Quaker

Why The Fed Must Allow Gold to Rise

Hey Greg, whenever I read something like your post, which is very logical and straightforward, I ask myself "what am I missing here?. John Hussman (quoted on SA a lot) agrees with you wholeheartedly. His BOND FUND carries a 20%!!!!! gold holding. Hussman is the best bear market fund manager in the country.

So what, if anything are we missing? One thing is certain. Like those oil guys who stare relentlessly at WTI, many US managers think America's inflation rate matters. In case nobody notices, gold doubled while inflation stayed at 2%. As you state, the relationship between Gold and the Dollar seems pretty strong. Gold stocks are lagging cold considerably, which tells me, like oil, money managers still simply don't get it. Late to get in with the first move and having lost HEAVILY they're now going to be even later getting in, but when they do, it's going to the mother of all parabolas.

I think one thing we're missing is that we're going to have the mother of all bear markets in bonds.

The week after 9-11, Bush told America to show their patriotism by spending money like it's going out of style. Greenspan obliged. It's payback time.