Gold News

Gold Prices in a Great Correction

Gold prices will rise...but not before we've had deflation...

NOW THAT Gold Prices have broken above $1,600, is it time to sell? Nah...not even close. It will have to go to $2,500 just to reach the high – adjusted for inflation – set 30 years ago, says Bill Bonner, founder of the Daily Reckoning.

But a lot of water has gone under the bridge in the last three decades. And almost every drop of it gurgles to us: Gold Prices will go higher.

There's much more debt than there was 30 years ago...and much more 'funny money.' What's more, Paul Volcker is no longer at the Fed. This time, America's central bank is run by Ben Bernanke...who has made it very clear what his response to crisis will be – print more money!

Yes, dear reader, gold is going higher. A lot higher. But not necessarily right away.

Harry Dent sent us the manuscript for his new book. He argues that gold will go higher...but not before it sinks. Debt is deflationary, he says. Everyone owes Dollars. As debt is destroyed in the Great Correction the price of the Dollar will go up and gold will go down. We will have deflation before we can move on to a super-boom, he believes.

He could be right. The markets always find a way to surprise us; you can count on that. But, by one route or another, gold will end up at twice today's price – at least.

So let's go back to see how the Great Correction is proceeding:

"Economy Faces a Jolt as Benefit Checks Run Out," was a headline in The New York Times last week.

Europe's debt market was melting down last week too. In all of the excitement, we overlooked this NYT item. But it is important. For two reasons. First, it shows the extent to which the US economy has been zombified. Second, it shows what happens when you let the zombies take over.

A large part of Americans' income now comes neither from the sweat of their brows nor from the toil of their money. Instead, it is money that is given them by the government.

A large part of the population has turned away from profit-seeking, growth-enhancing work and towards zombie-ism, feeding at the public trough. And the more people who live at the expense of others, the less incentive the others have to bust their humps. Real GDP – the real wealth of a nation – goes down.

Then, the zombies get squeezed too. If you're going to live at someone else's expense, you better hope that he is doing well! But as the Great Correction continues and intensifies, zombie benefits run out...

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New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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