Everyone (including me), based on the little packages of trailing history that we are, mutters about inflation and gold being its hedge. We are lead to understand that with inflation we can devalue the debt—that is the benefit we pray for.
Is that what's happening? Will it be the same as it has always been? Can it happen?
First up in mind these days is: That's an awful big f'n financial mess the world's financial class has put everyone in. Next I think: Gold's price sure has been looking like it's being managed. Then: Are thos etwo linked? Duh!
The Masters of our universe are the banking class. What do they claim to master? Money or more correctly fiat currency which is a great tool when your business is the illusion of wealth.
Why would they want gold (increasingly the common man's wealth measure) to muscle in on their territory? I wouldn't!
But the world is a mess because of debt (which represents how well the banking class actually created wealth—they didn't). Everytime the economy moves up slightly the 'bank-karma' effect kicks in: no liquidity. The banks are holding (or should I say withholding) a lot of cash given to them by governments but they are not injecting it into the economies. Why? Because they know how bad they made the situation. The world's economy in truth cannot support the debt and grow.
So how will inflation happen? Can it? In order for inflation to occur the economy must be heating up. I do not see that happening—certainly not for a while.
Debt is the problem.
Do I think gold has peaked and its story is over?
So what is different about the whole economic downturn this time?
One big difference is the financial world is much much larger than it was during the last gold bull market cycle. The number of people in financial markets, in business dwarfs the human mass involved in the late 70s.
The economic expansion since then has seen a number of third world countries vault to first world status. In human terms that represents a least a 400% increase active in the world's economy.
Add to that the number of added central banks and the conditions under which they manage individual economies and specifically the currency valuation dance they do together around the debt-bomb musical chairs and you can see how threatened they are by gold....and why they are working so hard to control the gold price.
In my opinion, if inflation drives gold's valuation, we will be waiting for several years(3 to 5) for gold's cycle to head to a more appropriate valuation. However, given that debt is preventing growth, gold may be used by the same fiat loving banking class to reset the financial baseline.
How? Well I'm not sure and I am sure they aren't but more on this later.