Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Opinion Pollsters, YouGov MRP General Election 2019 Result Seats Forecast - 11th Dec 19
UK General Election Tory and Labour Marginal Seats Analysis, Implied Forecast 2019 - 11th Dec 19
UK General Election 2019 - Tory Seats Forecast Based on GDP Growth - 11th Dec 19
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19

Market Oracle FREE Newsletter

UK General Election Forecast 2019

Gold Hard Money Wins Out!

Commodities / Gold & Silver 2009 Nov 17, 2009 - 08:43 AM GMT

By: Larry_Edelson

Commodities

Best Financial Markets Analysis ArticleThey called it “a relic of the past.” They described its last major bull market surge as an “anomaly.” They said it was a dinosaur of an investment, never to return to the arena of modern finance.

Even The Wall Street Journal recently said it’s an investment that pays no interest or dividends and implied that owning it was as good as having a lump of coal in your backyard.


They were all talking about gold. Including The Wall Street Journal’s inane comments of just a few weeks ago.

And they were — and are, and will be — all dead wrong. Because just over a week ago, on November 8, at precisely 2:30 P.M. Eastern Time, an event took place that even the most skeptical of investors cannot — and must not — ignore:

The December Contract for Gold Closed above the $1,100 Level For the First Time Ever.

A few days later it soared to as high as $1,122.50. And now, within a time frame that could come a lot sooner than anyone now dreams possible, the yellow metal could surpass $1,500.

Suddenly and inexplicably, the skeptics are gone. Suddenly, everyone is starting to talk about gold again.

Only this time, they’re believers. This time, they’re not calling it gold; they’re calling it “hard money.”

This time, they say, is different from past gold rallies.

And this time, on that score, they’re right — this rally in gold has a different face.

It’s much stronger … and more enduring. And this time it will continue much higher. My forecast: Expect a rise of at least another $1,200 higher — to more than $2,300 per ounce!

Why am I so confident? Because the Fed remains so committed to printing money ad infinitum … to devaluing the dollar … to inflating away the country’s debt problems … and reinflating assets as if there’s no tomorrow.

The Reasons for Gold’s Explosive Rally Are Not All That Different From The Forces behind Its Past Rallies.

They’re Just 100s of Times More Powerful!

For the last 5,000 years, gold has been propelled higher by many of the same causes. Today, the reasons are …

Gold Bricks

1. Paper money is being systematically devalued by central bankers and politicians, especially in the U.S.

2. The private sector and investors are losing confidence in governments all over the world.

3. Geopolitical strife is more prevalent than it has been in the last 30 years.

4. The wild, out-of-control spending and debt accumulating that’s ingrained in today’s culture, especially in the U.S.

5. A massive explosion in income growth in other parts of the world. In the 19th and 20th century, that was the industrialization of Europe and the U.S. In the 21st century, it’s the same industrialization, but of Asia, and nearly 60% of the world’s population — and where more than 80 million new middle-class families are being born each and every year!

But one of the keys to understanding gold today — and indeed, virtually all natural resources — is to understand how the public has gotten burned by paper in the past. So let’s take a walk into just the recent past and look at some recent examples …

The Time: The Middle of 1998 The Places: Thailand and the former Soviet Republic

Strange bedfellows you might think. But not really. Moscow was reeling under an estimated $150 billion worth of publicly issued IOUs, debt they had accumulated when the Berlin Wall fell and the former Soviet Republic turned into a splintered group of free-market Russian states.

The debt, mostly issued with the intent of building infrastructure for the new Russia, was for the good of the country’s new 146 million capitalists.

However, corruption at so many levels in the government resulted in waste and bureaucratic nightmares. Projects either never got off the ground or ended up lining the pockets of the oligarchs who effectively printed their own money with assets previously owned by the state.

End result: The sovereign debts of the new Russia quickly went bad, and for the next five years Russia collapsed into turmoil.

