news.goldseek.com >> 7 February 2012

Common Misconceptions About Gold
By: Steve Saville, The Speculative Investor
When reading stuff about the pros and cons of investing in gold we regularly come across two misguided assertions, the first being that changes in gold's price in terms of a currency do little more than offset changes in the currency's purchasing power. To put it another way, the first misguided assertion is that gold's purchasing power is roughly constant over time, meaning that changes in its price are almost solely due to changes in the purchasing power of the money in which the price is denominated.

news.goldseek.com >> 31 January 2012

Secular Trends
By: Steve Saville, The Speculative Investor
If the duration of the current secular bear market turns out to be the same as the duration of the preceding one, then the Dow/gold ratio will reach its ultimate low during the first half of 2014. But whenever it occurs, the ultimate low will likely come at the end of an upside blow-off in the gold price.

news.goldseek.com >> 17 January 2012

Random thoughts about the year ahead
By: Steve Saville, The Speculative Investor
There are similarities between the current situation in the US, the US of the 1930s and post-bubble Japan, but the monetary backdrop is very different in the US today than it was in the earlier post-bubble periods. The most obvious effect of the monetary difference is that the prices of most goods and services have continued to rise in the US since the bursting of the private-sector credit bubble in 2007.

news.goldseek.com >> 20 December 2011

Gold Sector: Current Situation and Per-Ounce Valuations
By: Steve Saville, The Speculative Investor
Last week's price action proved that the correction/consolidation in the gold sector that began in December of last year is still in progress. The following weekly XAU chart shows that it has been a 'water torture' type of correction in that the decline has been slow, but relentless.

news.goldseek.com >> 13 December 2011

Gold Stocks: The Wide Angle View
By: Steve Saville, The Speculative Investor
Gold stocks, as a group, did poorly in 2011. They did very well during 2009 and 2010, although the strong 2009-2010 performance was partly a reaction to the dismal 2008 performance. If we step back we see that despite experiencing some huge swings, they have essentially gone nowhere since March of 2008. In other words, long-term holders of gold stocks have now spent almost 4 years treading water in rough seas.

news.goldseek.com >> 6 December 2011

Is the US$ in danger of losing its reserve currency status?
By: Steve Saville, The Speculative Investor
A week seldom goes by without us reading somewhere that the US dollar is in danger of losing its reserve currency status. We are now going to argue that the US$ is actually in no such danger, because it can't lose what it doesn't have.

news.goldseek.com >> 29 November 2011

A Summary of the Risks
By: Steve Saville, The Speculative Investor
Of all the risks facing the global economy, the euro-zone's sovereign debt crisis has recently had the highest profile and the biggest effect on the financial markets. The most blatant outward signs of the crisis are the sharp rises in European government bond yields since early October and especially since early November.

news.goldseek.com >> 22 November 2011

The Two Prerequisites for Hyperinflation
By: Steve Saville, The Speculative Investor
Relatively rapid inflation of the money supply -- say, a monetary inflation rate averaging 10% per year -- can occur for a long time without the "inflation" becoming "hyper". The reason is that a certain mass psychology must be present to create the condition known as hyperinflation. At the same time, hyperinflation cannot result from psychological factors alone. There must also be rapid growth in the money supply.

news.goldseek.com >> 15 November 2011

Why the sovereign debt crisis began in Europe
By: Steve Saville, The Speculative Investor
This is a point we touched on in a couple of earlier commentaries, but it is important enough to reiterate. The point is that the sovereign debt crisis began in Europe because the countries of the euro-zone (EZ) do not have captive central banks. A captive central bank is one that stands ready, willing and able to monetise all government debt should it become difficult or impossible to find other buyers for the debt.

news.goldseek.com >> 1 November 2011

Big Picture Charts
By: Steve Saville, The Speculative Investor
Just for a change and on the off chance that we will be able to obtain some useful information by doing so, we'll now take a look at some long-term monthly charts. The blue line on each of these charts is the 12-month moving average.

news.goldseek.com >> 18 October 2011

How the Fed could boost the money supply without 'printing' money
By: Steve Saville, The Speculative Investor
Public opinion is against the Fed creating more money to support banks. This doesn't mean that if push came to shove the Fed would not create a lot more money with the aim of supporting the banks, although it does suggest that the Fed will have to tread carefully in the future lest it lose any semblance of independence*. Public opinion is not, however, against monetary inflation per se, and neither are most economists and financial-market pundits.

news.goldseek.com >> 11 October 2011

The Next Shoes To Drop
By: Steve Saville, The Speculative Investor
The US economy is definitely in recession and the recession will probably extend into next year. This isn't necessarily a reason to be concerned about downside risk in the broad stock market, because the stock market attempts to discount the future and might already have priced-in the sort of earnings decline that a recession would bring about. The reason to be concerned about downside risk in the stock market is that the recession is not widely recognized and most analysts are still projecting growth in earnings over the next 12 months.

news.goldseek.com >> 4 October 2011

The Sceptical Inflationist
By: Steve Saville, Speculative Investor
We aren't ruling out the possibility that the deflationists are finally going to be right. We hope they are going to be right, because more inflation will only lead to an even bigger problem down the track. It's just that they are, in effect, betting that devotees to the central planning ideology will suddenly realise the error of their ways and let nature take its course. The odds are very much against this bet paying off.

news.goldseek.com >> 20 September 2011

Why Debt Levels Are So High
By: Steve Saville, The Speculative Investor
Economists of all stripes agree that debt levels are way too high, but only a small percentage of economists understand why the total amount of debt has reached such a troublesome magnitude. Most of them come up with explanations that involve something going wrong with the financial system. For example, one group believes that the root of the problem is inadequate regulation of banks and other financial institutions. The actual cause, however, is the design of the monetary system itself. The system has achieved exactly what it was designed to achieve.

news.goldseek.com >> 13 September 2011

The Nikkei Model and Monetary Inflation
By: Steve Saville, The Speculative Investor
Based on the average duration of secular bear markets in equities, it is reasonable to expect that the NDX's secular bear market will end within 12 months of the time predicted by the Nikkei Model. However, it is clear that the post-bubble NDX has more of an upside bias than the post-bubble Nikkei. This is the result of the US' rate of monetary inflation being much higher than Japan's rate of monetary inflation.

news.goldseek.com >> 30 August 2011

Gold: The Big Picture
By: Steve Saville, The Speculative Investor
With gold having 'gone parabolic' in the weeks leading up to this week's top, the question arises as to whether or not gold's long-term bull market has ended. After all, upside blow-offs usually occur during the final phases of major rallies. To help answer the question we present, below, a chart of the Dow/Gold ratio courtesy of www.sharelynx.com. This chart shows that the ratio recently fell to near the bottom of its ultra-long-term channel, which indicates that gold is no longer cheap relative to the Dow Industrials Index.

