3 Incredibly Key Charts For Battered Gold & Silver Bulls

“Debt in most countries has been growing exponentially. Last year in Europe almost every single country grew its debt. If they don’t grow the debt the political leaders will be thrown out of office. Rajoy, the Prime Minister of Spain, had a landslide victory a year ago. Now with austerity his approval rating is down to 15%. So we know austerity will not work.

As long as these countries continue to run deficits, it’s guaranteed the currencies will continue to decline in real terms, which is against gold. In 1965, Charles De Gaulle gave a superb speech in which he said most countries accepted that the dollar was as good as gold. He said that will lead to the US going massively into debt.

De Gaulle, stated that “A currency system must be based on an indisputable money base that doesn’t bear the mark of one country.” He said that “There is only one standard that meets those criteria and that must be gold.” That was back in 1965, Eric.

A few years later De Gaulle demanded the US pay all of their debts to France in gold. Of course as we all know that forced Nixon to close the gold window in 1971. That was the start of the monetary experiment and explosion in money printing in the world, and this is only going to accelerate in the next few years.

I’ve included the gold chart below which shows that gold is up almost 7-fold since 1999. During the last 13 years gold has reached overbought situations a few times. We saw it in 2006, 2008, and again in 2011. Every time gold has reached those overbought situations we’ve seen a consolidation.

 

Compared to the previous rises this has been a relatively mild consolidation. This last consolidation has finished in my view. All of the major moving averages have caught up nicely to the price of gold and it is now preparing for liftoff.

The balance sheets of all central banks are continuing to grow and I’ve included a chart of the Fed’s balance sheet (see chart below). The Fed’s balance sheet has now gone over $3 trillion. $3 trillion is an absolutely massive amount. The total borrowings are now actually over $3.1 trillion.

So the Fed continues to print money to finance the deficits. They are also there to finance and backstop the precarious nature of the banking system. We’ve seen the balance sheet of the Fed consolidating in the last year, just like gold. But now as you can see on the chart above that it’s breaking out again and I think we are ready for the next move higher in the Fed’s balance sheet.

What we are witnessing right now is a perfect Ponzi scheme with the central banks buying up the government debt. But like all Ponzi schemes it will fail and it will fail badly. They will be constantly printing up new money to finance the debt and as this accelerates we will see the hyperinflation I have been predicting for quite some time.”

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