. So its purchasing power — and value — would be equivalent to whatever it is at that time.

Also, and no matter what, one must realize that when a new world currency is finally introduced, it will be in the context of a wildly inflated world; in other words, asset prices will have inflated because of the depreciation that’s being deliberately unleashed by central bankers to push up asset prices relative to private and public debt levels.

Then, the system gets reset, or rebooted, if you will, to reflect a new balance sheet, if you will.

In the end, a new monetary system and a single world currency for international trade will be a good thing. Unfortunately, getting there will be the hard part as there is simply no one in Washington or any other government in the world that will fess up to what they’re doing: Inflating asset prices.

So it remains up to you to see through it, and protect and grow your wealth.

Q: Larry, since gold has been going up since 2000/2001 above the rate of inflation, does that mean we have been in a deflationary period ever since? Does this make the deflation/inflation argument mute?

A: Excellent questions! In the sense that gold now buys you much more of many other assets, especially stocks and real estate, the answer would be YES, for those particular assets. Indeed, they have deflated relative to the price of gold.

Naturally, other asset prices, such as the price of oil or food in general, have inflated along with the price of gold.

Bottom line #1: All asset prices and value are relative, and …

Bottom line #2: Inflation and deflation are two sides of the same coin. One does not exist without the other.

However, that does not make the argument mute, because in order to protect and grow one’s wealth, one has to know which asset prices are inflating, versus which are deflating.

Q: Do you think Keynes idea of the “Bancor” as the world international trading currency [is viable]? Is it possible for governments to give up their monopoly on money entirely?

A: Actually, I think central banks, especially the U.S. central bank, should give up their monopoly on money and credit. The ability to create money and credit should be a function of the government and not a central bank.

Having said that, a government’s ability to create and control money and credit needs to be removed from those in power and pegged to an objective medium of exchange.

The best way to do that is to use a commodity-basket, which will rise and fall in value according to the natural expansion and contraction of global economic growth and other factors, such as global population growth and more.

The IMF, the World Bank and the United Nations all endorse similar proposals, but none of them have gone far enough yet in working out the details.

Q: Since the exchanges have the ability to raise margins, like they did recently with silver, can’t they squash market rallies whenever they want, no matter what the commodity, or stock market, for that matter?

A: Short term, yes. Long term, no. Long-term trends are far more powerful than any exchange, government, and central bank.

Q: Larry, gold seems to be in trouble here. Are you concerned?

A: Not in the least bit. Yes, gold could and probably will pullback. But keep the long term in view. Gold is real money whose value is going to continue to appreciate in the years ahead.

Q: It was recently revealed that George Soros dumped some $800 million of gold. Since he’s getting out, shouldn’t we be?

A: No. First, no one really knows for sure how much gold he has, therefore, we don’t know whether he sold all of it, most of it, or a modest amount.

Second, we don’t know what he’s doing with the gold he sold. In fact, most of the gold he sold was via shares in the SPDR Gold Trust ETF. He could have been selling that gold and switching to actual physical gold that he’s storing in his own bank. Or, buying gold miners.

Keep in mind that you almost never get the full story from the press, no matter who issues the news, or who they are talking about. Nor do you ever get the full story from any investors, especially big ones like George Soros.

Bottom line: Never make any decisions based on news reports alone.

Q: The dollar is rallying again as the euro sovereign debt crisis erupts anew. Does this mean we are just seeing the dollar and the euro seesaw lower over time, due to both countries’ problems?

A: You are precisely correct. Both the euro and the dollar are losing purchasing power and in bear markets. Sometimes the U.S. dollar loses more, and sometimes the euro takes the lead.

Q: Larry, the Chinese yuan is not appreciating as quickly as you thought. What gives?

A: True, the yuan is not moving up as quickly as I expected. But I have no doubt it will. At the recent pow-wow in Washington, Beijing agreed to …

Increase its domestic savings interest rates to coax Chinese savers into saving even more.

Use “other methods” to help the U.S. boost its exports and put a lid on domestic Chinese inflation. That’s code speak for moving to more rapidly appreciate the yuan against the dollar.

Q: I watch your UWD videos, Larry, but the markets move so fast these days. Where’s support and resistance now in gold and silver?

A: Keep your eyes on the $1,477 level in gold as important support. If it gives way, expect to see a pullback to $1,425. On the resistance side, gold will find some selling between $1,525 and $1,545.

In silver, major support lies at $32. I expect that to soon give way, leading to a decline to $30, then $28 and quite possibly $23. Resistance lies at the $39 to $40 level.

Q: You have not written much about Asia lately. Why and what’s your view?

A: Great question! The simple reason is that with all the action in gold and silver over the past few weeks, and so many of my readers heavily invested in the precious metals, that’s where the urgency is.

But I am as bullish as ever on Asian economies, and emerging markets in general. The weakness in the dollar — and the euro — continues to drive investment capital into emerging markets. And consumers in emerging markets continue to drive economic growth throughout the developing world.

I have a good portion of my own net worth invested in emerging markets. And those investments are thriving.

Best wishes, as always,

Larry Edelson

Thirty years ago Tuesday, on Sunday, June 7, 1981, eight IAF F-16s and and six F-15s took off from the IAF’s Etzion Base in northern Sinai. Their destination was the Iraqi nuclear plant at Al-Tuweitha, near Baghdad.

