It now looks that inflationary pressures are starting in earnest…In the last two years, inflation has gone from 0% to 2.5% which is a 5-year high…and could easily reach 10% in the next couple of years and ultimately a lot higher as inflation turns into hyperinflation. That will have an explosive effect on metal prices.
The comments above & below are edited ([ ]) and abridged (…) excerpts from the original article by Egon von Greyerz (GoldSwitzerland.com)
It might seem incredible today but it happened in the 1970s when the 10-year Treasury went from 7% to 16% in 4 years.
The same is happening in the EU. Inflation is back and on the way up to much higher levels.
From -0.2% a year ago, EU inflation is now at 2%. Like in the US, we will see EU rates climbing above 10% in the next couple of years and ultimately a lot higher as inflation turns into hyperinflation.
EU inflation rising fast
The currency debasement will continue in the race to the bottom. It is difficult to predict which currency will win this race since most of them are worthless. They will all go to ZERO but not at the same time.
Hyperinflation and the Price of Gold
Since 2002 I have been predicting that gold will reach at least $10,000 in today’s money and silver $666 based on a gold/silver ratio of 15. With the coming hyperinflation, these figures will of course be a lot higher. The gold and silver charts below show that these are not unrealistic targets.
The 300-year chart of gold adjusted for real inflation shows that gold is now at the bottom of the range. Even more interestingly, the $850 top in January 1980, adjusted for inflation, would be $14,463 today.
The 300-year silver chart, adjusted for real inflation confirms that the 1980 $50 top would be $669 today.
In 2017, we are likely to see gold and silver reflecting all the major global risks as well as the continued growth of U.S. and global debt. Also, the severe shortage in physical precious metals that will occur, as the manipulated paper market implodes, will have an explosive effect on metal prices.
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