What’s Happening Between Banks and Gold?
Julian D. W. Phillips from GoldForecaster.com (IMHO) one of the more brilliant metals people in the world, offers some rather unique insight on gold for the year ahead.
The $ has started to tumble and the gold price has positively turned. Meanwhile investors are not staring into the abyss quite as much. With interest rates tumbling across the globe, the world’s central bankers are acting in concert, clearly in hopes that foreign exchange rates will steady. At the same time, the global economy and the nations that make it up are all stimulating their economies.
The Swedish central bank, Bank of England, and the European Central Bank cut short-term interest rates by 1.75% to 2%, 1% to 2%, and 0.75% to 2.5%, respectively in the last week and, without a doubt, more cuts to come, from anyone out of line. Add to this the monetary stimulation, through direct injections into the money system, alongside “quantitative easing” [flooding the system with liquidity directly] that we are now seeing across the developed world, and you end up with a tidal wave of reflation that hopefully will effectively tackle deflation.
In the event that this does in fact take place, will all be well again?Unfortunately, the answer is no and we firmly believe that the Central Bankers are fully aware of this.
If successful, we will return to the days of “live now, pay later” that supported the global economy before we were bitten by the credit crunch. The tidal wave of new money will add up, globally, to a Tsunami of capital. This leaves another monetary disaster ahead of us; that is unless the stimulation is allowed to cheapen paper money irrespective of its dropping value persistently preventing any repeat of a credit crunch. And what of the buying power of money?
It will drop directly in line to the additional quantity of money released less the amount lost through deflation. This will send the gold price soaring. There is absolutely no doubt that this will send the gold price up to the extent necessary to counter such a cheapening of currencies.
It’s almost the new year, have you bought your gold yet? Visit GoldMoney or e-Dinar for more information.
Comment by Pecunix user on 23 December 2008:
Indeed, the gold price seems abnormaly low; with Opec cutting production this could also increase the gain.
The fed cant print enough money right know; the fear for some is hyperdeflation.
Comment by Adam Smith on 30 December 2008:
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