Is more money chasing less and less gold every day? Yes,
it is true. And that should be one reason why gold prices
could zoom to a record $2000 levels in 2009!
According to a 2009 forecast from Mumbai-based Commtrendz
Risk Management Services, all over the world broad money supplies
in developed nations generally have an average growth rate
of around 7% annually, while world gold supplies have hardly
gone up by 1-2% over years.
In 2008, central banks around the world have acted in concert
to lower interest rates to such levels that low interest rates
themselves start to stimulate economies. The ECB, BOE has
cut short-term interest rates by 0.75% to 2.5%, 1% to 2% respectively
of late.
Japan and the US Interest rates are just about at zero. The
fiscal spending programs of US could expand into multi trillions
of dollars. The above efforts coupled with monetary stimulations
in the form of direct injections into the money system, if
happen to get the world out of deflationary grip could leave
explosive inflationary situation on the back of high crude
oil prices.
Nominal paper money increase will lead to inflationary push
to whole commodities complex and crude oil should not escape
from it.
Higher input cost amid longer term positive demand forces
could see oil prices testing earlier highs in coming years
and which will only support gold prices as gold too shares
a good correlation with energy.
Money supplies in developed nations generally have an average
growth rate of around 7% annually, while world gold supplies
have hardly gone up by 1-2% over years.
