What do you think will happen to the gold price in the coming years ?

As we witness fiat inflation the price of gold as well as the price of everything else will rise.

So last September the FED went into their own panic and doubled the monetary base. The monetary base is mostly bank reserves, i.e., the checking accounts member banks have with the FED. The FED did this by creating checking accounts on its books (a FED liability) and loaning the newly created checking account balances to member banks, which checking account balances the member banks can then use to create new checking accounts on their own books and loan them to customers.

The FED could have quadrupled the monetary base or even increased it by ten times and the effect would have been the same, because the banks had plenty of reserves after the FED doubled them and more would have been superfluous. This was a one shot deal to bail out the deteriorating liquidity of banks. If they tried to double the monetary base again, it would likely have very little effect; the old pushing on a string cliche.

The result of doubling the monetary base was an increase in the rate of growth of M2 money supply from the 6% is was running last August, up to almost 10%, year on year. For the past few months the rate of growth year on year has bounced around 9% +, but not exceeded 10%. In other words the rate of growth pushed up, but leveled off.

But here is the kicker. Last September was the first month when M2 money supply growth kicked up because it was being compared to 12 months earlier where M2 had not been pushed up with extraordinary measures. But this September, the current M2 will be compared to the kicked up M2 of a year ago; this October, the current M2 will be compared to the kicked up M2 of a year ago, etc. What this means is the year on year rate of growth will plunge, at first probably back to the 6% rate of growth that was happening before the panic began, and probably even plunge more with the passage of each month (maybe down to even 2%). Don't forget we are talking about the inflation rate, not the absolute amount of new money added.

So all of a sudden, instead of looking at a rate of increase of M2 that is running at 10%, we will be looking at a rate of increase of M2 that is 6%, or maybe even down to 2%. Is this the rate of increase in money supply that you think will produce hyperinflation of prices?

The reason that the increase in money supply has not translated into run away prices is because the velocity of money movement decreased. Two of the factors that should have caused prices to increase, more money supply and less goods produced, were offset by decrease in velocity of money movement; fear caused people to hold on to money and slow down purchases.

I think the fear will increase as these "economists" realize that the rate of growth in money supply is decreasing, not increasing, and a lousy Christmas for retailers should put to icing on the cake.

Looks to me like deflation or disinflation might just overwhelm the banks this time and put an end to bubble after bubble and an end to this fraudulent banking system.

Of course this is a wait and see deal, but watch the M1 and M2 money supply data published by the FED and the year on year rate of growth. The FED does not publish M3 but it is available at this web site:

http://www.nowandfutures.com/key_stats.html

The rate of increase (rate of inflation) of M3 has been falling like a brick.

I think that unless the Federal Government starts to print up its own fiat (sort of like California now issuing IOU's) I don't think they can cause much re-inflation of prices. I think the handwriting is on the wall for the collapse of the Federal Government and their evil spawn, the FED.

Why in the world do you think the sales of ammunition and guns are so very, very strong?

I think it will go up in price but keep the same Value. IMissLiberty is right.

Gold is not an investment, it is a store of Value. But when your fiat is collapsing it is worth it's weight in, you know, Gold!

You Judge A Tree By It's Fruit, NOT its Flower