Only time will tell whether gold has established a long term bottom and which factors have been driving the trend change. But, from our perspective, we believe that all of the above are increasingly driving gold’s price higher, a trend which will only intensify.
It’s no news that inflation is one of the biggest retirement risks. There is a school of though that allocating a portion your self-directed IRA to precious metals – like gold or its stocks – could help hedge against inflation. In fact, with buzzes going around that inflation is around the corner, gold IRA rollover is becoming increasingly popular. But, in reality, gold isn’t the ultimate inflation-hedging tool it’s being made to be. Here is why.
Fire and Ice have little impact upon gold and silver. Gold and silver were money long before the unholy union of fractional reserve banking and government unleashed Fire and Ice upon our world through inflating paper currencies and deflating debt. It is time to protect our financial future with gold and silver – Fire and Ice resistant assets.
How is gold impacted in this inflation vs deflation war? The key conclusion of the research is that, due to the fractional reserve banking system and the dynamics of the ‘monetary tectonics’, inflationary and deflationary phases will alternate in the foreseeable future. Gold, being a monetary asset in the view of Austrian economics, tends to rise in inflationary periods and decline during times of disinflation. The key take-away for investors is to position themselves accordingly and consider price declines as buying opportunities for the coming inflationary period.
Gold has been the most popular precious metal to invest in for many years, but is it still worth the investment today? There is no denying the decline of gold on the market today, but that doesn’t necessarily mean that gold is not a good investment.
In this interview with Dimitri Speck, the gold price suppression scheme of the last 2 decades is discussed. In terms of gold’s outlook, the most likely scenario is one comparable to the current Japan: suppress deflation, stimulate slight inflation while avoiding strong inflation. In this scenario, the velocity of money will increase, savers will step out of the banking system, inflation will occur in asset and consumer prices. Gold is the best hedge in such a scenario.
Ryan Jordan, Ph.D. is the author of “Silver – The Peoples Metal” which I highly recommend. He sees silver fundamentals from the perspective of a historian and as an astute observer of present conditions. He studies the drivers of the silver market, supply, demand, mining, inflation, investment sentiment, central bank bond monetization policies, and politics.
Mr. Bernanke will get to visit his ideal world of 2% price inflation, but it will only be a whistle stop. The price inflation that lies ahead will be at least as bad as what happened in the 1970s episode, when the annual inflation rate approached 15%. The money that’s already been printed so far may be enough to produce such a 1970s-size problem.
Gold was stopped cold in its tracks at the psychological round number resistance level of $1300. It had initially reacted to Ben Bernanke’s comments, by moving smartly higher. During the Q&A session which followed, gold was slammed lower by a wave of very strong selling. Think about it this way – the QE will continue as long as the economy needs it. Okay – what is new about that? We have seen this QE going on for some time now and to the minds of most market participants, there is still no real inflation threat looming on the horizon. What is there to make them waver the least in their convictions that inflation is benign? Answer – there isn’t anything… YET.
While the largest gold ETF in the Western hemisphere is unloading physical gold the land of the rising sun is doing the opposite. The biggest ETF in Japan has accumulated 10% of its physical holding this year. Bloomberg writes that “Japanese consumers are poised to become net buyers of gold for the first time in eight years as the yen’s decline and looming inflation drive them to seek refuge in bullion.
Gold and silver will not only continue to serve in their timeless role as a store of wealth while fiat currencies flail and ultimately fail—right now, market conditions are ripe for a once-in-a-lifetime profit opportunity to take shape. The current gloom in the mining-stock sector has stock prices at astounding lows… but those who know which companies are best positioned to ride out this temporary collapse and have the fortitude to invest in them now can make a fortune. This isn’t exaggeration—this scenario has played out before in the US.
Full market capitulation is underway. Headlines about gold are almost universally negative today, and all about selling. This feeds on itself, and the process may not be over. In this kind of environment, prices will overshoot to the downside. In other words, the bottom may not be in. What if we get more short-term pain?
We have two things going on at once right now. You have deflation which is perfectly natural and what you would expect in a depression. Against that, we have inflation from the Fed money printing. In rough numbers we might have 4% deflation and 5% inflation at the same time which net out to about 1% inflation in the CPI. That is not a stable series; that is actually two forces pushing against each other.
On the question where gold will trade for the rest of this year, Rickards is convinced that gold will go sideways this year and that it will go up next year. He also believes inflation is coming with a lag. On the question what deflation means for gold, Rickards answers that gold traditionally performs well amid deflation, as well as inflation.
Inflation – a few percent seems unimportant, but over a decade, it becomes very important. Look at the calculation in this article. According to several surveys, real people think their personal inflation rate is around 8% per year with a significant percent of the responders claiming 9 – 11% or more per year. Are you going to believe what the government is telling you?