news.goldseek.com >> 23 August 2011

Nobody Wants A Strong Currency
By: Steve Saville, The Speculative Investor
The world of policy-making is dominated by Mercantilism and Keynesianism. Under the Mercantilist way of thinking, the greater the level of goods exports relative to goods imports, the better. Or, looking at it from another angle, from the perspective of a Mercantilist a good policy is one that maximises the amount of money flowing into the country by maximising the amount of goods flowing out of the country.

news.goldseek.com >> 9 August 2011

Does the Fed simply follow the market?
By: Steve Saville, The Speculative Investor
If you look at a multi-decade chart comparing the yield on a 3-month Treasury Bill with either the Fed Funds Rate (FFR) or the Discount Rate, you will see that the short-term interest rate set by the Fed almost always follows the short-term "risk free" interest rate set by the market. Therefore, if this chart is all you have to go on you will probably conclude that the market sets interest rates and the Fed does little more than tag along behind the market, which is exactly the conclusion reached by the author of the article posted HERE. However, when assessing the Fed's role we have a lot more to go on than a simplistic chart comparison of the T-Bill yield and the Discount Rate.

news.goldseek.com >> 26 July 2011

Real Performance
By: Steve Saville, The Speculative Investor
We'll now step back and review some 'big picture' inflation-adjusted (IA) charts. These charts show monthly prices in June-2011 dollars, using our own inflation index to adjust historical data for the estimated loss over time in the US dollar's purchasing power. As discussed in earlier commentaries, our inflation index is based on the assumption that the rate at which a currency loses purchasing power over the long term will be roughly equal to the rate of increase in its supply minus the rates of growth in productivity and population.

news.goldseek.com >> 19 July 2011

Bonds, Inflation Expectations, and QE3
By: Steve Saville, The Speculative Investor
The difference in yield between the standard 10-year Treasury Note and the 10-year TIPS (Treasury Inflation Protected Security) is what we call the Expected CPI. The Expected CPI is not a realistic measure of the market's inflation expectations, but the direction in which it trends should be the same as the direction in which the market's inflation expectations are headed. The Expected CPI can therefore be useful, provided that we focus on its trend rather than its value. With this in mind, let's now take a look at weekly charts of the Expected CPI and T-Note futures.

news.goldseek.com >> 30 June 2011

The Insidious Effects of Monetary Inflation
By: Steve Saville, The Speculative Investor
Most people with a basic grounding in economics know that increasing the supply of money leads to a fall in the purchasing power of money. However, this is as far as most people's understanding goes and explains why monetary inflation is generally not unpopular unless the cost of living happens to be rising rapidly. Monetary inflation would be far more unpopular if its other effects were widely understood. We list, herewith, some of these other effects.

news.goldseek.com >> 21 June 2011

Bank Reserves, Money Supply, and a Secular Change in Credit
By: Steve Saville, The Speculative Investor
The relationship between bank reserves and money supply is widely misunderstood. Some analysts believe that the Fed dictates the US money supply by controlling the reserves of the US banking system, but, as we'll explain, this is only partly correct. Other analysts believe that if commercial banks are collectively unable or unwilling to lend then the Fed won't be able to increase the economy-wide money supply, regardless of how much it increases bank reserves. As we'll explain, this view is completely wrong.

news.goldseek.com >> 14 June 2011

The “Backing” of Today’s Money, Part 2
By: Steve Saville, The Speculative Investor
Our 6th June commentary included a short piece titled "What backs today's money?", in which we attempted to explain that money is not "backed" by anything and nor does it need to be. Money is what it is -- the most commonly used medium of exchange within an economy. This piece was subsequently posted as a standalone article at a few web sites and generated an unusually large amount of feedback (questions, comments and objections). Today we'll address the three most common objections.

news.goldseek.com >> 7 June 2011

What “Backs” Today’s Money?
By: Steve Saville, The Speculative Investor
All of the major central banks hold currency reserves in the form of gold or other national currencies, but it is not strictly true that these reserves "back" the associated currencies. For example, if the US' gold reserves or Japan's US$ reserves disappeared tomorrow, the US$ and the Yen wouldn't be worth any less than they are today. What, then, backs today's fiat money?

news.goldseek.com >> 24 May 2011

What Should The Gold/Silver Ratio Be?
By: Steve Saville, The Speculative Investor
The price of gold is dominated by investment/monetary demand to such an extent that nothing else matters as far as gold's intermediate- and long-term price performance is concerned. Investment/monetary demand is probably also the most important driver of silver's price trend, although in silver's case industrial demand is also important. In addition, changes in mine supply have some effect on the silver market, because unlike the situation in the gold market the annual supply of newly-mined silver is not trivial relative to the existing aboveground supply of the metal.

news.goldseek.com >> 17 May 2011

The “Smoothing out the Bumps” Fallacy
By: Steve Saville, The Speculative Investor
Governments and central banks have invoked the writings of J.M. Keynes to justify the massive increases in government spending and monetary inflation that have occurred over the past few years. However, some of Keynes's apologists have pointed out that the famous British economist would not have agreed with many of the policy responses for which his work has provided the intellectual justification. They point out, for example, that Keynes only advocated temporary increases in government spending as a means of absorbing shocks to the economy, and that he was dead against currency debasement and the creation of structural deficits. The problem, though, isn't that Keynes's theory has been applied to an unreasonable extreme; the problem is that the theory is completely wrong.

news.goldseek.com >> 10 May 2011

The Relatively Poor Performance of Gold Stocks, 1976-1980 and Now
By: Steve Saville, The Speculative Investor
Below is a chart comparison of the Barrons Gold Mining Index (BGMI) and the US$ gold price covering the period from 1974 through to 1984. In other words, this chart captures the final 6 years of the secular bull market that ended in 1980 and the first few years of the secular bear market that would ultimately continue until 1999-2001. Note that the BGMI portion of the chart has a linear scale whereas the gold portion of the chart has a log scale.

news.goldseek.com >> 2 May 2011

Gold versus silver and other commodities
By: Steve Saville, Speculative Investor
Now, we aren't arguing that gold is money today (it isn't). Nor are we arguing that silver will not out-perform gold over the course of the long-term bull market that encompasses both gold and silver (we have always maintained that silver's reward potential was greater than gold's, but that the additional reward potential was offset by greater risk). What we are arguing is that gold is now a long way ahead of any other commodity (including silver) in terms of ability to fulfill the monetary role, an implication of which is that gold will very likely continue to out-perform silver by a wide margin during those periods when there is a surge in the demand for the safety/liquidity of "money" (2001-2003 and 2008, for example) and under-perform silver during those periods when there is a general shift towards riskier ventures.