The youngest F-16 pilot was Captain Ilan Ramon, 25. He volunteered to fly last in the attack formation — the most dangerous position — because he had no wife or children.

The strike made history and denied Iraq’s Saddam Hussein his dream of nuclear weapons. He was eventually toppled and executed after the US led a coalition force into Iraq.  

An animation created in 2003, in the months leading up to the coalition’s invasion, tells the story of that strike. By a stroke of chance, it was put online just days after the tragic death of Ilan Ramon, Israel’s first astronaut, on board the space shuttle Columbia.

The animation by Gil Ronen was viewed at the time by over 250,000 people, including numerous people within the US political leadership and defense establishment — the same ones who decided to finish the job Israel had started 22 years earlier and rid the world of the danger that Saddam Hussein would ever use weapons of mass destruction against other countries. 

Israel bombed a site it claimed was a fledgling nuclear reactor in Syria several years ago.  The International Atomic Energy Agency, IAEA, recently corroborated Israel’s claim, but condemned Israel for destroying the site instead of filing a complaint.

Click here to view the animation.

In the year 66 AD, a great Jewish revolt began against the Romans in Israel. Instigated by Roman idolatry and forced taxation, the fighting began in Caesarea and spread northward into the Galilee. The revolt would last for seven years, only ending with the fall of Masada in 73. It was responsible for some of the greatest tragedies and destruction in the history of Judaism, most notably, the siege of Jerusalem and subsequent destruction of the Second Temple.

As Jewish rebels in the Galilee faced defeat in the early years of the revolt, its leaders, determined to hold off the Romans, fled to Jerusalem. It was there that many of the rebels, known as the Zealots, would make their last stand in an attempt to protect the Temple.

The seizure of power in Jerusalem by the Galilean rebel leaders was not the only change in leadership that took place prior to the Roman conquest of the Holy City. In 69, following an ongoing power struggle taking place at the time in Rome, Roman commander in Israel Vespasian hastily departed the Holy Land to claim the throne of his empire, leaving his son Titus responsible for capturing the Holy City.

While his father had patiently laid siege on the outskirts of the walled city for nearly two years, Titus was eager to prove himself and determined to take Jerusalem. Several attempts to negotiate with the Jewish rebel leaders – through the Jewish Roman slave and historian Josephus Flavius – were carried out in vain. The Zealot rebel leaders, determined to defend the Temple and the holy city, refused to make any concessions.

This hardline position, however, also played a significant role in the fall of Jerusalem and ultimate destruction of the Temple. The Zealot position of not negotiating with the Romans created a significant and bloody rift among Jerusalem’s Jews. Many of the city’s residents, particularly the wealthier classes, perhaps sensing impending destruction, wanted to negotiate some sort of surrender. The Galilean rebel leaders, however, would have none of it. A bloody civil war broke out inside the city’s walls at the same time as its outer walls were being pounded by Roman battering rams.

In a perhaps suicidal effort to motivate fellow Jews to fight against the lengthy siege instead of surrendering to it, the Zealots at one point began burning dry food stores, adding hunger to the already long list of problems faced by the ancient Jerusalemites. Some historians have suggested that more Jews died from the infighting than were killed by the Roman conquest itself.

The city of Jerusalem and its residents were not the only victims of the Roman siege and destruction. The environment and landscape were also ravaged. In order to build the stockade towers and battering rams necessary for breaching the city’s walls, Titus ordered that every tree within ten miles of Jerusalem be cut down. Josephus Flavius wrote after the battle:

And truly, the very view itself was a melancholy thing; for those places which were adorned with trees and pleasant gardens, were now become desolate country every way, and its trees were all cut down. Nor could any foreigner that had formerly seen Judaea and the most beautiful suburbs of the city, and now saw it as a desert, but lament and mourn sadly at so great a change.

But the wooden tools of war, despite their ultimate success, also had their weaknesses – wood burns. Historical and archaeological records suggest that the city’s defenders managed to hold off the Roman advances several times by tunneling under the city’s walls in order to set fire to the stockade towers, as well as more traditional attacks throwing firebombs over the walls. The tunneling, however, it has been suggested, backfired in the end. Although certainly aided by constant Roman pounding, the tunnels may have contributed to the walls’ collapse by undermining their otherwise solid foundation.

Titus and his Roman garrisons finally broke through Jerusalem’s walls in the early summer of 70 AD; the city was ravaged and destroyed. Although there is an historical debate as to whether Titus himself gave the order, the Roman soldiers quickly set fire to the Jewish Temple, an event that is commemorated on Tisha b’Av. Josephus Flavius described the destruction afterward, saying that Roman soldiers who had grown to hate the Jewish rebels set fire to an apartment adjacent to the Temple against Titus’ orders, the flames quickly spreading to the Temple. Other accounts suggest that Titus revised this version of history to improve his image.

While most of the Jews in the city were killed or enslaved when Jerusalem fell, some of the rebels managed to escape through tunnels and reestablished themselves at the mountaintop fortress of Masada, joining other Jews who had already moved there. In 73 AD, Masada fell, bringing the Jewish revolt to an end.