Gold Will Break Previous High in Near Term: Brien Lundin
September 27, 2012 by Gold Editor
SOURCE:[The Gold Report]-Brien Lundin expects money printing by the Federal Reserve to raise gold above its $1,920/oz high, and as editor and publisher of Gold Newsletter, he considers it his job to show people how to profit. In this exclusive Gold Report interview, Lundin explains why he believes it is time to be aggressive in equity positions and names companies that could benefit the most from the coming leg up.
The Gold Report: We just had a third round of bond buying in quantitative easing (QE). Will QE3 help the economy?
Brien Lundin: It will not help the economy, but it will help Wall Street. It will help elevate the stock market, including precious metals and resource stock prices. Although that was not the Fed's stated goal, it will be the ultimate result.
As I have written lately, we now have "QE as far as the eye can see." There is no end to it. The Federal Reserve will use QE until it works. If it does not work, the Fed will ratchet up the program and print more money until it does work.
The Fed is using the brute force of money creation to eliminate the U.S. unemployment problem, but that is not a foundation upon which a sustainable recovery can be built. At the same time that the Fed is trying to build a towering economy, it is eroding the very foundation of that economy by issuing vast pools of liquidity.
TGR: At a recent Casey Research Summit, some speakers suggested that the stage is being set for inflation. Do you agree?
BL: I see the danger, but I think it is important for investors to recognize the differences between monetary inflation and price inflation.
Price inflation is a symptom of the underlying disease, which is monetary inflation. Every new piece of fiat currency created in the world that is not backed by gold raises the relative value of tangible assets, primarily the monetary metals gold and silver, but also other commodities.
For a number of reasons, I do not think we will see soaring price inflation in the U.S. as we saw in the 1970s anytime soon. There are other very powerful parallels with the 1970s, but I do not think that retail price inflation will be one. We are living through monetary inflation right now. That is why precious metals prices are rising.
TGR: The August edition of Gold Newsletter predicted what happened in the beginning of September: a gold price close to $1,800/ounce (oz). Where do you see things headed?