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Euro-Bailout to Send Gold and Silver Prices Much Higher

By: Peter Cooper, Arabian Money

-- Posted Monday, 10 May 2010 | Digg This ArticleDigg It! | | Source:

Gold and silver prices advanced late last week in the aftermath of Thursday’s 1,000-point plunge in the Dow, and bounced higher in the immediate reaction to the near trillion dollar euro-bailout package on Monday morning.

‘Mr Gold’, Jim Sinclair explained: ‘A nuclear solution to Europe’s debt problems is simply another way of saying ‘Quantitative Easing to Infinity’. All national debt will be bailed out. All states of the USA will be bailed out. Paper currencies are headed to dust.

‘Regardless of the first knee jerk market reaction, gold is going to $1,650 and beyond due to nuclear suggestions of adding more debt to entities failing because of debt. This is the EU Helicopter Drop coming up.’

Money printing in Europe

Mr Sinclair is absolutely right. The Europeans have thrown in the towel in terms of austerity and are heading instead for the politically easier option of inflation through money printing. This can only be a positive for gold and silver as money that cannot be printed.

For democratic societies the austerity required for debt repayments is very difficult to muster. Note the riots on the streets of Athens last week. However, as Mr Sinclair often reminds readers of his excellent website there are consequences to a bailout, especially one this big.

There are no easy answers to high debt for nations. Debt can be inflated away or dealt with by default and devaluation. Inflate away debt and you push up the cost of goods and services while salaries fall behind. If you are living beyond your means you will have to pay the price one way or another. You can delay paying debt, not avoid it.

Inflation ahead

So Europe is going down the bailout or inflation route too. Welcome to the club that the US, Japan and China have joined. This is not a path for healthy economic growth, if there is any. It means stagnation and falling wealth for many as the relative value of many assets to general price levels will fall.

The trick is to find the asset class that inflation actually benefits, and an increasing band of investors are waking up to the fact that gold and silver will fill this role. And as to those who think equities are the answer, the 70s’ precedent does not support that argument at all. Remember the 1974 stock market crash?

As ever the chart from Clive Maund is very prescient:

-- Posted Monday, 10 May 2010 | Digg This Article | Source:

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link


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