Gold, Silver and Platinum All Fall

July 9, 2009 | By | Reply More

Gold, Silver and Platinum all fall to two month lows before gold crawls back from below $906 an ounce to $914 an ounce in Thursday’s NY morning trading.

That gold has lost its lustre in the last few weeks is as much due to its midsummer annual doldrums as any other single factor.

During the period we have had much talk of the green shoots of recovery, investors risk appetite returning, oil moving over $70 a barrel before falling to the low $60s, and the dollar fluctuating like a yoyo as uncertainty alternates with its appeal as a safe haven currency (we know how hard that is to believe!).

The conclusion we draw is that the perceived direction of the economies of the world, and in particular, the US, is at odds with reality.

It reminds us of King Canute, famous for sitting on his throne on the beach and commanding the tide not to rise.

The Fed and all its minions, together with their international counterparts, are telling us that everything is going to be great by the Fall, or by the end of the year, or early next year or just round the corner!!

Meanwhile more and more plans are announced to increase public expenditure in the name of getting economies back on track, or creating employment, or to encourage banks to lend (which got us into the mess in the first place!) without mention of the eventual consequences of the profligate spending that declining tax revenues will not even scratch the surface of the huge deficits that are building up to the tune of over a billion dollars a day in the US alone.

Just think of California before you rush off to put more money into government paper!

Clouding the issue is the prospect of deflation, which many hold the mistaken belief is bearish for gold. That this is not the case has been discussed here on several occasions.

That the longer term prospect of galloping inflation in the face of the continuing pumping of money into the systems of the developed world economies is a given.

Despite the protestations of Tim, Helicopter Ben and their worldwide cohorts, that they will be able to time to perfection the moment to withdraw the precise amount of money from circulation to avoid inflation but to keep the economic recovery going is just wishful thinking.

Even history tells us that!

At this advanced stage of the recession we do not think that our masters have much choice but to continue in their attempts to stimulate the economies by injecting more and more money.

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