The Real Move In Gold Has Yet To Begin
by Pollitt & Company
The world is split between the Western world on the one hand and the rest of the world (R o W) on the other. For more than a century the Western world (less than a billion people) has consumed perhaps 90% of the world’s copper, oil, steel, in fact pretty well everything. Now the R o W (over five billion people) is clearly consuming far, far more of everything – probably well over fifty per cent of the world’s steel, for example. But the production side of the equation hasn’t changed much, pretty well across the board. Except for gold where, as mentioned above, serious decline is taking place.

These changing realities, plus the tons of money governments have thrown at the system, have contributed to the strong performance of gold and other commodities in recent years. Now stronger governments are throwing tons of money at weaker governments and weak currencies, rather like giving alcoholics free cases of whiskey. It sure looks like easy money for a long time and a Malthusian commodity market.

Rather than fight the tide like King Canute, we should embrace it and take advantage of it. Not all commodities will move together – stick to the best. Just imagine what would happen if a mere ten percent of the money currently going into bonds were instead to go into gold. As in 1972, the real move has yet to begin.