Tonight the 7.30 Report on the ABC featured a fairly comprehensive report on why gold is performing strongly in the aftermath of the Global Financial Crisis.
The theme was that the spending stimulus packages initiated throughout the world, are likely to be inflationary and that the movement in gold is confirming the inflationary expectations of the market place.
Interestingly, up until now, the main stream press have basically ignored the gold boom that has been running for the last 8 years. Gold has made new closing highs each and every year over that time period and outperformed all other markets despite earnest attempts to keep it subdued.
You wouldn't have known of gold's exploits from media reporting or for that matter by the behaviour of the gold shares. The gold miners have pretty much been ignored both here on the ASX and on mining bourses throughout the world.
The fact that we are now seeing gold positive articles almost everywhere in the media, is extremely positive. In effect, the media are acknowledging that the heavy handed gold suppression exercised over the last couple of decades is no longer sustainable.
With the inflationary storm ahead of us, there is clearly no point throwing valuable gold at the market trying to keep a decaying US Dollar somewhat respectable.
The so called US Strong Dollar policy was in effect a strategy to keep gold subdued, thereby keeping the focus on the dollar as the world's supreme currency. Given that currencies are no longer backed by anything, if gold wasn't seen as a competitor as a medium of exchange then they had a free reign to run the electronic printing presses. And they did! They were very successful at it, but not any more. The world has woken up.
Companies like IGR really are in the box seat as they move forward with their plans for production into an increasingly gold hungry world. IMHO, we will be looking back in 12 months time at how cheap IGR was back in May 2009.
An extract of the 7.30 Report on gold is available from the following link.
