Wednesday, January 18, 2012

Propaganda of the Day: 'Long Term Outlook for Gold is Zero'

Just when you thought you had seen it all with shills denigrating gold and silver with illogical and blatantly false arguments, we have this piece of brilliance from John Lindauer.
Lindauer informs us that the price of gold is on its way to the cost of storing it because gold is no longer used in dentistry for false teeth, and also because Asian women will soon be liquidating their gold jewelry for stocks and bank deposits.   Oh, yeah, and he throws in the classic barbaric relic and earns no income lines too.

In the long run the price of gold can only go down. And it will keep going down until mining virtually stops. This will occur as the world's economies and banking systems continue to modernize and gold long-held in vaults to back currencies comes on the market. As it stands, in the long run the price of gold will almost certainly fall as the supply in the market continually increases far faster than the demand.
The long-run decline is under way for a number of reasons. For example, modern dentistry now relies on other commodities for false teeth; access to banks and stock markets and other assets is spreading rapidly in gold buying countries such India so that women, as women already do in the West, can now hold their assets in banks and securities and other assets instead of wearing them.

Also in the long run, the older less knowledgeable generations of Geithners and Ron Pauls will pass out of positions of power - so that the kinds of uncertainty and ignorant national and central bank decisions now triggering economic collapse, such as those now prevailing in the United States, will finally cease, thus ending the demand for gold as a safe haven for investor's wealth.
But the trend toward sustained prosperity is under way and it means significantly lower gold prices in the future as declining demand meets an increasing supply - not just from increased production through the use of modern mining techniques but also as nations sell their useless reserves and women in underdeveloped countries convert their gold jewelry to income-earning assets such as stocks and bank deposits. (
editor note- when have you ever seen your own wife sell even a single piece of her own jewelry for stocks or bank deposits!?! Obviously this man has never been married!!)
Since the gold standard won't be back investors should be wary of buying gold or the shares of gold-related companies because someone claims gold will always have value, or suggests gold may again "back" the dollar or some other currency, or claims that having gold associated with our currency would somehow "fix" inflation or enhance the value of and stability of the dollar.
The reality of today's world is that gold won't return to its previous eminence and its long-run price prospects are poor.
The only thing certain is that long-term investors will lose as the price of gold continues to inexorably trend toward the cost of storing it. Long-term investors should sell their gold and gold-related stocks as soon as possible.

Read more of this brilliant analysis here