The above are edited excerpts from an article* by GE Christenson (DeviantInvestor,com) entitled Gold – A 40 Year Perspective.
The following article is presented by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and the FREE Market Intelligence Report newsletter (register here; sample here) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.
Christenson goes on to say in further edited excerpts:
Gold prices were pushed too high in late 2010 and 2011 and have corrected since then. Currently gold is 15% below its 144 week moving average or about 0.6 standard deviations below that average. I don’t suggest that gold prices must rally next week or even next month, but prices are very likely to be much higher next year and even higher by the next presidential election in late 2016.
What will push the price of gold higher?
- The Fed and other central banks are “printing money” and this…has always ended badly.
- Expect more consumer price inflation, declining purchasing power for currencies, and higher gold prices.
- The U.S. and Japanese governments are borrowing as if the credit to run bloated governments will always be available.
- The debts will be paid with newly “printed” money and the cycle of borrow, run a deficit, borrow more, and print will repeat.
- The U.S. dollar, and most paper currencies, are backed by nothing more substantial than “full faith and credit”.
- The governments doing so are insolvent.
- The U.S. official national debt exceeds $17.5 Trillion, which does not include unfunded liabilities that are perhaps another $100 – 200 Trillion.
- We all know this debt can never be repaid in dollars that are worth more than a tiny fraction of their current value.
- Perhaps the debt can never be repaid under any conditions other than hyperinflationary “money printing.”
- Our warfare/welfare governments are actively pursuing their own agendas…are encouraging the growth of warfare, welfare, and the size of government.
- It will be financed with printed dollars, euros, yen etc. The result will be decreased purchasing power of the dollar, euro and yen.
- Geopolitical events…could aggravate an already unstable financial world and accelerate the process of:
- dollar devaluation, rising gold prices, and a shakeup in the use of the dollar as the reserve currency.
- Individuals, and the more solvent nations, will protect themselves with hard assets such as gold.
- The citizens of China, Russia, and India and their central banks are buying gold in quantity.
- That demand is unlikely to decrease so what will happen to prices when that gold supply is restricted or terminated?
- The Fed, central banks, and many governments want and need inflation, not deflation.
- They are likely to get it, and then blame their self-created inflation on the politically appropriate enemy at the moment, the current war, or some other diversion.
- Government expenses are rising exponentially and more rapidly than revenues. Mathematically we know this cannot continue forever. Expect higher gold prices and all paper currencies to devalue against hard assets.
I could go on, but the situation is clear:
- gold did NOT blow-off into a bubble high in 2011,
- all the drivers for continued higher gold prices are still valid,
- demand is huge,
- supply will be restricted when the western central banks run out of gold or choose to terminate “leasing” into the market, and
- government expenses, “money printing” and bond monetization are out of control and accelerating.
Gold prices will climb a wall of worry in the years ahead and are very likely to be much higher next year and even higher by the next presidential election in late 2016.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://www.deviantinvestor.com/5835/5835/ (Copyright © 2014 – All Rights Reserved)
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