Alan Greenspan
The ‘Golden Staircase’ Points to Record Prices for Gold
As gold once again breaks the psychologically important barrier of $1,000 an ounce, all the pundits are wondering if it will last.
I have to confess that – deep down – this makes me smile. The reason: I know that the real question to ask is “When will gold go on to set new highs?”
So let me cut right to the chase. This breakout run in gold prices will last.
The “Golden Staircase” tells us so.
After bottoming out about $250 an ounce about nine years ago, such key fundamental catalysts as increasing demand, lower supply, inflationary fears and a flight to safety have been driving the price of gold northward.
But gold is like any other financial asset in that prices don’t rise…
Clairvoyant Economists Still Pessimistic
The Economist magazine, in a column wryly titled “Pangloss Revisited”, notes that “The average deficit over the next decade in now expect to be 5.1% of GDP, compared with an average of 4% in the original budget”, and that even in the last year of the forecast, 2019, the budget deficit is supposed to be 5% of GDP! Wow!
As weird as that is, it gets weirder later in the article when Peter Orzag of the White House’s Office of Management and Budget (OMB), whom the article called “Mr. Obama’s top budget man”, has “tried to put a positive spin on the situation. By 2019, he argued on his blog, America’s primary deficit (the difference between revenue and spending excluding interest…
Gold Will No Longer Be a Toxic Derivative to Central Banks
“If gold is ‘past its day’, what of toxic derivatives and today’s deluge of US Treasury bonds…?” Just like poor Pip Dickens’ Great Expectations, central banks keep inheriting unwelcome bequests.
Today’s “legacy assets” are toxic derivatives; a decade ago it was gold reserves. Both are proving hard to shrug off, but for very different reasons. Both legacies also come thanks to previous central-bank history; the fossils remain only too livid today.
And 10 years from now, if not sooner, just how welcome will the current central bank must-have become – freshly printed government debt, bought with money that doesn’t exist until the central bank wills it?
Seeking first to defend against inflation and war, the West’s central banks built up huge reserves of the…