Of late, gold is being beaten like a rented mule. Something I would never do, by the way – rent a mule that is. You can’t listen to or watch the financial news for 15 minutes without hearing someone predict gold at $1000 an ounce, even $800 an ounce based on the most absurd interpretation of reported inflation data. How soon we forget that government subsidies of all kinds have served to skew true inflation rates. In the absence of subsidies, everything you buy would cost more. PERIOD!
Last week, a real blockbuster story broke that should have gotten more play than any other financial story in the last week. Instead, it barely got a mumble from the talking heads. The House just rejected a Senate approved Farm Bill.that would cut subsidies to farmers. In short, the House didn’t think the Bill went far enough on the cutting side. Included in this bill are food stamp subsidies which the House also maintains did not include enough cuts.
My contention is that ANY cuts will manifest themselves in higher prices for everything we buy and everything we do. Don’t be fooled. The low costs of groceries, gas, heat and electricity, that we enjoy today, come at a cost. Either deficits continue to soar or the cost of goods has to rise. If you think debt can now rise to infinity without consequence, you are one who is susceptible to another blindside attack by Debt Crisis – Part II.
This story has turned up the heat under the cauldron of budget controversy and could well be part of the Gold rebound story about to unfold. Turning the heat up further is the fact that gold, by many many accounts, is now trading at a cost at or below its production cost. The cost settled on by many experts, sits at $1300 an ounce. For the moment, the gold paper traders are ignoring this as COMEX gold prices seem to be in free-fall. In reaction, gold mining stocks are also ...