news.goldseek.com >> 12 April 2011

When Will The Gold Bull Market End?
By: Steve Saville, The Speculative Investor
The main reason that we expect the gold bull market to run for at least a few more years relates to the theories that dominate thinking within the halls of policy-making -- chiefly the theory that the economy can be made stronger via more monetary inflation, more credit expansion and more government spending. In effect, policy-makers have been trying to fight cancer by feeding the cancer, and there is every indication that they will continue to do so.

news.goldseek.com >> 5 April 2011

Inflation, Bank Lending, and the Employment Spiral
By: Steve Saville, The Speculative Investor
Can inflation happen when the banks aren’t lending? We can state with absolute certainty that "yes" is the correct answer to the above question. We know for a fact that the total supply of money can increase in parallel with a contraction in the commercial banking industry's collective loan portfolio because that's exactly what has happened in the US since October of 2008.

news.goldseek.com >> 29 March 2011

Long-term bearish on China and the US
By: Steve Saville, The Speculative Investor
When it comes to their outlooks for China's economy, most analysts fall into one of two groups. The first group is outright bullish on China's prospects over all time frames, while the other is very optimistic on a long-term basis but is concerned about the potential for a painful short- and/or intermediate-term 'correction'. In other words, most analysts are long-term bullish.

news.goldseek.com >> 22 March 2011

Japan and the T-Bond
By: Steve Saville, The Speculative Investor
The Japanese government is the third largest holder of US treasuries (behind the Chinese government and the US Federal Reserve). Should we therefore expect some downward pressure on T-Bonds stemming from the Japanese government's efforts to finance earthquake-related reconstruction? In other words, is the government of Japan likely to become a seller of T-Bonds in the near future due to its need to raise money for the re-building effort?

news.goldseek.com >> 8 March 2011

Inflation-Related Thoughts
By: Steve Saville, The Speculative Investor
"Don't fight the Fed" is an adage that's always worth remembering; however, this adage shouldn't be applied to all of the Fed's endeavours because the Fed is powerful in some areas and impotent in others. For example, the Fed can ALWAYS depreciate the US dollar -- that is, it can always cause dollar-denominated prices to rise -- if it chooses to do so, but it can't create real economic growth or sustainable employment (despite the fact that achieving "full employment" is part of the Fed's official mandate). Furthermore, although the Fed can always bring about a rise in prices by inflating the currency supply, it can't control which prices rise the most in response to its monetary inflation. In fact, the price-related effects of the Fed's inflation will often be the opposite of what the Fed intends.

news.goldseek.com >> 1 March 2011

Gold Market Update
By: Steve Saville, The Speculative Investor
Gold hit its intra-day correction low prior to the start of US trading on Friday 28th January, and then reversed upward. As we explained at the time, although Egypt's revolution was the catalyst for this directional change the gold market was primed for a reversal prior to this event. We noted, for example, that evidence in the form of the Commitments of Traders (COT) data and the Market Vane survey indicated that sentiment in the gold market prior to the 28th January reversal was roughly the same as it had been in mid July of 2010 -- just prior to the start of a relentless 2.5-month advance that resulted in a $200/oz addition to the gold price.

news.goldseek.com >> 15 February 2011

Will Silver Do Better Than Gold?
By: Steve Saville, The Speculative Investor
Many analysts are convinced that silver is going to outperform gold this year and for years to come. Are they right? We don't know. What we do know is that: a) most of the recent silver-related commentary has focused on silver's upside potential and has not mentioned, or has glossed over, silver's downside risk, and b) silver bulls are generally ignoring the relationship between the silver/gold ratio and the economic growth theme. These two points go together in that silver's downside risk is linked to the potential for the 'growth trade' to collapse.

news.goldseek.com >> 8 February 2011

Inflation Is A Deliberate Policy Everywhere
By: Steve Saville, The Speculative Investor
While an economy-wide inflation-fueled investment bubble is in full swing, policy-makers will look smart. At least, they will look smart to the economically illiterate. But when the bubble bursts, the policy-makers that looked ingenious will quickly begin to look decidedly less so. In fact, if they try to short-circuit the corrective process that must follow the bursting of an inflation-fueled bubble -- by ramping up government spending, for example -- there's a very good chance that they will end up being widely perceived as incompetents.

news.goldseek.com >> 1 February 2011

Egypt’s Revolution and Inflation
By: Steve Saville, The Speculative Investor
Unless you've been unconscious for the past few days you are probably aware that the situation in Egypt is becoming increasingly precarious. Increasingly precarious, that is, for Egypt's government (the dictatorship of Hosni Mubarak). Inspired by the fall of Tunisia's dictatorship two weeks ago, Egyptians have taken to the streets en masse in an effort to bring Mubarak's thirty-year rule to an end. Predictably, the Egyptian government's response to the protests has been draconian. For example, police have assaulted protestors with tear gas, water cannons and rubber bullets, the military has been deployed to assist the police and to help enforce a curfew, and the internet has effectively been shut down.

news.goldseek.com >> 26 January 2011

Random Thoughts About The Year Ahead
By: Steve Saville, The Speculative Investor
Stock market risk is high, but if the stock market avoids a large decline then uranium- and agriculture-related stocks will probably do very well in both absolute and relative terms. If the stock market goes into a lengthy retreat then gold will probably be the best-performing sector.

news.goldseek.com >> 18 January 2011

Gold Update
By: Steve Saville, The Speculative Investor
Many commentators like to speculate on where the dollar-denominated gold price is ultimately headed. Some claim that it is destined to reach $3,000/oz, others claim that it won't top until it hits at least $5,000/oz, and some even forecast an eventual rise to as high as $50,000/oz. All of these forecasts are meaningless.

news.goldseek.com >> 28 December 2010

Inflation Update
By: Steven Saville, Speculative Investor
Despite what Bernanke claims, the US money supply continues to grow at a rapid rate. As evidence we present the following chart, which shows that TMS's year-over-year growth rate is above 10% and has been in double digits for almost two years. By the way, we don't think that Bernanke is lying when he says that the US money supply hasn't grown by much over the past 1-2 years. The problem, we suspect, is that he doesn't know how to measure the money supply, which is possibly worse for the US economy than if he understood what was going on but was deliberately hiding the truth. If he knew there was a monetary inflation problem, but was lying about it, there would be a chance of corrective measures being implemented sooner rather than later. Instead, he feels comfortable promoting more monetary inflation because he truly believes that the current inflation rate is low.

news.goldseek.com >> 15 December 2010

Inflation and the “Commodity Supercycle”
By: Steven Saville, Speculative Investor
Our view is, and has always been, that the rapid economic growth occurring in countries such as China and India is NOT the primary driver of the long-term bull market in commodities that is often referred to as the "commodity supercycle". Instead, we see the bull market as mostly an effect of inflation, where inflation is defined as an expansion of the money supply. One of the consequences of inflation is a reduction in the value of money relative to some of the things that money can buy.

