Carl Spackler

What Is Going On With Gold?

Gold has been supported by all those who are waiting for hyper inflation from all the money being tossed around, but like all good Americans (and I am one of them), they expect instant results. They believe that since they put the printing presses on full steam that presto - we will have major inflation. Make no doubt about it, we are in the clutched of deflation. Every product and good on the planet is falling in value. Japan fought deflation with all the same tools as we are using now, and they could not shake it in 10 years! They reduced interest rates to 0.25%, they did quanitative easing, etc..., but in the end they could not get the consumer to reinflate. We face the same issue. I appears to me that 95% of America assumes that the Fed will lead us out of deflation in 6-9 months - a ridiculous notion since it took us 10 years in the 30's and Japan took 10 years with no success. I do think we will turn it around, but it will take at least 2 years. When the market realizes that inflation is not right around the corner, gold should correct to the $500-600 range. That will be the time to buy - not now!