Five Reasons Gold (and Silver) Keep Rallying

Yes that’s the title of a WSJ article by Dave Kansas.  His five reasons are:

Euro woes – all that is needed here is the mention of Portugul, Italy, Ireland, Greece and Spain (PIIGS)

MENA – Middle east – need I say more?

Japan – Earthquake, Tsunami, Volcano, “dogs and cats sleeping together”, what’s next?

The Fed -Inept, QEs ad infinitum

Inflation – we all know price increases are more than the government is telling us.

Kansas leaves out the real reason that Gold and Silver are rising.  Investors are waking up to the fact that we are insolvent, as Dallas Federal Reserve Bank President Richard Fisher said yesterday.

“If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when…”

But, most of us who follow the economy closely conclude it’s too late. We either have to stop the debt growth now and suffer the pain or the economy collapses and we suffer big pain. We have a fiat currency, as do most of the countries of the world and all fiat currencies fail. What’s Gold and Silver worth if you don’t have enough dollars to buy it from me? Why would anyone trade a hard asset for paper that’s not worth the paper its printed on?

When it dawns on our fellow citizens that their currency is really failing, there will be a mad scramble to get rid of the stuff. You don’t want to hold paper when the music stops.

I’m grateful to Dave Kansas for his list, but they are mostly just symptoms not the cause.

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