How to brew a gold bull market
worldnetdaily.com
If you want to brew beer, you need malt, hops, water and yeast. If you want to brew a gold bull market, a really big gold bull market, you need the following ingredients:
1) A barrel of inflation
At the end of one of the worst weeks in American history – by Sept. 17 – $165 billion dollars had been added to the country's money supply. That was just in the aftermath of the first week. It was accomplished largely through the Fed's granting of a special right to lend money to American banks. It will prove to be the beginning of a brand new tidal wave of dollars.
Everywhere you look, there's a billion here and a billion there for support and stimulation: $100 billion to pay for the Towers' collapse … $343 billion for an admittedly much-needed defense budget ... a $75 billion economic stimulus package, and that on top of the old one. There are billions for the airlines, billions for revamped security, billions for the victims and their families, for new unemployment claims, for all the various sectors of the economy suffering from these horrendous acts. Everyone from travel agents to aerial cartographers.
The surplus actually vanished last August, a few weeks before the attack, when there was a virtually unreported all-time record $80 billion deficit (overshadowing the earlier mark of $53 billion in May of 1991). So, no matter how you look at it, paying for the above and for the myriad of other "unlisted" terrorist-associated costs is now and will be an inflationary event, maybe the greatest of all time. There's that much need out there.
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And it comes out gold
The last time we saw conditions even remotely resembling today was in the late '70s. And, even as the stage was set back then, gold and other commodities (like oil) had already witnessed huge gains. That was before gold hit a record $850 an ounce.
Today, by contrast, the main indicator of tangibles and commodities – the CRB Index – is now at its lowest level in over 80 years. That means commodities are cheaper today in real terms than they were during the Great Depression of the 1930s. Think about it: These are real, useful and productive things of inherent value ... and they're almost criminally underpriced.
So, when you mix all of the economic ingredients, even if you overlook a few key ingredients, you still end up with this: Not only has there seldom been a more obvious recipe for a gold rally, but gold and other tangibles haven't been this underpriced, relatively speaking, in 70 years.
The wise investor can see what's brewing. |
