An article on Bloomberg comparing the gold market in the late 1970s – dramatically peaking in 1980 – to that of recent years has suggested that “gold could soon get very boring” and a “repeat of that trend would leave gold at around $1,000 an ounce in 2035.”
So long as a central bank decides to hold interest rates at a chosen level and is prepared to provide liquidity to any bank that requires it, the central bank stands in the market to offer unlimited quantities of money at the stated rate.
Last Wednesday the Fed surprised most people by deciding not to taper. What is not generally appreciated is that once a central bank starts to use monetary expansion as a cure-all, it is extremely difficult for it to stop.
"Two years ago gold bugs ran wild as the price of gold rose nearly six times. But since cresting two years ago it has steadily declined, almost by half, putting the gold bugs in flight." That was written in 1976.
The long-term “irreversible” trends continue to develop. Many of the trends, such as debt creation and the movement away from the U.S. dollar, are accelerating and their consequences are appearing globally.
In his new book, David Stockman, former Republican U.S. Congressman and a founding partner of Heartland Industrial Partners, levies blame for the dire straits of the global financial system on central bankers, economists and politicians of both parties.
Why are central banks buying gold? Don't they know that gold holdings don't earn them any money? Don't they know they'd be better off with US Treasuries? Don't they know the dollar is as good as gold? Apparently not.
The Federal Reserve’s new stimulus measures have had a noticeable impact on market confidence in the dollar and the solvency of our current monetary system. The Fear Index picked up in September and is once more over 3%.
I despise the interventionist ways of the Federal Reserve. But as a gold investor, I appreciate the Federal Reserve’s “help” in boosting my portfolio. Fed policy right now can only lead the gold price in one direction: higher.