The US Mint is suspended its production of 1 oz. gold eagle and gold buffalo coins three times in 2009
Over the last decade the DJIA is down about 80% against gold.
The following is from John Hathaway at Tocqueville Asset Management 11/30/2009
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This quantity adds a puny 1% or 2% to the above ground supply of 163,000 or so metric tonnes.
Therefore, traditional supply and demand analysis does little to explain price movement.
It is better to think of gold as a multi trillion dollar capital market asset.
In theory, all of it is potentially for sale at any given time.
To speak of a rising gold price is technically incorrect.
Gold per se does not excite the investment world. It has not suddenly changed its stripes.
What has changed is the world around it.
“In our opinion, the investment rationale for gold, in today’s circumstances, is deflation.
The post World War II economic model of economic growth based on secular credit expansion is broken.
We believe the applicable model is a 1930’s style credit deflation.
Asset prices are pressured by deleveraging.
Uncertainty as to collateral values restricts credit despite available liquidity.
A negative shift in expectations rapidly overtakes behavior.
The Fed understands this and is acting accordingly.
This is pretty much where things stand at the moment.
It remains to be seen whether massive stimulus can offset the headwinds of a negative credit cycle.
“Zero interest rates are designed to encourage a new carry trade.
Free money is intended to inflate asset values in hopes of restarting the credit cycle.
In other words, our ‘leaders’ in Washington will solve the problem of too much debt with more debt.
Decades of credit excesses have brought us to the brink of a credit collapse.
Things should get really interesting for gold when government actions are seen to be impotent.
If currencies are successfully debased through inflation, gold will retain its value.
Gold is a hedge against a world monetary order on its death bed.”
John Hathaway, Tocqueville Asset Management L.P., 11-30-09