Hi Ron,
I enjoy your posts along with the many others that help us think things through.
As you stated: "Strength in the price of gold undermines the confidence in economic strength, and all of the coincidental factors that make up that confidence."
One would have to ask, why that is the case. If there is a lack of confidence in whatever economy or currency one has stored his value in, he would look for some other store of value.
As you mentioned, it could be anything. The attempt by some to destroy gold to sustain confidence in anything that people are loosing confidence in does nothing to instill confidence, but acts to confuse.
Another proxy will be found to protect ones wealth, if it is not gold.
The bullish case for gold, IMO, can be found in it's simple commodity status. Money supply has grown by leaps and bounds over Gold supply growth. There are many more dollars to by a slightly greater supply of gold.
Without dishoarding, gold would be gradually moving higher, as demand growth has outstripped new supply growth. That demand, in an indirect way, is a result of the high rate of money growth and the accompanying prosperity.
I am not saying that gold could not be kept down for a lengthy period of time, but eventually, if the supply / demand picture stays the same or improves, the powers that are manipulating confidence will run out of the tool they are using to do so, namely gold.
When this takes place, or is even perceived as coming to pass, gold will head higher.
Have a good day,
Rich |
