PM values 2014

Originally Posted by olddude

for
what ever predicting is worth. Barkley's predicts average gold prices at $1260 and silver @ $19.80 for 2014.

Margins for gold, silver and copper have been reduced on futures speculation which means they believe all three will stay relatively steady.

I wouldn't put a lot of stock in what the bean counters have to say. They've got it all down to a science. It's all very black and white.

There's a problem with black and white thinking .... If something comes along that doesn't fit within their narrow worldview it doesn't calculate. They're oblivious to it. They cannot see it coming. Those guys have a real problem when it comes to grasping abstract concepts.

Here's where i think they're falling short:

If you have an economy you need to have some kind of a money supply. Way back in the day our economy was fairly small. The hard currencies like gold and silver sufficed to serve our needs.

There's a problem though .... in order to expand your economy you have to be able to expand the money supply. IMHO, this was one of the primary reasons for the Great Depression. There was a finite amount of gold and silver out there. It hit a point where the available money pool was all locked up and economic activity stalled out.

What we needed to do was decouple the value of the dollar from gold. This was a slow process that began in the Roosevelt administration and was finished during the Nixon administration. Once that process was completed we had a currency that could be infinitely inflated to accommodate an expanding U.S. economy.

Somewhere along the line the British pound sterling was replaced by the U.S. dollar as the global reserve currency. Essentially that means that commodities like oil and so on are bought and sold in dollars.

As the Global economy expanded the money supply ( U.S. dollar ) had to be inflated proportionally in order to permit growth.

Here's another problem to factor into the mix: As you increase the number of dollars out there the individual dollars are debased in value. In simple words, it takes more dollars to buy the same thing. A gallon of gasoline used to be .25 USD. Nowadays it takes roughly 3.75 USD to buy that same gallon of gas.

The key thing that people have trouble with understanding is that it's not that prices are going up ... it's that the value of the dollar is dropping. It takes more of them to buy the same thing.

Allright ..... where are we heading ?

Back around fifty years ago there were about 3.5 billion people on the planet. Nowadays, that's topped seven billion and it's increasing at an exponential rate. In order to feed all of those hungry mouths the global economy must be expanded to increase accordingly. That means that the currency (U.S. dollar ) must also be inflated to meet increasing demand.

More dollars out there floating around means that the currency will be further debased.

It will take more dollars to purchase PM's as long as the market isn't being manipulated.

A few years ago gold topped out at somewhere around 1,900.00 USD/oz. The main reason it topped out was because the International Monetary Fund stepped in to stabilize the value of both gold and the dollar. If it hadn't stopped the slide the entire global economy might have tanked. There would have been massive chaos.

We're in the process of a controlled collapse of the U.S. dollar for the time being. According to DSK and the current head of the IMF we will need to replace the dollar as the global reserve currency with a truly international currency backed by the IMF's gold holdings sometime over the next five or six years.

It's a difficult situation. Hopefully, all of the folks calling the shots will finesse it so that things don't get completely out of hand.

There's gonna be some pain. If you've got some PM's on hand you might want to hold onto em' as a fallback means of currency.