Is Gold's Run-up An Aberation, Or, The Norm?

From the big picture point of view it's becoming increasingly clear that the system is broken and the tools that central banks are using are not the right tools. When you have a broken system, you have to sort of step back and take a look at what's going on. Similarly, if you're driving a car and you press on the throttle and the car doesn't go anywhere - there's something wrong. Well central banks have been pressing on the throttle now for years and the economy is doing nothing - there's obviously something wrong so the talk about more quantitative easing is absolutely foolhardy in my point of view. And when people see central banks talking about more quantitative easing and that it's not doing anything to the economy, the impact means that it's going to destroy the purchasing power of crises from inflation and other problems. So it's quite natural and understandable that in reaction to central bank actions, people are moving back to gold. From a longer-term point of view as well, you have to consider that for thousands of years gold has been the centre of global commerce. We've had four decades now where gold has certainly moved to the side - now are we going to deny thousands of years of history and say the four decades is really the basis for going forward, or are we going to say these four decades have been aberration and in fact are going to come back to gold as a centre of global commerce. I think it's clearly the latter - gold is going to continue emerge because there are attributes that you can find with gold, that have not been lost even though we've ignored those attributes over the past couple of decades - and those are attributes like there is no counter-party risk when you own gold. It's outside the control of governments although they do influence the price, they can't control the price. So as a consequence you're going to see gold continue to move towards its traditional role as money.

Whether we hit that $1,800 or $2,000 target this year or next year really doesn't matter. You're running a bull market and what people have to focus on is continue to accumulate gold because it's still relatively cheap and that's the key thing.

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