Saturday, January 31, 2009
Why Has Gold Soared?
My view is that what is driving gold higher is the ever louder death rattle of the entire post Bretton Woods system whose soft underbelly has been badly, more likely, fatally exposed by the European and American banking system collapse. And speaking of the banking system, whatever is done going forward will involve more, much more, quantitative easing, to the point of engaging in thoroughly unsterilized monetization if need be. That, to me, is a given. The only question now is who will foot the bill for the removal from the bank's balance sheets of those holdings which are deemed "bad assets." In such an environment, when so much currency debauchery has already occurred, but hardly run its course, owning gold, and even silver, makes a great deal of sense. And though there will certainly be volatility going forward in the precious metals markets, the path of least resistance, over periods of months and years, is higher, much higher.