news.goldseek.com >> 7 December 2010

China’s Bubble and Commodities
By: Steven Saville, Speculative Investor
The most vociferous commodity bulls tend to be China bulls, and rightly so given that the price gains achieved across the industrial commodity complex over the past 12 months can only be justified by making the assumption that China will continue its rapid growth. China's importance to the commodity world stems from the fact that the bulk of its growth involves fixed-asset investment, which means that the growth is commodity-intensive.

news.goldseek.com >> 23 November 2010

Inflating The Debt Away
By: Steven Saville, Speculative Investor
In many economies the total quantity of debt has become so high that repayment is no longer possible using the current supply of money. This means that default on a grand scale is inevitable, the only unknown being the nature of the default. One possibility is that most debt defaults will be the direct kind, while the only other possibility is that enough new money will be created to enable most debts to be repaid using substantially depreciated currency units. The second possibility is often described as "inflating away the debt".

news.goldseek.com >> 16 November 2010

The Choice of an 'Accounting Yardstick’
By: Steven Saville, Speculative Investor
Regardless of what currency you use to purchase gold bullion, after you have made the purchase you own ounces of gold. You don't own ounces of US$-denominated gold or euro-denominated gold. Gold is gold. You can then choose to measure the performance of your gold in terms of dollars or euros or Yen or barrels of oil or bushels of wheat or the S&P500 Index or something else entirely. The choice is yours, and the choice won't alter the fact that what you own is a certain quantity of gold ounces.

news.goldseek.com >> 9 November 2010

Running faster…In the Wrong Direction
By: Steven Saville, Speculative Investor
Ramping up government spending will make the economy less productive, so it should be no surprise to logical economists that the "Keynesian" response to economic downturns has a very poor record. It should, however, be a big surprise to Keynesian economists, and yet they never seem to be surprised by evidence that their policy prescriptions didn't work as advertised. Instead, they usually claim that the prescriptions would have worked had they been applied more aggressively.

news.goldseek.com >> 2 November 2010

The Faith-Based Metal
By: Steven Saville, Speculative Investor
We agree that gold is a faith-based metal, although we don't like the term "faith-based". It is more appropriate to say that gold's value is not primarily determined by how much of it gets consumed in industrial, commercial or digestive processes. Gold is not "mostly used for nothing more useful than jewelry", as Grantham claims. It is mostly used as a store of purchasing power.

news.goldseek.com >> 26 October 2010

China and the Anti-Realists
By: Steven Saville, Speculative Investor
There is much gnashing of teeth by the realists and celebrating by the Keynesians over the possibility that the Fed will soon embark on another round of "quantitative easing". The anticipation of faster inflation of the US$ supply has put downward pressure on interest rates and caused the speculative juices to flow more freely in the commodity and equity markets.

news.goldseek.com >> 19 October 2010

Inflation and Treasury Bonds
By: Steven Saville, Speculative Investor
As at the end of September, our preferred measure of US money supply (TMS2) had a year-over-year growth rate of 11.2% and had spent 20 months in double digits. This obviously constitutes substantial monetary inflation, although apparently not substantial enough for the Fed.

news.goldseek.com >> 4 October 2010

Can The Fed Help The US Economy?
By: Steven Saville, Speculative Investor
The Fed's official mandate is to promote maximum employment and price stability. Since changes in employment levels are effects of changes in the pace of economic growth, this effectively means that the Fed's official mandate is to promote maximum economic growth and price stability. Which naturally prompts the question: how could a committee with only interest-rate and money-supply manipulation tools fulfill such a mandate?

news.goldseek.com >> 28 September 2010

How Hyperinflation Really Happens
By: Steven Saville, Speculative Investor
All historical episodes of hyperinflation that we know of -- and we know of many -- have been step-by-step processes set in motion by, and sustained by, increases in the supply of money. After the supply of money grows at a rapid rate for a period of at least a few years, some people conclude that the inflation will be endless.

news.goldseek.com >> 21 September 2010

Devaluing the Dollar
By: Steven Saville, Speculative Investor
There is regularly talk about the Fed (or Treasury) devaluing the US dollar, but how do you devalue something that doesn't have a fixed measurement? Specifically, what would the Fed/Treasury devalue the dollar against and how would they go about it?

news.goldseek.com >> 14 September 2010

Gold As Money
By: Steven Saville, Speculative Investor
Money is the economic good against which almost all other goods are traded, or, to put it more simply, money is the general medium of exchange within an economy. The corollary is that if something is the general medium of exchange within an economy, then that 'thing' is money.

news.goldseek.com >> 31 August 2010

Gold Stocks – The Long-Term Perspective
By: Steven Saville, Speculative Investor
Displayed below is a long-term weekly chart of the Barrons Gold Mining Index (BGMI) with a log scale. The chart includes the BGMI's 200-week moving average (in red) and two upward-sloping trend-lines (in green). We've given the trend-lines the same slope to show that the gold sector's current long-term bull market is progressing at roughly the same pace as the long-term bull market that ran from the early 1960s through to 1980.

news.goldseek.com >> 24 August 2010

Approaching the Point of Recognition?
By: Steven Saville, Speculative Investor
US economic data have been deteriorating over the past three months and are likely to deteriorate further over the next three months, but that's not necessarily a problem for the stock market. The stock market always attempts to discount the future, which means that economic weakness is only ever a threat when it hasn't been discounted.

news.goldseek.com >> 17 August 2010

Print, Baby, Print!
By: Steven Saville, Speculative Investor
Bernanke was correct back in 2002 when he pointed out that the Fed could always devalue the dollar by increasing its supply, but as far as we can tell that's the only important economics concept he has ever been correct about.

news.goldseek.com >> 10 August 2010

The Depression Outlook, Revisited
By: Steven Saville, Speculative Investor
Towards the end of 2008 and during the first two months of 2009, we laid out our case for the second great depression of the past 100 years. In a nutshell, our thinking was that there are two fundamental prerequisites for a depression within a semi-free economy, these being a massive credit bubble and a concerted effort by the government to prevent the corrective process from running its natural course after the bubble bursts.

news.goldseek.com >> 3 August 2010

What Is Gold Really Worth?
By: Steven Saville, Speculative Investor
The reason we are very bullish on gold's prospects beyond the short-term isn't that we think gold is a screaming bargain based on the way things are today; we are bullish because we don't think that today's gold price comes close to fully discounting the adverse FUTURE effects of government and central bank policies.

