Friday, 28 June 2013

The Forces That Will Drive the Next Bull Market in Gold and Silver - Larry Edelson

Edelson has been a long term gold bull but rightly very bearish since 2011 expecting a "normal" 2 year correction of the long bull run, he took criticism in 2011 for becoming bearish ahead of the top.
He puts forward a strong case for the key drivers of the bull going forwards and suggests some new correlations. He suggests that war cycles are a key driver going forwards. Money printing will be less significant as the financial holes are so large they cannot be filled and that realisation, and defaults and bail ins, will drive the flight to safety. He sees inflation is some way off, 2015-6,  but the hoarding of supply will drive prices up in precious metals.
Linked - HERE

In other recent articles he has looked to find major support  at $1028 - HERE
If you’re counting solely or largely on central bank money-printing to drive gold and silver prices through the roof in the next leg up, then you’ll miss the real reasons the metals will go higher. Money-printing will be a force, but it will not be nearly as strong a force as it was in the metals’ first leg up from 2000 to 2011. The reason is simple: Between the towering inferno of as much as $150 trillion of global debt with weak underpinnings and derivatives bets that now approach more than $1.2 quadrillion in notional value …There is simply no way central banks could ever print enough money to stabilize the global monetary system. So print or not, the next leg up in the precious metals will be driven largely by a breakdown in the global monetary system, not by money-printing. A breakdown in the global monetary system means there will be big banks and financialinstitutions going belly up … sovereign nations, especially in Europe going bust … Washington going bust … and sovereign bond markets collapsing to 10 cents on the dollar. Money-printing will not solve or prevent or even delay those things from happening in the next several years. Gold and silver, once they bottom, will start rising again because savvy investors are finally beginning to realize that their Emperors really do have no clothes, and all the money-printing in the world won’t be able to cover that up.

We face higher inflation in the years ahead. But that part of gold and silver’s next leg up is still a ways off and won’t arrive till late 2015 or early 2016. In fact, we probably face more disinflation in the months ahead. But here’s the catch: Disinflation doesn’t mean gold and silver prices cannot go up.Indeed, they can. The more deflation we get over the next few months, the more bullish it will become for gold and silver. It will mean investors and consumers are hoarding cash and other valuable assets. Hoarding reduces supply, which raises prices. 
Third, are the War Cycles I’ve been warning you about. In previous columns, I’ve told you how the impact of the war cycles is already beginning to show in many different geo-political realms. In Syria, in North Korea, in the Cyprus confiscation of depositor assets, in Russia’s recent military moves in the Mediterranean, in China and Japan’s war of words over the Senkaku Islands, in China’s moves in the South China Sea, and more. This is going to ultimately be the most important force driving precious metals higher. It will coincide with the first force above, the collapse of the world’s monetary system. It will be a nasty set of conditions where governments are at war militarily or financially with each other … And governments are at war with their own citizens — repressing more and more liberties and personal freedoms, chasing down assets to tax and confiscate, and more. In other words, total upheaval of modern society, coupled with a collapse of the global monetary system.

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