Good post. My interpretation of why gold has been falling...

Good post. My interpretation of why gold has been falling despite central banks pumping up the printing press is that money centre banks have drastically reduced their lending since the GFC. As these banks create far more "money printing" via the fractional reserve banking system whereby they can lend up to 10 times the value of their deposits (despite the fact that they do not have that money) They create the money digitally by crediting the borrowers bank account. For example, if a bank receives a 10 million dollar deposit then they can create 100 million of loans with that. In the lead up to the GFC the banks digitally "printed" many multiples of what the central banks have created and that in my opinion explains the bull market in gold over the past 12 yrs. So, since the CFC there have been two forces opposing each other. The deleveraging of bank balance sheets and tighter lending standards has led to a total global reduction in credit growth (negative for gold) whilst central bank money printing has increased credit growth (positive for gold) In my opinion its just that the destruction of bank credit has been greater than the creation of central bank credit - hence the overall fall in the gold price as gold is measured against total credit and not just central bank credit. However, I think now we are finally at a stage where bank credit is once again increasing and despite tapering overall credit is once again going up hence the potential bottom in the gold price. None of this of course has solved the long term solvency issues facing the US, Japan, Europe and many of the emerging markets and it is for this reason that I am a long term gold bull. Most of the countries that I analyse are totally bankrupt so the politician will have two choices . Either increase taxes and reduce entitlement programs where the public will know who to blame or tax the people by stealth by printing what they need thus devaluing their debt through the destruction of their currency. This is what is happening now via the "currency wars" and this is reason why I continue to accumulate gold and select gold mining companies with low sovereign risk.