Understanding Where Gold and Silver Go from Here

Monday, November 21, 2011, 9:15 AM
Enroll NowFor enrolled members only. Enroll or Sign in to read the full article.

Understanding Where Gold and Silver Go from Here

by Gregor Macdonald, contributing editor
Monday, November 21, 2011

Executive Summary

  • The outlook for precious metals will be heavily influenced by the steps the European Central Bank (ECB) takes in the near future.
  • Understanding the likely price trajectories of the precious metals whether or not central banks resume quantitative easing (QE, a.k.a. money printing)
  • The specific price targets for both gold and silver under the most likely scenarios
  • Underscoring the gravity of our current situation

Part I - The New Price Era of Oil and Gold

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II - Understanding Where Gold and Silver Go from Here

As readers now understand, I am not currently a supporter of higher gold prices as a function of inflation risk. Instead, my view is that we must first move through the various iterations of crisis, collapse, debt default, instability, and policy panic before gold attaches itself to inflation. Yes, I agree with the Paul Brodsky thesis (and the FOFOA thesis) that the foundations of future inflation have already been laid. But it’s also my view that for a severe inflation to unfold, there has to be a collapse in currency demand itself. It would also be necessary for global industrial production to have collapsed down to much lower levels to provide sufficient scarcity of goods. Mind you, I see both of these conditions -- rejection of currencies and industrial collapse -- as high risk. The two maps I offer here include them.

Mapping the Price Future of Gold and Silver

The first price path I want to share with you is called The Grand QE Cycle. It begins with the resolution to the most pressing question facing markets right here, right now, today: Will the ECB federalize all Eurozone debt?

Based on my own analysis and in consultation with contacts, I concluded for myself weeks ago that the crisis in the EU was becoming increasingly binary. Indeed, it is now fully binary. Either the ECB guides to a new charter or mandate, allowing it to buy unlimited quantities of EU debt, or it follows through on its hard-money threats -- and the sovereign debt, which forms the core asset of pension funds, banks, institutions across the EU, will become distressed debt, forcing a cataclysmic purge.

Because this urgent question has not been definitively answered as yet, gold is making its way in volatile fashion towards a price of...


Enroll Now
Or Sign In with your enrolled account.
Endorsed Financial Adviser Endorsed Financial Adviser

Looking for a financial adviser who sees the world through a similar lens as we do? Free consultation available.

Learn More »
Read Our New Book "Prosper!"Read Our New Book

Prosper! is a "how to" guide for living well no matter what the future brings.

Learn More »


Related content

33 Comments on Understanding Where Gold and Silver Go from Here

Enroll now or Sign In to read all member comments.