Take a look at this interesting commentary shown on kitco.com: Why the Gold Bears are Wrong Once Again by Peter DeGraaf.
His article highlights several activities occurring not only in the gold and stock markets but also those activities occurring on the world stage.
He notes that many analysts look at the surface performance of gold in relation to the dollar, but they either forget or dismiss the real relationship. That relationship, Mr. DeGraaf claims, is the historical significance spanning 5000 years of gold being the “template against which all fiat money is measured.”
As for the US, we’re not 5000 years old as a country or government. However, we used the gold standard for many years. This article by a Rutgers University economics professor provides historical background for how the US used the gold standard: Gold Standard by Michael D. Bordo. Interestingly, Mr. Bordo concludes his article by commenting, “Although the last vestiges of the gold standard disappeared in 1971, its appeal is still strong.”
Based on recent activity with people, banks and countries clamoring for gold bullion, the importance of gold has not diminished.
In his article, Mr. DeGraaf provides charts and observations of dips and advances of gold over time. He highlights the areas where it was a good time to buy and a good time to sell gold. Though this is looking at historical information, he archives the articles he published at those times on his site: www.pdegraaf.com.
But, his main article goes on to comment on how the performance (deficit) of the FDIC and the performance (deficit spending) of the US Treasury can be bad for our economy but can increase the gold values.
Perhaps most worrisome, Mr. DeGraaf ends his commentary with the chart showing how much private sector business experience the cabinets of presidents have had over the years starting with Roosevelt.
For those of you who remember the economic woes of the early 1980s, President Carter’s cabinet contained just over 30% of people experienced in the private sector. Now, our current president’s cabinet cannot even claim a whopping 10% level of experience.
Yet, these are the people who are supposed to solve the economic challenges we currently face.
Historically, a good economy drives gold prices down.
Do you think the economy will recover quickly and make gold’s value decrease?