Why Gold Is Set To Soar: Money Supply, Fractional Reserve Banking, A Global Recession

Seeking Alpha ^ | 3-14-2016 | Mr. DeepValue

[Citizen Zed]

Summary:

The creation of global money supply will lead to an aggregate reduction in the value of global currencies relative to gold in the long-term.

The rise of the fractional reserve banking system as a model for the majority of established central banks will continue to exacerbate the money supply problem.

Gold's value to global currencies will continue to appreciate with global monetary stimulus measures on the rise.

The relative values of global currencies are driven by macroeconomic principles such as money supply, and this discussion deserves more attention.

[expat_panama]

...a lot easier to store an ounce of gold...

True, but if ease was all there was to it nobody would store either.   When the goal is profit, I look at the market and my take is there's a lot bigger payoff from storing oil than gold.

[Ultima]

Right. I suppose you’d have to buy silver straight from the mines. If you could buy enough (and it wouldn’t take that much money relatively) industry wouldn’t get the silver they need and then the price would go crazy as they try to outbid each other in order to get it.

[SomeCallMeTim]

All indicators predict a strong possibility

LOL.... I'm going to take that to the bank!

[Sam Gamgee]

Yes, meaning gold has held up well considering the fall in oil. If gold is so great why has it lost 50% of its value since 2008?

[Sam Gamgee]

Markets seem to be on a path of insanity. If gold and oil are forecasting a major meltdown, why are US markets doing so well?

[Rockingham]

The high levels of public debt issued by the US and other developed countries logically impel the Fed and other central bankers toward a policy of financial repression that aims at keeping interest rates low. Meanwhile, in developed countries, high tax rates, demographic aging and decline, and a heavy regulatory load hold down the velocity of money so that what would otherwise be a potent monetary stimulus has little effect.

The result is that loose monetary policy by the Fed and the ECB do not readily yield inflation. Indeed, inflation must be kept low so that interest rates do not spike upward and wreck the budgets of the developed world's governments though increased carrying costs for their massive debt loads. A significant rise in the price of gold seems implausible in such circumstances.

[Therapsid]

http://www.infowars.com/why-is-jp-morgan-accumulating-the-biggest-stockpile-of-physical-silver-in-history/

[Ultima]

JP Morgan is one of the organizations that doesn’t want the price of gold or silver to go up too much. They may be buying physical silver simply to use in the future to keep the price from going up too much in the future.