Commodities Essential - July 6, 2011

Betting against the government. 


The Federal Reserve knows nothing else but to print money, extend dollar-based liquidity, drive down the value of the dollar and create inflation. It is the Federal Reserve growth model, more or less. I normally ignore this elementary name-calling and finger-pointing that often lacks consideration of many items like the velocity of money, deflationary trends and public vs. private balance sheet analysis. But this idea might have some credibility in that the Fed lags developments in economic data. 

There are plenty of measures to value or forecast gold. And there are plenty of reasons — faults in the monetary systems and fiscal policies of major world economies — why gold could continue to appreciate. If something is not done soon, particularly in the US, then confidence in fiat currency may recede at an increasing pace and urge more money into gold.

But is there anything to prevent this, to turn the tides, to shore up confidence in governments and currencies? At this point, it doesn’t look good. But gold seems to be the best bet.  


Commodities Essential. 6 July 2011


Trade Essentials.

 No new recommendations or adjustments.