Bursting The Bubble Of The Gold Bubble Prophets

We’ve all seen them. Every time gold undergoes a significant correction, the gold bears come out of the woodwork to proclaim that the gold ‘bubble’ has finally burst and we’re about to see a massive sell-off.

And, each time, those gold bubble prophets have been proven wrong as gold has continued its uptrend, climbing the proverbial wall of worry to new highs. Fundamentally, this is because the basic drivers of higher gold prices: inflationary monetary policy in the US and the global debt crisis, are still in place. Gold, as the true market money throughout history, stands as the lone alternative to fiat currencies, and stands to benefit when those currencies are being debased – as is the case in the US via the Fed’s QE policies – or when there are more political type risks that pose threats to the viability of a fiat currency – as is the case with the euro and the European monetary union. It is also crucial to understand that the global debt crisis goes hand in hand with monetary inflationism; currency debasement is the easy way out for governments faced with either significantly cutting bloated spending levels and raising taxes – an extremely unpalatable political option in a democratic system – or using the printing press to reduce the real value of debts via inflation.

After today, it seems that the Europeans, after making a good show of holding out against the temptation, have opted to use the printing press themselves. The plan is, apparently, to raise the bailout fund to 1.4 trillion dollars. So, they’re coming fashionably late to the currency debasement party, but, hey, better late than never!

Click the link below to read the entire article:

via Bursting The Bubble Of The Gold Bubble Prophets – Seeking Alpha.

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