Wednesday, September 7, 2011

Jim Willie: Is it too Late to Enter Gold?

Jim Willie discusses the differences between the current financial panic facing markets this fall with the one that saw a significant gold and silver correction in 2008. 
Willie believes a return to a gold standard will begin to dominate public debate over the next year, providing further fuel to gold's price run.
As yesterday's announcement of the CHF pegging to the Euro indicates, This ain't 2008.
Gold and silver are the ONLY REMAINING safe haven assets.


The performance of Gold in the last three years has proven to demonstrate loudly and visibly that the potential price in future years is likely to be more like $2500, then $3000 and higher. The reason is simple. Nothing is being fixed, no remedy even attempted, the debasement of money continues, the ruin of the monetary system spreading like a Texas wildfire, the bailouts making headline news almost every week, and Gold actually being the ONLY, the ONLY good performing asset.

The bigger question is no longer whether Gold will repeat the 1980 decline and multi-year fizzle, but nowadays whether climbing aboard the Gold train at the $1800 to $1900 price will offer much upside potential. In other words, is it too late to enter the Gold investment trade? My answer is that if a rise from $1800 to $2500 and then a zoom past $3000 seems attractive, sure, climb on. By the time $2000 is surpassed, the upward moves in the Gold price will be justified by widespread openly discussed debate about whether the Western monetary system and sovereign debt structure is permanently broken. The next hotly discussed topics will be whether almost all efforts to treat the severe ills actually make the problem worse and actually add to the potentially higher Gold price. The next year will see the arrival of more realistic debate over a Gold Standard, the dreaded solution.


Put aside the Gold correction news. That is today's news, soon to become yesterday's news. It is merely a healthy consolidation, compressing the ground so that it supports more weight and higher prices. The Powerz said in May that Gold was a dead trade, only three months before yet new highs were established. Tomorrow's news will center on USGovt stimulus, heading off a recession, the transition back to bigger deficit spending, the better understood Global QE, and the inability for the USEconomy to find its footing and generate anything resembling growth.

The current consolidation will permit an all-out assault on the $2000 level this autumn, complete with severe psychological damage. What a pleasure to see that the May ambush of Gold is long forgotten, the effect overcome with the passage of time and the pathogenesis of the financial crisis continuing its course.

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