news.goldseek.com >> 27 July 2010

The Decade Cycle
By: Steven Saville, Speculative Investor
In our 5th August 2009 commentary we discussed the strong tendency for one of the most dominant investment themes of a decade to make a 'blow-off top' during the final few months of the '9' year or the first half of the '0' year. At that time we thought that the best candidates for a 2009-2010 speculative bubble peak were gold, the currencies (a blow-off move to the downside in the US$ and corresponding blow-off moves to the upside in the euro, SF, A$ and C$), government debt, and China.

news.goldseek.com >> 20 July 2010

Economists Don’t Understand Money
By: Steven Saville, Speculative Investor
Strangely, many economists have a mental block when it comes to money. They just can't seem to get their heads around what money is, what the quantity of money should be, how the money supply should be measured, and how changes in the money supply affect the economy. Even the late great Milton Friedman had a mental block about money and unfortunately passed it along to most of his followers.

news.goldseek.com >> 14 July 2010

Re-visiting the “China Story”
By: Steven Saville, Speculative Investor
Great credit expansions prompt investment decisions that only make sense within the fantasy-world created by a relentless deluge of new money. When the flow of new money slows or when the true nature of the inflation-fueled boom becomes apparent to a critical mass of people, many of the investments prompted by the easy money fail and the economy enters a recession.

news.goldseek.com >> 29 June 2010

The Bad-Policy Spiral
By: Steve Saville, Speculative Investor
Many libertarians assert that the government is morally bound to pay its debts, and that therefore default or repudiation must be avoided. The problem here is that these libertarians are analogizing from the perfectly proper thesis that private persons or institutions should keep their contracts and pay their debts. But government has no money of its own, and payment of its debt means that the taxpayers are further coerced into paying bondholders. Such coercion can never be licit from the libertarian point of view. For not only does increased taxation mean increased coercion and aggression against private property, but the seemingly innocent bondholder appears in a very different light when we consider that the purchase of a government bond is simply making an investment in the future loot from the robbery of taxation. As an eager investor in future robbery, then, the bondholder appears in a very different moral light from what is usually assumed.

news.goldseek.com >> 22 June 2010

Inflation Update
By: Steven Saville, Speculative Investor
The best web-based presentation of US money supply data is located at http://trueslant.com/michaelpollaro/austrian-money-supply/. That's where we obtained the following chart, which shows the year-over-year (YOY) percentage changes for TMS1, TMS2 and M2. Note that "TMS2" is what we normally refer to as TMS (True Money Supply), whereas "TMS1" is a narrower definition of money supply that doesn't count savings deposits.

news.goldseek.com >> 15 June 2010

The Promises Must Be Broken
By: Steven Saville, Speculative Investor
Many governments, including those of the US, Japan, and most euro-zone countries, have made extremely costly promises to provide entitlements to their citizens and to repay their creditors. These promises must be broken, firstly because they cannot be kept and secondly because they should not be kept.

news.goldseek.com >> 7 June 2010

Articles Point To A Higher Gold Price
By: Steven Saville, Speculative Investor
In conclusion, the first of the above-mentioned Barrons articles is gold-bullish because it reflects a belief that a lot more monetary inflation will be needed to support the economy in the future, while the second is gold-bullish because it reflects gross misunderstandings of gold, money, and what a real "gold bubble" would look like. Such misunderstandings are usually prevalent in the early or middle stages of bull markets, but never near the ends of bull markets.

news.goldseek.com >> 25 May 2010

The Post-Bubble Recriminations Ramp Up
By: Steven Saville, Speculative Investor
The main problem with credit bubbles is that they result in a massive transfer of resources to activities that would not be economically viable in the absence of the artificially low interest rates and the monetary inflation. Consequently, although they temporarily create the feeling of prosperity, they deplete real savings and lessen the economy's long-term growth potential.

news.goldseek.com >> 18 May 2010

Gold and Silver Update
By: Steven Saville, Speculative Investor
A point we've made numerous times over the years is that gold is not primarily a play on a decline in the US dollar's foreign exchange value; it is a play on a general decline in monetary confidence.

news.goldseek.com >> 20 April 2010

Explaining Gold Price Fluctuations
By: Steven Saville, Speculative Investor
Most mainstream financial journalists try to link the daily market action with the news of the day, as if the markets did nothing other than react to news. In general terms, they make the assumption that if a market fluctuation coincided with or followed a news event, then the news event must have caused the market fluctuation.

news.goldseek.com >> 13 April 2010

Long-Term Bearish On China
By: Steven Saville, Speculative Investor
Excluding the people who labour under the delusion that the US is still the "land of the free" and China is still a Soviet-style basket case, most people fall into one of two groups when it comes to their views on China's economic prospects. The first group is outright bullish on China's prospects over all time periods, while the other is very optimistic on a long-term basis but is concerned about the potential for a painful 'correction' within the next couple of years. In other words, most people are long-term bullish. We, however, are not.

news.goldseek.com >> 23 March 2010

Measuring the Money Supply
By: Steven Saville, Speculative Investor
The year-over-year growth rates of popular monetary aggregates M2 and MZM are presently around 2%, which is near their lows of the past 15 years. Furthermore, M3, another popular monetary aggregate, has just experienced the fastest decline in its growth rate in at least 40 years and is now down by about 5% on a year-over-year basis.

news.goldseek.com >> 16 March 2010

Are Rising Interest Rates Bullish Or Bearish For Gold?
By: Steven Saville, Speculative Investor
The reason that a large increase in the yield-spread (a pronounced 'steepening' of the yield curve) tends to be bullish for gold is that it indicates either rising inflation expectations (if the yield-spread is being driven upward by rising long-term interest rates) or falling financial-market liquidity (if the yield-spread is being driven upward by falling short-term interest rates). The large increases in the yield-spread that occurred over the past decade were driven by falling financial-market liquidity; or, to put it another way, by increasing risk aversion.

news.goldseek.com >> 2 March 2010

“Peak Gold”, Central Banker Confusion
By: Steven Saville, Speculative Investor
It is said that the cure for high commodity prices is...high commodity prices, the reason being that a high price encourages more production and thus eventually brings about a price decline. However, gold's 10-year (and counting) bull market has not yet prompted an increase in the gold-mining industry's output.

news.goldseek.com >> 23 February 2010

The "Too Big To Fail" Lie (As Applied to US Banks)
By: Steven Saville, Speculative Investor
"They are too big to fail" was the reason given for using trillions of dollars in money and guarantees to 'bail out' several large US banks during 2008-2009. Their failure, it was argued, would all but bring the entire economy to a standstill; such were the size and scope of their operations. Providing the banks whatever financial support they needed to remain in business was therefore touted as serving the "public interest". However, the "too big to fail" argument was a giant, multi-faceted lie.

