Gold To Hit $2,000 Before Year End By Garry White |
August 5, 2011
Gold at $2,000? I didn't used to think so
- but now I am not so sure. In fact, I'm almost convinced
it will happen before the year is out.
Last week’s events on Capitol Hill
in the US were very damaging. After we abandoned the gold
standard, the dollar is now the globe's reserve currency
– and US politicians decided to play a game of chicken
with the debt ceiling. Their behaviour verged on the shameful.
The fact that an 11th hour deal was done
and the ceiling was raised is a relief, but the process
shattered trust and confidence in US politicians.
There is also an uncanny correlation between
the gold price and the US debt ceiling. Over the past 30
years, the gold price has tracked the ceiling whenever it
has been raised.
The US economy is also flat lining, with
slower growth now expected – confidence in the country
evaporated overnight and a frantic hour of trading on Wall
Street sent the Dow Jones Industrial Average on its worst
run since the financial crisis, falling for the eighth successive
day.
This gloom has also raised the prospect
of more money printing by the Federal Reserve. QE3 is not
a certainty, but it is now more likely than it was even
last week. This will further debased the value of the dollar
and will cause even more investors to flee to the safe-haven
currency of gold.
Then there’s the imploding eurozone.
The debt debate was a distraction from the structural problems
faced in the region, China is potentially overheating, in
common with most emerging markets that are battling crippling
inflation.
Gold is a hedge against the debasement of
currencies and rampant inflation – and all of these
problems are now getting worse. The case for gold has never
been stronger.
Gold at $2,000 by the end of the year is
not a certainty – but everything is now in place to
make it happen.