Gold Price Leading Indicator of Trouble Ahead
Source: San Francisco Examiner, Anthony G. Martin (6/22/10)
"When the economy is strong, gold and other PMs tend to fade. . ."
Upon the strength of heavy investments by Russia, the UK and the United States, gold rose to its highest price in history on Monday.
Historically, this kind of dramatic surge is a signal that stock markets are on shaky ground. And when the markets are shaky, national economies are standing on quick sand.
For ten consecutive years the price of gold has gone up. The last time the metal experienced this kind of long-term gain was in 1920, during the height of 'the mini depression' brought on by the policies of 'progressives' in Congress and the White House, the most notable of which was Woodrow Wilson.
The U.S. economy suffered under the policies of Wilson and the progressives, and it took the election of Warren G. Harding in November of 1920 to reverse the damage that had been done. Harding's policies set the nation on a course that led to "the roaring '20s"—a period of unprecedented prosperity and economic growth.
When the economy is strong, gold and other precious metals tend to fade as a favorite of investors. But when gold begins to surge, the historical record shows that investors are feeling squeamish about stocks and bonds and the economy in general.
This is precisely what is happening currently.