July 18, 2011 – I’m going out on a limb: In regards to the future of gold and silver prices, you ain’t seen nothing yet. Ordinarily I would never suggest buying gold or silver on the upside, but these are extraordinary times. Besides, I’m plain sick of hearing Wall Street fairy tales.
I doubt that the debt ceiling fiasco will result in default but that’s immaterial. The US of A has made it abundantly clear that the global economy cannot rest easy until the monetary system is stabilized and the markets are once again operating under the fundamentals. The world has to find a substitute for the fiat money of a crumbling empire and the markets have to extricate themselves from the morass of self-defeating derivatives before we will ever see the runs of gold and silver level out.
Wall street bulls say record profits and the steady increase in corporate cash holdings this century prove that the upside for equities is just getting started. I see things a little differently.
Hording cash does nothing to promote growth. Corporations build up disproportionate cash reserves to hunker down for coming hard times. If there were a broad-based belief that consumer spending – the biggest slice of the GDP by far – was about to rebound, corporations would be shoveling cash right and left into capital to maximize profits during the upswing.
Still, we can expect gold and silver prices to stutter as the Fed throws Wall Street a few more bones to keep the illusion alive for a while longer. We may even see a significant dip or two as pundits postulate and investors panic. But nothing on the horizon even remotely suggests a reversal – or even moderation – of the fundamentals driving gold and silver strongly upward.
The excess assets from silver’s big selloff that started in May have been absorbed by bargain hunters and gold has been idling a little too long. Meanwhile the fundamentals have been building up a head of steam that could blow at any time.
So, uncharacteristically, I’m feel obliged to make this prediction: within the next 12 months gold will break the $2,000 mark and silver will pass $50 per ounce, finally breaking its non-inflation adjusted record. And for what it’s worth, I’ll toss this in: once clear of those barriers gold and silver prices will continue moving much higher and much faster than anybody suspects.
Senior Staff Writer – GoldSilver.org