Further QE to Cause Higher Inflation and Rise in Gold Price

The chart below [of] the U.S. monetary base, the price of gold and the U.S. consumer price index [clearly] shows [that] gold prices and the consumer price index have responded to historical growth in growth of the monetary base.

[The price of] gold experienced a euphoric bubble in the 1980s when gold exceeded the monetary base [and during this current] 10 year bull market in the price of gold the growth in the monetary base has kept pace [see chart below].

Investor Gold Holdings Only at 0.96% of Assets

Similar to the first chart outlining the bubble territory in the 1980s, [the chart below shows that] gold as a percentage of assets was three times higher in 1980 [than currently is the case]…

Conclusion

While I believe that QE3 will be a catalyst for further increases in the price of gold, similar to QE1 and QE2, the thesis on gold is not linked to another QE program. The thesis on gold is simply monetary debasement by world governments and debt growth since 1971.

*http://seekingalpha.com/article/320554-buying-gold-on-more-qe?source=email_macro_view&ifp=0

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