news.goldseek.com >> 16 February 2010

Monetary Inflation and the Fed’s Exit Strategy
By: Steven Saville, Speculative Investor
The following monthly chart compares the year-over-year (YOY) growth rates of True Money Supply (TMS - the blue line) and M2 (the red line). As at the end of January the TMS yearly rate of change was down a few percent from its high, but was still well into double digits and in the top quartile of its 10-year range.

news.goldseek.com >> 2 February 2010

Gold Stocks versus Gold Bullion
By: Steven Saville, Speculative Investor
It is widely believed that gold stocks offer leveraged exposure to changes in the gold price, but this belief is false. At least, the historical record suggests that it is false on a long-term basis. As evidence we include, below, a chart of the BGMI/gold ratio covering the past 50 years (BGMI is short for Barrons Gold Mining Index).

news.goldseek.com >> 19 January 2010

Interest Rate Manipulation
By: Steven Saville, Speculative Investor
Anticipation of a Fed rate-hiking campaign could be an excuse for an intermediate-term gold correction at some point, but there is almost no chance that the Fed will become 'tight' enough to end gold's long-term upward trend. In our opinion, an extension of gold's bull market to at least 2013-2014 is 'baked into the cake' based on the money-supply growth that has already occurred.

news.goldseek.com >> 12 January 2010

Thoughts on Monetary Inflation
By: Steven Saville, Speculative Investor
The reason we are harping on this subject is that over the next few months you will very likely read articles in which money-supply charts are used to 'prove' that DEFLATION is occurring and other articles in which money-supply charts are used to highlight an INFLATION problem. It is important to understand how such contradictory conclusions could be drawn about something that should be straightforward.

news.goldseek.com >> 15 December 2009

Recognition of the US Inflation Problem
By: Steven Saville, Speculative Investor
When the banking system (the central bank and the commercial banks) creates so much new money out of nothing that the total supply of money rises rapidly, it can be likened to counterfeiting on a grand scale. This counterfeiting distorts price signals, brings about the undeserved transfer of wealth to the first receivers of the new money, and depletes real savings.

news.goldseek.com >> 8 December 2009

Dubai, Inflation, and Gold
By: Steven Saville, Speculative Investor
As we've explained a number of times over the years, it is not strictly correct to say that gold is a hedge against inflation. We are convinced, however, that under the current system a high rate of monetary inflation is one of the two primary ingredients of a long-term gold bull market. Monetary inflation is not sufficient by itself, but when mixed with the second ingredient the result will be a powerful advance lasting many years.

news.goldseek.com >> 1 December 2009

Inflating Away the Debt? Not Really.
By: Steven Saville, Speculative Investor
According to popular opinion, a benefit of inflation is that it reduces the debt burden by reducing the value of the currency in which the debt must be repaid. An associated belief is that when the Fed and other central banks create money out of nothing they are acting to "inflate away" the debt and are thus performing a useful service on behalf of everyone who owes a lot of money. But as is often the case when it comes to central-bank and government manipulations of money and credit, there's a big difference between the way things are commonly portrayed/perceived and the way they are in reality.

news.goldseek.com >> 24 November 2009

The Stock Market’s Lengthy Topping Process
By: Steven Saville, Speculative Investor
Fed rate hikes have preceded every major decline in the US stock market over the past 80 years. This doesn't mean that every Fed rate-hiking campaign has been followed by a major stock market decline, because that certainly isn't the case. Rather, it implies that while a Fed rate-hiking campaign will not necessarily bring about a major stock market decline, it could, under the current system, be a prerequisite for such an event.

news.goldseek.com >> 10 November 2009

Why Changes In Gold Production Don't Matter
By: Steven Saville, Speculative Investor
Most analyses of the gold market consider the annual change in the amount of gold produced by the mining industry to be an important determinant of the gold price, with bulls regularly supporting their case by citing the mining industry's inability to ramp up production and bears sometimes claiming that increasing mine production will eventually weigh the gold price down. Our contention, however, is that the annual supply of newly-mined gold is so small relative to the existing aboveground supply that changes in mine production should be ignored when assessing gold's prospects.

news.goldseek.com >> 3 November 2009

Bank Reserves and Inflation
By: Steven Saville, Speculative Investor
We think it is fortunate that banks have, to date, chosen to 'sit' on their reserves, because if they decided to use the reserves to support trillions of dollars of additional lending then the inevitable result would not only be an even more troublesome debt burden; it would also be an inflation problem of immensely destructive proportions.

news.goldseek.com >> 27 October 2009

The "Long Run" is a Sequence of "Short Runs"
By: Steven Saville, Speculative Investor
Even within the ranks of analysts who have some understanding of the problems caused by fiscal and monetary "stimulus", it is commonly held that an economic/financial crisis requires "liquidity injections" and government intervention in order to overcome the immediate obstacle. It is acknowledged that the 'assistance' provided by the government and the central bank will have negative consequences in the long run, but it is generally argued that the long-term negatives can be dealt with after the dust settles.

news.goldseek.com >> 20 October 2009

Popular Misconceptions
By: Steven Saville, Speculative Investor
The "circular flow of income" theory favoured by Keynes and his disciples holds that one man's spending is another's income, the implication being that if consumer spending is boosted then economy-wide income will be boosted and the overall economy will strengthen. It follows from this theory that an economy-wide increase in savings will lead to a weaker economy, since the only way to increase savings is to reduce current spending.

news.goldseek.com >> 13 October 2009

Gold and Saving
By: Steven Saville, Speculative Investor
It is very likely that two ultra-long-term trends reversed direction over the past two years, the first being the expansion of private-sector credit in the US and the second being the contraction of the US savings rate. The trend reversals are, of course, inter-related, in that the new trends towards less debt and more savings are being driven by economic hardship in the present and the revelation that the economic future will not be as rosy as previously thought.

news.goldseek.com >> 29 September 2009

The "Credit-Based" Monetary System
By: Steven Saville, Speculative Investor
In summary, the monetary system is only "credit-based" up to a point, and even if it were totally "credit-based" the central bank would still have practically unlimited ability to expand the money supply. Does this mean that deflation is impossible under the current monetary system unless the central bank is willing to allow the system to deflate? Yes.

news.goldseek.com >> 22 September 2009

Mini Inflation Blow-Off
By: Steven Saville, Speculative Investor
Coming into September the markets had the potential to experience either a deflation scare or a mini blow-off in inflation-related plays. Within the first few trading days of September it became apparent that it was more likely going to be the latter.

news.goldseek.com >> 16 September 2009

Is This the Top for the Gold Sector?
By: Steven Saville, Speculative Investor
The following chart shows the HUI and the HUI/gold ratio. Of importance is that the HUI traded as much as 22% above its 50-day moving average on Friday and ended the week 19% above this moving average. There is no telling how 'overbought' a market will become before it begins to retrace, but note that the HUI has rarely, in the past, been as far above its 50-day moving average as it is right now.

