I suggested in my last column that using the monetary aggregates which have increased the most in recent years would point towards a gold price in the mid $1700s per ounce. Using other money supply measures which have not expanded as much would point towards gold prices around $1400 per ounce.
On the other hand, it seems likely that money supply measures will, in fact, increase going forward. After all, the general mood in the country is malaise, and the head of the central bank is a Keynesian. With unemployment rates north of 9% and GDP growth rates south of 2% and a full bore European credit crisis, how in the world could Bernanke not end up pumping money into the system? When the mobs are restless, you put Prozac in the water supply.
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