Melman on Gold & Silver
September 2015 by Leonard MelmanThe most important question, of course, is when these deteriorating fundamentals (positive for the precious metals) will overcome the lengthy deterioration in the long-term trading charts for gold and silver and their associated mining shares.
In our opinion, these dizzying up and down moves reflect not so much a change in the direction of hard data, but rather fluctuations in sentiment regarding the degree of danger relating to the overall international economic structure.
…the general investment community has turned away from mining shares over the past three years and moved whole-heartedly into conventional investments.
Much of the past 12 months, both in America and around the world, has been devoted to discussions of Keynesianism versus the Austrian School of economics; of the value versus risks of “Quantitative Easing,” of free markets versus government-dominated markets; and of the right of government to accede to unlimited demands on her resources, no matter the cost.
This collection of positives augurs well for strengthening worldwide industrial activity leading to upward price pressures and eventually rising inflationary expectations—all of which have historically positive implications for gold and silver...
First, in order to compensate for the diminishment of purchasing power that usually accompanies rising inflation, investors normally have demanded higher interest rates on their investment assets. This was particularly true in the 1977-81 era when inflation soared to almost 20% and interest rates rose to roughly the same level.
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