The Four Main Forces Pushing Gold Higher

What are the major forces driving gold prices up?

We spotlight four of them:

WAR

It is our view that the mainstream media ignores or underplays the significance of all of the forces destroying our currency and prosperity.  But it seems most clueless about the way war destroys both.  However, our hands-on experience goes back a long way.  We remember the Vietnam War and the role it played in ending the gold-backed dollar, just as we remember the Soviet invasion of Afghanistan, the revolution in Iran, and the fire they lit under gold prices.

So, we are not willing to turn a blind eye to war drums beating today.  We note that the situation in Ukraine is escalating with the attack on Sevastopol, Crimea.  Russia blames the US and promises to retaliate.  The widening of the Mideast war to include Lebanon is another fuse that appears about to be lit.

DE-DOLLARIZATION

 The move away from the dollar and to gold is very real and a key driver of higher gold prices.  It can only accelerate.  Note for example that a Russian court has approved the seizure of hundreds of billions of dollars of assets from Western banks, a response in kind to the theft of Russian assets by the sanction regimes.  It goes without saying that this makes dollar-holders around the world very nervous indeed and heightens gold’s allure as an asset whose value is not subject to the whims of some issuing government.

INFLATION

Inflation teaches everyone that eventually made-up government money loses value.  The highest US inflation in more than 4o years is beginning to drive that lesson home.  Average weekly earnings have risen over the last 3 ½ years, but rising prices have undone any advantage, as the average real (constant dollar) income of working families has fallen $2,300.  

Some get it already, but eventually, almost everyone will realize that this is not because of cosmic rays or the greed of corporations, but because the money itself is being managed specifically to lose purchasing power.  Then what can today be called a slow diversification by some Americans into gold and silver will become a stampede.

DEBT

All inflations are the result of dishonest governments spending money they do not have and running up debts that they cannot repay.

Even the Congressional Budget Office, which tries its best to downplay the real debt debacle, expects the budget deficit to skyrocket, from $1.9trillion this year to $2.8 trillion by 2034.  

As for the national debt itself, it will hit $35 trillion in a few weeks, and $37 trillion by the end of this year.  In fact, on our current path, the debt will reach a stratospheric $60 trillion at the end of the ten-year budget window, according to David Stockman.  And that, he adds, is with the happy face the CBO is putting on its projections:

Even that depends upon the latest CBO iteration of Rosy Scenario, which envisions no recession ever again, just 2% inflation as far as the eye can see and real interest rates of barely 1%. And that’s to say nothing of the trillions in phony spending cuts and out-year tax increases that are built into the CBO baseline but which Congress will never actually allow to materialize.

David Stockman

So, there you have the four biggest drivers of higher gold prices now and in the foreseeable future:  war, de-dollarization, inflation, and debt.  All four are hopelessly intertwined, each powering the others.

Other less visible developments will add to the fuel-propelling gold higher, little-noticed financial annoyances like the war on cash and major destructive forces like the unstoppable spread of state socialism.

Don’t wait any long to protect yourself, your family, and your wealth with gold and silver.