Forecasting Gold

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Forecasting Gold

Gold Poised To Do A Double-double?

It sure looks like it doesn’t it. We have the Euro poised perhaps not so much on the brink of collapse, but well over the brink of uncertainty.  Uncertainty breeds risk, lots of it, and investors (those that haven’t been burnt so bad that they are risk averse) will want to be paid a premium for that risk. That’s only fair.  After all, if you’re going to do something pretty risky, you are going to expect that the potential reward is great enough to compensate for the risk. So gold looks good against the Euro.

The US Treasury Builds Hyper-Inflation Bubble

The US treasury has had the printing presses working at blinding speed since 2008 when the kaka first hit the fan and they don’t look like they are slowing down. Here’s the rub though. Despite all the cranking out of huge volumes of money (2.65 Trillion in the system atm) there is only slightly over half that amount liquid, and fully utilized within our economy. Almost fourty percent sits on the sidelines, held by the banks and currently keeping the status quo pretty much, well, status quo. Pressure is mounting on the government to force the banks to release those funds into the economy. More money dilutes the value of the US dollar so gold looks good.

People With Pins Approach Bubble

Now these are well meaning (if a bit misguided) folks who want to fix a specific problem in the easiest way possible that are applying the pressure. Banks are unwilling to lend money to marginal borrowers (remember the European countries that use the Euro back in the first paragraph) because the risk is too high compared to what they are being paid now. The people who see themselves as the saviours of the small and downtrodden feel that if only that money was released we could all go to the bank to get some. Gee, doesn’t this sound like 2004-2008 all over again? Hold gold.

Gold Boom Or Gold Bust?

There is a huge difference between now and then however, actually many differences. There is no longer a perceived notion that the value of real estate can never falter, that real countries will ever default on their debts, or that there is a finite growth to the technological boom. We have seen all these things come crashing down as well as seen the price of gold go from fourty dollars an ounce to fourteen hundred before crashing back down to around three hundred. So why is gold set to do it again? Simply put there is nowhere else for money to go.

Gold Train. All Aboard!!

Gold is undervalued right now based on any number of measuring sticks. In 1979 terms, gold is the equivalent of fourty dollars when everything was bubbling along nicely. For those of us old enough to remember, the bubbling pot suddenly blew the lid off and all hell broke loose over the next four years. Those holding gold got very rich, most of them. The few that didn’t rode the roller coaster to the top and then instead of getting off, they elected to stay on for the steep downward plunge. Those are the same haggard riders you see now riding the gold train. It’s been a long climb back for them but you get to hop on the ride now in time for the fun climb to the top again. I’m betting this time they will be getting off at the top. So should you.

Till Next Time….

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Sigrid McNab

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About Sigrid McNab

Sigrid McNab is the author of #1 Amazon Best Seller, speaker and the CEO and Founder of Sigrid specializes in blogging, attraction marketing, and generating highly qualified leads. Sigrid teaches people how to build a successful online business.

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