news.goldseek.com >> 8 September 2009

Gold Money Versus The Monetary Ambitions Of Governments
By: Steven Saville, Speculative Investor
China's government follows a mercantilist trade policy, meaning that it attempts to manipulate international trade -- via tariffs, subsidies, regulations and exchange rates -- in order to maximize the amount of money that flows into the country. This policy is unlikely to change anytime soon.

news.goldseek.com >> 1 September 2009

The Inflation Process
By: Steven Saville, Speculative Investor
In our 5th August commentary we explained that the central bank couldn't simply withdraw monetary stimulus in order to avoid an inflation problem, because injecting new money doesn't just alter the general price level; it also changes the STRUCTURE of the economy. In the world of economics there are few things of greater importance than the concept of how monetary inflation really works, and yet hardly anyone understands it. Of special relevance, the current Fed chairman appears to have absolutely no idea how monetary inflation affects the economy. We'll therefore take another shot at explaining it; this time, for the sake of clarity and brevity, in point form.

news.goldseek.com >> 25 August 2009

Bank Reserves and Inflation
By: Steven Saville, Speculative Investor
Recent arguments between deflationists (those who are forecasting deflation) and inflationists (those who are forecasting inflation) often boil down to opposing views about what will happen to the huge quantity of reserves that the Fed has supplied to the US banking industry over the past year.

news.goldseek.com >> 11 August 2009

Withdrawing the Stimulus
By: Steven Saville, Speculative Investor
There has been a lot of discussion in the mainstream financial press about how and when the Fed will withdraw the "monetary stimulus" it has provided over the past year. Also, Ben Bernanke has recently gone into considerable detail about the methods he will use, once the economy is on stronger footing, to gradually remove any excess money before an inflation problem arises. Unfortunately, these discussions and Bernanke's detailed plans betray a terrible misunderstanding about how money-supply changes affect the economy.

news.goldseek.com >> 4 August 2009

Getting Some Things Straight Regarding China
By: Steven Saville, Speculative Investor
The conventional wisdom has it that the massive foreign currency reserve held by China's government is primarily due to the US trade deficit, and that the US economy will be in big trouble should China ever decide to stop financing the trade deficit. As is often the case, this piece of conventional wisdom is wrong.

news.goldseek.com >> 28 July 2009

Gold Stocks: The Big Picture
By: Steven Saville, Speculative Investor
During 2001-2007 there were some hefty downward corrections in the gold sector, but although these corrections seemed dramatic in real time they didn't come close to matching either of the primary corrections that occurred during the bull market in gold stocks that began in the early 1960s and ended in 1980. However, the 2008 downturn was every bit as severe as the primary corrections of 1960-1980.

news.goldseek.com >> 21 July 2009

M3’s False Signal and the Japan Myth
By: Steven Saville, Speculative Investor
During April-June of last year we described the rapid growth in M3 money supply that was occurring at the time as a "major league false signal". We thought it was a false signal because it contrasted starkly with the performance of the monetary aggregate known as TMS (True Money Supply). Whereas TMS was suggesting that the rate of monetary inflation was relatively slow, and, therefore, that a deflation scare was a distinct possibility within the ensuing 12 months, M3 was pointing to an inflationary shock to the system.

news.goldseek.com >> 7 July 2009

Inflation: Expectations and Effects
By: Steven Saville, Speculative Investor
In 2006, 2007 and 2008, rising inflation expectations during the first half of the year prompted a sell-off in US Treasury Bonds. And in each case inflation expectations peaked in June, leading to an intermediate-term bottom in the T-Bond market at that time. Interestingly, but not surprisingly from our perspective, this year has followed a similar pattern to date.

news.goldseek.com >> 23 June 2009

The Depression Case Reiterated
By: Steven Saville, Speculative Investor
In a semi-free country such as the US there are two prerequisites for a peace-time economic depression, where a depression is defined as a period of 5-10 years or longer of economic stagnation or outright contraction. The first is a massive expansion of credit based on fractional reserve banking (supported, nowadays, by a powerful central bank), and the second is a far-reaching attempt by the government to prevent the corrective process from running its natural course after the credit bubble has burst.

news.goldseek.com >> 16 June 2009

The Government Bubble
By: Steven Saville, Speculative Investor
It is clear that a concerted effort is being made to replace the ruptured private-sector debt bubble with a government debt bubble, although the effort is generally not labeled as such. Moreover, the dramatic increase in government debt that we are seeing is really just a symptom of expanding government. In the case of the US, for example, GW Bush presided over a rapid expansion of government power and the trend has accelerated under Obama.

news.goldseek.com >> 2 June 2009

Money Confusion and Inflation/Deflation
By: Steven Saville, Speculative Investor
The total supply of US dollars, as measured by TMS, is about 10% higher now than it was a year ago. Also, the total amount of credit within the US economy is higher now than it was a year ago thanks to the government's yeoman-like efforts to replace the bursting private-sector credit bubble with a public-sector credit bubble.

news.goldseek.com >> 26 May 2009

Thoughts on the Gold Standard, Risk and Speculation
By: Steven Saville, Speculative Investor
The most commonly cited reason against returning to a gold standard is that there isn't enough gold in the world, but no one with a good understanding of money's role within an economy would argue against a gold standard on the basis of insufficient gold supply (for the uninitiated, Frank Shostak explains why in: How Much Money Should There Be?). There is, however, a good reason to argue against a gold standard.

news.goldseek.com >> 19 May 2009

Why We Are Gold Bulls
By: Steven Saville, Speculative Investor
The actions of the US Fed and Treasury between September and December of last year prompted fear in some quarters that the US was speeding towards a Zimbabwe-style hyperinflation. However, while we view hyperinflation as inevitable over the very long-term at no stage have we viewed it as a serious intermediate-term threat. In our opinion, the probability of the US experiencing hyperinflation within the next two years is close to zero.

news.goldseek.com >> 12 May 2009

Everyone Is Wrong, Again (Except The Gold Bulls)
By: Steven Saville, Speculative Investor
One of our readers sent us a very interesting article from itulip.com entitled "Everyone is wrong, again -- 1981 in Reverse Part II: Nine Signs of Inflation". The article is an explanation by Peter Warburton (the author of the book "Debt and Delusion") of why generalised 'price inflation' is likely to become an issue by early next year, with comments by itulip's editor (Eric Janszen) interspersed.

news.goldseek.com >> 5 May 2009

Central Planning Is Back In Vogue
By: Steven Saville, Speculative Investor
At the root of central planning ideology is the belief that a group of well-meaning government officials and/or experts is more capable than the unrestrained free market of allocating resources for the betterment of society. However, whenever and wherever central planning of the economy has been attempted it has always been a failure, with the magnitude of the failure generally being proportional to the breadth of the central planning experiment.

