Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Thrives, Paper Dies

Commodities / Gold and Silver 2015 Dec 17, 2015 - 04:32 PM GMT

By: DeviantInvestor

Commodities

(From “Bobby,” a reader – posted as a comment)

Both Gold and Silver it is said
Are jeered yet feared by the Fed
For if they rise it will but show
The dollar’s worth is very low
So if they rise in upward trend
The Fed then feels it must defend
The things they do we know aren’t right
But they don’t care, they have the might


To lie and cheat and say “F.U.
We have our man, we have Jack Lew
The FTC, just who are they?
They’ll do our bid, we’ll have our way”
A falling price we must endure
Until no gold they can procure
To fuel their scheme and thus prolong
Their crooked plan that will go wrong
So Gold and Silver you should collar
Not stocks, nor bonds and not the dollar
Our day will come, you wait and see
Our stacks will show what they can be.

To Paraphrase Bobby’s Thoughts:

  1. Gold is the enemy of Central Banking. A rising gold price indicates central banks are devaluing their paper currencies too rapidly.  Hence they “jeer” gold and simultaneously “fear” it.
  2. The Fed must defend the “funny money” it has created. That usually means suppressing the price of gold through “leasing” or selling gold.  They will until they can’t.
  3. The “game” is over when the gold available for “leases” and sales is gone. That day is not here yet but it seems close.
  4. Many global stock markets are down hard. Several $ Trillion in global bonds yield negative interest (crazy).  Currencies have been declining in purchasing power for decades.  Gold and silver remain – the last ones standing.
  5. Stack silver and gold!

In Contrast to Bobby’s Thoughts …

If you want a more conventional approach, then read the propaganda from central banks, too-big-to-fail bank forecasts, and Keynesian economist papers.  Also Harry Dent thinks we will see gold prices perhaps as low as $250 – $400 in a few years.  He believes that gold is only a commodity and that commodities peaked in 2010 – 2011 and will not peak again until about 2038 – 2040.  Hence gold, according to Harry Dent, after 4.5 years of falling prices, is still over-priced and going lower.  I disagree, but I suspect his view is popular, especially among central bankers.

Regarding What Harry Dent and Central Banks Think, Consider the Basics:

  1. Politicians will spend more than their revenues and will increase debt as long as they can. There is no doubt about politicians and spending.
  2. Increasing debt correlates with increasing gold prices on average. See log-scale graph below for gold prices and official US national debt since 1971.
  3. Debt will increase and so will gold prices, regardless of suppressed or free markets, crazy or sane policies, with or without Keynesian nonsense, with or without hope and change.
  4. The world appears closer to another world war, or at least a proxy war in Syria. War and related expenses, massively increased debt, and “money printing” will increase gold prices.
  5. Western socialist governments spend far more on welfare and warfare programs than they can collect via taxing citizens. Hence we should expect more unpayable debt, inflation, economic nonsense, “money printing” and (unfortunately) a hot war to divert attention from failed policies.  Debt, inflation, economic nonsense, welfare payments, “money printing” and wars will increase the price of gold.

CONCLUSIONS:

The US official national debt has increased from under $ 2 Billion to almost $19 Trillion in the 102 years since the Federal Reserve was created.  Gold has increased from $20.67 per ounce to today’s price of about $1,070.  Expect more debt and higher gold prices.

Gold prices have been crushed during the past 4.5 years.  Expect a reaction higher.  When?  If you are a stacker it matters little whether the low was this month or will occur in 2016.  The inevitable reset higher should occur relatively soon, and will not be delayed until 2030 – 2040, as per Harry Dent and others.

Gary Christenson

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2015 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Deviant Investor Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in