Gold has touched the $1300 mark. For those of you who understand the macro-economic backdrop and understand our past, current and future economic policies, you know that gold will absolutely continue moving higher. $1300 is just another level that will be crossed on the way up to a level few people imagine at this point.
While I’ve laid the case multiple times here on this site, let’s look at the main factors why gold has to go higher.
First, you need to know that there is no way out for the economic policy makers of this country other than a debased currency. Too much debt, absorbing losses from financial institutions like Freddie & Fannie, weakened economy that isn’t producing enough tax revenue, there is no way out. The fed must print money and must debase the currency.
This is nothing new. The dollar has lost over 90% of its value since the Federal Reserve was created in the early 1900s. One of the Fed’s jobs is to keep inflation in check, but this is a blatent lie. They want and need inflation in order for the status quo of bloated government and Wall Street power to continue. Inflation is a must.
Inflation is a guarantee. Even in a miserable economy where deflation is the natural cure and what the market attempts to do via bankruptcies, foreclosures, liquidations, deleveraging, etc., inflation is and still will be the result.
There is inflation everywhere right now. Prices of grocery store items are going up – and if they aren’t going up, the package & quantity is decreasing which is the same as inflation. Starbucks is raising prices. What? Shouldn’t Starbucks be dropping prices due to a terrible business environment since Starbucks is a premium product and a unnecessary item amidst an economy where people are cutting back on non-essentials? Nope. They’re raising prices.
Amazingly, stocks continue to move higher (even though we’re still lower than the highs on the year from April), despite record outflows of retail investors. Regular joes like you and me are bailing out of stocks. They want no part of it. But the government and its pseudo-helpers (financial institutions) will make sure to put a floor in stocks because like Alan Greenspan said, nothing is better for the economy that higher stock prices. Absolutely the Federal Reserve will buy stocks. Not exactly a true market anymore is it?
Ignore the level of the Dow. The Fed may be able to increase stock prices nominally, but measured against the rising price of gold, the truth is revealed. Stocks will lose value when priced in gold. As will houses.
If you don’t have some of your assets in precious metals like gold & silver, you are accepting some significant risks. Your cash in your savings account is losing value every single day. That 1% return you’re getting from the bank doesn’t cover the loss of purchasing power due to inflation. You need to hedge this with gold & silver.
Again, $1300 gold is just another intermediate milestone. We will see the $1300 be passed and then $1300 will become the new floor. Even if this doesn’t happen right away, it’s inevitable. We might see gold drop to $1100 before we see it hit $1400, that is fine. I will be buying gold in that case. It will not go up in a straight line, but make no mistake, it is going up.