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Gold
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The Central Banks have better things to be doing than trying to make goldbugs look stupid.
We've been hearing about this "rampant inflation" to come for years now, and if anything we're still stuck close to deflation. Where is this inflation you speak of? There's massive under-utilisation of resources in the world economy, and workers are not about to get massive pay rises any time soon considering the numbers unemployed. So where is the inflation going to come from?
Central banks are very interested in suppressing the gold price. If gold were to increase to $3000, the world economy would likely lose interest in fiat currencies as a form of trade. If numerous countries (many have already e.g. India buying Iranian oil) were to flock to gold as a form of trade for resources e.g. oil, the petrodollar paradigm would completely collapse. Here is an interesting article I found relating to this: http://www.moneynewsnow.com/2013/02/will-hoarding-of-gold-by-russia-china-collapse-u-s-economy/
Deflation?! When's the last time you heard people being excited about cheaper groceries or cheaper electricity?! Inflation is closer to 10% than the bullsh!t CPI of less than 2%. How can you measure inflation without accounting for energy or food?! THE MOST IMPORTANT PRICES ORDINARY PEOPLE CARE ABOUT! Governments seem to have no problem leaving them out though, I wonder why?
Look at stock prices, money printing wouldn't have anything to do about that, would it? Because the Fed targets asset prices, it tends to start in those areas that we don’t normally associate as inflationary. Let’s face it, no one is really going to freak out about a rising stock market, but that is the first sign of inflation. The Fed’s liquidity has to land on something, and it usually starts in the stock market first. Unfortunately it always eventually ends up in the commodity markets. Now, look back to 2008 - big increase in stock prices, stocks fall, commodities increase. We are going through this cycle again, except the amount of money flowing into commodities this time is going to be much greater due to huge QE programs exercised by the Fed and other central banks. Same goes for housing, don't even make me start talking about housing!
So, yeah, that's where "the inflation" is coming from - it's already here, but you haven't noticed it yet.
The current situation in the gold market, in my opinion, is actually good. I have a very good understanding of how markets work technically, and it appears that recent activity is good for gold (and silver). What's happened now is most speculators and "weak" holders of gold have been washed away. This is brilliant for gold for when it makes it way upwards again. I think we are going to see a huge spike in gold on the next move upwards, probably followed by another dip in 2015/16 and then a move upwards into bubble territory. I looks like gold is forming a V-Shaped dip. The Nasdaq in 98 and Oil in 07 are unbelievably similar to gold in the way that they had a washout followed by a bubble.
All I'll say is - sit tight and you'll come out on top in the end. In all honesty though, if you were a Cypriot, would you prefer to have had gold which had a rough move downwards recently or would you prefer to have "fiat", worthless paper money being stolen from you?0 -
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