Thursday, June 10, 2010

Gold Boom Rationale Tracking in Mainstream News (finally)

Eric King, the guy who interviewed almost everyone who is anyone in today's economic guru world, says that we are in a long phase II and about to enter into a phase III mania.
What does that mean?
Good question.  I also want to know.
Perhaps these charts can help us understand... (scroll down in the link to the last chart and hold on to your pants... that is what we have to look forward to when this phase of the precious metals bull market shifts into the next phase, due unexpectedly at anytime)...

Enjoy more from Eric King below...

Cheers, Tate

Forbes - Gold: The World's True Reserve Currency



This is a portion of an excellent article from Forbes regarding gold: Inflation is just another form of a cruel tax placed on the middle class without its consent...While Europe is embracing austerity, the U.S. is headed in the opposite direction.


Here are a few more snippets from the Forbes piece:


How can anyone  believe a government can create viable growth or sustainable wealth? The truth is that governments are incapable of any such thing. Redistributing savings from one part of the economy to another does not lead to growth. Borrowing money from foreign sources only amounts to a deferred tax on future production--with interest.


...The real problem with the U.S. thinking all it needs to do is spend more and keep interest rates in the cellar is that much of the rest of the world has already started to repent. Leaders in many other countries now understand that they must reduce leverage instead of borrowing more, and are raising interest rates to protect their currencies.


The 20th century taught Europeans two valuable lessons: that killing each other isn't really a good way to bring about peace, and that massively inflating a currency doesn't engender prosperity. Now the 21st century is--we hope-- teaching them that countries cannot bail themselves out of debt by issuing more debt.


...The two most important factors in protecting the value of any nation's currency are to have the central bank provide interest rates above the rate of inflation, and for the government to ensure the debt of the nation can always be easily serviced. Canada, Europe, South America and Asia are moving slowly toward those goals. Leaders in those economies are also learning that any fiat currency--even the almighty dollar--can never truly be an adequate substitute for owning gold. That's especially true when the U.S. government and Federal Reserve are determined to undermine the dollar's purchasing power.


The pressing question has become how long other countries will continue to squander savings by parking it in U.S. dollars, if we continue to debase both the value of our debt and the currency in which it is based.


Some may worry that these types of articles going mainstream are a warning sign. The fact is that this is a natural occurrence in a secular bull market, especially as you move through a long phase II, prior to the phase III mania. Gold has plenty more work to do on the upside, so be patient and do not worry about gyrations in the gold price.


To read the entire Forbes article CLICK HERE.


Eric King

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