Gooch
Thanks for sharing your thoughts.
A very good overall summary of the situation.
My main concern with it is that if shares around the world go down then the money outflow will go into bonds (already happening a bit in the US where the 10 year treasuries have fallen back).
Weak commodities signals to me lower economic growth to come. A selldown in shares has in the past tended to also result in a selldown in gold and goldies. At least that is what happened in the second half of 2011 (especially note the fall in the price of goldies back then despite the elevated POG).
If we are going into a deflationary period things could get pretty nasty. US profit margins are at historically elevated levels so there could be a big sell off in the markets due to intense price competition that happens in deflation.
The strange thing about the US is that its net employment is not really growing much if at all. The reduction in the unemployment level is mainly due to falling workforce participation rate (now back to 1979 level). However, to some extent there is due to the increasing retirement of the baby boomer generation.
The bottom line is that Bernanke needs to get those helicopters going to drop off a lot more cash into the hands of consumers rather than the banks which are not lending the extra money being printed.
Another $1 trillion stimulus package by China is also needed - their economy has a lot of issues now - to generate more inflation there (now down below 2.5% if you believe the official figures). That would do wonders for our miners, although there is plenty of new supply to come onto the market soonish. More empty appartment blocks in China and useless investment, but it keeps things humming along and should generate more inflation and hence more reason for Chinese to own gold.
India has a high level of inflation (12%) that makes owning gold attractive, but the govt is trying to curtail gold imports and redirect the funds towards productive investments.
Maybe Martin Armstrong is right. Gold will have lull to around 2015. I dunno.
loki
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GoochThanks for sharing your thoughts.A very good overall...
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