Gold Revaluation Is The Only Solution

Gold stocks continue to take out key highs, but in the big picture, the upside action has barely started. Please click here now. Double-click to enlarge this quarterly bars XAU index versus gold chart. A multi-decade rise in gold stocks versus all other assets is likely beginning. Institutional money managers are buying on days of strength, weakness, and sideways price action! Why are these money managers so enthusiastic about gold, and even more enthusiastic about gold stocks? Well, central banks around the world are engaged in a bizarre policy of low interest rates and quantitative easing that is ostensibly designed to ‘kickstart the economy’, but is really designed to allow governments to borrow and spend until the cows come home. Negative interest rates allow governments to borrow money, and make a profit on their reckless actions. In America and Japan, where a lot of citizens are elderly, negative real interest rates on pensioners is very destructive. In Japan, most pensioners lost large amounts of money in the huge equity bear market that began in 1989. Now, the remnants of those investments are subject to negative interest rates. They are pulling money out of the banking system, holding cash, and buying gold.

This post was published at GoldSeek on 12 July 2016.