A Wonderful Time of Our Year
As we celebrate the birth of the King of Kings, the Lord of Lords, the Mighty God,the Everlasting Father, we also experience one of the most weird times for the markets. Our attention, and that of many traders, is directed, correctly, more toward the celebration than to the markets.
Gold has been bouncing between about 440 and 505 per ounce during the current correction. Is the correction over? It may be, but remember we are still in a weird market time. To fully resume its upward bull trend, gold would have to exceed 550. Why is gold seemingly in an extended bull rally? To answer this, we must examine some basic economic facts.
First, all currencies of the world are unbacked with anything other than the full faith and credit of the nations and central banks. They are legal tender, as our dollar clearly declares "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE." Thus,the value of each currency is based upon the coercive power of the government to force its use and the acquiescence of the people to use it. In the world market place, individuals seek to hold, as a store of value, the currency in which they have the most faith.
Second, since the currencies are unbacked pieces of paper, banks can create as much as they desire by lending to the governments, businesses, and individuals through the fractional banking systems of the world. Due to the law of supply and demand, the more there is of anything, the less is the value thereof. Thus, when more dollars are put into circulation, the value or purchasing power of the dollar is decreased.
With these two facts in mind, examine the mushrooming debt of our governments, businesses, and individuals. Billions and trillions of dollars have been created out of thin air to support this debt. Therefore, the dollars have lost a commensurate amount of purchasing power. Thus, it takes more of these abundant dollars to purchase an ounce of gold. So the price of gold is going upward.
Most people concentrate upon price inflation, incorrectly calling it "inflation." This is commonly measured by the government measured consumer price index. Price inflation is what we see as we shop for groceries and other needed items. However, inflation is truly an unwarranted examine of unbacked currency in circulation. The price of gold reflects this and not necessarily price inflation. In fact, both the price of gold and price inflation of most other items in our economy are a result of inflation of the currency in circulation.
It is my opinion based upon these facts that there will be an increase in the dollars in circulation with the lowering of their purchasing power for the foreseeable future. This is required to mask the outstanding debt of our nation.
I would suggest that your understanding of the these economic facts can be used to guide you as you build your portfolio of savings and investments. Gold and mining stocks should be a portion of every portfolio. The percentage of the that portion is up to you.
Study, make your investment plans, commit them to the Lord and depend upon Him for the success. Then worship and praise Him for His mercy and providence.
A blessed Christmas to one and all, Doug
Gold has been bouncing between about 440 and 505 per ounce during the current correction. Is the correction over? It may be, but remember we are still in a weird market time. To fully resume its upward bull trend, gold would have to exceed 550. Why is gold seemingly in an extended bull rally? To answer this, we must examine some basic economic facts.
First, all currencies of the world are unbacked with anything other than the full faith and credit of the nations and central banks. They are legal tender, as our dollar clearly declares "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE." Thus,the value of each currency is based upon the coercive power of the government to force its use and the acquiescence of the people to use it. In the world market place, individuals seek to hold, as a store of value, the currency in which they have the most faith.
Second, since the currencies are unbacked pieces of paper, banks can create as much as they desire by lending to the governments, businesses, and individuals through the fractional banking systems of the world. Due to the law of supply and demand, the more there is of anything, the less is the value thereof. Thus, when more dollars are put into circulation, the value or purchasing power of the dollar is decreased.
With these two facts in mind, examine the mushrooming debt of our governments, businesses, and individuals. Billions and trillions of dollars have been created out of thin air to support this debt. Therefore, the dollars have lost a commensurate amount of purchasing power. Thus, it takes more of these abundant dollars to purchase an ounce of gold. So the price of gold is going upward.
Most people concentrate upon price inflation, incorrectly calling it "inflation." This is commonly measured by the government measured consumer price index. Price inflation is what we see as we shop for groceries and other needed items. However, inflation is truly an unwarranted examine of unbacked currency in circulation. The price of gold reflects this and not necessarily price inflation. In fact, both the price of gold and price inflation of most other items in our economy are a result of inflation of the currency in circulation.
It is my opinion based upon these facts that there will be an increase in the dollars in circulation with the lowering of their purchasing power for the foreseeable future. This is required to mask the outstanding debt of our nation.
I would suggest that your understanding of the these economic facts can be used to guide you as you build your portfolio of savings and investments. Gold and mining stocks should be a portion of every portfolio. The percentage of the that portion is up to you.
Study, make your investment plans, commit them to the Lord and depend upon Him for the success. Then worship and praise Him for His mercy and providence.
A blessed Christmas to one and all, Doug
posted by Doug @ 9:33 AM
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