Gold Outlook

With an astronomic and ever growing debt and derivatives overhang, there are essentially only two choices for the world economy. One is to deal with it head on, which would trigger a deflationary implosion that would create an economic wasteland leading to anarchy, riots and revolution etc. Quite clearly nobody wants that, least of all those in power. So that only leaves one other option, which is to keep things limping along for as long as possible by clamping interest rates at zero to stop debt compounding and to print whatever quantity of money is required to keep the status quo going. The big difference between now and 2008 is that this is now a truly global strategy with the WWEW, the World Wide Elite Web, now controlling and directing a coordinated campaign of liquidity enhancement to achieve this objective. For evidence of this you need look no further than the Fed delivering boatloads of newly created cash to the European Union to prop up its banks, or to Japan suddenly abandoning decades of deflationary policy to get with the plan, which is why the yen has collapsed. However, the Fed’s generosity towards Europe may not extend to saving the euro, which US elites may view as a nuisance because it potentially undermines the dollar’s reserve currency status.

Creating vast quantities of money out of nothing to make available to big banks and the financial sector free of charge must of course have a price, since real wealth cannot be created out of nothing, and that price is monetary debasement, the consequences of which are neatly passed along to the lowest tiers of society via inflation. So the big banks and favored entities and institutions are the direct beneficiaries of the munificence of the money printers, while the bill for it all is passed along to the man in the street via robust inflation.

The need to save the world by clamping interest rates at zero also provides another convenient mechanism for transferring the wealth of the middle and lower classes to the elites. The big banks, as we know, can borrow newly created money for nothing or almost nothing, but when the little guy wants to borrow money for whatever reason he has to pay the banks 4 or 5% interest, so the banks pocket an instant 4 to 5% profit for a little paperwork– not bad work if you can get it. On the other hand, if the little guy actually succeeds in saving some money, and makes the mistake of letting it accumulate in a bank account, what will the banks pay him in interest? – nothing, or next to nothing. This is why the little guy, frustrated at getting no return on his savings in the bank, is encouraged to venture into more risky areas like the stock market – which is then cyclically flushed to strip him of his holdings at low prices. To add insult to injury the little guy is then advised that “for the greater good” he should tighten his belt and endure austerity measures. As if all this isn’t enough the size of bars of chocolate is being slyly reduced . The trick for the elites is squeeze the little guy as much as possible so that he is simmering with anger and frustration, but not so much that his anger boils over and he goes on the rampage, which could result in unfortunate consequences, such as bank windows being smashed and bonuses being reduced. Now and then a “trial balloon” such as Cyprus is floated to see what the little guy’s limits are, so that they know what they can get away with later in places like Italy and Spain.

Now, as you know, we are quite above ranting on this site – the point of the above discussion was to make clear that the global elites have charted a course for robust global inflation. Deflation could lead to things quickly getting out of control and a descent into a state of anarchy, which could lead to them losing power and possibly even their lives. Inflation on the other hand, means that they can keep things limping along, maintain the status quo, which benefits them hugely, and engage in the steady transfer of wealth from the poorest sections of society to the richest. This for them is the perfect outcome, and – now we are getting to the point – it means that hard assets with intrinsic value can be expected to remain in uptrends as far as the eye can see – as investors struggle to maintain the value of their assets in the face of the relentless ravages of inflation. Thus there is no reason to fear an end to the ongoing major bull markets in Gold and Silver, and various other hard assets, and that means that the recent trading ranges in gold and silver are not top areas but zones of consolidation ahead of the resumption of the major uptrend.

Having figured the fundamental reasons for the continuance of the bull market in gold, let’s now look at the charts to see how close we are potentially to the next major uptrend beginning. As we will soon see, it should get underway soon.

A 7-year chart for gold enables us to neatly delineate its major uptrend channel, the lower supporting trendline of which is drawn as a parallel to the clearly operative top line drawn across 3 important highs. As we can see the trading range that has developed over the past 18 months or so has both allowed the overbought condition that had earlier existed to unwind, and allowed the lower supporting trendline to pull up close below the price, which can be expected to lead to the next major uptrend starting soon.

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