news.goldseek.com >> 28 April 2009

The Effects of Inflation
By: Steven Saville, Speculative Investor
The effects of monetary inflation are three-fold. First, it brings about an unwarranted transfer of purchasing power (resources) to the creator of the new money and/or the first user of the new money. Another name for this unwarranted transfer is theft. Second, it has a NON-UNIFORM effect on prices, leading to mal-investment and the wastage of resources.

news.goldseek.com >> 14 April 2009

Greenspan’s Mistake
By: Steven Saville, Speculative Investor
Former Fed Chief Alan Greenspan has stridently argued that his decision to lower the Fed Funds Rate (FFR) from 6.5% to 1.0% during 2001-2003 was NOT the cause of the housing bubble. Does his argument have any validity?

news.goldseek.com >> 7 April 2009

What’s Happening On the Inflation Front?
By: Steven Saville, Speculative Investor
The Fed scaled back its money-pumping efforts over the first three months of this year, which is not surprising given that it would have been almost impossible to sustain the frenetic pace achieved during the final four months of last year. But even though the Fed's actions have become less frenzied of late, the Fed-Treasury tag team has made sure that the rate at which new money is borrowed into existence continues to exceed, by a substantial margin, the rate at which money is extinguished via debt repayment.

news.goldseek.com >> 24 March 2009

Gold: The Big Picture
By: Steven Saville, Speculative Investor
However, on a long-term basis the gold price generally does what it should do based on our understanding of its most important fundamental drivers, which is why we rarely devote any space at TSI to gold market manipulation. We'll use the following long-term chart of the gold/CRB ratio (gold relative to a basket of commodities) to illustrate what we mean.

news.goldseek.com >> 17 March 2009

Market Value, Money and Credit
By: Steven Saville, Speculative Investor
One of the arguments regularly made to support the claim that deflation is underway goes like this: "While the supply of money is expanding rapidly, the amount of additional money created is miniscule compared to the reduction in the market value of assets." In our opinion, this is not a valid argument.

news.goldseek.com >> 10 March 2009

Sentiment in the Gold, Stock and Commodity Markets
By: Steven Saville, Speculative Investor
When the gold price rose to $1000 in late February there was naturally a lot of enthusiasm about this market's prospects, which, combined with the almost uninterrupted $200 rise over the preceding five weeks, paved the way for a downward correction. The gold price then fell for eight trading days in a row, with the eighth down day being last Wednesday. The stage was thus set for a rebound, but as noted in last week's Interim Update the fact that the 8-day decline had barely put a dent in bullish sentiment suggested that the overall correction from the February high had not yet run its course.

news.goldseek.com >> 3 March 2009

Depression and Inflation
By: Steven Saville, Speculative Investor
Although we are anticipating another great depression we want to emphasize that we are NOT anticipating a replay of the 1930s. We are anticipating a drawn-out period of economic contraction, but the details will almost certainly differ markedly from previous depressions.

news.goldseek.com >> 27 February 2009

Silver in a Deflation
By: David Morgan, Silver Investor
As I have stated many times, the easy money has been made in the precious metals but the BIG money lies ahead, because if you think like I think, once this “disinflation” turns into a dollar collapse people will be looking for anything that will hold value, and that certainly includes both the precious metals.

news.goldseek.com >> 24 February 2009

Arguments Against the Depression Outlook
By: Steven Saville, Speculative Investor
Over the past two months we've explained why we think a great depression is on the cards. We are not 'doom-and-gloomers' who relish the prospect of an economic debacle; in fact, we very much hope that our depression prediction proves to be way off the mark. Our analysis of the economic situation is simply heading where logic takes it.

news.goldseek.com >> 17 February 2009

The End of an Era
By: Steven Saville, Speculative Investor
In a nutshell, there is no limit to the amount of bonds that the US government can issue to the Fed in exchange for newly-created dollars, or that any other government can issue to its central bank in exchange for newly-created currency. The only question is: what will the new money be spent on? The answer to this question gets to the heart of the biggest problem facing the economy today.

news.goldseek.com >> 10 February 2009

The Coming Great Depression
By: Steve Saville, Speculative Investor
In our 3rd December 2008 commentary we explained that the probability of an imminent great depression was uncomfortably high. Our reasoning, in a nutshell, was that the recent credit bubble was much bigger than any previous credit bubble of the past century and that the policymakers of today were blundering much more rapidly and on a much grander scale than their counterparts of the 1930s.

news.goldseek.com >> 3 February 2009

The Inflation-Deflation Debate
By: Steven Saville, Speculative Investor
For many years we have been expecting inflation (growth in the supply of money) and nothing but inflation as far as the eye can see, but there have been times, such as the past 12 months, when we have felt more affinity with deflation forecasters than with most other inflation forecasters.

news.goldseek.com >> 27 January 2009

It’s ONLY A Gold Bull Market
By: Steven Saville, Speculative Investor
One of our themes over the years has been that monetary factors are driving the major trends in the financial markets. To put it another way, we have tended to downplay the effects on market prices of non-monetary drivers such as the expansion of the internet, the industrialisation of China, and "Peak Oil".

news.goldseek.com >> 20 January 2009

Loan Defaults, Deflation and Bonds
By: Steven Saville, Speculative Investor
In the US and many other countries a lot of people are in default on their home loans, causing banks to suffer large losses. It is reasonable, then, to conclude that banks will be less able or willing to make new loans in the future than they were in the past; so although the loan defaults will not directly cause the money supply to fall they could result in slower future monetary expansion.

news.goldseek.com >> 13 January 2009

Bear Market Comparison
By: Steven Saville, Speculative Investor
A scenario favoured by many analysts is that a new bull market commenced last November. This view will undoubtedly gain traction if the stock market continues to strengthen over the next few months (as we currently expect), but it has almost zero chance of being proven right.

news.goldseek.com >> 7 January 2009

Monetary Delays
By: Steven Saville, Speculative Investor
Changes in money-supply trends affect prices in ways that are often difficult to predict, thanks in part to the lengthy and variable delays involved. However, it is still possible to explain much of what has happened to prices and much of what will likely happen to prices in terms of money-supply changes.

news.goldseek.com >> 4 January 2009

Gold Stocks During the 1930s
By: Steven Saville, Speculative Investor
There are some important similarities between the present and the 1930s. For example, in TSI commentaries over the past 6 months we've discussed the similarities between 1937-1938 and 2007-2008, both with regard to the economic situation and the performance of the US stock market. It is therefore apropos to review how the gold sector of the stock market performed during the 1930s.