The US and Japan alone will flood the world with almost 2 trillion new currency units (dollars and yen) over the next 12 months.
Consider that gold fell…
- 29.5% in the autumn of 2008
- 22.6% in the spring of 2006
- 47% from 1974 to 1976
Today, gold has fallen as much as 28.5% from its 2011 high (based on London PM fix prices). Yet none of these corrections signaled it was time to sell.
The fundamental case for gold is growing, not lessening.
In spite of the downtrend in the price, the conditions that support owning gold are increasing in importance. The US and Japan alone will flood the world with almost 2 trillion new currency units (dollars and yen) over the next 12 months. Europe’s problems have not been solved, and the Eurozone continues flirting with recession. As of last month, not one G20 country had a balanced budget. The current fiscal and monetary paths of many major countries remain unsustainable. No amount of gold selling by short-sighted traders and hedge fund managers has changed any of these facts.
One might argue that these issues have had less of an effect on the gold market than we expected, but the effects of these actions have not played out yet. There is no easy way out of the corner our political leaders have painted themselves into. In other words, the damage has already been done to our fiscal and monetary systems. The endgame to the global debt situation hasn’t changed, and when the ramifications begin setting in, investors will return to the gold sector.