No group of Americans had more to be grateful for over Thanksgiving than the few people at the top of the pile. Over the past four decades, their wealth has soared... thanks largely to the feds. In 1971, President Nixon cut the last link between the dollar and gold.
Positive price drivers and physical market fundamentals could form a “perfect storm” for gold in the closing weeks of 2012 – and, quite possibly, we could see the metal approach or even surpass its record high by year-end or early 2013.
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%.
Gold is money that maintains its purchasing power, and for this reason it should be viewed as insurance against financial calamity and a hedge in case of economic collapse. When money supplies are inflated, fiat currencies are devalued and the price of gold goes up.
Doubling down on QE3, the Federal Reserve (Fed) Chairman Bernanke tells China and Brazil: allow your currencies to appreciate. One does not need to be a rocket scientist to conclude that Bernanke wants the US dollar to fall.
Rather than going on for eternity, this third round of QE is only hastening the day when there is a flight of confidence from the dollar and US Treasuries. This will cause a sharp rise in market interest rates and surging consumer prices across America.
Wholesale gold prices hovered in a tight range just below $1,780 an ounce for most of Tuesday morning in London, just below a new 2012 spot market high touched yesterday following comments from US Federal Reserve policymakers.
Gold no longer has a legal role in the world’s monetary system, but because of a collapse of faith in sovereign obligations and a coming complete lack of trust in governments and financial institutions, gold is going to quickly become a core banking asset.