Steve Saville

The following is excerpted from a commentary originally posted at www.speculative-investor.com on 16th September 2012. An Appropriate Quote The great H.L. Mencken wrote: “As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will … Continue reading

The following is excerpted from a commentary originally posted at www.speculative-investor.com on 19th August 2012.

Although it probably won’t happen within the next couple of months, it’s a good bet that the ECB will eventually be prodded into monetising a large amount of European government and commercial bank debt.

Major peaks in the gold market tend to follow major shifts in the monetary backdrop — from a high to a low monetary inflation rate — with a lag of more than two years.

Gold and “risk” assets rally whenever traders get the faintest scent that more QE (a central bank program designed to increase the money supply) is coming.

We discussed Warren Buffett’s illogical opinions about gold in our 15th February 2012 report under the heading “Buffett’s Blind Spot”.

To paraphrase Einstein, not everything worth measuring is measurable and not everything measurable is worth measuring.

s time to update our long-term weekly charts showing how the gold sector, as represented by the Barrons Gold Mining Index (BGMI), has performed in US$ terms, gold bullion terms and S&P500 (SPX) terms.

The US Great Depression lasted from 1929 until 1945, but the deflationary phase of the Depression effectively ended in 1932.

We addressed the above question last year and arrived at the answer: no, gold left bargain territory long ago.

Considering how popular the term “Quantitative Easing”, or “QE” for short, has become, it’s remarkable that many commentators on the financial markets appear not to understand what QE is.

When reviewing the long-term performance of the gold sector in previous TSI commentaries we looked at performance in nominal dollar terms and in gold terms, but as far as we can recall we never looked at performance relative to the broad stock market.