Though almost a world away, it wasn’t much different in Thailand. The country’s economy was cooking in the earlier part of the 1990s. Gross domestic product was jumping at an average rate of 9% a year.

So the country borrowed money, lots of it, to expand even more. Public officials and those quickly getting wealthy in Bangkok were all thinking the same way.

In fact, so much money came into Thailand that the Thai baht was strengthening quickly in local markets. Yet it remained tied to the dollar, which at the time was also rising in value. So with a currency too strong, the economy suddenly became uncompetitive in the region.

Billions of dollars borrowed and bet on the future were suddenly at risk. The economy continued to slow to such a point that there was only one option for authorities and regulators: Bust the Thai baht loose from the dollar and let it float freely on foreign exchange markets.

Give the system some flexibility and let market forces take over.

It was good thinking and the only choice the authorities really had at the time. But what they didn’t realize is that confidence in the government had already been lost. Investors felt insecure about debt issued by the government.

End result: The baht collapsed, soaring from 28 to the dollar to 58 overnight. Capital stampeded out of Thailand like there was no tomorrow. The economy collapsed, shrinking almost 50% in no time at all. Bonds and other debt offerings went bust. And the International Monetary Fund had to step in and bail out the country.

Moscow and Bangkok … strange bedfellows no doubt … totally unrelated at first glance. But in both cases, simmering below the surface, were excessive debt levels going bad. Paper assets went up in smoke. And investors got burned. Big time.

Another example from just a few years ago …

The Time: 2000 The Place: New York

The Nasdaq hit 5,132 in March 2000, up 1,489% from its low of 322.93 in October 1990. Dotcoms were everywhere, all the rage. Investors couldn’t care less about brick and mortar companies with real assets, with real three-dimensional products for sale.

All they wanted to know was how many eyeballs are looking at a web page at any given moment. All they wanted to know was how many clicks a link on a website got. And all they wanted to know was the latest dollar figure being assigned to such numbers. They multiplied them out and got the stock price. Forecasts kept getting raised and share prices kept going up.

But suddenly reality set in and investors took a breather. They thought about what they were doing. They woke up and smelled the coffee, prodded no doubt by disasters such as Enron and WorldCom. They started to ask themselves what the heck they were really buying.

And voila! The assets suddenly collapsed virtually overnight, in the worst stock market crash since the Great Depression. Paper, in the form of stock certificates, crumbled in value.

Now, fast-forward to today …

The Time: 2009 The Place: All over the U.S.

The problem: Subprime mortgages … prime mortgages … bad real estate … corporate debt to the tune of $7 trillion … Federal debt to the tune of $125 TRILLION.

It’s not so much that real estate prices collapsed under the sheer weight of the debt. Believe it or not, that was only the trigger and prelude to a much deeper debt crisis that is now beginning to emerge.

And it’s not so much that we have to compete with Chinese products when it comes to manufacturing and exporting our own goods. Or with Japan. Or Vietnam.

It’s not any one single cause that has led the U.S. to where it stands today.

It’s a series of blunders made by all of us … from Washington to Main Street. And it’s created a debt pyramid that is now the largest that civilization has ever witnessed … and, it’s crumbling before our very eyes.

Is it any wonder that the U.S. dollar, once the most respected currency in the world, has been losing its value virtually non-stop?

Is it any wonder that December gold has now pierced the $1,100 barrier?

Is it any wonder that gold is now being rediscovered as the hard currency it has always been?

Is it any wonder that virtually all natural resources under the sun are acting like tangible assets should … rising as the dollar crumbles … and as investors start to shun paper assets?

I don’t think so. Not in the least.

Remember, virtually all natural resources are in strictly limited supplies … under intense demand pressures … and they are real assets — hard money that almost always act as hedges in an environment where paper money is becoming worth less and less.

So I suggest staying the course with the natural resources you’ve been reading about here in Uncommon Wisdom. They are real assets … real, tangible goods … creating REAL WEALTH for you!

Best wishes,

Larry

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules