Ever wonder why, in the midst of a global debt crisis, you never here about gold as a potential source of funds to bailout any portion of a country’s debt?
Even Greece, who sits on some 111 tonnes of gold does not inkle one bit about offering up gold reserves as collateral against money borrowed. In fact, reports suggest the opposite. Greece is in trouble so its citizens are cashing out savings to buy gold not sell it.
And so it is with Central Banks of the world. As the commercial goes, “Central Banks are flooding the world with printed money.” But what you don’t hear is the rest of the story. It goes something like this, “Central Banks are flooding the world with printed money and then buying gold in record amounts.”
According to the World Gold Council, Central Bank gold purchases, this year, will top 500 tonnes, up from 465 tonnes in 2011. The further in debt the world goes, the more gold the world buys. This is a story that should be hollered from the satellites to every roof top. Go ahead I dare you (mainstream financial news) to run a story about central bank gold purchases. Let me hear you explain why BRIC nations are buying or keeping all the gold they can get their hands on. Let me hear someone – Anyone! — link Central Bank gold purchases to rising global debt.
In the last 10 years our own national debt has tripled and gold is up more than 500%. Do you think there is a connection between the two. You bet! So why isn’t there a connection between global debt and record high Central Bank gold purchases? Well — there is! It’s just that no one talks about it.
While the geniuses on financial television, explain a hundred ways to Sunday, how and why gold could be or couldn’t be a good fiscal cliff play, the people who really know are buying every time the average guy gets duped into believing some excuse for gold prices to collapse.
Why are Central Bank gold purchases rarely discussed on national financial news? Let me answer by asking, what do you think would happen to the gold price if every week there was a national TV report on which central bank was taking its turn at buying more gold? Yea, I’m thinking like you. I’m thinking that alone would drive the gold price higher making it more difficult for those with an infinite ability to print money to accumulate at lower prices.
In my personal opinion, and it is just my opinion, money printing will go on to infinity, global debt will rise into outer space and some form of default is inevitable. That is what I believe central banks know and that is why I believe they will continue to buy more gold as they continue to print money and put the world further into debt.
That said, maybe, just maybe, the whole world will learn why today’s silence on the correlation between rising debt and the wont of central banks to own more gold is a signal of rising gold prices ahead.
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