Flight Into Gold A Flight To Quality

That's the take of Bob Chapman at the Centre of Research into Globalization. He says that the Fed's near-zero interest rate policy and quantitiative easing will eventually produce 14% inflation. [I believe he's using John Williams' gauge; by William's measure, inflation is already above 10%] He also predicts another round of quantitiative easing, in order to cushion the economy from more damage due to still-slumping housing prices and to give the stock market another boost.

We believe that for the past 2-1/2 years the price of gold has been mainly driven by a flight to quality, as gold vied with the dollar for supremacy, as the world’s reserve currency. As we have witnessed gold has won that battle. The only way the dollar or any other world reserve currency can compete is by being backed 25% by gold. The elitist’s royalty of Wall Street and the City of London are quite upset with these developments, because they want all currencies to be fiat, so that they would not have to have a gold backed international monetary unit. Over the last six months another historic factor has come into play in evaluating gold versus currencies, and that is the interconnectivity of gold’s relationship with inflation. In the late 1970s this was the underlying factor for the rise in the prices of both gold and silver. At that time they never had the luxury of strength also coming from recognition of being monetary units. We hear the manic claims that gold and silver are bubbles or are manias. That cannot be because gold is and always has been the only real money. Every time the major media makes these bogus claims they always fail to mention that both gold and silver have appreciated in value in excess of 20% annually versus nine major currencies. They refuse to point out gold and silvers’ 11 years track record having risen from $260.00 and $3.80 respectively to more than $1,500 and $50 per ounce. This shows you the massive deception by the major media, which is totally controlled by the elitists from behind the scenes....

As for Williams' Shadowstats service: whether one likes it or dislikes it, it has the virtue of consistency over time. It demonstrates that calculating inflation the same way as was done in the 1970s, shows inflation this past decade to be just as bad as during the 1970s.