Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Prices Benefit From Economic Sins

Commodities / Gold and Silver 2014 Jul 01, 2014 - 02:54 PM GMT

By: DeviantInvestor

Commodities

Governments, such as the United States, United Kingdom, Europe, and Japan, spend their paper currencies as if tomorrow will never come.  They act as if they believe debts can increase forever, more money will always be available, and debts can be rolled over forever.  A recent US vice-president even stated that “deficits don’t matter.”  Such economic sins may help the financial elite but they ultimately hurt most people and most economies.


Governments pretend they don’t know there are consequences to actions, bills must be paid, and nothing lasts forever.  Government actions are equivalent to an individual announcing, “I can’t be out of money, my credit cards still work.”

A few consequences:

President Nixon closed the “gold window” in 1971 and disconnected the U.S. government, the Federal Reserve and the dollar from the discipline of gold.  The result, as measured by official national debt is shown here – a massive increase in debt.

US Official National Debt

US Official National Debt

The two invasions of Iraq have not, based on recent ISIS conquests, produced the benefits that the US & UK war planners expected.  The costs as measured in human life, international prestige, and expenses have been considerable.  Additional consequences have been massively increased national debt, a sluggish economy, and accelerating inflation in food and energy prices.  Prognosis:  higher oil prices, more inflation, weaker dollar and more economic sins.

There are always consequences from the actions of individuals, countries, governments, and central banks.  Prognosis:  prepare for stormy weather.

Regardless of what politicians profess, there are consequences to their actions – their economic sins – and it is wise to clearly assess the likely outcomes.

Most governments spend much more than their income and borrow the difference – economic sin # 1.  The result is a larger money supply and increasing debt.  Eventually the central bank begins “printing money” – economic sin # 2.  Consumer price inflation accelerates and angry citizens watch as their capital, savings, and pensions are consumed in the fires of government created inflation – economic sin # 3.  A diversion, such as another war or invasion, is then needed and economic sin # 4 commences.  Prognosis:  more spending, more debt, and the cycles of economic sins and economic destruction will continue.   

CONCLUSIONS:

  • Expect larger government, more government programs, more debt, more spending, and more military adventures.
  • Expect more price inflation, declining purchasing power for the dollar, euro, pound, and yen, and wages that will not increase to match the rise in the costs of food, energy, and taxes.
  • Expect excuses and diversions.
  • Hyperinflation, another economic sin, can be created by central banks and governments.  It may seem unlikely in the USA, but it is very real in Argentina and Zimbabwe.  It can happen in Europe, Japan, the US, and the UK.  The costs to savings, investments, and personal well-being would be incalculable.
  • We can’t tax ourselves into prosperity.  “Printing money” does not create wealth.  We can’t inflate our currencies into wealth for the masses.  We can’t devalue our dollars, yen, pounds, and euros and expect to create capital or lasting prosperity.  Debts are paid, one way or another.
  • More wars and invasions benefit military contractors – but at what cost to everyone else?
  • Gold has been a store of value for 5,000 years.  It has protected people from inflation, wars, and irresponsible governments during the last several thousand years.  Gold has not always and forever been a good investment – the price of gold declined between 1980 and 2000.
  • But gold is currently excellent insurance against counter-party risk, consumer price inflation, central bank “money printing” and the consequences of the economic sins committed by irresponsible governments and central banks.
  • Gold (and silver) prices have bottomed and will move up substantially for several years.

GE Christenson aka Deviant Investor If you would like to be updated on new blog posts, please subscribe to my RSS Feed or e-mail

© 2014 Copyright Deviant Investor - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in