Gold the protector as democracies move towards totalitarianism Gold, and perhaps silver, are still in a bull market phase which is likely to continue as governments print money, spin figures, manipulate markets and erode basic liberties.

Author: Lawrence Williams

Let's look at the realities. Governments can release trillions of dollars into the markets to try, mostly unsuccessfully so far, to stimulate growth, mitigate unemployment and keep the general population's ‘feel-good' factor short of being suicidal. In this context it is hardly beyond likelihood that the relatively tiny sums (in comparison with all the money being printed under quantitative easing programmes) needed to keep stock markets appearing at least reasonably healthy - on the grounds that a healthy stock market gives the impression that the economy in general remains sound - may be being deployed. Likewise dollar, or other currency, strength - or weakness - is indeed often manipulated by governments as perhaps can be the price of gold (effectively a currency in its own right) where a rising gold price is a flag that all is not well with the mighty dollar or, indeed, with the global economy in general.

Overall, the writer views gold at the moment in a positive light and as remaining in a bull market phase as the global economy continues to collapse around us. The Eurozone crisis is not played out yet and debt levels within and outside the common currency area, and in the USA, continue to cause major concerns and it is difficult to see any certain way out of the current crisis. Maybe we will muddle through, but living standards are set to fall - drastically in some areas. Gold, and by association silver, have tended to stand the test of time as offering at least some wealth protection. History, which does tend to repeat itself over and over, is on their side.

Organisations such as GATA have been suggesting that gold and silver prices are manipulated by governments and banks - and the way the silver price was hit back in May does certainly suggest that the huge fall in a matter of minutes at a time virtually no-one would have been at work has to be suspicious to say the least. If gold and silver might be subject to external manipulation then it is not beyond the bounds of possibility that stock markets can be too with concerted buying or selling at key moments. Certainly inflation figures are massaged to protect confidence and the suspicion is that many other government statistics are too.

This is, of course, pure conjecture, but with so-called democracies seemingly moving ever further into totalitarian territory as basic liberties are taken away from us, in the name of counter-terrorism or economic necessity, it is difficult to judge to what purpose some of the huge, and ever-growing, debt may be being applied.

Likewise, the long-held GATA view that the gold price has been suppressed, if that has been happening, is also clearly unable to keep the price down, although GATA would argue that without suppression the price would be far higher.

The writer reiterates his view that all the drivers which have been responsible for gold hitting its highs are still intact and there is likely further upside ahead.

Silver is still suffering even more than gold from the even bigger fallout (in percentage terms) in May, and then again in September, which dented investor confidence - and with signs that the global economy is not pulling out of recession, and that any future growth will be strictly limited for years to come as austerity programmes make their impact, silver's industrial demand element may hold back rises. However, overall, we would still expect it to track gold and the thinness of the market could lead to some considerable volatility.

But bear in mind also that dollar strength is relative - and illusory. It is just doing better on the way down than many other recession hit currencies - notably the Euro. It will inevitably be hit by rising inflation from the printing of all that additional money from QE and other stimulus programmes.