Friday, Jan 2, 2008
Is more money chasing less and less gold every day? Yes, it is true. And that should be one reason why gold prices could zoom to a record $2000 levels in 2009!
According to a 2009 forecast from Mumbai-based Commtrendz Risk Management Services, all over the world broad money supplies in developed nations generally have an average growth rate of around 7% annually, while world gold supplies have hardly gone up by 1-2% over years.
In 2008, central banks around the world have acted in concert to lower interest rates to such levels that low interest rates themselves start to stimulate economies. The ECB, BOE has cut short-term interest rates by 0.75% to 2.5%, 1% to 2% respectively of late.
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Japan and the US Interest rates are just about at zero. The fiscal spending programs of US could expand into multi trillions
of dollars. The above efforts coupled with monetary stimulations in the form of direct injections into the money system, if happen to get the world out of deflationary grip could leave explosive inflationary situation on the back of high crude oil prices.
Nominal paper money increase will lead to inflationary push to whole commodities complex and crude oil should not escape from it.
Higher input cost amid longer term positive demand forces could see oil prices testing earlier highs in coming years and which will only support gold prices as gold too shares a good correlation with energy.
Money supplies in developed nations generally have an average growth rate of around 7% annually, while world gold supplies have hardly gone up by 1-2% over years.
This article was posted: Friday, January 2, 2009 at 5:19 am