For prices to rise somebody has to have the money. If Europe is collapsing and America is heading into another major recession where will the money come from to buy gold at a higher price? Our entire economy has become over-inflated and I suspect prices across the board are headed downward when the dam breaks.
Oh, there’s money out there! Way, way, way more than you think!
TENS, if not HUNDREDS OF TRILLIONS of dollars (nominative, face value) in derivatives and hedge funds.
If ten percent of that was to flow into the metal funds, gold would probably hit over $100,000 an ounce.
Seriously.
The same place all of our dollars came from; U.S. government printing presses.
I certainly don't claim to be an expert on this, but I do have an opinion.
First, let me ask you a question; How much of this last year's federal deficit was financed by having the Federal Reserve exchange newly printed dollars in exchange for debt certificates bearing almost record low interest rates?
How about a follow on question; If the Federal Reserve had not been buying U.S. debt, what interest rate would investors insist upon before buying such debt?
And some final questions:
Who will be buying U.S. debt over the next four years?
What interest rate will be paid on that debt?
What will happen to the present value of debt certificates that bear low interest rates when identical instruments become available bearing much higher rates?
If the Federal Reserve must continue buying U.S. debt in order to maintain the low interest rates, what must happen to the value of printed dollars?
In 1966 I could buy gasoline for about 20 cents per gallon. Today gasoline costs about $3.50 per gallon. Not coincidentally, at today's silver prices, that is about two silver dimes per gallon.
-—— where will the money come from to buy gold at a higher price?-——
The author uses the interesting phrase “ the counterflow into gold “ while writing about US Treasuries already paying nothing. That means that when the foreign money pouring into US Treasuries and saving Obama’s ass gets spooked by the continuing devaluation of the US$, the place the money will counter flow to is into gold.
Obama has always blamed his poor performance on his predecessor. He will have the opportunity to set up his successor with some kind of trap worse than the mess he has already created. It will be revenge of the worst sort. It will exacerbate the counter flow
If that is the future, gold stocks with a low P/E are a bargain