History shows that gold prices rise and fall but inevitably, over time, follow the increase in money supply and debt. As such the next big move will be upward to match the exploding national debt. I support said contention with some most interesting charts showing the long-term relationship between the price of gold and the growth in national debt.
The above comments, and those below, have been edited by Lorimer Wilson, editor of munKNEE.com (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample here – register here) for the sake of clarity ([ ]) and brevity (…) to provide a fast and easy read. The contents of this post have been excerpted from an article* by Gary Christenson (deviantinvestor.com) originally entitled Gold vs Debt: The Big Picture which can be read in its unabridged entirety HERE. (This paragraph must be included in any article re-posting to avoid copyright infringement.)
The U.S. national debt has steadily increased. Examine the following two graphs regarding gold and the national debt.
WHAT THESE GRAPHS SHOW
- Gold prices increase with national debt, with notable exceptions such as 2001 and 2015 – circled in green. Those exceptional prices did/will correct higher to match the upward trend in national debt.
- Gold prices in 2015 are clearly low compared to long term national debt, as they were in 2001. Expect gold prices to rise substantially to compensate for the past four years of declining prices.
- The ratio of gold to population adjusted national debt for the past 20 years shows that gold prices rise along with both population and the inexorably increasing national debt. Currently the ratio is at the low end of its multi-decade range. Gold prices will rise more rapidly than population and the national debt for several, probably many, years.
Examine the 25 year log scale graph of gold and note points 1 – 4 on the graph.
- The sun will rise tomorrow and national debt will continue its exponential increase.
- Gold prices will rise and fall but inevitably follow the increase in money supply and debt. The next big move will be upward to match the exploding national debt.
- The ratio of gold to national debt is currently low, based on decades of history. Expect the ratio to increase in the next several years.
Since we absolutely know that national debt will increase, gold prices have considerable upside, even without hyperinflation or a currency collapse…
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