Sunday, August 23, 2009

Three Charts That Scare the Crap Out of Bernanke, Summers and Geithner

The first two charts are the 1-yr. daily price of gold in U.S. dollars and in Indian rupees (hat tip to MontyHigh of for the second chart). These two charts point to a big move up for gold for several fundamental and technical reasons.

In addition to the ongoing financial deterioration of the U.S. Government and melt-down in the banking system - and the aggressive accumulation of gold by China and Russia to offset their U.S. dollar exposure - the primary seasonal buying by India is about to begin:

"Gold is becoming a major investment avenue for Indian investors. Despite high local prices, dollar volatility and fall in general demand for jewellery, retail investment demand for gold has taken a sharp upswing of 515.8 per cent to 109 tonnes in the second quarter (April-June) of calendar 2009 from 17.7 tonnes in the first quarter."

India Is Getting Hungry For Gold

And finally, have a look at the chart of the U.S. dollar:

A lot of market observors recently have been calling for a big bounce in the dollar.  But as long as the Fed is inflating the money supply, which is reflating the stock market bubble, the dollar will continue its downward path and, conversely, gold will continue moving higher.  The only issues in my mind with regard to this are the timing, duration and magnitude of the move.


  1. It looks like German central bank gold is indeed "in play":

    Again, why can we not get a Fort Knox independent inventory????

  2. email your two Senators and House Rep and ask them.