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Evaluate monetary policies
If you wish to understand our advice "go from green to gold" you should understand what the green money is all about. Where does it come from? Why is it issued? Who benefits?
There is often talk about how the price of gold, which has certainly been rising for ten years, has "topped out" and should now fall. If there were evidence of large new supplies of gold being produced and coming to market, beyond what the market demands, there would be reason to suppose that the price was near a top. But, the price of gold was suppressed, often deliberately, between 1981 and 1999. During that time, an entire generation of exploration geologists retired, and very few people came to replace them.
The twelve years of rising prices since 1999 has certainly inspired considerable new exploration. Some new discoveries have been made. Many new exploration geologists are on the job, or in schools learning the job. However, also since 1981, many new rules and regulations, especially concerning environmental impact of mining, have come into existence, not only in advanced countries but in many other places around the world. So, it now takes ten or more years to bring a new discovery into production with gold actually reaching the market.
Meanwhile, what of demand? Gold and silver demand continues to include seasonal festivals in India, the jewellery trade in Europe and North American, and demand for hedging against monetary inflation. Populations continue to rise in places where gold and silver are valued. Industrial uses of gold and silver, especially for personal electronics devices, continues to grow unabated. But the most obvious demand area is in hedging against monetary inflation.
So, consider monetary inflation. Is there anything in the fiscal, trade, foreign, and monetary policies of the major world governments to suggest that deficit spending is ending? Is there anything to suggest that trade policies that exclude imports and attempt to subsidise exports are ending? Is there any reason to believe that war policies are ending? Or, rather, do we see ever more wars being fought in the name of peace? Most of all, given the deficits and large national debt, is there any evidence of a restrictive monetary policy? In all these things, we strongly urge you to consider information resources available to you on the web. Look at the news. These situations do change somewhat, from time to time, and from place to place. But the overall tendencies have remained the same for well over the last thirty years. Indeed since about 1971 the world economic, foreign, trade, and monetary policies have pointed to an ever expanding supply of money.
There are some resources on this page worth your reflection. Some of them are primary source materials, such as the Federal Reserve's reports on its monetary base and money supply figures. However, some of those figures are no longer reported - the Fed stopped reporting on L back in 1998 and on M3 in 2006. So we have supplemented some secondary sources where additional information is available. As well, we have indicated a few of our favourite sites for analysis and opinions on what it all means. You should not simply take our word for it, as circumstances can change rapidly. You should consider going beyond our sources listed here, and evaluate their footnotes, the sources they cite, and other sources you find on your own. Thinking for yourself is one of the most important freedoms you have.
Analysis and Opinion