Will gold deliver another glittering year in 2012? … This year saw dizzying gains and two big crashes. So does gold still deserve its 'safe haven' image, or is it just another volatile and risky asset? Is it a wise decision to buy gold at present? The asset – famously given as one of the gifts of the magi – is seen as the ultimate "safe haven" investment in times of political instability, economic turmoil or rising inflation. Given world events this year – the Arab Spring, financial crisis in the eurozone, economic stagnation in the West, and the inflationary effects of central banks printing money to keep credit markets liquid – it is not surprising that the price of gold has risen again, after a decade of strong gains. – UK Telegraph
Dominant Social Theme: Gold is in a bubble. Beware.
Free-Market Analysis: Every once in a while, and with increasing frequency, major media presents a commentary wondering "how high gold can go" and whether the yellow metal is now in an official bubble. Every once in a while, we point out that gold is being driven by market manipulations, not by the free-market.
Gold can keep going up until this metals-market "bull" subsides. When will it subside? We are on record in plenty of articles as stating (for years now) that the metals bull will gradually peter out around 2015 or so. We came to this conclusion by comparing this bull leg to the previous one in the 1970s. We figured the economy was 50 percent more distorted now than then. And that's why we tacked on an extra five years. "Why Gold Sells Off and What Will Happen Next …"
But we might be wrong. The powers-that-be have taken extraordinary action to retard the depressive distortions of the market. By disallowing cures for the distortive elements, the power elite that apparently runs most of the planet has prolonged economic distortions and turned what might have been a short, sharp depression into a long one.
Why would they want to do such a thing? Well … we've speculated that the idea is to create a worldwide economic crisis that will lead to an atmosphere accommodative of world-wide government. The basic functionality of one-world governance has already been created and can be seen in facilities such as the UN, the IMF, the World Bank, the International Criminal Court, etc.
The power elite utilize dominant social themes – fear-based promotions – that frighten people into giving up wealth and power to globalist facilities. These themes need to be buttressed by action in order to be entirely believable. Thus, fear of a global depression needs to be promoted via reality. And so, gradually, it evidently is.
The unreliability of gold is another elite dominant social theme. The last thing the Anglosphere power elite apparently wants is for people to begin using gold and silver within a free-market context. So they launch broadside after broadside against the rise of gold via the controlled elite news media. This Telegraph article would seem to be a variant on the theme. Here's some more:
According to figures from the World Gold Council, the price of gold was $1,596 per ounce just before Christmas. (Gold is traditionally priced in dollars and is still weighted by a medieval measure called the troy ounce, which is just over 30g.) This is up from $1,420 at the beginning of the year, and an increase of almost 500pc from the price it was trading at ($278 per ounce) on Christmas Eve 2001.
Even when gains are converted into sterling, British investors have made substantial and sustained gains at a time when many other assets have fallen in value. In sterling terms, gold rose by 33pc in 2005, 8.3pc in 2006, 29.2pc in 2007, 34.2pc in 2008, 12.7pc in 2009, 31.4pc in 2010 and, despite a recent blip, it has still gone up by 12.2pc since the start of this year. The question for investors is how long this gravity-defying rise in prices can continue. Should those who already own gold be increasing their holdings while economic uncertainty remains, or be looking to reduce their exposure and bank profits instead? And is it too late for those who don't have any gold to join the party?
We can see the case being built in this article, point by point for gold … wariness. Of course, the question is not asked as to why the entire mainstream financial community remained quiet most of this past decade about gold.
If there were some other asset class that had appreciated like gold, it would be shouted from the proverbial rooftops. But when was the last time you received a glowing mainstream report on the prospects for gold? And how about earlier in the decade? Did your Merrill Lynch broker call you up with a "hot tip" about money metals? Ever?
This is part of the problem that the top elites have with what we have come to call the Internet Reformation. It exposes the essentially charlatan nature of the larger financial community. How is it that that the alternative, free-market press has been right about everything from the business cycle to money metals to the bust of the housing bubble? How is that the trillion-dollar-a-year Western financial media has been so wrong? Somebody ought to bring some sort of class action lawsuit …
The mainstream financial media supposedly contains the best minds and has at its fingertips the best possible data. And yet bunches of financially illiterate bloggers lacking glittering economic degrees have been able to directly anticipate the future. How is that possible?
