Posted Oct 4, 2015 by Martin Armstrong
ANSWER: Exactly. If you buy gold based upon inflation, you will lose money when that idea proves wrong. You will donate to the professionals and make the bankers rich. It is important to understand what moves a market for only then will you enter and exit without losing your shirt. Why hold something that declines for several years and waste all your efforts and resources? You could have made a lot of money in a different market and then returned to gold with a lot more cash buying low rather than high. Of course, if you do not want to be accused of manipulating markets, then BUY HIGH and SELL LOW. The bankers will send you a Christmas card maybe.
If you just run a correlation of inflation to gold, you will see that gold does not respond to changes in the money supply. You can say that I am wrong all you like, but the numbers are the numbers. Gold has not yet exceeded the 1980 high adjusted for inflation. The cars I bought back then are worth more than 300% today. Gold would have to be about $2700 to match that today compared to a German car. The Dow was 1000 in 1980, but it then reached the 18500 area and gold would have had to rally to $16,000 to match that. So explain that one. Why fight the trend? It makes no sense. Is this about making a good trade or trying to prove that some theory is correct?
Those who are brainwashed by the gold promoters are pissed off at me instead of the clowns who duped them. They assume the cart is before the horse and that gold would rise because of an increase in money supply. But when you look closely, the German hyperinflation was a communist revolution, and anyone with money at the time hoarded it. The money supply increased because confidence declined FIRST. The promoters will tell any story to sell gold. They are salespeople, not analysts, who are no different from used car salesmen. A collapse in CONFIDENCE will cause governments to increase the money supply.
Right now, congress is pushing off the debt ceiling until December. Treasury says it will run out of money by November, one month before the politicians assumed. They have noted that tax revenues are dropping rapidly. These morons cannot figure out that raising taxes reduces net disposable income, which leads to lower GDP and higher unemployment.
The rise in gold will come ONLY when people start to realize that we are in a lot of trouble economically. We have provided the dates in our reports. Some people say I am wrong, stating that people are buying gold in record numbers. It is amazing how these people still cannot get it in their heads. China is turning down. Now the Fed will have to go into QE4. Gold declined after 2011 with constant QE. In euros, we are in the second year of QE, so this argument is just wrong.
Each population measures wealth in terms of their own currency and not in dollars. So if you want to fool yourself, go ahead. Are you just repeating what the promoters are telling you? Gold is not making new highs in anything. The test of a REAL bull market is new highs in all currencies and not just one. You do not buy gold because it is rising in Mexico pesos. You buy only when it makes a profit in your own currency.