No Inflation

One of the enduring themes of the two year bear market in gold has been the conspiracy by  the bullion banks and the US government to tear down the price of gold. After reading a 100 such commentaries over time I am now convinced they only work at the periphery of the situation, taking advantage of weak technical positions on the charts.

The elephant in the room, as far as I am concerned has been the lack of inflation manifesting itself in the global economy. Deflation is king and all the money printing in the world is not shifting this sleeping dog. The short sellers have taken advantage of this situation and made truckloads helping gold lower.

As the global economy slowly picks up steam we will eventually see inflation begin to rise, but until then the smart money will continue to withdraw funds. Already we have sen the US trade imbalance halve since 2009. The oil boom there will drag their economy up eventually.

In the meantime $1050 gold is on the cards. Another shipload of gold will go to china, jewellery demand will finally pick up and then it will be a great time to buy gold, and especially gold stocks. “It’s the inflation! Stupid”.


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