Well, let us use the Daily Bell as a modest example. We have no glittering degrees. We have never taught at Harvard (not one of us). We have never received invitations from the president of the US to work as a financial advisor to his cabinet. (We had hopes, of course. It is our fate to remain bitterly disappointed.)
And yet our record (our public record) is pretty good. We were aware of the housing bubble and the general financial malaise that was upcoming prior to 2007. We wrote article after article explaining the potential demise of the EU and euro, of the Chinese bubble economy and the upcoming struggles of the dollar-reserve system, the decline of popularity of the Federal Reserve and central banking in general.
Some would claim we are relentlessly pessimistic. Others would claim that our positions are merely lucky guesses. No such thing. It IS possible to tell the future in the current global economy because it is a MAN-MADE economy. If it were a FREE economy, we would not have such an easy time of it. But it is not a free economy. Hence, we can anticipate the manmade patterns. (And so can you!)
Just keep in mind that a gigantic hoax has been played on the people of the West over the past century. They have been convinced by the most devious and facile among us that human beings (central bankers) can control the rate and volume of money to create prosperity. Of course, they cannot. They can only create ruin.
And they have. By printing so much money, endlessly, around the world – so many dollars, really – they have fooled business owners into thinking they were rich. That's how fiat-money bubbles work … every time. There was a global boom that is now turning predictably into a global bust, driven by an overabundance of money. No central banker, after all, can tell you how much is too much. The price of money is now fixed around the world. And price fixes never work.
The obverse of price-fixing is the chaotic result. The power elites – while making noises in the opposite direction – seem to seek this chaos. Everything they do from lending money to failed corporate giants to demanding that large banks set aside additional pieces of paper ("money") before they can lend more only retards the process of recovery and plunges the world deeper into gloom.
They know all this, though. They must! They put the system into place. Hundreds of central banks around the world supervised by the secretive BIS. Coincidence? No, the object is very obviously global governance, or so it would seem. Make things bad enough and people will surrender to what seems inevitable.
What is necessary to keep in mind in this economy is that everything the powers-that-be say and do runs contrary to economic salvation. It is a backwards "bizarro" world in which every "positive" move carries the seeds of additional destruction. Ah, we could write a book about all this. (Actually, we have: High Alert.) But the bottom line when it comes to buying gold and silver is to keep in mind the larger environment and whether or not the elites are actually allowing the global economy to unwind quickly or slowly.
So long as the unwinding is retarded, as it has been, there is no reason to believe that gold is in a "bubble." People are buying gold because they distrust everything else. Countries are insolvent, large corporations see nowhere to peddle their gadgets and banks are being constrained from lending via a variety of central banking initiatives.
How high can gold go? Much higher as economic chaos grows – or so we would think. We don't feel like we are anywhere near the end of this cycle. Interest rates are low, not high, and economies are not generating jobs (how could they?).
China has not yet collapsed (we anticipate it will) and the full-on depression the elites apparently seek has not yet been realized. Within this context gold COULD go much higher. On the other hand, as we have written previously, we don't know if it will get there.
We don't know if the powers-that-be will tolerate US$5000 an once gold. We think they may seek to shut the economy down (or even consider gold confiscation) as part of installing something larger. We think they may have in mind making the IMF into a kind of global central bank. We think they may use war, along with global economic ruin, to move the world along to the international fiat currency of which they dream.
As for gold, it may continue to ascend until it is stopped. Inevitably, it will likely cycle through the metal itself to "paper gold" and stocks, including junior mining stocks as the metal itself grows more expensive. Same with silver. Again, it is a man-made cycle. As such it is predictable.
Nonetheless, we have a hard time thinking even "Tall" Paul Volcker can reverse THIS business cycle. What would rates have to go to? Forty percent? The alternative is inflation, maybe hyperinflation. That, too, may have been "baked into the cake."
Conversations about a "gold bubble" and how high gold can go are perhaps incidental (or unimportant) conversations when one considers the possibility of more fundamental issues …