This week many Investment Banks have come out with their views that the Economic Recovery will now accelerate and therefore monetary easing will subside in 2013 & 2014, thus Gold prices will fall.
I would like to show the above Banksters the below picture, and kindly excuse me for this. I will explain below why....
Foreigners are no longer buying US Treasuries and the Privately Held Federal Reserve is printing and lending the money to the US Government. Foreigners are dumping dollar reserves and buying-hoarding commodities and resources, creating a lot of inflation. (read my earlier post: if ben allows interest rates to rise).
A recovery is not possible unless inflation reduces the burden on disposable incomes so that people consume and spend on other things.
If Inflation keeps rising, then disposable income will fall further and the masses will not be able to support conspicuous consumption which can bring about economic recovery.
Also people are now afraid to borrow and spend, as they very well remember the forecolosures and evictions and the joblessness post the 2008 Subprime debacle. Banks are also not lending as they have strict rules regarding creditworthiness!
Once again, if RECOVERY is not occuring, FED cannot increase Interest Rates ! and if Fed does not increase interest rates, Inflation will SCREW THE RECOVERY !
CATCH 22 !
Also how about all those entitlement (Social Security, Medicare, etc) payments maturing in the coming few years ? How will USA finance them ? MORE MONEY PRINTING ?