Gold: Its Time Has Come

December 1987 to March 1993:  Gold fell 36% in 5.3 years

February 1996 to July 1999:  Gold fell 40% in 3.4 years

August 2011 to November 2014:  Gold fell 40% in 3.3 years

(price changes based on US Dollars)

Monthly Gold - Log Scale

Governments, confidence, and prices rise and fall.  The current collapse in gold prices from August 2011 to November 2014 has been typical for a once-per-decade gold price decline.

What changed?  Let’s look at the usual suspect:

  • The US Dollar was strong during the 1996 – 1999 gold price collapse.
  • The US Dollar was strong during the 2011 – 2014 gold price collapse.

but

  • Gold bottomed in early November 2014 and has risen 13% (January 23 close) since then, even though the dollar index has also increased another 9% since the gold bottom.

There is more that will explain the rally in gold prices.  By the way, gold is close to all-time highs in several other currencies, even though it is not in US dollar terms.

  • The Swiss National Bank assured the world that their “peg” to the Euro was solid, but soon thereafter they abandoned the “peg” and assisted with billions in losses (still counting) globally. The Swiss just reconfirmed what has been evident for decades – central banks often lie to protect themselves as well as the political and financial elite.  The Swiss traded their gold for a huge loss on euros while Asians have wisely been trading currencies for gold.  Expect the Asian demand for more physical gold bars to continue.
  • Crude oil prices have collapsed over 55% in six months. Certainly some oil companies were hedged against an oil price collapse, but not all of them.  What happens when the hedges expire or the counter-parties can’t pay off on the hedges?  How large are the derivatives that are at risk?  Collateral damage to several oil exporting countries seems inevitable.  Perhaps the elite see the negative consequences and are buying physical gold for protection.
  • War is escalating in the Ukraine. Kissinger and Gorbachev have both warned this could lead to resumption of the US – Russian cold war and potentially a hot or nuclear war.  War encourages massive debts, inflation, and purchases of gold.
  • Gold has strengthened as a consequence of the delusion that “money printing” will help anyone but the political and financial elite. The Bank of Japan has been printing Yen like there is “no tomorrow,” which unfortunately may describe the rather bleak future of the Japanese economy.  Perhaps the Japanese and other westerners are buying gold for protection from their central bank “money printing” policies.
  • There are serious financial and political issues with Greece, Spain, Italy, the European Union and the euro. Ditto for the Middle-East and the United States.  Gold purchases are accelerating.
  • Interest rates are currently at multi-generational lows with some European rates negative out to five or more years. This is not a sign of economic health.  Since the typical “solution” is more debt, “money printing,” bond monetization, and larger deficits, investors understand the consequences of such “money printing” and have finally realized they must buy physical gold for protection.
  • Perhaps the common denominator is that Central Banks and indebted governments are desperate, scared, floundering in uncharted monetary territory, lying, and manipulating many markets. Investors appear tired of central bank and government lies.  Their loss of confidence is reflected in market volatility and the relative but temporary strength in the US dollar.  When the US dollar weakens again the urgency to purchase physical gold will increase!

Weakening confidence in currencies, central banks, and governments will focus attention upon real money, the money that has survived for thousands of years BEFORE AND AFTER the era of central bank promises, lies, manipulations, and monetary stimulation.  Gold is making a determined come-back in financial markets because it is more real than paper fiat currencies backed only by the faith, credit, and the lies of insolvent central banks and sovereign governments.

Gold is approximately $150 higher than its early November low and still long-term UNDERVALUED.  Paper promises, paper currencies, and official pronouncements from central banks and governments are looking less real, more vulnerable, and likely to weaken further in 2015 and 2016.

To paraphrase Churchill, central banks will (we hope) do the right thing (back their currencies with gold) after they have exhausted all other alternatives.  How much collateral damage will occur in the meantime, and what can you do for self-protection?

GO FOR THE GOLD (and silver)!  It has withstood the test of time, history, the ravages of paper money, and central bank lies.

Read:          Folly Triumphant by Hugo Salinas Price

Gary Christenson

The Deviant Investor

GEChristenson.com

 

 

12 thoughts on “Gold: Its Time Has Come

  1. Gary you are correct , I did say that, referring to you, in answer to you, when you said
    We largely disagree, , everything I listed was stated . not because I don’t believe there is no
    inflation. or no debt, etc-etc. [ note ] I wasn’t talking about the article, I was talking to you
    in answer to what you said [ disagree ] and I wanted to know why, that’s why I listed
    what I listed. Gary when I use the word YOU, I’m not referring to myself..
    I can’t explain it any better.
    Thank you for your time. silvercup


  2. Gary would you tell me where I said . There is NO inflation.
    On Jan 27th [ No on can live a normal life .Inflation , Debt, War, Fiat money. ]
    I live in the real world, I know there has been and still is inflation.
    Feb 1 — I said [you] don’t think we have inflation, in answer to your statement.
    Gary I’m not here to give anyone a hard time.
    Thank You::: silvercup


  3. Gary I don’t know what you disagree about , I can only tell the truth and what knowledge I have.
    Everything I stated was the truth. correct me if I stated something that wasn’t true.
    Of course you will state your opinion as well as someone else, through the learning ways that we all have
    learned, depending on what a person believes. Isn’t many works ! and opinions based on the works of others.
    Thank you:: looking forward to your answers
    I am a friendly silvercup.


  4. You don’t think we have inflation .
    You don’t think we are in debt, a total of over 200 trillion.
    You don’t believe the BANKS control you-me and everyone , the markets, P. Metals, etc-etc..
    You don’t believe the purchasing power of the dollar is down to 1.2 cents .
    You don’t believe the FED is going to pump another 1.5 to 1.8 trillion into the system.
    I can go on and on . Who’s going to pay the BILLS.
    No Jobs ::: Homes being lost:: Un-imployment up to 23%.
    S.S. is broke, What State is not in trouble ?
    Over 300 million people in the USA.
    Half of the working class are GOVE. imployed .
    Every Country on the face of the earth is in trouble BIG TIME.

    I know better. silvercup.


  5. I’m curious as to why silver has fallen over the last couple of years…I know it’s started back up but how high do you think it will go? We’re holding some we bought at about $39 an ounce and we plan to keep it. It’s junk silver we want to have in case the SHTF. Thanks so much.
    Carl Capps
    Kent, OH


    • Silver got way too high too quickly in 2011. Then it crashed, with considerable help from the Comex and various other large traders. There are many large forces in play that need to keep silver and gold prices suppressed. That too shall pass. I still see $100 silver in our future – certainly by the end of the decade. I think silver will spike to $50 and higher by the end of 2016.
      The Deviant Investor


  6. I still believe the Banks control everyone. The Fed will always be around. The Gov. will always be corrupted
    At the present time we have a very sad world. No one can live a normal life. Inflation-Debt-War-Fiat Money
    People loosing homes-Soup lines getting bigger. Paper Silver-Gold- Derivatives in the trillions.
    How did we get here and where are we going?
    I’m not a Gold-Silver person, I’m a land and App. owner. I don’t believe P.Metals will save anyone. For those that believe it will, GREAT for them. Man digs it out of the ground and then he digs another hole to put it in.
    Great stuff isn’t it. It’s all about GREED. Clean Water–Good Food–and a roof over your head isn’t important anymore. Your friendly silvercup.


Leave a Reply

Your email address will not be published. Required fields are marked *