STAFF NEWS & ANALYSIS
Gold: 'It's a Bargain at $930 an Ounce'
By - May 16, 2009

From a long-term perspective, gold is a bargain at recent prices in the $900 to $930 an ounce . . . and will remain so even as it begins to move into a higher trading range. Recent gold-market developments and technical price action – along with broader economic and financial-market developments – suggest gold is bracing for a resumption of its long march upward and a retest of its historic high in the months ahead. First and foremost, the bullish outlook for gold rests on the increasing likelihood of accelerating U.S. inflation in the years to come – and an associated unprecedented rise in investor demand for the yellow metal. This nascent inflation has not yet been reflecting in world financial markets. But, judging from anecdotal evidence and the financial press – and the warnings of a growing number of institutional investment managers – we believe a gradual, subtle, but important, upward shift in inflation expectations is already under way. – UK Telegraph

Dominant Social Theme: A new analysis.

Free-Market Analysis: Mainstream media is starting to recognize that gold will continue to go up. As it becomes clearer that sooner or later the incredible orgy of central-banking money creation is going to propel price inflation to new levels (regardless of central banking sterilization), various articles, like popcorn are starting to appear that recognize the inevitably of honest-money expansion.

What tickles us a bit is that these articles are going to become numerous and strident the higher gold goes. And sooner or later mainstream media gurus are going to emerge who will be trumpeted as having recognized the trend. In truth, the Internet has memorialized (as it did not in the 1970s) a band of hard-money economists who have been writing accurately about investments for nearly six years now. The free-market economic model works – and the ability of those who subscribe to it to recognize a bull market in gold and silver as far back as 2001-2002 is proof positive.

So … how is it that the Internet has been abuzz about gold and silver since 2001 while the mainstream media has spent most of the 2000s talking down the prospects of precious metals? How is it nonetheless, that the mainstream media remains an apparent repository of credibility and Western economists and political leaders continue to speak disparagingly of blogs and free-market Internet sites that told the truth long before the trillion-dollar mainstream media even began to recognize the shape of things to come? How is that the mainstream media did not predict the housing collapse, the eventuality of monetary and price inflation, the helplessness and corruption of central bankers, the global turning of the business cycle, the efforts at a more centralized world economy?

This last point is an especially interesting one. For nearly half a century, the alternative press (such as it was pre-Internet) has written about global government and central banking strategies. For exactly the same amount of time, mainstream media pundits, when they have deigned to respond, have characterized these points of view as "conspiratorial." Yet today, exactly on schedule, the world's leaders gather to speak of global regulatory authorities, a global currency and a global central bank. The world is apparently collapsing toward centralization, and yet the mainstream media carries on serenely as if this inexorable movement is not at all unusual, merely evolutionary.

We guess when the alternative press writes about an issue, it is by definition kooky and conspiratorial until the mainstream media recognizes it as a "trend." But the trouble with what's going on now is that readers and viewers have caught on to the mainstream media lack of objective analysis. There are plenty of successful alternative news sites and mainstream media is really starting to hurt. Moguls like Rupert Murdoch anticipate an evolutionary transfer to the Internet, but it is not technology that drives readers but credibility and truth. The trouble with the posture of the mainstream media is that it is part of a power structure based on paper money – and cannot speak freely about the constraints of current Western monetary policy and much else.

We wonder what is going to be left of the mainstream media's credibility – and the cultural power-paradigm it supports – by the time this business cycle is through. It is the first one that has played out in front of the eyes of a receptive community of viewers (via the Internet) and people on the whole are not stupid. Over a period of years they can see what works and what doesn't and who has made accurate predictions and who has not.

After Thoughts

Money is an incredibly powerful force. As more and more people realize that gold and silver are going to continue to gain in value through this latest business cycle, the prognostications of the mainstream media, and those it supports, are going to be increasingly devalued. The result well may be that those who support and read the alternative press shall grow rich buy buying early, while those who ignore it shall end up purchasing gold at perhaps $3,500 an ounce. As this reality sinks home, much may change. We think we see the signs already, the cracks running through ship of state and its great monetary engines. We have pointed these out on a continuing basis, and we hope to continue to chart this gradual disintegration. It is truly going to be among the greatest stories ever told. And the alternative press will tell it.

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