hedgeman

Will We See a Big Upward Move in Gold?

Pushing gold prices up is the cheapest way to postpone the inevitable. Without a thorough system reform the growth will not be reignited. In the mean time to slow the pace of declines in employment FED should create another "bubble" which would increase the "perceived wealth" effect. If you force banks to start lending again and revaluate a widely held asset (gold!) you jumpstart the system (it solves nothing but postpones reform and gives some breathing space...) Consumption would rise globally and also other asset classes would stabilise - correct higher...

Bubble "order" - Equity - Realestate - Commodity - Precious Metals

Give consumers credit and convince them something they hold is rapidly increasing in price and they will start to spend. A jumpstart so to say.

Inflation - USD falling - Deflation debates will become irrelevant once the FED decides that cheapest reflation is through gold.

But one of conspiracy lines goes like this : there is no physical gold left at the FED, China holds it somewhere as collateral against US Treasuries... :)

There should be a clear distinction between what should be done and what will be done. ECB and EU almost never do what they are supposed to do due to their organisational inneficencies. USA should lead the way.

And this time they will do it. Nothing worse for politicians then a bunch of workers staying at home (after a few days of family life a night out with union guys, after a few beers you can spark a riot easily...) Look at the Greece example.

Something should be done fast to alter perceptions and the most effective way ( - cheapest) is to push gold sharply higher.

Disclaimer: will buy brake of 835 on a daily closing basis for XAUUSD.