There is no shortage of scandals in Washington DC, New York, and London; and, there is an excess of monetary heroin, Quantitative Easing, in Europe, the UK, Japan, the USA, and elsewhere. (When will they ever learn?)
The S&P 500 is hitting new highs, and gold and silver are sitting roughly at two-year lows. Strange and stranger every day…
What should we make of it? Let’s ask the really intelligent old guys who have seen it all.
MOTIVE: The various governments of the world and their central banks produce and distribute a product – paper currencies. Those currencies are backed by confidence, faith, and credit, but not by gold, oil, or anything real. Those currencies are digitally printed to excess, since almost all governments spend more than their revenues. The UK, Japan, and the USA are prime examples.
Politicians want to spend more money, but they also need to maintain the illusion that the money is still valuable, that it will retain most of its purchasing power over time, and that inflation is under control. The illusion weakens when food, gasoline prices, and other consumer goods are wildly rising in price. At a more abstract level, gold indicates the same lack of confidence in the printed pieces of paper that our central banks distribute.
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