Thursday, April 14, 2005

Why the Gold Price will Explode in the Months and Years Ahead

GATA says the price of gold will explode in the months and years ahead because of one of the following reasons:

1. The Gold Cartel (Western Central Banks) will run out of physical gold supply to hold down the gold price.

GATA says the the demand for physical gold is soaring. As demand outpaces gold mine and gold scrap supply by 1500 plus tonnes of gold per year. The Gold Cartel must meet this deficit with Central Bank gold supply from somewhere.

GATA says this is what the proposed IMF gold sale was all about. They also say the Swiss Central bank is ending their sales, Australia Central Bank has run out, and the Canadian Central bank has run out. Recently the gold cartel had to go to the ECB for supply as they announced a surprise 47 tonne sale.

2. Or, the Gold Cartel will lose control of their rigging due to a financial market derivatives disaster which will lead to a US Stock Market Crash and Realestate Crash

Inflation has taken off in the US, yet the economy is weakening. If the Fed raises interest rates much more to combat inflation, it could destabilize the derivatives markets and result in a Stock Market Crash and a Realstate Market Crash. If the Federal Reserve doesn't raise interest rates the dollar should collapse with Foreign Central Banks dumping U.S. debt instruments. In that case, interest rates will have to go up, causing derivatives instability anyway.

There are over 230 trillion dollars worth of derivatives. The use of these financial instruments has grown exponentially over the years. There is no telling what could happen when counterparty risk problems begin at one firm and spread to another, Gata says.

Gata says to watch these big six interest rate derivatives laden, high profile US corporations, If a number of them tank from here run for the hills!

General Motors lost 6% today!




FMN Fannie Mae


JPM (JP Morgan Chase Co)

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