Yesterday’s post looked at some of the reasons why Gold may fall, or of course continue to rise. As Gold in one of its manifestations acts as a currency, or an unofficial Gold standard, it behooves us to look at fiat currencies to see if they are being inflated.
From the above chart, we can see that many currencies are in point of fact being inflated.
China, the saviour and driver of the decoupling theory, not one that I subscribe to, is suffering runaway inflation. China’s Banks additionally are a very dangerous mixture of very poorly performing loans, and a political instrument.
Inflation throughout history has decimated economies when allowed to run unchecked. China will learn the same lesson.
While the world runs inflationary monetary policies, inflationary fiscal policies, Gold will continue to appreciate. The trick will be recognizing when it is time to leave the table.
